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 ?
For the next 12-to-24 months, Fitch projects that fixed-charge coverage will remain in the 2.
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.
Southwest experienced a slight decrease in fixed-charge coverage from 2.
Fixed-charge coverage has remained been strong and exceeded 14.
For the trailing 12 months ended March 31, 2012, OHI's fixed-charge coverage ratio was 3.
believes that operational benefits derived from the acquisition, as well as continuing strong fixed-charge coverage offset this moderate negative.
Fitch places EastGroup on Positive Outlook based on steadily improving fixed-charge coverage measuring 2.
Fitch's ratings reflect PS Business Parks' solid fixed-charge coverage as of June 30, 2005, which represents EBITDA less capital expenditures to interest expense plus capitalized interest plus preferred distributions, of 2.
2 times (x) for the last 12 months and fixed-charge coverage after adjusting for capital expenditures and preferred dividends was 2.
In addition, the company's recurring fixed-charge coverage metrics have shown the company becoming increasingly reliant on transactional sources of income.
Torchmark's rating strengths include its high quality investment portfolio, very strong GAAP earnings before interest and taxes (EBIT) fixed-charge coverage, and strong pretax operating profit margins and consolidated risk-based capitalization (RBC) of 324% at Dec.