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.
Enter EBIT (Earnings Before Interest and Taxes) – This represents operating profit before interest and taxes.
Input Lease Payments – Include all contractual lease obligations.
Provide Interest Expense – The total interest paid on debts.
Toggle Tax Adjustment (Optional) – If enabled, the calculator adjusts for tax impact on lease payments.
Click “Calculate FCCR” – Instantly see your ratio, financial health rating, and coverage ability.
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.
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)
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.
Note: FCCR = (EBIT + Lease Payments) / (Interest + Lease Payments). Higher ratios indicate better ability to cover fixed charges. A ratio below 1x means the company cannot cover its fixed charges from operating earnings. Lenders typically prefer ratios above 1.2x-1.5x.
Tax-Adjusted Formula: FCCR = [EBIT + Lease Payments] / [Interest + (Lease Payments / (1 - Tax Rate))]
