Question

Interest coverage ratio can be numerically expressed in the form of the following equation:-

Q: Answer-Interest coverage ratio can be numerically expressed in the form of the following equation:-

The interest coverage ratio tells whether the PBIT Profit Before Interest and Tax is sufficient enough to pay off the interest expenses on long-term debts like debentures of the concerned entity.

A (Gross profit / interest on total debts)

B (Interest on long-term debts / Net profit before interest and tax)

C (Net profit after interest / interest on long-term debts)

D (Net profit before interest and tax/interest on long-term debts)

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Interest coverage ratio can be numerically expressed in the form of the following equation:-

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