Asked by Sarah Gaines on Jul 05, 2024
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The fixed charge coverage ratio is a more comprehensive version of the times interest earned ratio.
Fixed Charge Coverage
A financial metric evaluating how well a company can pay off its fixed expenses, like interest and leases, using its earnings before interest, taxes, depreciation, and amortization (EBITDA).
Times Interest Earned Ratio
A measure of a company's ability to meet its interest obligations, calculated as earnings before interest and taxes divided by interest expense.
- Understand the concepts and differences between various financial ratios and their significance.
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Learning Objectives
- Understand the concepts and differences between various financial ratios and their significance.
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