Question : ---------- ratio is calculated by dividing the ‘profit before charging interest and income-tax’ by ‘fixed interest charges.
Option 1: Net profit ratio
Option 2: Operating profit ratio
Option 3: Fixed assets turnover ratio
Option 4: Interest coverage ratio
Answer (1)
6th Jan, 2024
Correct Answer: Interest coverage ratio
Solution : Answer = Interest coverage ratio
Interest coverage Ratio is calculated by dividing the Profit Before Charging Interest and Income tax by fixed Interest Charges.
Interest Coverage Ratio = [N.P. before Interest and Tax/Interest on long-term] X 100
Hence, the correct option is 4.
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