On the basis of following information, answer the questions:
| Particulars | Amount (₹) |
| Inventory | 1,00,000 |
| Total current assets | 1,60,000 |
| Shareholders funds | 4,00,000 |
| 13% debentures | 3,00,000 |
| Current liabilities | 1,00,000 |
| Net profit before tax | 3,51,000 |
| Cost of revenue from operations | 5,00,000 |
On basis of above case, the interest coverage ratio is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 10 times
Interest Coverage Ratio = Net Profit before Interest and Tax ÷ Interest on long-term debts.
Interest on 13% debentures = 13% × ₹3,00,000 = ₹39,000
Net profit before interest and tax = ₹3,51,000 + ₹39,000 = ₹3,90,000
Interest Coverage Ratio = ₹3,90,000 ÷ ₹39,000 = 10 times
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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