Practice - Interest Coverage Ratio
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Practice Questions
Test your understanding with targeted questions
What is the formula for calculating the Interest Coverage Ratio?
💡 Hint: Consider the earnings and the cost of debt.
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.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What is the formula for the Interest Coverage Ratio?
💡 Hint: Break down the definitions of EBIT and interest expenses.
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.
1 more question available
Challenge Problems
Push your limits with advanced challenges
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.
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.
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