We compute 'economic' debt service cover ratios or DSCR, including all cash at bank (including any debt service reserve account). This ensures consistent computations across firms and a DSCR that genuinely represent the hard default point (DSCR=1).
Debt service cover ratios are computed thus:
DSCR_t = \frac{Cop_t + Cia_t + Cinv_t + Cbank + Cdd_t}{DS_t} |
where,
- Cop_t is cash from operations
- Cia_t is cash from investment activities
- Cinv_tis cash from investments (e.g. funds kept in escrow for bond funded projects)
- Cdd_tis cash from equity and debt drawdowns
- Cbank_t is cash at bank