Commercial Financing and the Debt Service Coverage Ratio

In commercial mortgage underwriting, the debt service coverage ratio (DSCR) is customarily computed to two places to the right of the decimal point. 

In other words, a debt service coverage ratio of 1.346 would be rounded to 1.35.   A debt service coverage ratio of 1.1 is customarily expressed as 1.10. 

Interestingly, a breakeven cash flow is customarily shown on the Executive Loan Summary as 1.0 - notwithstanding the custom to express a DSCR to two places to the right of the decimal point.

One of our new loan officers recently expressed a DSCR as one-point-twenty-seven.  Oops.   Busted.  She just revealed to her lender that she is a rookie.  She should have said one-point-two-seven.