Fair (640-679) Good (680-719) Excellent (720-850) The fixed charge coverage ratio (FCCR) measures a companys ability to pay its fixed charges—such as debt service, leases and insurance—which reveals the extent to which fixed costs consume a companys cash flow.
Additionally, what does fixed charge coverage measure? The fixed-charge coverage ratio measures a firms ability to cover its fixed charges, such as debt payments, interest expense and equipment lease expense. It shows how well a companys earnings can cover its fixed expenses.
Similarly, what is a good coverage ratio?
Generally, an interest coverage ratio of at least two (2) is considered the minimum acceptable amount for a company that has solid, consistent revenues. In contrast, a coverage ratio below one (1) indicates a company cannot meet its current interest payment obligations and, therefore, is not in good financial health.
What is a good Ebitda to interest ratio?
It can be used to measure a companys ability to meet its interest expenses. However, EBITDA is typically seen as a better proxy for the operating cash flow of a company. When the ratio is equal to 1.0, it means that the company is generating only enough earnings to cover the interest payment of the company for 1 year.
