| Posted by: Joe Moseley Apr 4 2004, 12:14 AM |
I am thinking of purchasing a golf course and from looking at its FYE 2003 financials, I would like some help in determining DSC. I was told by a local banker that debt service coverage is NI+Dep. Exp.+Int. Exp. / CPLTD+Int. Expense. My question is since P&I is included in CPLTD would I add back interest in my denominator of this calculation?
Would option 1 or 2 be correct?
1) 50M(NI)+150M(Dep)+30M(Int)/ 200M(CPLTD)+30M(Int)=1:1
2)50M(NI)+150M(Dep)+30M(Int)/200M(CPLTD)=1.17:1
Thanks in advance. |
| Posted by: loanuniverse Apr 4 2004, 10:07 AM |
Joe:
Option #1 is correct. CPLTD = Current Portion of Long-Term Debt {it does not include interet expense. It only includes the portion of the principal that will be repaid within the next twelve months}.
Hope this helps.
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