Interest Coverage Ratio (ICR) = _________.

EBIT/Interest

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Interest/EBIT

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Debt/Equity

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Equity/Debt

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Solution

The correct option is A EBIT/Interest
The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The interest coverage ratio may be calculated by dividing a company's earnings before interest and taxes (EBIT) during a given period by the company's interest payments due within the same period.

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Debt Service Coverage Ratio is EBIT-Tax+depreciation divided by Interest + Principal + Dividends. State true or false.

A higher value of interest coverage ratio ratio indicates __________ relative to debts.

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