medium · Private Credit & Debt underwriting-credit-analysis
Which of the following best describes the structural difference between the Interest Coverage Ratio (ICR) and the Fixed Charge Coverage Ratio (FCCR)?
- FCCR deducts capital expenditures and taxes from EBITDA in the numerator and includes scheduled principal in the denominator.
- ICR includes principal repayments in the denominator, while FCCR only considers interest.
- The FCCR denominator only includes dividends and management fees, unlike the ICR which focuses on interest.
- ICR is used exclusively for senior debt, while FCCR is used exclusively for mezzanine financing.
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