Fixed Charge Coverage Ratio Calculator
Calculate your Fixed Charge Coverage Ratio (FCCR) from EBIT or EBITDA, lease/rental payments, interest expense, and optional tax-adjusted principal payments. Get a coverage rating alongside the raw ratio.
Input
Earnings
EBIT is the standard textbook basis. EBITDA is common in lender loan covenants.
Fixed Charges
Annual lease or rental obligations, before tax.
Annual debt principal repayments — folded into the fixed-charge base, grossed up for tax below.
Used only to gross up principal payments to a pre-tax equivalent: Principal ÷ (1 − Tax Rate).
Output
| Metric | Value |
|---|---|
| No data yet | |
Guides
What this FCCR calculator does
The Fixed Charge Coverage Ratio (FCCR) measures whether a business generates enough earnings to cover its fixed obligations — lease payments, interest, and (optionally) debt principal — a number lenders check when underwriting a loan covenant. This tool calculates your FCCR from EBIT or EBITDA, lease/rental payments, and interest expense, with an optional tax-adjusted principal-payment component for lender-covenant-style calculations, and rates your coverage against common bands.
How to use it
Pick whether your earnings figure is EBIT (the standard textbook basis) or EBITDA (common in lender covenants), then enter it along with your annual lease/rental payments and interest expense. If your lender's covenant also folds in debt principal, add your annual principal payments and a tax rate — the calculator grosses the principal up to a pre-tax equivalent automatically. The result updates as you type: your FCCR, a coverage rating, and the full breakdown of what went into each side of the ratio.
How FCCR is calculated
Grossed-Up Principal = Principal Payments ÷ (1 − Tax Rate) [only if principal payments > 0]
Total Fixed Charges = Lease/Rental Payments + Interest Expense + Grossed-Up Principal
FCCR = (Earnings + Lease/Rental Payments) ÷ Total Fixed ChargesLease/rental payments are added back to earnings in the numerator because they were already subtracted in computing EBIT/EBITDA — the same treatment used on the denominator, so the ratio compares like with like. Principal is repaid with after-tax dollars, so grossing it up by ÷ (1 − tax rate) restates it on the same pre-tax basis as the other terms before adding it to the fixed-charge base.
A FCCR of 1.00x means earnings exactly cover fixed charges with nothing left over. Above 1.00x means there's a cushion; below 1.00x means fixed charges exceed what earnings can support.
FCCR rating scale
- Strong — 2.00x or higher
- Acceptable — 1.50x to 1.99x
- Marginal — 1.25x to 1.49x
- Weak — 1.00x to 1.24x
- Insufficient — under 1.00x
These bands are general guidelines, not a specific lender's covenant threshold — actual requirements vary by lender, loan type, and industry. Treat your result as a starting point for the conversation with a lender, not a final answer.
Frequently asked questions
Should I use EBIT or EBITDA? EBIT is the textbook definition. Many lender loan covenants specify EBITDA instead (earnings before depreciation and amortization are added back too) — check your actual loan agreement or covenant language for which one it requires, and supply that figure.
What counts as a "fixed charge"? Recurring, contractually-obligated payments — lease/rental payments and interest are the two universal ones. Some covenants also require debt principal; enable that with the optional Principal Payments field.
Why does the tax rate field only affect the principal payment? Principal repayments come out of after-tax cash flow, unlike lease and interest payments (which are typically tax-deductible), so folding raw principal into the ratio without adjustment understates the fixed-charge burden. Grossing it up to a pre-tax equivalent puts it on the same footing as the other terms. If you're not including principal payments, the tax rate field has no effect.
How is this different from the Debt Service Coverage Ratio Calculator? DSCR measures Net Operating Income against total debt service (principal + interest) — mainly a real-estate and commercial-mortgage metric. FCCR is broader: it adds lease/rental obligations into both the numerator and denominator, which is why it's the metric lenders reach for in general corporate loan covenants. See the Debt Service Coverage Ratio Calculator for the DSCR version.
Privacy
Everything runs in your browser. Your earnings and payment figures are never uploaded or stored.
Use it from code
From 3 credits per callREST API
curl -X POST https://api.iotools.cloud/v1/tool/fixed-charge-coverage-ratio-calculator \
-H "Authorization: Bearer YOUR_API_KEY" \
-H "Content-Type: application/json" \
-d '{
"earningsBasis": "EBIT",
"earnings": "500000",
"leasePayments": "60000",
"interestExpense": "40000",
"principalPayments": "0",
"taxRate": "21",
"currency": "USD"
}'Swap in your own key from your account. The tool's fields are the body — no wrapper.
Ask an AI agent
Use the IOTools `fixed-charge-coverage-ratio-calculator` tool (Fixed Charge Coverage Ratio Calculator) on this input:
YOUR_INPUT_HEREPaste this at any agent connected to the IOTools MCP server, then add your input.