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Definition
The fixed charge cover ratio compares earnings available to meet fixed commitments against those commitments — interest, lease payments and similar unavoidable charges. It is a broader cousin of interest cover, capturing more than just loan interest.
Why it matters
Lenders and some loan covenants use it to check a company is not over-committed on fixed outgoings. A higher ratio means more cushion. See DSCR and calculating interest cover.
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