Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

Interest Coverage Ratio refers to the number of times earnings before interest and taxes of a company covers the interest obligation and the "DSCR" takes care of the deficiencies referred to in the Interest Coverage Ratio (ICR). According to you, what is the correct full form of "DSCR"?

Options:

Debt and Shares Coverage Ratio

Debt Service Coverage Ratio

Debt to Share Converting Ratio

None of the above

Correct Answer:

Debt Service Coverage Ratio

Explanation:

"DSCR" i.e. Debt Service Coverage Ratio takes care of the deficiencies referred to in the Interest Coverage Ratio (ICR). The cash profits generated by the operations are compared with the total cash required for the service of the debt and the preference share capital.