Define the inputs before comparing.
PIK is a form of noncash income recognition whose treatment must be read in the issuer accounting policy. The balance of a PIK loan is not the same as PIK income for the period. Total investment income is a revenue measure; NII is after investment expenses. An identical numerator therefore produces two different ratios with different meanings. Fees, original-issue discount accretion and noncash dividends may be disclosed separately and should not be silently reclassified as PIK.
The calculation.
PIK share of total investment income = included PIK income / total investment income × 100. PIK relative to NII = included PIK income / NII × 100, interpreted only when NII > 0. These are separate calculations, not interchangeable definitions of a cash-conversion ratio.
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 quarter, USD million: recognized PIK is 18, total investment income is 180 and NII is 120. PIK/TII = 18 / 180 = 10%. PIK/NII = 18 / 120 = 15%. If NII falls to 60 while the other inputs stay unchanged, PIK/TII remains 10% and PIK/NII rises to 30%. The second increase can reflect expense pressure rather than new PIK recognition. If NII is −10, the worksheet retains that entered loss in the input record but does not label −180% as a meaningful income share.
How to use: find and match the inputs
Read the income statement and the investment-income recognition note together. Identify whether the issuer separates PIK interest, noncash preferred dividends and fee accretion. Search the filing for both “payment-in-kind” and “non-accrual”; an issuer may reverse or stop accrual when collection is doubtful. Record the note and page, period, amount and whether the value is gross or net of reversals. Do not infer a missing flow from a year-end investment balance.
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.
A large PIK ratio calls for an explanation of contractual terms, borrower performance and collection history. It does not by itself establish that income is fictitious or uncollectible. Compare like periods and definitions before describing a trend. A ratio can rise because its denominator shrinks. The worksheet intentionally shows both denominators so the reader can identify this effect rather than relying on a single unlabeled “PIK percentage.”
Assumptions and limitations
The worksheet does not value loans, estimate recoveries, model cash collections or reconcile taxable income. Negative PIK reversals cannot be entered as ordinary positive PIK income here; analyze such a period separately with the original reconciliation. Missing total investment income disables only PIK/TII. Missing NII disables PIK/NII. There is no market-data feed and no ranking of companies.
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.
Does 10% PIK mean 90% cash earnings?
No. Other noncash items, expenses and working-capital movements remain. This is an income-composition ratio.
Is PIK always a sign of default?
No. Contractual PIK and distressed payment amendments require context. Recognition and collectibility policies must be checked in the filing.
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.