Fixed Charge Coverage Ratio Calculator

What is the Fixed Charge Coverage Ratio (FCCR)?

The Fixed Charge Coverage Ratio (FCCR) is a financial metric that measures a company’s ability to cover its fixed charges, including interest expenses and lease payments, with its operating earnings. A higher FCCR indicates stronger financial health, while a ratio below 1x suggests the company may struggle to meet its fixed obligations.

How to Use the FCCR Calculator

1. Enter EBIT (Earnings Before Interest and Taxes) – This represents operating profit before interest and taxes.

2. Input Lease Payments – Include all contractual lease obligations.

3. Provide Interest Expense – The total interest paid on debts.

4. Toggle Tax Adjustment (Optional) – If enabled, the calculator adjusts for tax impact on lease payments.

5. Click “Calculate FCCR” – Instantly see your ratio, financial health rating, and coverage ability.

Interpreting FCCR Results

Why FCCR Matters

Lenders and investors use FCCR to evaluate a company’s financial stability. A ratio above 1.5x is generally acceptable, while below 1x indicates financial distress. Companies with strong FCCRs have better loan approval chances and lower borrowing costs.

Formula Variations

• Standard FCCR:

  FCCR=EBIT+Lease Payments  / Interest Expense+Lease Payments

• Tax-Adjusted FCCR (if applicable):

         FCCR=EBIT+Lease Payments  /  Interest Expense+(Lease Payments  /  1−Tax Rate)

Key Takeaways

• A higher FCCR means better financial flexibility.

• Lenders prefer FCCRs above 1.5x for loan approvals.

• Consistently low FCCRs may signal liquidity risks.

Use this calculator to monitor your company’s financial health and make informed decisions about debt management.