Fixed Charge Coverage Ratio Solution

STEP 0: Pre-Calculation Summary
Formula Used
Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest)
FCCR = (EBIT+FCBT)/(FCBT+I)
This formula uses 4 Variables
Variables Used
Fixed Charge Coverage Ratio - Fixed Charge Coverage Ratio measures a firm's ability to cover its fixed charges, such as debt payments, interest expense, and equipment lease expense.
Earnings Before Interest and Taxes - Earnings Before Interest and Taxes is a measure of a firm's profit that includes all expenses except interest and income tax expenses.
Fixed Charges Before Taxes - Fixed Charges Before Taxes are any type of expense that recurs on a regular basis, regardless of the volume of business.
Interest - Interest is the charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
STEP 1: Convert Input(s) to Base Unit
Earnings Before Interest and Taxes: 450000 --> No Conversion Required
Fixed Charges Before Taxes: 300000 --> No Conversion Required
Interest: 7 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
FCCR = (EBIT+FCBT)/(FCBT+I) --> (450000+300000)/(300000+7)
Evaluating ... ...
FCCR = 2.49994166802775
STEP 3: Convert Result to Output's Unit
2.49994166802775 --> No Conversion Required
FINAL ANSWER
2.49994166802775 2.499942 <-- Fixed Charge Coverage Ratio
(Calculation completed in 00.004 seconds)

Credits

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Created by Kashish Arora
Satyawati College (DU), New Delhi
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Coverage Ratios Calculators

Fixed Charge Coverage Ratio
​ LaTeX ​ Go Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest)
Interest Coverage Ratio
​ LaTeX ​ Go Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense

Important Formulas of Financial Ratios Calculators

Free Cash Flow to Firm
​ LaTeX ​ Go Free Cash Flow to Firm (FCFF) = Cash Flow from Operations+(Interest Expense*(1-Tax Rate))-Net Capital Expenditures
Debt to Equity Ratio
​ LaTeX ​ Go Debt to Equity (D/E) = Total Liabilities/Total Shareholders' Equity*100
Free Cash Flow
​ LaTeX ​ Go Free Cash Flow = Cash Flow from Operations-Net Capital Expenditures
Debt to Assets Ratio
​ LaTeX ​ Go Debt to Assets Ratio = Total Liabilities/Total Assets

Fixed Charge Coverage Ratio Formula

​LaTeX ​Go
Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest)
FCCR = (EBIT+FCBT)/(FCBT+I)

What is Fixed Charge Coverage Ratio?

The Fixed Charge Coverage Ratio measures a company’s ability to meet fixed charges from its earnings before interest and taxes (EBIT). Examples of fixed charges include insurance premiums and lease and loan payments because the same amount is due each month, no matter how much revenue the company earns.
Essentially, the FCCR shows how many times over your business can satisfy its predictable financial responsibilities. An FCCR of 1 means you have just enough earnings before interest and taxes to meet them. An FCCR of 2 shows you could pay them all two times over.

How to Calculate Fixed Charge Coverage Ratio?

Fixed Charge Coverage Ratio calculator uses Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest) to calculate the Fixed Charge Coverage Ratio, The Fixed Charge Coverage Ratio (FCCR) compares the company’s ability to generate sufficient cash flow to meet its fixed charge obligations, such as the required principal and interest payments on debt. Fixed Charge Coverage Ratio is denoted by FCCR symbol.

How to calculate Fixed Charge Coverage Ratio using this online calculator? To use this online calculator for Fixed Charge Coverage Ratio, enter Earnings Before Interest and Taxes (EBIT), Fixed Charges Before Taxes (FCBT) & Interest (I) and hit the calculate button. Here is how the Fixed Charge Coverage Ratio calculation can be explained with given input values -> 2.499942 = (450000+300000)/(300000+7).

FAQ

What is Fixed Charge Coverage Ratio?
The Fixed Charge Coverage Ratio (FCCR) compares the company’s ability to generate sufficient cash flow to meet its fixed charge obligations, such as the required principal and interest payments on debt and is represented as FCCR = (EBIT+FCBT)/(FCBT+I) or Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest). Earnings Before Interest and Taxes is a measure of a firm's profit that includes all expenses except interest and income tax expenses, Fixed Charges Before Taxes are any type of expense that recurs on a regular basis, regardless of the volume of business & Interest is the charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
How to calculate Fixed Charge Coverage Ratio?
The Fixed Charge Coverage Ratio (FCCR) compares the company’s ability to generate sufficient cash flow to meet its fixed charge obligations, such as the required principal and interest payments on debt is calculated using Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest). To calculate Fixed Charge Coverage Ratio, you need Earnings Before Interest and Taxes (EBIT), Fixed Charges Before Taxes (FCBT) & Interest (I). With our tool, you need to enter the respective value for Earnings Before Interest and Taxes, Fixed Charges Before Taxes & Interest and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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