fixed-charge coverage

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)

fixed-charge coverage

The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making payments in the event that business conditions deteriorate and earnings decline. Expenses used in calculating fixed-charge coverage usually include interest, lease payments, preferred dividends, and principal payments on debt. Also called times fixed charges. Compare interest coverage.
References in periodicals archive ?
The 'BBB-' IDR reflects favorable multifamily fundamentals resulting in sustained fixed-charge coverage appropriate for the 'BBB-' rating, the company's primarily acquisition-driven increase in size which incrementally lessens asset concentration, and accelerated leverage reductions via follow-on common stock offerings.
The upgrade of Associated Estates reflects favorable multifamily fundamentals resulting in sustained fixed-charge coverage appropriate for the 'BBB-' rating, the company's primarily acquisition-driven increase in size that incrementally lessens asset concentration, and accelerated leverage reductions via follow-on common stock offerings.
The ratings reflect the strength of the company's metrics (low leverage, high fixed-charge coverage, stable cash flows and exceptional liquidity due to no near-term maturities), which offset the largest credit concern - the focus on skilled nursing and assisted living facilities.
Fixed-charge coverage has remained been strong and exceeded 14.
Fitch anticipates the possibility of modest deterioration in DDR's interest and fixed-charge coverage and leverage ratios in the near term as the transaction closes due to the assumption of debt and other transaction and integration costs.
Fitch also expects 2006 fixed-charge coverage will continue to meet or exceed the 4x level that is the threshold for the current rating level.
Interest and fixed-charge coverage (adjusted for capitalized interest and capital expenditures) measured 1.
The only significant covenants are a minimum quarterly fixed-charge coverage requirement of 1.
The TDI senior subordinated notes permit additional debt so long as pro forma fixed-charge coverage would be greater than 2.
Canadian GAAP EBIT fixed-charge coverage improved to 8.
2 times (x) for the last 12 months and fixed-charge coverage after adjusting for capital expenditures and preferred dividends was 2.
The transaction itself is not expected to have a material impact on leverage or fixed-charge coverage.