Debt Service

Last Updated: Jun 6, 2019

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Debt service Includes Principal and Interest payments. It's part of the calculation of a borrower's Debt Service Ratio which gauges the client's ability to pay its interest and principal payments. The Debt Service Ratio is defined as (Principal plus Interest)/EBITDA. A ratio greater than one reflects the borrower can service its debt obligations while a ratio less than one denotes a borrower cannot service its debt obligations.