In project appraisal, lenders attach considerable importance to the Debt Service Coverage Ratio (DSCR) because it reflects the adequacy of cash available for repayment obligations in a given period. A DSCR persistently below 1 generally indicates that:

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Banking · Project Appraisal

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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The project cash flows are insufficient to fully service debt as due

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Answer 1

The concession period is longer than originally estimated

Answer 2

The project cash flows are insufficient to fully service debt as due

Answer 3

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Answer 4

The project is overcapitalized with excess equity

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