Financial Calculations & Valuation
Beginner
Commercial Credit Appraisal DSCR & Interest Coverage Calculator in Python
Automate commercial loan underwriting by calculating year-by-year Debt Service Coverage Ratio (DSCR), Average DSCR, and Interest Coverage Ratio in Python.
#pandas#numpy
Problem Statement
In corporate lending and term loan appraisal, evaluating whether a borrower's projected cash accruals cover principal repayments and interest requires a multi-year DSCR sensitvity model.
Formula / Core Logic
Cash Accrual = PAT + Depreciation + Annual Interest
DSCR = (PAT + Depreciation + Interest) / (Interest + Principal Installment)
Installation
pip install pandas numpy
calculate-dscr-debt-service-coverage-ratio-python.py
import pandas as pd
def calculate_credit_dscr(df_projections):
# Expected cols: Year, PAT, Depreciation, Interest_Outflow, Principal_Repayment
df = df_projections.copy()
df['Cash_Accruals_For_DSCR'] = df['PAT'] + df['Depreciation'] + df['Interest_Outflow']
df['Total_Debt_Service'] = df['Interest_Outflow'] + df['Principal_Repayment']
df['Annual_DSCR'] = (df['Cash_Accruals_For_DSCR'] / df['Total_Debt_Service']).round(2)
avg_dscr = round(df['Cash_Accruals_For_DSCR'].sum() / df['Total_Debt_Service'].sum(), 2)
return df, {'Average_DSCR': avg_dscr, 'Bank_Benchmark_Pass': avg_dscr >= 1.50}
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Buy Full Bundle on Gumroad ($19) →Frequently Asked Questions
Q: Why is Gross DSCR preferred over simple Net Profit / EMI?
Depreciation is a non-cash charge and interest is part of the denominator, so adding both back to PAT reflects true cash available for debt servicing.