Debt Servicing ratio for SIA - Dividend Machines by The Fifth Person

Q&A › Category: Dividend Stocks › Debt Servicing ratio for SIA

Chris Koh asked 1 month ago

Hi, i just signed up for dividend machine and is new here. Just want to make sure i am correct for my calculation for debt servicing ratio for SIA (homework for step 4). I found from 2024 AR that the finance charge = 424.5, interest income=631,7, net operating cash flow= 5,5054.90. So SIA actually has a net interest income and has pass the debt servicing ratio. Did i extract the figures correctly?

3 Answers

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Rusmin Ang Staff answered 1 month ago

That's right, Chris! So not all dividend stocks pay interest expense. Sometimes they may have more cash than debt which will earn them more interest income. This is a pass for Step 4.

Chris Koh replied 1 month ago

thank you very much!

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Nyx Chong answered 3 weeks ago

Hello, am new to this space too and wanted to check my understanding for step 4 on SIA Engineering (reference used for full year of group from 2023-2024: https://www.siaec.com.sg/pdf/Financial_Results_ending_March_2024.pdf )

i got really different numbers from Chris (but managed to find his references in the SIA report) and wanted to see if the numbers extracted from the SIA engineering report was right. Here's what i got:

finance charge: -4.4
interest income: 24.4
net operating cashflow 100.4

debt service ratio = (-4.4 - 24.4) / 100.4 = -0.28

I'm confused about the negative debt service ratio.

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Rusmin Ang Staff answered 2 weeks ago

Hi Nyx

Welcome to DM.

Your calculation is correct! I show you SIAEC example because I want to show you guys that not every companies are in the net debt position (net interest expense). SIAEC had more cash than debt and that's why we see net interest income which translates to negative debt to servicing ratio. This instantly a pass for Debt to Servicing ratio. You can then move on to the rest of the DM Steps.

Thanks for the direct link :)