Credit appraisal query

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Vicky Shah (Querist)
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16 June 2018 Hello everyone,

Wanted to ask one question :
While calculating Interest service coverage ratio and dscr for credit assessment, should we consider capitalised interest in denominator?
Suppose total interest is 100, of which 80 is capitalised, so net hit taken to my p & l is 20.
So while calculating iscr and dscr, in denominator should I consider 20 or entire 100, since payment made is for entire 100.

CRISIL suggests non - funded capitalised interest should be considered for iscr and dscr...

So wanted to know what is the industry practice with regard to capitalised interest for project finance cases and normal cases...

Pls guide

Thanks,

Link for CRISIL material : https://www.google.co.in/url?sa=t&source=web&rct=j&url=https://www.crisil.com/Ratings/Brochureware/RR_ASSES/CRISIL-Ratings-research-approach-to-financial-ratios_2013.pdf&ved=2ahUKEwj2iOGSis3bAhVIPo8KHYG2BCoQFjACegQICRAB&usg=AOvVaw3n9BHx0Oucfi7Y_mPAIEg0