Given the following information, calculate the debt coverage ratio for this investment: Potential gross income: $123,500;...

Given the following information, calculate the debt coverage ratio for this investment:

Potential gross income: $123,500;

Vacancy rate: 5%;

Net operating income: $64,975;

Operating expenses: $52,350;

Acquisition Price: $625,000;

Debt service: $45,620.

Can you teach me how to do this on excel?

Expert Solution

Debt coverage ratio is a measure of availability of cash flows to pay current debts obligation. It is calculated by dividing Net Operating Income by Total Debt Servicing.

Debt Coverage Ratio = Net Operating Income / Debt Service
= $64,975/$45,620
= 1.42

jeff jeffy answered 2 years ago

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