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What advantage does fixed charge coverage ratio offer using times interest earned?
This is a very open ended question that implies one does not understand the purpose of the ratio and I see no advantage to any ratio over another. A ratio simply measures the variables inputted. The Fixed Charge Coverage Ratio ("FCCR") reflects the amount of cash (or EBITDA) left after paying for unfinanced capital expenditures, dividends (or distributions) and cash paid taxes then divided by the "fix charges" or the sum of the past period's cash interest and required payments on long term debt or also know as the current portion long term debt ("CPLTD"). In my opinion to answer the question; the advantage of this ratio over the use of an Uniform Cash Flow Analysis ("UCA") Debt Service Coverage ("DSC") is simply the starting point of EBITDA vs. net income. EBITDA is more commonly used in larger credit facilities as a component of ratios or covenants measurement. Also a very similar ratio is Free Cash Flow ("FCF") divided by Total Debt Service ("TDS") or FCF/TDS.
What else can I help you with?
Is interest income reportable?
Earned interest is reported as income.
When are income taxes applied to the interest earned by business-owned annuities?
When are income taxes applied to the interest earned by business owned annuities
I need more information or advice about IRA tax deductible.?
There is no deduction for a Roth IRA. The advantage is given when you take money out of he roth after retirement. No tax is paid on the interest earned on the roth IRA.
What is the journal entry for interest earned on a checking account?
Debit cash / bankCredit interest income
Do you have to pay stat taxes on interest earned on Treasury bills?
No, interest earned on Treasury bills is exempt from state and local taxes. However, it is subject to federal income tax. This tax advantage makes Treasury bills an attractive investment option for many individuals seeking tax-efficient income. Always consult a tax professional for personalized advice regarding your specific tax situation.
If a firm has both interest expense and lease payments would times interest earned be smaller than fixed charge coverage?
times interest earned be smaller than fixed charge coverage
What advantage does the fixed charge coverage ratio offer over simply using times interest earned?
The fixed charge coverage ratio measures the firm's ability to meet all fixed obligations rather than interest payments alone, on the assumption that failure to meet any financial obligation will endanger the position of the firm
What is the formula for times interest earned ratio?
Times Interest Earned = Operating Income/ Interest Expense.
Interest earned on interest is known as?
Compound Interest
Compound interest is interest paid on interest previously earned?
yes
How is interest different from compound interest?
Simple interest is interest paid on the original principle only, Compound interest is the interest earned not only on the original principal, but also on all interests earned previously.
Type of interest is calculated by adding the interest earned to the principle?
Compound interest
How much interest is earned on the account?
A $5000 investment at an annual simple interest rate of 4.4% earned as much interest after one year as another investment in an account that earned 5.5% annual simple interest. How much was invested at 5.5%?
Is interest income reportable?
Earned interest is reported as income.
A company's fixed interest expense is 8000 its income before interest expense and income taxes is 32000 Its net income is 9600 The company's times interest earned ratio is?
Formula for times interest earned = earning before interest and tax / interest expense Times interest earned = 32000 / 8000 = 4 times
What is the value of compound interest?
Compound interest increases the amount earned by adding credited interest to the principal, and interest will then be earned on that money as well. The longer the principal and interest remain in the account, the greater the earnings they will accrue.
What is the amount of money paid or earned for the use of money?
Interest is earned or paid for the use of money
