Definition: What is the Fixed Charge Coverage Ratio?
Fixed Charge Coverage Ratio is the financial ratio which is used to measure the ability of the company to pay all of the expenses with its income before income taxes and interest. This ratio is the expanded form of the time interest coverage ratio.
Investors and creditors use the fixed charge coverage ratio to measure the ability of the firm to make its fixed payment.
This ratio has the result in number instead of the percentage the same as the result of time interest ratio.
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