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