- Maintenance Covenants - have to maintain ratios
- Leverage Ratio = Debt / EBITDA
- Interest Coverage Ratio = EBITDA / Interest
- Variations like Net Debt rather than Debt, or EBITDA – CapEx rather than EBITDA
- Fixed Charge Coverage Ratio (FCCR) = (EBIT + Non-Interest Fixed Charges) / (Non-Interest Fixed Charges + Interest Expense + Mandatory Principal Repayments)
- How well the company’s business earnings can pay for its “fixed” expenses, such as rent/leases, utilities, and debt interest and principal repayments
- Higher = better
- Debt Service Coverage Ratio (DSCR) = (FCF + Interest Expense) / (Interest Expense + Mandatory Principal Repayments)
- Incurrence Covenants
- Can't engage in certain activities
- Covenant holiday
- Period of time in which covenant breach is forgiven (more detail to be added)
Up to (5x)
(up to 2x)