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    Question

    Which of the following increases the debt service

    coverage ratio (DSCR)?
    A Increase in interest expense Correct Answer Incorrect Answer
    B Increase in principal repayment Correct Answer Incorrect Answer
    C Increase in net operating income Correct Answer Incorrect Answer
    D Decrease in operating income Correct Answer Incorrect Answer
    E Increase in short-term borrowings Correct Answer Incorrect Answer

    Solution

    DSCR = Net operating income / Debt service (interest + principal). Higher operating income increases DSCR.

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