Debt service ratio

A debt service ratio may be:

  1. The ratio of cash available to pay debt, to debt payments, for a company or a project; the debt service cover ratio. In this case it is preferable to use the more precise term.
  2. The analogue of the above for personal debt: the ratio of payments to disposable household income
  3. The ratio of a country's exports to its payments on foreign debt.

In all the above cases, the debt payments are the total payments due, both principal and interest. This is very different from ratios such as gearing, the ratio of debt to GDP, interest cover, and many other measures which measure either just the amount of principal (plus accumulated interest) owed or only the annual interest.

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