Debt service coverage (Debt service cov.)
How many times over pre-tax earnings cover interest plus the debt falling due within a year.
Unlike interest coverage it includes the principal actually due, which is what has to be found in cash.
How it is computed here
EBITDA / (interest expense + short-term debt)
Measured over the latest complete fiscal year, as filed. Filed under risk. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Withheld rather than shown as infinity when there is no debt service, so an absent figure often means no debt.
- EBITDA ignores the capital spending required to keep earning it.
Not meaningful for banks, insurers: the product prints n/m with the reason rather than a number for them.
Questions
How is debt service coverage calculated?
EBITDA / (interest expense + short-term debt). Measured over the latest complete fiscal year, as filed.
What does debt service coverage tell a value investor?
Unlike interest coverage it includes the principal actually due, which is what has to be found in cash.
When does debt service coverage mislead?
Withheld rather than shown as infinity when there is no debt service, so an absent figure often means no debt. EBITDA ignores the capital spending required to keep earning it.