Question

How does the LLCR differ from the Debt Service Coverage Ratio (DSC

Q: Answer-How does the LLCR differ from the Debt Service Coverage Ratio (DSCR)?

The Loan Life Coverage Ratio LLCR differs from the Debt Service Coverage Ratio DSCR primarily by assessing long-term solvency using the Net Present Value NPV of future cash flows, whereas DSCR measures short-term, period-on-period liquidity. While DSCR highlights immediate repayment ability, LLCR provides a comprehensive overview of a projects capability to cover all debt over the entire loan life.

A DSCR is forward-looking over the entire loan life, while LLCR is a snapshot of one period.

B DSCR includes cash balances from previous years, while LLCR ignores them.

C LLCR focuses on the "Project Life," whereas DSCR focuses on the "Loan Life."

D DSCR measures the ability to pay debt in a specific period (e.g., a year), whereas LLCR measures the ability to pay over the entire remaining tenure.

E There is no functional difference; they are the same metric used in different regions.

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