Finance Tools
Cost Shock DSCR Impact Calculator
Estimate how an increase in operating costs impacts EBITDA, DSCR, and loan covenant risk under different cost shock scenarios.
Stress-test how an operating cost shock impacts EBITDA, DSCR, and loan covenant risk.
Principal + interest due annually.
Expected increase in operating costs.
Baseline
EBITDA: $800,000
DSCR: 1.60
After cost shock
Operating cost: $3,520,000
EBITDA: $480,000 (-$320,000)
DSCR: 0.96 (-0.64)
Risk assessment
Risk level: Severe (Covenant Breach Likely)
DSCR < 1.0 usually implies cash flow is insufficient to cover debt service.
How it works
- EBITDA = revenue − operating costs.
- DSCR = EBITDA ÷ annual debt service.
- Cost shock increases operating costs and reduces EBITDA.
- Lower DSCR increases covenant breach and refinancing risk.
FAQ
What DSCR do lenders usually require?
Many commercial loans require 1.20–1.30 minimum, but it varies by lender and industry.
Does this include revenue changes?
No—this tool isolates cost shocks. Pair it with revenue stress tests for full downside analysis.
How to use this cost shock dscr impact calculator
- Enter current annual revenue and operating costs.
- Enter annual debt service (principal + interest).
- Enter expected operating cost increase (%).
- Review new EBITDA, DSCR, and covenant breach risk.
Example
A business has $4,000,000 revenue, $3,200,000 operating costs, and $500,000 annual debt service. Costs rise by 10%.
- Baseline EBITDA = 4,000,000 − 3,200,000 = 800,000
- Baseline DSCR = 800,000 ÷ 500,000 = 1.60
- New operating costs = 3,200,000 × 1.10 = 3,520,000
- New EBITDA = 480,000
- New DSCR = 0.96 → covenant breach likely
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