easy · Debt Capital Markets credit-ratings-risk
The Fixed-Charge Coverage Ratio (FCCR) is often considered a more stringent test than the Interest Coverage Ratio because it:
- Is only used for investment-grade companies with very high ratings.
- Calculates coverage using Net Income instead of EBITDA.
- Subtracts capital expenditures from EBITDA and includes principal repayments as 'fixed charges'.
- Only includes the interest on senior secured debt, ignoring subordinated debt.
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