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What is a Debt Service Coverage Ratio (DSCR)?

A debt service coverage ratio measures a company’s ability to use its operating income to repay its debt obligations. This ratio shows how much cash a company generates for every dollar of principal and interest owned. The debt service coverage ratio is calculated by dividing net operating income by debt obligations.

A ratio above 1 indicates that the company is more creditworthy and is generating sufficient funds to service their debt obligations. Equiton had a debt service coverage of 1.43 times as of June 30, 2022.

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