EX-12.1 5 dex121.htm COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES Computation of Ratios of Earnings to Fixed Charges

EXHIBIT 12.1

Encore Capital Group, Inc.

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

(in thousands)

 

     For the year ended December 31,
     2004    2005    2006    2007    2008

Earnings:

               

Net income (loss) before income taxes

    $ 38,846    $ 51,083    $ 36,910    $ 18,729    $ 23,546

Add:

               

Fixed charges

      35,708      34,475      36,213      35,636      21,708
                                  

Total earnings and fixed charges

    $ 74,554    $ 85,558    $ 73,123    $ 54,365    $ 45,254
                                  

Fixed Charges:

               

Interest expense

    $ 35,330    $ 32,717    $ 31,032    $ 29,760    $ 15,629

Amortized debt discount and loan cost

      —        1,143      4,278      4,744      4,943

Estimated interest portion of rental expense

      378      615      903      1,132      1,136
                                  

Total fixed charges

    $ 35,708    $ 34,475    $ 36,213    $ 35,636    $ 21,708
                                  

Ratio of Earnings to Fixed Charges(1)

      2.09      2.48      2.02      1.53      2.08

 

(1)

The ratio of earnings to fixed charges is computed by dividing earnings before taxes plus fixed charges by fixed charges. Fixed charges means the sum of the following: (i) interest expense (including interest expense from capital leases), (ii) amortized premiums, discounts and capitalized expenses related to indebtedness, and (iii) the estimated portion of rental expense deemed by us to be representative of the interest factor of rental payments under operating leases.