10% Long term Loan (SBI) = ₹10,00,000
Net profit after tax = ₹2,10,000
Tax rate = 30%
On the basis of the above details, Interest Coverage Ratio and Net Profit Before Interest and Tax will be:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 4 times, ₹4,00,000
Interest on long-term loan = 10% of ₹10,00,000 = ₹1,00,000
Net profit before tax = ₹2,10,000 ÷ (1 − 0.30) = ₹3,00,000
Net profit before interest and tax = ₹3,00,000 + ₹1,00,000 = ₹4,00,000
Interest Coverage Ratio = ₹4,00,000 ÷ ₹1,00,000 = 4 times
NCERT (2026-27 edition): NCERT (2026-27 edition):
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