Finance Tools
Farm Debt Risk Calculator
Estimate farm debt risk using key ratios like debt-to-asset, debt-to-income, and DSCR to flag financial stress.
This calculator estimates debt risk using three simple signals: debt-to-asset (solvency), debt-to-income (leverage vs earnings), and DSCR (coverage).
All interest-bearing obligations (short + long term).
Land, equipment, inventory, cash, etc. (approximate is fine).
Net operating income before debt service (simplified).
Total annual principal + interest payments.
Debt-to-asset
30.0%
Low risk
Debt-to-income
4.29×
Moderate risk
DSCR
1.47×
Moderate risk
Overall risk signal
Moderate risk
Snapshot inputs
Debt: $600,000 · Assets: $2,000,000
NOI: $140,000 · Debt service: $95,000
Moderate risk signal: stress test NOI drops and rate increases; watch liquidity and working capital.
How it works
- Debt-to-asset = Total debt ÷ Total assets (solvency / leverage).
- Debt-to-income = Total debt ÷ Annual NOI (how many “NOI years” of debt).
- DSCR = Annual NOI ÷ Annual debt service (coverage; higher is safer).
- Overall risk is a simple composite signal from the three bands.
FAQ
Are these lender standards?
Not exactly. These are practical heuristics for stress signals. Lenders may use different thresholds and add liquidity, collateral quality, and history.
What should I stress test next?
Try an NOI drop (crop price down / yield down) and see how DSCR changes, or run a rate-shock scenario with the Farm Loan Stress Test Calculator.
Does this replace an accountant or lender?
No—use it as a fast “early warning” dashboard, then validate with detailed statements.
How to use this farm debt risk calculator
- Enter total farm debt and total farm assets.
- Enter annual net operating income (NOI) and annual debt service.
- Review leverage and coverage ratios to gauge risk.
Example
A farm has $600,000 debt, $2,000,000 assets, $140,000 NOI, and $95,000 annual debt service.
- Debt-to-asset = 600,000 / 2,000,000 = 30.0%
- Debt-to-income = 600,000 / 140,000 = 4.29×
- DSCR = 140,000 / 95,000 = 1.47
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