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 ?
After their exhaustive study, they found the most common items found in debt covenants were debt-to-cash flow measures and both interest coverage and fixed charge coverage ratios
Benefiting from increasing earnings and the positive impact of several refinancings completed during fiscal year 1997, the company's total interest and fixed charge coverage ratios have improved.
7x, respectively, and fixed charge coverage ratios of 2.
While Fitch notes that the transaction was met with high demand during the early stages of dislocations of the credit markets, the issuance resulted in increased leverage ratios, lower risk-adjusted capitalization, and somewhat lower fixed charge coverage ratios.
Best notes that while total leverageCoboth financial and operating leverageCohas increased in recent years, PFI has shown significant improvement in its historical fixed charge coverage ratios and has significantly strengthened the liquidity of its balance sheet as measured by its strong cash and cash equivalent ratio to equity.
Secondly, CPT has demonstrated good operating performance with traditional and risk-adjusted fixed charge coverage ratios consistently around 2.
E[acute accent]Interest coverage and fixed charge coverage ratios of 2.
Fitch believes that the company's interest and fixed charge coverage ratios are appropriate for the current rating category.
Best notes that while total leverage--both financial and operating leverage--has increased in recent years, PFI has exhibited substantial improvement in its historical fixed charge coverage ratios and has significantly strengthened the liquidity of its balance sheet as measured by its strong ratio of cash and cash equivalents to equity.
Fitch does expect some modest deterioration in Public Storage's interest and fixed charge coverage ratios after the transaction closes due to the assumption of debt, transaction and integration costs, and significantly lower occupancy in Shurgard's European operations.
Best notes that while total leverage--both financial and operating leverage--has increased in recent years, Prudential has exhibited substantial improvement in its historical fixed charge coverage ratios and has significantly strengthened the liquidity of its balance sheet as measured by its strong ratio of cash and cash equivalents to equity.