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Debt Capacity Calculator

Debt Capacity Calculator (DCC) – How much credit can your company withstand in the long term?

What is debt capacity?

Bank Austria's "Debt Capacity" analysis tool calculates the maximum amount of debt financing bearing a "healthy" rate of interest that the company can bear alongside its current business model. This debt capacity provides important insight into whether additional financing is an option from the long-term cash flow – obviously depending on the risk appetite of all creditors – but under no circumstances means credit will be granted.

How does the debt capacity calculator work?

Debt capacity is computed based on the consolidated annual financial statements for the last three years. The debt capacity can also be calculated for individual companies, but the maximum possible value is always defined via the Group's results – after all, this "overall picture" is how companies evaluate their suppliers too. The main source for repayments (and therefore debt capacity) at a company is the adjusted long-term cash flow. To this end Bank Austria has developed its own calculation tool. Long-term debt capacity is determined based on historical results, with particular regard to replacement investments, withdrawals and, if need be, growth. The result calculated from the weighted mean of the last three years is adjusted accordingly during the consultation based on current data (e.g. status of economic activity and orders, founded and plausible quarterly results, current status of liabilities, etc.). The figure determined in this way serves as the measure of the company's ability to meet its liabilities within a certain period from its free, disposable and long-term cash flow.

Sustainability instead of snapshot approach

Many companies are currently affected by swings in orders or prices. This can have an impact on creditworthiness and the short-term financial strength of businesses. At the same time, opportunities are cropping up in new markets. The Debt Capacity Calculator is an advisory, simulation and analysis tool that helps to assess the ability of a company to repay its debts over the medium term. This facilitates an evaluation of the sustainability of the company and its financing and business structure. Short-term scenarios can consequently be compared with a long-term perspective. This new service tool facilitates active financial position and resources management that can display the sustainability of the business model vis-à-vis suppliers, business partners and banks and therefore provide support in achieving growth objectives for business.

Target group

Small and medium-sized companies with revenues of EUR 3 million to EUR 250 million / year. Given its limited meaningfulness with companies requiring significant amounts of capital, sectors such as energy, real estate and the hotel industry are excluded from applying the debt capacity calculator.
For retailers and service providers the need for working capital financing must be determined separately.

What you benefit

With the help of the debt capacity calculator your investment opportunities and your capital needs become more transparent while you obtain recommendations for the following issues:

  • Which investments can be carried out from long-term cash-flow on the basis of the current business model (products, prices, costs, customers, production, etc.)?
  • What is your current repayment capacity to reduce existing liabilities?
  • How much financial leeway do you have to improve your business model, e.g. to invest in new production equipment?
  • By how much should your operating results (EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation) be improved to be able to finance maintenance and expansion investments "internally"?
  • What distributions/withdrawals can be made without jeopardising the repayment ability of your company? What contributions/capital injections are required to provide you with some financial leeway for economic slowdowns, start-up periods for new investments or changes in the business model?
  • Competent assessment of financing for your future business planning.

Based on your debt capacity, you and your relationship manager simulate scenarios and possible responses. Using the results of the simulations, companies can draw up specific strategies for their future business policy.

The Debt Capacity Calculator is a service tool of Bank Austria and is provided to customers free of charge as an advisory service.

Where can you get more information?

Your relationship manager at Bank Austria will be happy to provide you with more information.