FCCR (Fixed Charge Coverage Ratio)
Corporate Credit Analysis glossary · Credit Metrics & Debt Schedule Modeling
Definition
(EBITDA - Capex) / (Interest + Scheduled Amortisation + Rent). A more conservative coverage measure than EBITDA/Interest because it deducts maintenance capex and includes principal + lease payments in the denominator.
FCCR (Fixed Charge Coverage Ratio) in plain English
The Fixed Charge Coverage Ratio asks a blunt question: does the company make enough cash to cover ALL its unavoidable bills? The top of the fraction is roughly the cash the business earns from operations minus the money it MUST spend to keep its equipment running ('maintenance capex'); the bottom adds up its truly non-optional payments — loan interest, the chunk of principal due this year ('amortisation'), and rent/lease payments. A result above 1 means it earns more than enough to cover those charges; below 1 means it's coming up short. It's stricter than the simpler 'earnings ÷ interest' test because it refuses to ignore rent and the principal you actually have to pay down — the bills that don't go away just because times are tight.
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