Enter the net operating income and the loan amount into the calculator to determine the debt yield.
Debt Yield Formula
The following formula is used to calculate a debt yield.
DY = NOI / L
- Where DY is the debt yield
- NOI is the net operating income ($)
- L is the loan amount ($)
Debt Yield Definition
A debt yield is defined as the ratio of net operating income to a total value of a loan.
Debt Yield Example
How to calculate debt yield?
- First, determine the NOI.
Calculate the total net operating income of the business. For this example we will assume the NOI is $50,000.00
- Next, determine the loan amount.
For this example the loan amount will be $100,000.00
- Finally, calculate the debt yield ratio.
Using the formula we find the debt yield to be 50,000/100,000 = .5 .
Debt yield is a measure of the ratio of net operating income to a specific loan amount.
Debt yield is used by lenders to analyze the risk of lending money to a business or entity. The higher the ratio, the lower the risk.
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