Yahoo Finance Fct

Yahoo Finance FCT (Fixed Charge Test) is a financial ratio used to assess a company’s ability to cover its fixed charges, like debt payments, lease obligations, and preferred dividends. It provides a broader view than simply looking at interest coverage, offering a more comprehensive evaluation of solvency. While not always explicitly labeled as “FCT” within Yahoo Finance data, you can calculate it using information readily available on the platform.

The formula for calculating the Fixed Charge Test is:

FCT = (Earnings Before Interest and Taxes (EBIT) + Fixed Charges Before Tax) / (Fixed Charges Before Tax + Interest Before Tax)

Where:

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EBIT: Earnings Before Interest and Taxes, often found on the Income Statement.

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Fixed Charges Before Tax: These typically include lease payments (often found in footnotes to the financial statements), and mandatory debt principal repayments. You’ll likely have to consult the company’s filings (10-K/10-Q) accessible via Yahoo Finance’s “SEC Filings” section to find this detailed information.

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Interest Before Tax: This is the interest expense found on the Income Statement.

To use Yahoo Finance for FCT analysis, start by searching for the company’s ticker symbol. Navigate to the “Financials” section and select “Income Statement”. Extract the EBIT for the period you’re analyzing. Then, access the “SEC Filings” section to review the company’s 10-K or 10-Q filings. Search within the filings for “lease obligations” or “debt repayments” to identify the relevant fixed charges. Note that finding this information may require some effort.

Once you have gathered the EBIT, fixed charges, and interest expense, apply the FCT formula. The resulting ratio indicates the number of times a company can cover its fixed charges. Generally, a higher FCT ratio suggests a stronger ability to meet its obligations. A ratio of 1.0 or higher indicates that the company’s earnings are sufficient to cover fixed charges. A ratio significantly below 1.0 raises concerns about the company’s financial health and its ability to manage its debt and lease obligations.

Interpreting the FCT also requires considering industry context. Companies in capital-intensive industries may naturally have higher fixed charges than those in service-based industries. Therefore, compare the FCT to that of peers within the same industry to gain a more meaningful perspective.

While Yahoo Finance provides essential data for FCT calculation, it’s important to recognize its limitations. Yahoo Finance does not automatically calculate the FCT, requiring manual data extraction and computation. Furthermore, accurately identifying all fixed charges may necessitate a thorough review of the company’s SEC filings, a time-consuming process. Always remember that FCT is only one piece of the puzzle. To get a complete picture of a company’s financial health, use it in conjunction with other financial ratios and qualitative analysis.