Hovnanian Enterprises (HOV) 10-K 2017 FY Annual report

 Exhibit 12

RATIO OF EARNINGS TO FIXED CHARGES

For purposes of computing the ratio of earnings to fixed charges and the ratio of earnings to combined fixed charges and preferred stock dividends, earnings consist of earnings from continuing operations before income taxes and income or loss from equity investees, plus fixed charges and distributed income of equity investees, less interest capitalized. Combined fixed charges and preferred stock dividends consist of fixed charges and preferred stock dividends declared.

				Year Ended
(Dollars in thousands)	October 31, 2017			October 31, 2016		October 31, 2015			October 31, 2014			October 31, 2013
(Loss) income before income taxes	$	(45,244	)	$	2,436	$	(21,765	)	$	20,180		$	21,935
Add:
Interest expense, homebuilding (a)		185,840			183,358		151,448			141,344			143,574
Interest expense, financial services		1,871			2,912		2,143			1,835			3,008
Interest pertaining to rent expense (b)		5,248			5,936		5,548			5,538			5,199
Distribution of earnings from unconsolidated joint ventures, net of equity in income (loss)		8,527			5,348		4,269			(1,853	)		(9,700	)
Amortization		1,632			5,261		5,460			10,320			7,843
Total earnings	$	157,874		$	205,251	$	147,103		$	177,364		$	171,859
Fixed Charges:
Interest incurred, homebuilding	$	160,203		$	166,824	$	166,188		$	145,409		$	132,611
Interest incurred, financial services		1,871			2,912		2,143			1,835			3,008
Interest pertaining to rent expense		5,248			5,936		5,548			5,538			5,199
Amortization		1,632			5,261		5,460			10,320			7,843
Total fixed charges	$	168,954		$	180,933	$	179,339		$	163,102		$	148,661
Ratio of earnings to fixed charges		(c)			1.1	(c)				1.1			1.2

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

			Year Ended
(Dollars in thousands)	October 31, 2017		October 31, 2016		October 31, 2015		October 31, 2014		October 31, 2013
Total earnings – above	$	157,874	$	205,251	$	147,103	$	177,364	$	171,859
Total fixed charges – above	$	168,954	$	180,933	$	179,339	$	163,102	$	148,661
Preferred stock dividends (adjusted to pretax dollars)		-		-		-		-		-
Total combined fixed charges and preferred stock dividends	$	168,954	$	180,933	$	179,339	$	163,102	$	148,661
Ratio of earnings to combined fixed charges and preferred stock dividends		(d)		1.1	(d)			1.1		1.2

(a)	Includes the amortization and expensing of debt expenses that were not capitalized during the period.
(b)	Management has determined the interest component of rent expense to be 33%.
(c)	Earnings for the years ended October 31, 2017 and 2015 were insufficient to cover fixed charges for such period by $11.1 million and $32.2 million, respectively.
(d)	Earnings for the years ended October 31, 2017 and 2015 were insufficient to cover fixed charges and preferred stock dividends for such period by $11.1 million and $32.2 million, respectively. Due to restrictions in our debt instruments, we are currently prohibited from paying dividends on our preferred stock and did not make any dividend payments in fiscal 2017, 2016, 2015, 2014 and 2013.