Fixed Charge Coverage Ratio

Fixed Charge Coverage Ratio

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.