Lecture 61: Debt service coverage ratio (DSCR) - formula, calculation & practical examples- In Hindi

[@MonikaGoyal-rs4js]

Thank you Sir for covering all practical points.... Superb video...😊

[@AnkushJain]

Thank you

[@ca.rahulkumarrathod9587]

Dear sir, you have explained the topic in-depth and also brought our attention to the shortcomings of the DSCR ratio in the case of credit sales. Thank you for sharing your knowledge.

[@AnkushJain]

👍

[@funny55589]

Thank you sir for making such video and helping other to gain knowledge. I appreciate your efforts for spreading in-depth knowledge.

[@AnkushJain]

Thank you

[@Dream.Thebabybuoy]

Best channels for bankers working in credit

[@AnkushJain]

Thank you

[@shubhammhaske938]

Thank you sir for explaining in simple words....

[@AnkushJain]

Your welcome

[@vivekok81]

Borrower is in textile manufacturing business... Borrower is rented some part of property for rented Is rent income is operating income or non operating income?

[@AnkushJain]

Non operating

[@AnkushJain]

Non operating

[@vivekok81]

In DSCR..sales / Income is calculated as per projected or provisional financial ? Obligation we are considering proposed term loan

[@AnkushJain]

We can take projected income as well

[@gopalkrishna8977]

1)why interest is added back in numerator and denominator as well is it for just better presentation purpose? and what is the impact if we dont add interest in numerator and only pricipal in denominator... 2) we do charge depreciation to replace asset at the end of life of asset so what is the rationale in adding in caluclation if that amount has dedicated use .

[@AnkushJain]

1. It's our call... Not much impact if we ignore adding back and obligating if facility amount is same... However when utilisation is low in previous year then added back interest is low while in denominator we obligate considering full utilisation then eligibility will reduce. 2. Depreciation is a non cash expense and it does not involve cash outflow due to which it is added back

[@vivekok81]

Any video on ISCR?

[@AnkushJain]

Yeah pl check interest coverage ratio. Have already made it

[@vivekok81]

Awesome 😍

[@AnkushJain]

Thank you 👍

[@chanderdeep2071]

Great work brother.....all the best

[@AnkushJain]

Thank you

[@mohitchandrajoshi4454]

Can you pls tell how we will cross check credit sales and credit exp from cash flow statement by practical case study

[@AnkushJain]

Hi Mohit, in cash flow statement, impact is already considered of credit sales and credit expenses since we adjust debtors and creditors in cash flow statement. I will prepare separate lecture on cash flow statements itself

[@mohitchandrajoshi4454]

@@AnkushJain thanks

[@puneetranabt]

Many time client approaches for CC limit when they have taken excess BL in running FY & while assessing we check PBDIT of last ABS is less than EMIs payable and with track of no EMI bouncing. What validate we should check if it is to be funded.

[@AnkushJain]

This could funded out of fresh borrowing as well, i mean enhanced funding used to clear old debts, or business done out of books of account

[@sudipto6818]

Sir you are considering future EMI but not considered future income to be generated from Future loan. Please clarify.

[@AnkushJain]

Yes when we prepare cma, the dscr is calculated on future income

[@hkhatnani8462]

Sir have you made any video on valuation report how to read and understand plans layout and remarks if technical to be considered while credit underwriting

[@hkhatnani8462]

If credit or cash sales is not being factored then cash flow se cash flow from operating activites can be considered aginst loan obligations??

[@AnkushJain]

Yeah can be

[@Vijendrabhau]

Sir isme interest repayment ya EMI. As Principal also part of EMI so what actually you are saying

[@AnkushJain]

Main samjha nahi.. obligations ka keh rhe ho?

[@harshitvijay2930]

Sir need one more clarification Which type of loans considered for calculating dscr Like should unsecured loans / cc limit etc be considered

[@AnkushJain]

Every loan should be counted unless until there is definite other source of income available other than business income which is sufficient to repay other loans

[@harshitvijay2930]

@@AnkushJain sir how much principal amount will be considered in case of cc limit or other wc loans while calculating dscr

[@AnkushJain]

For cc limit and other revolving facilities, only interest amount to be considered

[@harshitvijay2930]

@@AnkushJain thnk u sir Sir is there any other way to have conversation with u

[@AnkushJain]

👍 I would suggest if u ask queries here since it will help other people also

[@RajanKumar-gh2qx]

Sir, if principal is also being repaid from the Cash Profit then why does the expense of Principal portion not forms part of the Expense in P&L. Just a View: Kyuk Pay to krna hi hai, to other expense and the Principal portion of the loan ko pay krne k baad jo PAT aaye usko hi actual income maane aur usko fir BS me, if retained, then us income ko Capital me add back kre to get a relaistic view of Capital account.

[@AnkushJain]

No, profit and loss account is prepared on accrual basis where in actual cash generated is not equal to profits and thus both are separate. Further loan is a balance sheet item like capital. If we go by that logic, if someone withdraws capital and that money is also taken out of cash generated by business and that way it should also be charged in profit and loss account?

[@RajanKumar-gh2qx]

@@AnkushJain Sir for a better clarity and my understanding can u elucidate by a hypothetical scenario Loan availed of Rs 10 payable in 1 yr Expense: Rs Raw Material: 40 Other Misc: 20 Interest: 10 Principal: 10 Tax: 05 Revenue: 100 Profit should be: 15 But if Principal is not taken as part of Expenses then Profit is : 25 So, sir Does it imply that Principal portions shall be repaid by PAT.

[@AnkushJain]

Pl understand that principle repayment of loan is not an expense. If the principle amount is charged as expense then disbursement of loan should also be treated as income

[@amanbhardwaj1000]

Very helpful....

[@AnkushJain]

Thank you

[@manisharora6848]

Sir kindly ans me that int of cash credit will also be added back with depreciation or only int on term loan will be added??

[@AnkushJain]

If you add interest of cash credit then pl also take its obligation in denominator. Otherwise ignore to take it and consider only TL interest

[@sukoonmoments6733]

Thanks for sharing

[@AnkushJain]

👍

[@TheSuresh2022]

Is tax audit report is essential for assessment?? What information are we get from tax audit report?? Actually my case is not logged in, just because of client is not able to share tax audit report..

[@AnkushJain]

It is essential. I will cover the relevance of it in a separate video

[@TheSuresh2022]

Ok sir

[@AnkushJain]

👍

[@harshverdhansaxena9166]

@Ankush sir Namaste🙏.. please ek session Budget pe🙏✨

[@AnkushJain]

😊 budget aane k baad bna dunga apne views ka uspe.

[@caaman93]

Sir can u explain why deferred tax provisions and mat credit is added back to arrive NCA's Please

[@AnkushJain]

Please consider tax amount as per ITR only. No need to be confused between deferred and mat

[@caaman93]

@@AnkushJain thank u so much sir 🙏

[@AnkushJain]

👍👍

[@TheSuresh2022]

Can we consider the rental income for DSCR??

[@AnkushJain]

No since it is not part of main business. However outside DSCR, you may derive comfort from rental if they are arriving from concrete sources. You can calculate adjusted DSCR by including these rentals

[@TheSuresh2022]

Even if rental income shows on ITR also??

[@AnkushJain]

Yes, I have already mentioned that if it is from concrete and reliable source then for the purpose of deriving comfort, you can calculate adjusted dscr

[@vivekok81]

If it's receieved on cash basis and not shown in itr then can we add??​@@AnkushJain

[@AnkushJain]

No

[@TheSuresh2022]

What are different scenarios there, if company debtors are more than the sales of the company??

[@AnkushJain]

Means company has not able to realise past years sales also. Which means in actual cash generation is not there in business

[@TheSuresh2022]

Ok sir, thanks

[@AnkushJain]

👍

[@yuvrajpatil1111]

Thank you sir

[@AnkushJain]

Your welcome

[@caravinumaretiya6868]

One lecture on mudra loan please

[@AnkushJain]

Ok noted

[@caravinumaretiya6868]

@@AnkushJain thanks

[@AnkushJain]

👍

[@harshitvijay2930]

Sir While calculating dscr why we are adding tax while calculating cash operating profit Some other teachers consider PAT for calculating the dscr Please clear

[@AnkushJain]

Both ways are correct in their own way. Please just follow whatever method your bank follows. I am not in particular favor of any of these. However ideally tax payment should be deducted while calculating DSCR as tax is mandatory cash outflow and While calculating ISCR, PBT should be picked.

[@caharishbalani5429]

Dear sir, I have 2 queries Please help IF PBDIT 10.40 lac ,DEP 0.25 lac , PBT 10.15 lac , tax - 3.73 , PAT 6.73 & customer requesting loan of Rs. 150 lac EMI 180805 What would be the DSCR ????? 0.03 8.38 Or kuch 2. PBDIT/ (interest + Existing Pos of loans/5 + proposed eligible loan Amt) Sir kya ye formula thik hai matlab why we are dividing by 5 & why we are considering proposed loan amount

[@AnkushJain]

For query 1, DSCR shall be PBDIT/180805*12 For query 2, by dividing 5, you are assuming loan tenor of 5 years although formula is incorrect since you have added proposed eligible loan amount in it instead of only its annual obligation

[@caharishbalani5429]

Thanks sir 🙏 for clarification & happy guru Purnima sorry sir thoda late ho gya….

[@AnkushJain]

Thank you. I am your friend not guru 😊

[@TheSuresh2022]

What is director report??

[@AnkushJain]

Prepared in case of companies only. Contain information about the company's results. Taken usually in logins

[@ca.rahulkumarrathod9587]

Practice in co-op banks: Tax amount is not added back while arriving at funds available to service debt obligations. Also, they are not making adjustments for nonoperating incomes & expenses.

[@AnkushJain]

Tax amount is sometimes not considered by many banks. But non consideration of non operating income and expenses is totally incorrect

[@ca.rahulkumarrathod9587]

@@AnkushJainagree 👍

[@vikramjain9989]

Gud

[@AnkushJain]

Thank you

[@rkm9253]

I am mba in finance and ca final -group 1 ,i want to work in the credit analyst how to get a job

[@AnkushJain]

kzbin.info/www/bejne/epfLlJibqrV6ocU Pl watch this video

[@पवनगेदर-च4द]

अब आपका स्वास्थ्य कैसा है sir?

[@AnkushJain]

I am fine thank you 👍

[@Infojoshi]

Sir, what we need to pick up from the financials to calculate the DSCR? EBIDTA/Total Obligation? Plz explain🙏

[@AnkushJain]

Is video mein explained to hai

[@AnkushJain]

Ismein sb btaya hai