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Fixed Charge Coverage Ratio Covenant Calculator with EBITDA Cushion

Is this entity in good shape, or are there warning signs?

Fixed charge coverage from EBITDA, capex, cash taxes, interest and scheduled principal, the covenant minimum and the EBITDA cushion.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Fixed charge coverage ratio
1.89
Cash available per dollar of fixed charges
Fixed charges
$1,750,000
Numerator (EBITDA less capex and taxes)
$3,300,000
Drawn to one scale
Fixed charges$1,750,000
Numerator (EBITDA less capex and taxes)$3,300,000
EBITDA cushion before breach$1,112,500
All results
MeasureResult
Fixed charge coverage ratio1.89
Fixed charges$1,750,000
Numerator (EBITDA less capex and taxes)$3,300,000
EBITDA cushion before breach$1,112,500
Cushion as percent of EBITDA23.18%
StatusIn compliance
How this was worked out
Work shownrecomputed as you type
Ratio = (EBITDA - unfinanced capex - cash taxes) / (cash interest + scheduled principal + other fixed charges)
EBITDA needed = minimum x fixed charges + capex + cash taxes
Cushion = EBITDA - EBITDA needed

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Ratio = (EBITDA - unfinanced capex - cash taxes) / (cash interest + scheduled principal + other fixed charges)
  • EBITDA needed = minimum x fixed charges + capex + cash taxes
  • Cushion = EBITDA - EBITDA needed

How it works

A fixed charge coverage covenant tests whether earnings cover the payments the entity must make. Definitions vary by agreement, so use the exact defined terms in the credit agreement for each line, including permitted add-backs and the test period.

The cushion shows how far EBITDA can fall before the covenant is breached, holding the other lines fixed. Auditors use this when assessing covenant compliance for debt classification and going concern. A small cushion calls for a forecast and a waiver discussion.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Why does the definition matter?

Credit agreements differ on what counts as EBITDA, capex and fixed charges. Follow the agreement.

What if a breach is likely?

Consider debt classification as current and the going concern disclosure, and ask whether a waiver has been obtained.

Are taxes held fixed in the cushion?

Yes. In reality taxes fall with earnings, so the cushion is a conservative estimate.

Formulas on this page are the standard definitions.

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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