On the basis of following information, answer the Questions :
| Particulars | ₹ |
|---|---|
| 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 the 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 debt
Interest on debentures = 13% of ₹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):
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