DSCR Calculator for Project Finance
Calculate project finance DSCR, debt-service capacity and coverage headroom using CFADS, principal, interest and lender target DSCR.
Debt Service Coverage Ratio Calculator
Calculate project DSCR, debt-service capacity and coverage headroom using Cash Flow Available for Debt Service, principal repayments and interest.
Debt Service Coverage Ratio measures the cash available to service project debt relative to the principal and interest due during the same period.
Enter the project's CFADS and scheduled debt payments below. You can also open the detailed CFADS builder to calculate cash available for debt service from the underlying project cash flows.
Calculate DSCR
Use values for the same financial period, such as one year, six months or one quarter.
Use this section if you do not already have a CFADS figure. The exact CFADS definition should follow the applicable financing model and loan documentation.
The project generates $1.30 of CFADS for every $1.00 of scheduled debt service.
This calculator is illustrative only. Project finance lenders may define CFADS, debt service, covenant tests and calculation periods differently under the applicable facility agreement.
How to Use the DSCR Calculator
Enter Cash Flow Available for Debt Service for the relevant calculation period, followed by scheduled principal and interest payments for the same period.
If CFADS is US$13 million and total scheduled principal and interest are US$10 million:
The project therefore generates US$1.30 of cash available for every US$1.00 of scheduled debt service.
Understanding the Results
| Output | Meaning |
|---|---|
| DSCR | CFADS divided by scheduled debt service. |
| Cash Headroom | CFADS remaining after scheduled debt service. |
| Coverage Margin | Percentage by which CFADS exceeds scheduled debt service. |
| Maximum Debt Service | Maximum scheduled debt service that the current CFADS can support at the selected target DSCR. |
| Target Headroom | The difference between actual debt service and the maximum debt service permitted at the selected target DSCR. |
Using DSCR for Project Finance Debt Sizing
DSCR is not only a monitoring ratio. It can directly constrain how much debt a project is capable of supporting.
If a project produces US$15 million of CFADS and lenders require a 1.30x target DSCR:
That US$11.54 million must accommodate interest and scheduled principal for the applicable period. The project's debt balance can then be sized and amortized around the available debt-service capacity.
This is the basis of debt sculpting, where repayments are aligned with the project's forecast cash-flow profile instead of applying a simple straight-line principal schedule.
Read our guide to Debt Service Coverage Ratio in Project Finance for a detailed explanation of CFADS, minimum DSCR, lender sensitivities and debt sizing.
DSCR Is Not a Standalone Bankability Test
A project showing a 1.30x or 1.50x DSCR is not automatically financeable. Lenders also examine how dependable the underlying CFADS is.
- Revenue contracts and offtake arrangements
- Counterparty credit quality
- Construction and completion risk
- Operating expenditure assumptions
- Production or utilization assumptions
- Commodity or merchant-market exposure
- Interest-rate and foreign-exchange risk
- Reserve accounts and liquidity
- Minimum and average DSCR
- Loan Life Coverage Ratio
- Downside and sensitivity cases
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