See how revenue and margin shocks could affect your debt payments, loan conditions and cash position.
Enter your actual debt and cash-flow figures. The tool applies three illustrative stress scenarios and a sector-volatility calibration based on general market data and TEOL's frameworks. Its covenant thresholds are illustrative defaults, not your loan agreement or a lender's underwriting. Compare the results with your actual loan terms before acting on them.
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It depends less on a leverage multiple than on how stable your cash flow is. A business with contracted revenue and low fixed costs can carry more than one with volatile revenue and high fixed costs at the same profit. The useful test is what happens to coverage under a revenue or margin shock, not what the multiple is today.
Usually not immediate repayment. A breach gives the lender rights: they can reprice, tighten terms, require additional security, or restrict what you do with cash. The outcome depends heavily on whether you raised it with them first or they found it in your reporting.
Your total debt divided by profit, usually EBITDA. Lenders often also look at senior leverage separately, counting only the debt ranking ahead of everything else. The definitions in your loan agreement may differ from how you calculate it internally, and that difference is worth checking.
The gap between where you are and where you would breach. Knowing it in advance is what separates a manageable conversation from a surprise, because a forecast breach you raise early is a negotiation and one your lender discovers is a problem.
That depends on your cost structure. A business with high fixed costs sees profit fall faster than revenue, so a modest revenue drop can produce a large coverage problem. Modelling a revenue shock and a margin squeeze separately is more useful than modelling one combined scenario.
Look at what happens under stress rather than what the numbers say today. If a plausible downturn takes you through a covenant or leaves you without liquidity, the structure is tight regardless of how comfortable current coverage looks.
A few of the questions and inputs you will see. Your answers and results stay in the diagnostic.
Use the Capital Structure Stress Test to make a directional read of your business. This is not a lender quote, valuation opinion or commissioned diligence report.
Provide your details and work through financial figures and loan terms across four sections. Allow about 15 minutes; your pace may vary.
Enter the figures you can evidence and review how a lender could interpret the inputs and assumptions.
Read coverage, covenant headroom and stress-scenario results. The output is indicative, not a formal quote or verified diligence opinion.
Review the recommended actions where gaps qualify. If no areas need remediation, maintain the evidence and revisit the read when your circumstances change.
Choose the next question you want to examine:
The Capital Structure Stress Test applies three institutional downside scenarios to the business's current capital structure to identify covenant headroom, liquidity runway, and breach pathway exposure. The methodology is calibrated to general market data and TEOL's frameworks. Results are general guidance, not advice, and can contain errors.
Revenue Shock Scenario models the impact of revenue decline (mild 5–10 percent, moderate 10–20 percent, severe 20–35 percent) on EBITDA, coverage ratios, and covenant compliance. Flow-through severity is calibrated to fixed cost ratio and gross margin structure.
Margin Compression Scenario models the impact of gross margin reduction and operating expense inflation (mild GM -200bps and opex +5 percent, moderate GM -400bps and opex +10 percent, severe GM -700bps and opex +15 percent) on EBITDA and ratio compliance.
Combined Stress Scenario applies moderate revenue shock and moderate margin compression simultaneously to identify the covenant breach pathway under realistic combined stress.
Stressed EBITDA calculation under the scenario assumptions, calibrated to operating leverage from the fixed cost ratio input.
Stressed ratio calculation showing Fixed Charge Coverage Ratio, Senior Leverage, and Total Leverage at the stressed EBITDA level.
Covenant breach identification flagging which covenants breach under the scenario, by what magnitude, and at what point in the duration window.
Liquidity runway projection showing monthly cash position under the scenario including working capital release or absorption and maintenance capex floor compliance.
The Capital Structure Resilience Score (0–100) weighs covenant headroom (40 percent), liquidity runway (30 percent), maturity wall exposure (15 percent), and contingent liability exposure (15 percent). Band placement: Structurally Fragile (0–25), Stress-Sensitive (26–50), Resilient (51–75), Institutionally Resilient (76–100).
The outputs show what happens under the stated assumptions, not how a particular lender, buyer, board or rating agency will decide. Use the scenarios to investigate covenant pressure and discuss the terms of your actual facility with an adviser.
This is a directional stress test using your inputs and scenario assumptions, not an independent credit assessment or a forecast of actual lender action.
Sector multiples, adjustment ranges and stress factors in this tool are TEOL's illustrative calibrations, based on general market observation and TEOL's frameworks. They are not drawn from a single dataset and do not predict any specific outcome.