fixed charge coverage ratio
- fixed charge coverage ratio
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USA
The ratio of EBITDA to interest expense and scheduled principal payments on debt for borrowed money. Fixed charges may also include rent payments, required dividends and capital expenditures. This financial ratio measures the company's ability to satisfy its fixed expenses as they become due. Higher ratios (greater than 1:1) are preferable and indicate the company is better able to satisfy such obligations.
Practical Law Dictionary. Glossary of UK, US and international legal terms.
www.practicallaw.com.
2010.
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