Practicing Success
Which profit is used for calculating the interest coverage ratio? |
Net profit before interest only Net profit before interest and tax Net profit after interest and tax Net profit after interest only |
Net profit before interest and tax |
Interest Coverage Ratio : It is a ratio which 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: |