A company debt service coverage ratio (DSCR) measures:

A Total debt outstanding

B Whether operating income is sufficient to cover debt obligations including principal and interest

C Credit score

D Stock price

✓ Correct Answer: Option B

DSCR = Net Operating Income / Total Debt Service. >1 means sufficient cash flow to cover debt payments. Lenders typically require DSCR > 1.2-1.5 for loan approval.

💡 Why is B) the correct answer?

The correct answer to the question "A company debt service coverage ratio (DSCR) measures:" is Option B: Whether operating income is sufficient to cover debt obligations including principal and interest.

The other options — A) Total debt outstanding, C) Credit score, D) Stock price — are incorrect for this Pre-MBA Exam Prep question. As explained above: DSCR = Net Operating Income / Total Debt Service. >1 means sufficient cash flow to cover debt payments. Lenders typically require DSCR > 1.2-1.5 for loan approval.

📚 About This Pre-MBA Exam Prep Practice Question

This 3-level Pre-MBA Exam Prep question from the Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

Practice Pre-MBA Exam Prep Quizzes → Browse All Questions Study Flashcards

A company debt service coverage ratio (DSCR) measures:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

Related Pre-MBA Exam Prep Questions