Question
 ABC Inc’s Income statement shows a sale of Rs
2000, COGS of Rs 800, Pre-Interest Operating Expenses of Rs 600 and Interest expenses of Rs 200. Interest Coverage ratio of ABC Inc is:Solution
Interest Coverage Ratio = EBIT/Interest EBIT = Sales – COGS – Pre interest operating expenses = 2000 – 800 – 600 = 600 600/200 = 3
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