If DSCR improves due to timing differences in cash receipts, what risk remains that requires ongoing monitoring?

• A. Sustainability of the improvements and true cash flow growth.
• B. There is no risk; DSCR improvement is permanent.
• C. Only interest rate risk remains.
• D. Only working capital changes matter.

Answer: (A)

DSCR measures how much cash is available to cover debt service. When it improves because of timing differences in cash receipts, that boost can be temporary. Early or lumped receipts, seasonal peaks, or other timing quirks may lift the ratio now, but if the underlying business performance isn’t actually stronger, those gains can disappear once timing normalizes. The real risk to monitor, then, is whether the improvement is sustainable and whether true cash flow will grow over time, not just because of timing. This is why the best answer highlights the sustainability of the improvements and genuine cash flow growth. While other factors like interest rate movements or working capital fluctuations can affect DSCR, the key ongoing concern after a timing-driven bump is whether the cash flow story is truly improving.