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Total Fixed Charge Coverage Ratio

While the interest coverage and preference dividend coverage ratios consider the fixed obligations of a firm to the respective suppliers of funds, that is, creditors and preference shareholders, the total coverage ratio has a wider scope and takes into account all the committed fixed obligations of a firm, that is, (i) interest on loan, (ii) preference dividend, (iii) lease payments, and (iv) repayment of principal. Symbolically,

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