Fixed Charges Coverage Ratio Calculator: Assess Financial Stability
Fixed Charges Coverage Ratio tells how many times your earnings cover fixed charges; values above 1.25 indicate healthy coverage (Investopedia, https://www.investopedia.com/terms/f/fixedchargecoverageratio.asp). Enter EBIT, fixed charges, and interest—this calculator instantly returns the percentage and highlights any shortfall.
Fixed Charges Coverage Ratio Calculator
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How to use the tool
Step 1 – Enter EBIT: Type your earnings before interest and taxes, e.g., 820 000 USD or 950 000 USD.
Step 2 – Enter Fixed Charges (Before Tax): Include lease and insurance costs such as 135 000 USD or 155 000 USD.
Step 3 – Enter Interest Expense: Add period interest, e.g., 70 000 USD or 52 000 USD.
Step 4 – Calculate: Press “Calculate” to view your Fixed Charges Coverage Ratio (FCCR) as a percentage.
Healthy threshold: Minimum 1.25× coverage is widely accepted (Investopedia, https://www.investopedia.com/terms/f/fixedchargecoverageratio.asp).
S&P 500 industrial median 2022: 3.8× (S&P Global Market Intelligence, 2023).
Lender covenants: Banks often require ≥ 1.5× before approving credit (Moody’s Covenant Report, 2022).
Included charges: Lease payments must be counted per ASC 842 (FASB, 2016).
Common range: 0–5× for mature companies (Corporate Finance Institute, 2023).
FAQ
What is the Fixed Charges Coverage Ratio?
FCCR shows how many times your earnings can pay fixed charges such as leases and interest (Investopedia, https://www.investopedia.com/terms/f/fixedchargecoverageratio.asp).
How do I calculate FCCR?
Add fixed charges to EBIT, divide by interest plus fixed charges, then multiply by 100 for a percentage.
What FCCR do lenders look for?
Lenders usually demand at least 1.5×; “a ratio below 1.0 is viewed as a covenant breach” (Moody’s Covenant Report, 2022).
Can FCCR be negative?
No. If EBIT is negative, the ratio falls below 1 but never turns negative (CFI, 2023).
An FCCR over 5× may signal under-leverage, missing growth funded by debt (S&P Corporate Ratings Methodology, 2021).
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