Distinct from the real-estate-specific DSCR calculator on this site — FCCR is a business-wide loan covenant metric that also folds in lease payments as a fixed obligation.
How it works
EBIT plus lease payments, divided by interest expense plus lease payments plus the current portion of long-term debt, gives the fixed charge coverage ratio.
What this does not include
Specific loan covenants may define “fixed charges” slightly differently (including or excluding certain items like capital expenditures or dividends) — this calculator uses the common core definition, not any one lender’s specific covenant language.
How to use this calculator
- Enter EBIT, lease payments, interest expense, and current portion of long-term debt.
A worked example
EBIT $500,000, lease payments $50,000, interest expense $100,000, current portion of debt $80,000: fixed charge coverage ratio = 2.391304 — earnings comfortably cover all fixed obligations combined.
What the variables mean
| Variable | Meaning |
|---|---|
| EBIT | Earnings before interest and taxes |
| Lease payments | Fixed lease obligations for the period |
| Interest expense | Interest owed on debt |
| Current portion of debt | Principal due within the next year |
Edge cases worth knowing
This is broader than the simple interest coverage ratio — it folds in lease payments and current debt principal, not just interest, giving a fuller picture of a company’s ability to meet all its fixed near-term obligations.
All fixed charges at zero makes the ratio meaningless — with nothing to cover, the calculator declines to show a result for that degenerate case.
Frequently asked questions
Why include lease payments on both sides of the ratio?
Because lease payments are a fixed obligation much like debt service — adding them to both EBIT (as if added back) and the denominator normalizes the comparison for businesses that lease versus those that own.
What FCCR do lenders typically require?
Requirements vary by lender and industry, but a minimum FCCR of 1.0 to 1.25 is commonly specified in commercial credit agreements as a covenant.
What happens if a business breaches its FCCR covenant?
Breaching a loan covenant can trigger a default provision, potentially allowing the lender to demand repayment, adjust terms, or take other remedial action specified in the loan agreement.
