I’m having difficulty learning ratios used in S&P ratings. Particularly with debt service coverage and debt payback period. any suggestions?
yeah same prob. maratikus…I just keep writing them down from time to time… Debt service coverage = FOCF + Int / Int + Ann. Prin. Repay Debt payback = T.debt / Disc. CF
So looking at this again…i guess an easy way to remember Debt service coverage is FCFF/total debt payment so thinking about this in the same way as Interest cov. ratio… Ebit/Int Debt service is the free cash flow to the firm over the payments to debt holders…
are you sure about “before capital expenditures”, secret sauce says “after”.
sorry about that maratikus… your right it is after…
thanks, chad. I appreciate your help with this difficult topic.
no problem… I wish I knew of a better way to remember this stuff…