Times Fixed Charges

times fixed charges

See fixed-charge coverage.

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Times Fixed Charges

A measure of a company's ability to pay its fixed liabilities. It is calculated by subtracting its fixed payments from its operating income. High times fixed charges indicate that the company can easily make its payments and indeed is able to set funds aside to do so in the event that its income declines. Low times fixed charges indicate that the company can make its payments, but that it has less flexibility in doing so. A negative number indicates that the company cannot pay its fixed liabilities. The payments included in this calculation are lease payments, dividends on preferred stock, and debt service. It is also called fixed-charge coverage.