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NFP to EBITDA and DSCR: the two numbers the bank looks at before saying yes, with the thresholds and where they come from.

How it is calculated

NFP to EBITDA tells you how many years of operating margin it would take to repay all the net debt, if every euro of EBITDA went there. Below 2 is an optimal situation, from 2 to 3.5 it is manageable with constant attention, above 4 it is a risk zone: you might struggle to refinance.

The threshold of 6 is not an opinion: it was introduced by the European Central Bank with the Asset Quality Review, having observed that many companies that later became non-performing loans exceeded it. Exceeding it is not a sentence; it is a signal that calls for deeper analysis.

DSCR is the ratio between the resources available and what goes out each year for debt, i.e. interest plus the repayment of loan principal. Banks normally ask for at least 1.2; below 1 is an alert, and it also matters under the Italian Business Crisis Code.

What this calculation leaves out

Here the numerator is EBITDA alone. The full DSCR also takes into account cash flows from investments, other balance sheet movements, new financing and the cash actually available; the denominator includes interest on all debt plus the principal instalments of amortising loans only — not the principal of revolving and self-liquidating lines, which are renewed rather than repaid.

Two rules that apply when you go to the bank: don't settle for reaching 1.0, because below 1.2 the bank is not satisfied; and don't force the result with a tiny loan just to reach the threshold.

This is a calculation on three numbers. On your company's real figures, month by month and with a forecast of the next twelve months, the Firm's Predictive Analysis Simulator does it: find out how it works on www.fmstudioconsulenza.it.