Fixed Charge Coverage Ratio Calculator
The fixed charge coverage ratio (FCCR) extends interest coverage to include leases, rent, and other recurring fixed obligations. It tells lenders how comfortably a company can meet all its mandatory fixed payments from earnings, not just debt interest. Enter EBIT, total fixed charges (such as lease or rent payments), and interest expense. The calculator adds fixed charges back to earnings, divides by total fixed obligations, and returns the FCCR along with the numerator and denominator so you can audit the result.
Fixed charge coverage formula
Numerator = EBIT + fixed charges
Denominator = fixed charges + interest expense
FCCR = numerator / denominator
EBIT is operating income before interest and taxes. Fixed charges are recurring obligations such as lease and rent payments. The denominator (fixed charges plus interest) must be positive. A ratio of 1.0 means earnings exactly cover all fixed obligations.
Coverage ratio context
- FCCR is broader than interest coverage because it includes lease and other fixed payments.
- Many loan covenants set a minimum FCCR, often around 1.25.
- A ratio below 1.0 means earnings plus fixed charges do not cover the fixed obligations.
- FCCR is usually lower than interest coverage for the same company, making it more conservative.
- Definitions vary; confirm which charges your lender includes before comparing to covenant thresholds.
Fixed charge coverage: frequently asked questions
What is the fixed charge coverage ratio?
The fixed charge coverage ratio (FCCR) measures how well a company can cover its fixed financial obligations, including interest and lease or rent payments, from its earnings. It is a broader solvency test than interest coverage because it includes fixed charges beyond interest alone.
What is the FCCR formula?
FCCR = (EBIT plus fixed charges before tax) divided by (fixed charges before tax plus interest). The common form uses (EBIT plus lease payments) divided by (interest plus lease payments). This calculator uses EBIT plus fixed charges in the numerator and fixed charges plus interest in the denominator.
Why include lease payments?
Leases and other fixed charges are recurring obligations a company must meet regardless of performance, much like interest. Including them gives lenders a fuller view of the firm's ability to meet all its fixed commitments, not just debt interest.
What is a good fixed charge coverage ratio?
A ratio above 1.25 is often considered acceptable by lenders, and many loan covenants require a minimum FCCR of 1.25 or higher. A ratio below 1.0 means earnings plus fixed charges do not cover the fixed charges and interest, signaling strain.
How does FCCR differ from interest coverage?
Interest coverage divides EBIT by interest only. FCCR adds lease and other fixed charges to both the earnings and the obligations, capturing a wider set of mandatory payments. FCCR is therefore usually lower and more conservative than interest coverage.
Official sources
- U.S. Securities and Exchange Commission: How to Read Financial Statements.
- U.S. Small Business Administration: Manage Your Finances.
Reviewed by the CalculatorHub team, edited by James Graham, 16 June 2026. See our methodology.