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Interest Coverage Ratio

If Profit bef...

Question

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

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Solution

Net Profit before Interest and Tax = 5,00,000

Interest = 1,00,000

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

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Q. Net Profit before Interest and Tax ₹4,00,000; 15% Long-term Debt ₹8,00,000; Shareholders' Funds ₹4,00,000. Calculate Return on Investment.

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%.

Interest coverage ratio is expressed in terms of ___

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