From the following information calculate interest coverage ratio: Profit after Tax Rs. 2,70,000; Tax Rs. 30,000; Interest on long term funds Rs.50,000

5 times

No worries! We‘ve got your back. Try BYJU‘S free classes today!

8 times

No worries! We‘ve got your back. Try BYJU‘S free classes today!

7 times

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

5.5 times

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is C 7 times
Interest coverage ratio is given by =EBIT/Interest Expense
Therefore in this case EBIT= 270000+30000+50000=350000
Interest expenses= 50000
Interest coverage ratio will be 7 times

Suggest Corrections

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%.

Q. If Profit before Interest and Tax is ₹5,00,000 and interest on Long-term Funds is ₹1,00,000, find Interest Coverage Ratio.

(a) From the following calculate 'Trade Receivables Turnover Ratio'.

Total Revenue from operation for year Rs 8,40,000.

Cash Revenue from operation-40% of credit revenue from operation.

Closing Trade Receivable over Opening Trade Receivable by Rs 80,000. Opening Trade Receivables in 20% of credit Revenue from operation.

(b) From the following, calculate Interest Coverage Ratio.

Profit after Interest and Tax Rs 4,97,000.

Rate of Income Tax 30%.

12% Debentures Rs 6,00,000.

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

Calculate Return on Investment from the following information :

Net Profit after Tax : Rs. 6,50,000; 12.5% Convertible Debentures : Rs. 8,00,000; Income Tax : 50%; Fixed Assets at cost : Rs. 24,60,000; Depreciation Reserve : Rs. 4,60,000; Current Assets : Rs. 15,00,000; Current Liabilities : Rs. 7,00,000.

Join BYJU'S Learning Program

From the following information calculate interest coverage ratio: Profit after Tax Rs. 2,70,000; Tax Rs. 30,000; Interest on long term funds Rs.50,000

The correct option is C 7 timesInterest coverage ratio is given by =EBIT/Interest ExpenseTherefore in this case EBIT= 270000+30000+50000=350000Interest expenses= 50000Interest coverage ratio will be 7 times

The correct option is C 7 times
Interest coverage ratio is given by =EBIT/Interest Expense
Therefore in this case EBIT= 270000+30000+50000=350000
Interest expenses= 50000
Interest coverage ratio will be 7 times