ModeldrillDebt service coverage test
A financial modeling exercise from Modeldrill. Solve it with a live spreadsheet grid in your browser, with Fill right and Fill down, and it is checked the moment you submit.
The task
Lenders compare cash available for debt service with interest plus principal. Fill the coverage ratio (row 8) and a covenant test (row 9) that shows "Pass" when the ratio is at least the minimum in B2 and "Breach" otherwise.
What this exercise teaches
A ratio of 1.10 means cash covers debt service only 1.1 times. Flagging breaches with a formula means the warning appears the moment an assumption pushes a year below the line.
A hint if you get stuck
Ratio: cash available / (interest + principal), with brackets. The test is an IF with the covenant locked.
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