Ram is owing ICR (interest coverage ratio) as the indicator of the interest paying capacity of this company. However other side his old school days his friend Amrit tells him to use DSCR(do service coverage ratio) as the indicator to judge it... Do you agree with his friend?? Give reason for your answer
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Answer:
Yes, I accept as true with him.
Explanation:
As it may be a higher indicator of company’s ability to pay mounted money charges like interest as a result of it completes the disadvantage in ICR. ICR is unable to indicate the case money|of money} balance whereas in DSCR money profits generated by the operations ar compared with the full cash needed for the service of the debt.
ICR is that the easy quantitative relation of EBIT/Interest.
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