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Fixed charge coverage – cash basis

Fixed charge coverage – cash basis

Description

Fixed charge coverage – cash basis ratio is very similar to fixed charge coverage ratio. The only difference is that this ratio is calculated relying on the background of cash flow, whereas the fixed charge coverage ratio is calculated relying on EBIT plus leases expenses. Data needed to calculate this ratio is collected from cash flow and income statement.

Norms and limitations

There are no general norms for this ratio.

It is recommended to compare this ratio with the ratios of companies working within the same industry.

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