Advanced Project Finance Structuring
Debt service coverage
Can a profitable infrastructure project still miss a debt payment?
Practise debt service coverage with a worked example and a short check.
Coverage tests cash available for debt service against scheduled interest and principal.
DSCR = cash available for debt service ÷ scheduled debt service
Compare cash available during the period with scheduled interest plus principal for the same period. ₹120 crore ÷ ₹100 crore = 1.20×.
₹120 crore available against ₹100 crore of principal and interest gives 1.20×.
Compare cash available during the period with scheduled interest plus principal for the same period. ₹120 crore ÷ ₹100 crore = 1.20×.
Available cash drops to ₹90 crore with ₹100 crore debt service. What is the ratio?