Question : Which factor of capital structure explains how many times EBIT can repay interest obligation.
Option 1: Cash flow position
Option 2: Interest coverage ratio
Option 3: Return on investment
Option 4: Debt service coverage ratio
Correct Answer: Interest coverage ratio
Solution : Interest coverage ratio refers to number of times earning for interest and taxes of a company covers the interest obligation. ICR explains how many times EBIT can repay interest obligation.
Hence, option B is correct.
Question : Which factor is important in designing an appropriate capital structure?
Question : ‘Debt Service Ratio’ is termed as -----
Question : ______________shows the relationship of profit (profit before interest and tax) with Capital Employed.
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