Fixed-Charge Coverage Ratio
A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated as the following:
Investopedia Says:
For example, since leases are a fixed charge, the calculation determining a company's ability leases would be (EBIT + Lease Expenses) / (Lease Expenses + Interest). Related Terms:
Debt Financing
EBIT
Lease
Variable Annuity |