{"id":2,"date":"2025-05-01T00:00:00","date_gmt":"2025-05-01T00:00:00","guid":{"rendered":"https:\/\/bebaak.co\/blog\/dscr-tol-tnw-current-ratio-what-these-actually-mean\/"},"modified":"2025-05-01T00:00:00","modified_gmt":"2025-05-01T00:00:00","slug":"dscr-tol-tnw-current-ratio-what-these-actually-mean","status":"publish","type":"post","link":"https:\/\/bebaak.co\/blog\/dscr-tol-tnw-current-ratio-what-these-actually-mean\/","title":{"rendered":"DSCR, TOL\/TNW, Current Ratio \u2014 what these actually mean"},"content":{"rendered":"

Three ratios. One bank decision.<\/h2>\n

Every time you walk into a bank for a credit facility, three numbers determine the outcome more than any other factor.<\/p>\n

DSCR \u2014 Debt Service Coverage Ratio<\/h2>\n

Formula:<\/strong> DSCR = EBITDA \u00f7 (Annual Interest + Annual Principal Repayment)<\/p>\n

What the bank wants:<\/strong> Above 1.25. This means for every \u20b91 you owe in debt service, you earn \u20b91.25 in operating profit.<\/p>\n

If your DSCR is 1.4, tell the bank: “Our operations generate 40% more cash than we need to service our current debt.” That sentence moves the RM.<\/p><\/blockquote>\n

TOL\/TNW \u2014 Total Outside Liabilities to Tangible Net Worth<\/h2>\n

Formula:<\/strong> TOL\/TNW = Total Liabilities \u00f7 (Share Capital + Reserves)<\/p>\n

What the bank wants:<\/strong> Below 3x. Above 4x is a serious concern.<\/p>\n

Current Ratio<\/h2>\n

Formula:<\/strong> Current Assets \u00f7 Current Liabilities<\/p>\n

What the bank wants:<\/strong> Above 1.2. Below 1 means you have more due immediately than you can pay \u2014 this signals working capital stress.<\/p>\n

\n
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Three ratios. One bank decision.Every time you walk into a bank for a credit facility, three numbers determine the outcome more than any other factor.DSCR \u2014 Debt Service Coverage RatioFormula: DSCR =…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-2","post","type-post","status-publish","format-standard","hentry","category-working-capital"],"_links":{"self":[{"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/posts\/2","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/comments?post=2"}],"version-history":[{"count":0,"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/posts\/2\/revisions"}],"wp:attachment":[{"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/media?parent=2"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/categories?post=2"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bebaak.co\/blog\/wp-json\/wp\/v2\/tags?post=2"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}