Series 79: 3.3.2. Fixed-Charge Coverage Ratio

3.3.2. Fixed-Charge Coverage Ratio

Related to both leverage and operating leverage is the fixed-charge coverage ratio, which is a variation on the interest coverage ratio that includes all fixed costs (e.g., rent). As a result, it generally provides a more conservative estimate of a company’s solvency. As with the interest coverage ratio, a high fixed-charge coverage ratio suggests the