Balancing Growth and Risk in Medical Practice
Dr. Sharma carries a hefty $280,000 in student loan debt, impacting her cash flow and limiting her ability to invest in her growing medical practice. She's considering taking out a $150,000 loan to purchase new diagnostic equipment, but she is worried that this new debt, combined with her existing obligations, might overextend her financially and put her practice at risk. She needs a clear assessment of her ability to comfortably service all her debt obligations.
By using the Debt Service Coverage Ratio Calculator, Dr. Sharma can accurately assess her ability to handle the new loan. Entering her practice's annual net operating income (NOI) of $400,000, current debt service of $36,000, and the projected annual debt service of the new loan ($20,000), the calculator reveals a post-expansion DSCR of 6.9. This indicates a strong capacity to cover her debts and allows her to proceed with the expansion with confidence. Further, analyzing her Times Interest Earned Ratio helps her benchmark this against industry standards, ensuring financial prudence.
The Debt Service Coverage Ratio Calculator provides a straightforward and reliable metric for evaluating Dr. Sharma's financial health, empowering her to make informed decisions about practice expansion. Combined with the Times Interest Earned Ratio Calculator, she gains a comprehensive understanding of her financial position.
$150,000 investment yielding a 6.9 Debt Service Coverage Ratio and improved operational efficiency.
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