Commonly known as the Debt Service Coverage ratio, the calculation measures the ability of the company’s net profit plus non cash charges (e.g., like depreciation and amortization) to service it’s current portion of long term debt obligations. 

Generally, ratios greater than 1:1 (pronounced as 1 to 1) are desirable as ratios below 1 indicate that the company's net profit plus non cash charges are not sufficient to cover the current portion of long term debt. Beyond this, larger ratios indicate a greater ability for the company to cover its debt payments. 

Formula:

[ ( NPAT + Amortization Expense + Depreciation Expense + COGS Depreciation - Dividends ) * 12 ÷ # of months in current period ] / Current Portion of Long Term Debt & Capitalized Leases

This calculation is available within the CASH|Suite Insight Application to assess financial capacity and risk.