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fixed-charge coverage

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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.


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Based on Fitch's review of company reported earnings, Fitch calculates FR's recurring EBITDA fixed-charge coverage ratio, a measure in which Fitch excludes the effects of earnings from asset sales and also adjusts earnings to account for recurring capital expenditures and noncash rents, to be 1.
Ratios used to test the adequacy of cash flows generated through earnings for purposes of meeting debt and lease obligations, including the interest coverage ratio and the fixed-charge coverage ratio.
In addition, the company's recurring fixed-charge coverage metrics have shown the company becoming increasingly reliant on transactional sources of income.
 
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