Fixed-charge coverage ratio

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 ?
Fitch's downgrade of the holding company ratings reflects a financial leverage and fixed-charge coverage ratio profile that is no longer consistent with narrow notching.
Munich Re's fixed-charge coverage ratio is expected to remain very strong given its solid earnings generation.
Even with MYR 11.4 million of expected capital expenditure for the refurbishment of Menara ExxonMobil in FY Dec 2016, the coverage ratios are expected to remain healthy, with the fixed-charge coverage ratio maintained at about 7.20 times and the funds from operations (FFO) financing coverage ratio kept at around 0.30 times, i.e.
One example is a minimum fixed-charge coverage ratio (which normally approximates the amount by which the entity's earnings exceed interest, principal payments on debt, and other payments usually determined by the lender).
The proposed issue will not affect the company's debt leverage and would modestly improve fixed-charge coverage ratio. Both metrics will remain in line with the BBB- rating level, S&P said.
In most cases the fixed-charge coverage ratio is seen as an extension of the more standard interest coverage ratio (often referred to as times interest earned), a ratio itself defined along the lines of a comparison of a company's operating earnings to its interest expenses.
- financial leverage of above 30% and fixed-charge coverage ratio consistently below 4x; and
As at end-December 2013, its debt-to-asset ratio stood at 17.6% while its fixed-charge coverage ratio stood strong at 6.54 times.
Fitch expects the new issue to have a limited effect on Groupama's fixed-charge coverage ratio. An addition of EUR500 million debt at a coupon of 3.375% would result in a pro-forma fixed charge coverage (excluding non-recurring items) of around 3x, which remains weak relative to the group's rating.
--GAAP fixed-charge coverage ratio in the 12x to 14x range;
We also believe Lotte's weaker-than-peer fixed-charge coverage ratio is partly offset by the substantial rental income it receives, which has consistently been above the rental expense amount.
Its FFO fixed-charge coverage ratio may drop slightly to 2.4x in 2018-2019 from 2.6x in 2017.