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 ?
1) The Fixed Charge Coverage Ratio, EBITDA, and the Value of Unencumbered Assets Ratio are defined in the amended credit facility agreement filed with the Securities and Exchange Commission today on Form 8-K, which will be available on First Industrial's website, www.
Many financial management textbooks, such as Block & Hirt (2005), define the fixed charge coverage ratio as the ratio of income before fixed charges and taxes to fixed charges, with fixed charges defined as the sum of interest expenses and operating lease payments (sometimes also referred to as rental expenses).
0x (4Q'11 fixed charge coverage ratio pro forma for the Cogdell Spencer acquisition and senior unsecured note offerings is estimated at 3.
It also removes the fixed charge coverage ratio requirement for the fiscal quarter ending June 30, 2010 and decreases the minimum fixed charge coverage ratio to 1.
9 billion and EBITDAR to fixed charge coverage ratio of 1.
PSB's fixed charge coverage ratio (defined as recurring operating EBITDA less Fitch's estimate of recurring capital expenditures less straight-line rents divided by interest expense, preferred stock dividends and preferred unit distributions) was solid at 2.
Prior to receipt of the amendment, as discussed in the company's 2007 Form 10-K ("2007 10-K"), Perma-Fix was unable to demonstrate that it could comply with the fixed charge coverage ratio in its loan agreement as of the end of the first and second quarters of 2008.
While no assurances can be given until the financial statements for the first quarter ended March 31, 2003 have been closed, the Company believes that with the completion of this financing, it will meet the requirement of its fixed charge coverage ratio.
These credit strengths are offset by a fixed charge coverage ratio that remains consistent with the higher end of the 'B' rating category, a constrained liquidity position, and unencumbered asset value that provides modest downside protection to bondholders.
The amendment relaxes the three financial ratios that Tenneco Automotive is required to maintain under its senior credit facility: a maximum leverage ratio (total debt/EBITDA); a minimum interest coverage ratio (EBITDA/cash interest payments); and a minimum fixed charge coverage ratio (EBITDA - capital expenditures/cash interest payments).
Fitch-defined fixed charge coverage ratio, calculated as recurring operating EBITDA less Fitch's estimate of routine capital expenditures less straight-line rent adjustments, divided by interest expense and capitalized interest was 1.
Tenneco Automotive is required to meet three financial ratios under its senior credit agreement: a maximum leverage ratio (total debt/EBITDA), a minimum interest coverage ratio (EBITDA/cash interest payments), and a minimum fixed charge coverage ratio (EBITDA - capital expenditures/cash interest payments).