Covenant headroom calculator
See how close a borrower is to its leverage and DSCR covenants, and how much EBITDA could fall before the first one breaks.
- EBITDA could fall by
- 14.3%
- Leverage 3.00x vs 3.50x max
- 14.3% headroom
- DSCR 1.60x vs 1.25x min
- 28.0% headroom
- Covenant that breaks first
- Leverage
- EBITDA cushion in dollars
- $342,857
How to use it
Headroom = (Actual - Threshold) / Threshold, signed so a positive number means room to spare
- Use the covenant definitions in the credit agreement: the EBITDA add-backs, the funded debt definition and the test period all change the answer.
- For simplicity this calculator uses EBITDA as cash flow for the DSCR test. If your covenant subtracts capital expenditure, taxes or distributions, enter the adjusted figure.
- The EBITDA cushion is the smaller of the two: whichever covenant breaks first is the one that matters.
For illustration only. Use your institution's own policy definitions.
