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Debt protection ratio checker
Paste a borrower's debts and its owners' stake value. Get the cushion behind your claim and whether it clears the bar.
Debt protection ratio checker is a free AI skill for the job "Handle money and investing". Give the instructions to an AI assistant that supports the required files and tools, then review its output.
Free · No account · Made by AI Blocks · Thinking: high
What it does
A strong earnings record can mislead. A few good years, a short window or a flattering account can make a weak borrower look safe. A second test is harder to fake: is the business worth far more than it owes? If the owners' stake is worth several times the debt, a lot has to go wrong before your claim is hurt. This skill divides the value of everything that ranks behind your claim by all the debt in front of and level with it. It uses a recent low price, not a peak. It sets the result against a bar that is lower for steady businesses and higher for ordinary ones. It then reads the cushion and the earnings test together, and says how little weight to give to book values of property. It is a method, not financial advice.
You give it
- The result from "Average earnings coverage tester", or the claim and total debt
- What the owners' stake is worth, from a share price and count or a fair private price
- Details of any pledged assets (optional)
- Source text (optional)
You get
- Total debt and what it contains
- The cushion and how it was valued
- The ratio, the bar and the reason for it
- A reading of the cushion and earnings tests together
- How much the pledged assets count, and the weak spot
Use it when
- You have checked earnings cover and want a second, independent test.
- A borrower offers its property as security and you want to know how much that is worth.
- The earnings look good but the business has little equity behind its debt.
How to use it
- Start a chat with the skill. Open it if you added it to your AI, or copy it and paste it in.
- Paste the earnings cover result and the borrower's debts.
- Give a low recent share price, or say how you would value a private stake.
- Read the line about the two tests together before the verdict.
- Take the result to "Lender safety verdict writer".