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
Times Interest Earned = Operating Income/ Interest Expense.
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%?
direct deposit
Entrepreneurship.
Spread Ratio: Interest Earned / Interest Expense
times interest earned be smaller than fixed charge coverage
Times Interest Earned = Operating Income/ Interest Expense.
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.
Compound Interest
yes
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.
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%?
Compound interest
Formula for times interest earned = earning before interest and tax / interest expense Times interest earned = 32000 / 8000 = 4 times
Earned interest is reported as income.
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.
direct deposit