A Newbie Guide to Investing

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Hi guys, need some help with this. Was reading "the intelligent investor" and wasn't very sure what he is referring to when he use the term "total fixed charges". He is using minimum ratio of earnings to total fixed charges as a recommended minimum coverage for bonds. What actually does total fixed charges consist? Operating expenses + interest payments? Do we include investment on PPE (capex) or its totally something else??? Appreciate your answers.

AFAIK, operating expenses already catered inside earnings. Probably the idea is to make sure that free cash flow is more than enough to cover all known obligations/debt payments like installments and interests. Depreciation already catered for in EBIT, unless one uses EBITDA. I guess if you are trying to derive the free cash flow from cash statement... maybe might want to include capex if one thinks it is necessary for the company to sustain its cash flow. Might not be so straightforward to amortize the capex, though...

http://www.efinancemanagement.com/financ...rage-ratio