Answer: 2.0

The fixed charge coverage ratio measures a company's ability to cover its fixed financing obligations, such as interest and lease payments, with its earnings before interest and taxes (EBIT). The correct calculation includes adding lease payments to EBIT in the numerator and adding lease payments to interest payments in the denominator. **Calculation:** \[ \text{Fixed charge coverage ratio} = \frac{\text{EBIT} + \text{Lease payments}}{\text{Interest payments} + \text{Lease payments}} = \frac{16 + 4}{6 + 4} = 2.0 \] Option A (1.2) is incorrect because it uses net income instead of EBIT in the numerator. Option B (1.6) is incorrect because it omits lease payments in the numerator. Option C (2.0) is correct as it aligns with the standard calculation method for the fixed charge coverage ratio.

Author: LeetQuiz Editorial Team