See how comfortably your cash flow covers your loan payments, the same way a lender checks it.
Debt service coverage is cash flow available for debt service divided by the principal and interest due in the same period. A ratio of 1.25x means $1.25 of cash flow for every dollar of loan payments.
Each loan’s monthly payment is calculated for a fully amortizing loan and rounded to the cent, then multiplied by twelve. The ratio is shown cut off at two decimals, never rounded up, so a result just under your requirement never displays as meeting it.
Lenders define cash flow differently. Most start from EBITDA and subtract taxes, owner distributions, and capital spending that wasn’t financed. Use your loan agreement’s definition. Why definitions matter.
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