Debt Service Coverage Ratio
Calculate the debt service coverage ratio, a solvency ratio that measures a company’s ability to service its debt with its net operating income.
The debt service coverage ratio provides insights into a company’s ability to meet its debt obligations from its operating income. It is especially important for companies with significant debt obligations, as a lower ratio indicates higher financial risk and potential difficulties in servicing debt payments.
The formula is as follows:
\[\text{Debt Service Coverage Ratio} = \text{Operating Income} / \text{Total Current Liabilities}\]Also known as: DSCR, debt service ratio.
Debt Service Coverage Ratio in Python
get_debt_service_coverage_ratio is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_debt_service_coverage_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
debt_service_coverage_ratios = toolkit.ratios.get_debt_service_coverage_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.8683 | 0.7757 | 0.7866 | 0.6985 | 0.8033 |
| TSLA | 0.331 | 0.5113 | 0.3093 | 0.2455 | 0.1373 |
Parameters
get_debt_service_coverage_ratio accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.