From the following information determine Interest Coverage Ratio.

4 times

The correct answer is Option (4) - 4 times.

Interest on long term debts = 5000000 x 10/100
                                        = ₹500000

Profit after tax = ₹1200000
Tax rate = 20%
Profit before tax = 1200000 x 100/80
                         = ₹1500000

Profit before interest and tax = profit before tax + interest on debts
                                          = 1500000 + 500000
                                          = ₹2000000

Interest Coverage Ratio = Net Profit before Interest and Tax / Interest on long-term debts
                                   = 2000000/500000
                                   = 4 times