Formula
to calculate fixed charge coverage ratio:
Fixed
Charge Coverage Ratio
= (Net Income Before Interest and Taxes + interest +
fixed costs) / fixed costs.
Fixed
charge coverage ratio definition and explanation:
The fixed
charge coverage ratio indicates the risk involved in
ability to pay fixed costs when business activity falls.
The fixed charge coverage ratio is included in the financial
statement ratio analysis spreadsheets highlighted in the
left column, which provide formulas, definitions,
calculation, charts and explanations of each ratio.
The fixed charge coverage ratio is listed in our efficiency
ratios.
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