What Is a Fixed Overhead?
Economic management term, the symmetry of "variable expenses". Expenses that do not change in the short term with changes in the output (workload) of the enterprise (or a single project, a single piece of equipment), such as depreciation costs for fixed assets. F is commonly used in English.
- Fixed-cost guarantee multiples are taken into account
- Fixed fee coverage multiples = (profit before tax and interest payments + lease debt) / (total interest expense + lease debt)
- The use of the guarantee multiple indicator The fixed fee guarantee multiple indicator reflects the long-term debt repayment ability of the enterprise, taking into account all long-term debt. The fixed cost guarantee multiple must be at least equal to 1, otherwise it means that the enterprise cannot pay the long-term debt due to the enterprise. The higher this indicator, the stronger the company's ability to pay debts.
- Obviously, the lack of ability to repay fixed operating expenses will threaten the operation of the enterprise and make it difficult for the enterprise to maintain a sound state of operation. Many agreements on operating capital clearly stipulate that companies must maintain a fixed fee protection multiple ratio at a certain level. This provision guarantees that the borrower will be paid.