Fixed Charge

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DEFINITION of 'Fixed Charge'

Any type of fixed expense that recurs on a regular basis. Fixed charges can include insurance, salaries, utilities, vehicle payments, loan payments and mortgage payments. These charges allow both individuals and businesses to create more predictable budgets and estimate their cash flows more accurately.

BREAKING DOWN 'Fixed Charge'

Both businesses and individuals can have fixed charges. Businesses may have liability or malpractice insurance, while individuals pay car and home insurance. Businesses can often deduct many or all of their fixed charges as business expenses.

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RELATED FAQS
  1. What are some examples of general and administrative expenses?

    In accounting, general and administrative expenses represent the necessary costs to maintain a company's daily operations ... Read Full Answer >>
  2. How do dividend distributions affect additional paid in capital?

    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
  3. Why can additional paid in capital never have a negative balance?

    The additional paid-in capital figure on a company's balance sheet can never be negative because companies do not pay investors ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
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