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Calculate your debt service capacity

Three figures per year, the cash flow available for debt service, interest and scheduled repayments, and the calculator shows whether debt service is covered from cash flow, how much headroom is left and what an additional financing does to it.

Your figures (per year, €)
Debt service
—
interest + repayment
Debt service coverage
—
cash flow ÷ debt service
Headroom
—
cash flow − debt service
Debt service capacity
—
the most the cash flow can carry per year

How it is calculated

Debt service = interest + repayments of all financing in a year. Debt service coverage = cash flow available for debt service ÷ debt service. Below 1, debt service is not paid from the business but from reserves or new debt. Headroom is the difference; capacity is the cash flow itself, the most a year can carry.

Available cash flow is operating cash flow after tax, replacement capex and owner drawings. Which figure the bank uses, and how much margin above 1 it wants, is a matter for the bank meeting; the calculator therefore states no benchmark.

Derivation, examples and what the bank reads into the ratio: the guide to the financial status. Where the cash flow comes from: how to calculate cash flow.

Free Excel template

Debt service capacity is an annual figure. Whether the money is there in every week is what the 13-week template shows.

Get the template

Frequently asked questions

What is debt service capacity?
The ability to pay interest and repayments on all financing from ongoing cash flow, year after year. It is measured as debt service coverage: cash flow ÷ debt service.
Which cash flow goes into the calculation?
The part of operating cash flow left after tax, replacement capex and owner drawings. A cash flow before those items overstates coverage.
What does a coverage below 1 mean?
Debt service is not covered from cash flow; the gap is closed from deposits, lines or new loans. For the bank it is a warning sign; for management a reason to review repayments and investments.
From the annual figure to the weekly view

LiquidityLens shows debt service, lines and liquidity every day, and whether the next repayment fits into the weeks it falls due.

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