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Fixed Charge Coverage Ratio (FCCR)

Determine whether a company earns enough to cover fixed obligations like debt payments and lease expenses with operating income.

Input Financial Data

EBIT (Earnings Before Interest & Tax) ($)

Interest Expenses ($)

Lease Expenses ($)

Principal Repayments ($)

Tax Rate (%)

Other Fixed Charges ($)

FCCR Results

Fixed Charge Coverage Ratio

Coverage Rating

Total Fixed Charges

Available Earnings

Coverage Multiple

Interpretation:

Formula & Explanation

FCCR Formula:

FCCR = (EBIT + Lease Expenses) / (Interest + Lease Expenses + Principal Repayments/(1-Tax Rate) + Other Fixed Charges)

Components:

EBIT: Earnings Before Interest and Taxes
Interest: Interest expenses on debt
Lease Expenses: Operating and finance lease payments
Principal: Debt principal repayments
Tax Rate: Corporate tax rate

Interpretation Guide:

> 2.5: Excellent coverage
2.0 - 2.5: Good coverage
1.5 - 2.0: Adequate coverage
1.2 - 1.5: Marginal coverage
< 1.2: Poor coverage

Understanding FCCR

What is FCCR?

The Fixed Charge Coverage Ratio measures a company's ability to cover all fixed charges, including interest, lease payments, and principal repayments, from its operating earnings.

Why is it Important?

• Assesses financial stability and solvency
• Used by lenders for credit decisions
• Indicates ability to service debt obligations
• Helps evaluate financial risk

Key Features:

• Includes all fixed financial charges
• Accounts for tax effects on principal payments
• More comprehensive than interest coverage ratio
• Critical for leveraged companies

Usage Tips:

• Compare with industry benchmarks
• Analyze trends over multiple periods
• Consider alongside other coverage ratios
• Review loan covenant requirements