GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Net profit / Interest on Debt
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Debt capital / Interest on Debt
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Profit Before Tax / Interest on Debt
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Earning Before Interest and Tax / lnterest on Debt
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Detailed explanation-1: -The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The interest coverage ratio is calculated by dividing a company’s earnings before interest and taxes (EBIT) by its interest expense during a given period.
Detailed explanation-2: -You can calculate the interest coverage ratio by dividing your company’s earnings before interest and taxes (EBIT) by your interest expense. You can find net income on your profit and loss statement. Interest and taxes are are listed as expenses on your profit and loss statement.
Detailed explanation-3: -Interest coverage ratio is also known as debt service coverage ratio or debt service ratio. It is determined by dividing the earnings before interest and taxes (EBIT) with the interest expenses payable by the company during the same period.
Detailed explanation-4: -Interest Coverage Ratio = Net Profit before Interest and Tax / Interest on long-term debts.
Detailed explanation-5: -The interest coverage ratio is calculated by dividing earnings before interest and taxes (EBIT) by the total amount of interest expense on all of the company’s outstanding debts. A company’s debt can include lines of credit, loans, and bonds.