How the acquisition financing calculator works
Senior debt = price − buyer cash − seller note. Each loan is amortized separately and the annual payments are added together.
DSCR = (cash flow − capex) ÷ total annual debt service. Post-debt cash flow is what is left over.
How to read the result
- Below 1.00x the business cannot service its debt from operations.
- For a fuller picture including closing costs, working capital and a replacement salary, use the deal analyzer.
Questions
Should seller-note payments be included in DSCR?
Yes, unless the note is on full standby. Set the seller-note term to 0 to model a standby note.
Educational content, not advice. Bootstrapper.com publishes general information for education. It is not legal, tax, accounting, lending or investment advice and does not consider your circumstances. Calculator outputs are illustrative estimates. Rules, rates and programs change; confirm details with qualified professionals before making decisions.
Formulas are simplified and tested in an open test suite. Spotted an error? Email [email protected].