Practice Interest Coverage Ratio - 1.4.2.4 | ICSE Class 12 Accounts – Chapter 5: Ratio Analysis | ICSE Class 12 Accounts
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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the formula for calculating the Interest Coverage Ratio?

💡 Hint: Consider the earnings and the cost of debt.

Question 2

Easy

If a company has an EBIT of ₹50,000 and interest expenses of ₹10,000, what is its ICR?

💡 Hint: Divide EBIT by interest expenses.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the formula for the Interest Coverage Ratio?

💡 Hint: Break down the definitions of EBIT and interest expenses.

Question 2

True or False: An Interest Coverage Ratio of less than 1 is a signal of good financial health.

💡 Hint: Think about what the ICR signifies.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company reports an EBIT of ₹500,000 and interest payments of ₹150,000. What is its Interest Coverage Ratio, and what does this say about its financial status?

💡 Hint: Divide EBIT by interest payments for your answer.

Question 2

If a company's ICR falls from 4 to 2 over two years, what implications does this suggest for investors and creditors?

💡 Hint: Consider the reason for declining earnings.

Challenge and get performance evaluation