Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
The debt service ratio means the ratio of the debt service payments of a country to the ratio of the export-based earnings. The global financial position of a country is deemed healthy, whenever this ratio stays on the lower side. For most global nations, this usually hovers between 0-20%. The debt service coverage ratio is the income that is divided by debt, making this ratio inverse. This is calculated as the debt service that is divided by the income of the country from exports or international trade. A lower debt service ratio is indicative of the abilities of a country to repay debt. A higher debt ratio means that it is tougher for any country to meet its debt obligations smoothly, since it needs a higher chunk of its earnings from exports.
This is applicable for the real estate or property sector in many ways. The debt service ratio of a company indicates the ability of the same to repay its loans or debts. This will compare the debt-linked obligations to income of the company. This may apply for a real estate or property development firm as well. Bankers and lenders may evaluate the ratio before sanctioning business loans to these real estate firms.
