coverage ratio is the ratio of profit before interest and tax to the interest on long-term debt.

Tax

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Interest

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Profit

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Long-term Debt

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Solution

The correct option is B Interest
Interest coverage ratio express the relationship between net profit before interest and tax to the interest on long-term debt.

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Similar questions

From the following details, calculate interest coverage ratio: Net Profit after tax Rs. 60,000; 15% Long-term debt 10,00,000; and Tax rate 40%.

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