Financial Glossary
DSCR vs. FCCR
The debt service coverage ratio (DSCR) measures whether a business or property generates enough operating income to cover its principal and interest payments. The fixed charge coverage ratio (FCCR) is broader, testing whether earnings cover all fixed obligations, which can include debt service plus items such as lease payments and other recurring fixed charges. Both express coverage as a multiple, where a higher figure signals more cushion for lenders.
Problem & Application
Lenders evaluating a campground acquisition, a real-estate deal, or an operating business often look at DSCR for a property-level loan and FCCR for a company carrying significant lease or contractual commitments. A borrower can show a comfortable DSCR yet a tight FCCR if leases and other fixed costs are heavy, which changes how a credit committee views risk. Knowing which ratio a lender will apply helps an operator structure obligations and present financials accordingly.
In Short
DSCR focuses narrowly on debt payments, while FCCR captures the full weight of fixed obligations. Understanding both gives borrowers a clearer picture of how lenders will read their cash flow.