The Interest Coverage Ratio is the relationship between..............
Answer & explanation
Correct answer: option 4
Interest Coverage Ratio
It is a ratio that deals with the servicing of interest on loan. It is a measure of security of interest payable on long-term debts. It expresses the relationship between profits available for payment of interest and the amount of interest payable. It is calculated as follows:
Interest Coverage Ratio = Net Profit before Interest and Tax/ Interest on long-term debts