medium · Corporate Credit Analysis cap-structure
A credit analyst notes that a company's EBITDA interest coverage is 4.5x, but its 'Fixed Charge Coverage Ratio' (FCCR) is only 1.2x.
What is the most likely reason for this discrepancy?
- The company has significant mandatory debt amortization or large operating lease payments.
- The company's reported EBITDA is overstated due to one-time non-cash accounting gains.
- The company has a very low tax rate, which narrows the gap between EBITDA and cash flow.
- The interest expense on the company's outstanding debt is structured as 'payment-in-kind' (PIK).
Sign up free to see the explanation and track your rank →
More Corporate Credit Analysis cap-structure practice
- For a specialty retailer, what is the historical industry convention multiplier used to ca
- If an analyst is adjusting the financials to capitalize these operating leases using a 7x
- If the OpCo assets are valued at $1.4B in a default, what is the likely recovery for the H
- Which of the following describes 'Structural Subordination' rather than 'Contractual Subor
- What is the estimated recovery for the HoldCo unsecured creditors?
- If the borrower elects to PIK the 5% portion for one year, what is the new principal balan
- An issuer has $4,000M in reported debt and issues $500M of p… — What is the analyst-adjust
- If the US subsidiary defaults and its assets are valued at $400M, and no parent guarantees