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Finance Dictionary and Glossary of Investment Terms
fixed-charge coverage ratio
Profits before income taxes and interest payments, divided by long-term interest, for a given period of time.
A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated as:
A measure of a firm's ability to meet its fixed-charge obligations: the ratio of (net earnings before taxes plus interest charges paid plus long-term lease payments) to (interest charges paid plus long-term lease payments).