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      Question

      Debt Service Coverage Ratio is calculated

      as:
      A EBIT/Interest Correct Answer Incorrect Answer
      B (Net Profit + Depreciation)/Debt Service Correct Answer Incorrect Answer
      C Current Assets/Current Liabilities Correct Answer Incorrect Answer
      D Total Debt/Total Assets Correct Answer Incorrect Answer

      Solution

      DSCR = (Net Profit + Depreciation + Interest + Non-cash expenses)/(Interest + Principal repayments). It measures ability to service debt.

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