Min ADSCR----
Min LLCR----
PLCR----
Equity IRR----
Project NPV----
Debt:Equity----

Project Inputs

Capital Structure
$
$
$
Auto-calculated
Debt Terms
%
years
Project Timeline
years
years
Operations
$
$
Valuation
%
Key Formulas
ADSCR = CFADS / Debt Service
LLCR = NPV(CFADS) / Debt Outstanding
PLCR = NPV(Full CFADS) / Initial Debt
Ryan O'Connell, CFA
Calculator byRyan O'Connell, CFA

Coverage & Return Metrics

Avg ADSCR--
Debt Tail--
Avg Life (WAL)--
Payback Period--
Total Interest--
Total Distributions--

Coverage Ratios Over Time

ADSCR
LLCR
1.0x Default

Cash Flow Analysis

CFADS
Debt Service
Equity CF

Cash Flow Schedule

YearPhaseCFADSInterestPrincipalDebt SvcADSCRDebt OutLLCR

Sensitivity Analysis: Min ADSCR

Shows how Minimum ADSCR varies with changes in interest rate (rows) and operating cash flow (columns).

Rate \ CF-20%-10%Base+10%+20%
Model Assumptions
  • Cash flows occur at end of each annual period
  • Flat operating cash flows (no escalation)
  • Debt is a direct input (not sized to target DSCR)
  • No interest capitalized during construction
  • Pro-rata equity drawdown during construction
  • Level-payment (annuity) debt amortization

Understanding Project Finance Coverage Ratios

Project finance coverage ratios are critical metrics used by lenders to assess a project's ability to service its debt. Unlike corporate finance, project finance loans must be fully repaid from project cash flows, making these ratios essential for structuring and monitoring deals.

Debt Service Cover Ratio (DSCR/ADSCR)

The Annual DSCR measures the project's ability to pay interest and principal from operating cash flow in each period. A DSCR of 1.20x means the project generates 20% more cash than required for debt service. Minimum requirements typically range from 1.20x for low-risk projects to 2.00x for merchant power plants.

Loan Life Cover Ratio (LLCR)

The LLCR provides a forward-looking view by comparing the NPV of all remaining cash flows over the loan term to outstanding debt. It smooths out year-to-year DSCR fluctuations and gives lenders confidence that debt can be fully repaid.

Project Life Cover Ratio (PLCR)

The PLCR extends the LLCR calculation to cover the entire project life. The difference between PLCR and LLCR represents the "debt tail" - extra cash flow capacity after scheduled debt repayment that provides additional security to lenders.

Frequently Asked Questions

The DSCR measures a project's ability to service its debt from operating cash flow. It equals CFADS divided by total debt service (interest plus principal). A DSCR of 1.0x means cash flow exactly covers debt payments; lenders typically require minimums of 1.20-1.50x depending on project risk.

Minimum DSCR varies by project type: 1.20x for PPP contracts, 1.25x for offtake agreements, 1.50x for natural resources, 1.75x for transport concessions, and 2.00x+ for merchant power.

LLCR uses the NPV of cash flows over the remaining loan term, while PLCR uses cash flows over the entire project life. The difference reflects the "debt tail" - the period after loan repayment when the project continues generating cash.

Equity IRR is the IRR of equity cash flows: negative during construction (equity drawdowns) and positive during operations (CFADS minus debt service). The IRR is the discount rate that makes the NPV of all equity cash flows equal to zero.

The debt tail is the period after scheduled debt repayment when the project continues generating cash flow. This provides extra security to lenders. Lenders typically require a debt tail of 1-3 years beyond final loan repayment.

WAL measures the average time debt remains outstanding, weighted by principal repayments. It is calculated as the sum of (principal repayment x time period) divided by total principal. For level-payment loans, WAL is less than half the loan term.

Related Calculators

IRR Calculator

Calculate the internal rate of return for investment projects. Find the discount rate that makes...

Try Calculator →

NPV Calculator

Calculate net present value for investment projects with irregular cash flows. Evaluate capital budgeting decisions...

Try Calculator →

DSCR Calculator

Calculate the debt service coverage ratio for real estate and business lending. Measure the ability...

Try Calculator →