Difference between revisions of "Calculate Debt Service Payments"
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Debt service is the total amount paid in interest and principal on debt during a specific time frame, usually a year. Businesses may be required to disclose their total debt service to lenders when applying for a loan. Lenders use this information, along with the company’s net income, to calculate the debt service coverage ratio. This measures the percentage of net income used to pay for debt. | Debt service is the total amount paid in interest and principal on debt during a specific time frame, usually a year. Businesses may be required to disclose their total debt service to lenders when applying for a loan. Lenders use this information, along with the company’s net income, to calculate the debt service coverage ratio. This measures the percentage of net income used to pay for debt. | ||
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== Steps == | == Steps == | ||
=== Calculating Debt Service Payments === | === Calculating Debt Service Payments === | ||
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#* Most creditors will require a ratio of 2 or more before granting any new debt. | #* Most creditors will require a ratio of 2 or more before granting any new debt. | ||
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== Related Articles == | == Related Articles == | ||
