Fixed-charge coverage ratio

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Fixed-charge coverage ratio

A measure of a firm's ability to meet its fixed-charge obligations: the ratio of (Earnings before interest, depreciation and amortization minus unfunded capital expenditures and distributions) divided by total debt service (annual principal and interest payments). Notice that lease payments are sometimes included in the calculations.

Fixed-Charge Coverage Ratio

A measure of a company's ability to pay its fixed expenses, such as rent and interest, on debt without resorting to more debt. A ratio over 1 indicates that the company is able to pay its fixed charges, while a ratio below one indicates the opposite. The fixed charge coverage ratio is calculated thus:

Fixed-charge coverage ratio = (EBIT + fixed charges before tax) / (fixed charged before tax + interest)
References in periodicals archive ?
The company said the amended terms include revisions to leverage ratio, fixed charge coverage ratio, applicable rate as well as its annual excess cash flow.
The rating downgrade is a result of slower-than-anticipated improvement in UDR's credit profile, and Moody's expectation that future improvement could take several years as UDR's new management refocuses the company Moody's noted that the real estate investment trust's (REIT's) fixed charge coverage measures remain at the low end of similarly rated peers, and that effective leverage and secured debt levels remain high.