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Project life cover ratio

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The Project Life Cover Ratio (“PLCR”) looks at how much cash a project will generate over its full life compared to its debt balance. Its calculation is almost identical to the Loan life cover ratio except that all CFADS amounts are included rather than just for the life of the loan.

For example, you might be developing a mine with a mine life of 10 years, but debt is repaid over 6 years. For the LLCR, you would calculate the NPV of the CFADS for the first 6 years, but for the PLCR, you would calculate the NPV using the cash available over the full 10 year project life. The final step, dividing the NPV by the debt balance, is the same for both the PLCR and LLCR.
For further information on variations to the calculation and common problems, refer to the post on LLCR, as all the issues are the same.

See also:

Loan life cover ratio
CFADS
Net vs gross
Debt service reserve account

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Brendan WalpoleProject life cover ratio

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