medium · Corporate Credit Analysis
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 EBITDA is overstated due to one-time non-cash gains.
- The company has a very low tax rate.
- The interest on the debt is 'payment-in-kind' (PIK).
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