Fixed Charge Coverage Ratio Calculator

Updated: Jun 10, 2018

Fixed Charge Coverage Ratio Calculator is a tool that measures a business's ability to satisfy fixed costs, such as interest and leases

Fixed Charge Coverage Ratio:
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Background Information

What does Fixed Charge Coverage Ratio mean?
The Fixed Charge Coverage Ratio is a financial ratio that finds out how well a business's earnings cover its fixed charges. This ratio is an expanded version of the ‘times interest earned ratio’.
Formula
Fixed Charge Coverage Ratio = (EBIT + Lease payments) / (Interest expense + Lease payments)
Example

An income statement shows $300,000 income before interest and taxes and interest expense of $30,000. The current lease payment is $2,000 a month or $24,000 a year. On applying the formula, the Fixed Charge Coverage Ratio equals 6 (six).

 

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History

Jun 10, 2018
Tool Launched