Define the inputs before comparing.
Non-accrual is an accounting treatment for income recognition, governed by the issuer policy and collectibility assessment. The investment need not have a fair value of zero. Cost and fair value give distinct views: cost retains the investment basis while fair value reflects the valuation used at the reporting date. A percentage of total debt investments is not directly comparable with a percentage of all investments, including equity.
The calculation.
Non-accrual at cost = non-accrual investment cost / matching portfolio cost × 100. Non-accrual at fair value = non-accrual fair value / matching portfolio fair value × 100. Non-accrual FV/cost = non-accrual fair value / non-accrual cost × 100. Each denominator must use the same population as its numerator.
Formula version bdc-1.0.2. Decimal arithmetic uses 40 significant digits without intermediate display rounding. Arithmetic precision does not increase the accuracy of the source inputs. Display rounds half up to four decimal places; nonzero values smaller than 0.0001 retain five significant digits. Plain decimals are used through 24 fractional places; longer tiny values use scientific notation. Blank or unavailable inputs stay missing; zero denominators produce “Not defined” with a reason.
Reproduce the arithmetic.
Synthetic point-in-time snapshot, USD million: non-accrual cost 50 within total matching cost 1,000 gives 5.0000%. Non-accrual fair value 20 within total matching fair value 950 gives 2.1053%. The non-accrual assets are marked at 40.0000% of their cost. If they are written down further, the fair-value percentage may fall even if the cost exposure does not improve. That is why a lower fair-value percentage is not automatically evidence of better credit performance.
How to use: find and match the inputs
Start with the schedule of investments and footnotes that identify non-accrual positions. Reconcile the disclosed totals to the portfolio population used by management. Read the valuation note and non-accrual accounting policy, including whether uncapitalized accrued interest is reversed. Capture the same as-of date for all four values. If only total-debt percentages are disclosed, do not use an all-investment denominator to reconstruct an apparently comparable number.
Record each source URL, accession if applicable, table or note location, original period and scale. Preserve the issuer definition. The source record below each result distinguishes manual entry from review: no reviewer or review date is invented.
Interpret the result with its denominator.
Read the two percentages side by side. A wide gap can reflect valuations below cost, while changes in portfolio size also move each denominator. A zero fair-value amount with positive cost is retained rather than dropped as a missing record. Neither percentage estimates the probability of default or the eventual recovery. Verify whether a restructuring or sale changed membership in the non-accrual population between dates.
Assumptions and limitations
This is a descriptive snapshot, not a credit model. It does not distinguish first-lien from subordinated claims, assess collateral, predict exits from non-accrual or convert fair-value marks into realized losses. Total portfolio values must be positive for ratios to exist. A non-accrual numerator above its corresponding total is rejected. Do not compare cost and fair-value amounts from different dates or scopes.
No automatic currency, share-count, quarter/YTD or adjusted-to-reported conversion occurs. The common context is a user assertion, not evidence that pasted figures match. Check each original disclosure yourself; a manual input is not a verified company result.
Questions worth asking.
Why is the fair-value ratio lower?
A position marked below cost contributes less to a fair-value numerator; the two total denominators also differ.
Can a reported 0% be treated as an exact zero?
A rounded disclosure may conceal a small amount. Preserve the published precision and the source note rather than inventing an exact amount.
Primary sources and corrections.
- Investor.gov: publicly traded BDCs ↗
- SEC EDGAR: find the original filing ↗
- Issuer filing: PIK recognition and non-accrual accounting policy (definitions, not example data) ↗
Sources explain the definitions and disclosure context; the synthetic numbers above do not come from these issuers. See our editorial approach or submit a correction with the field, source location and reproducible calculation.