Question

Net profit before interst and tex 200000,10percent long term debt 500000 . calculate interest coverage ratio​

Answer 1

Explanation:

first we find total interest

10% debenture= 500000×10%100= 50000

Now

Interest coverage Ratio = EBIT/ Interest

= Profit before interest and tax / interest on l.d.d (long term debenture) ....times

Now ,

2000000%50000 = 4 times