Q. 44 DK Goel Accounting Ratios Solutions Class 12 CBSE (2024-25)
the solutions of Question number 44 of Accounting Ratios chapter 5 of DK Goel Class 12 CBSE (2024-25)
From the following information, calculate interest coverage ratio and give your comments also:
| ₹ | |
| Net Profit after Interest and Tax | 1,20,000 |
| Rate of Income Tax | 50% |
| 15% Debentures | 1,00,000 |
| 12% Mortgage Loan | 1,00,000 |
[Ans. Interest Coverage Ratio = 9.89 times.]
Solution:-
Comments:– An interest coverage ratio of 6 to 7 times is considered appropriate. As the actual interest coverage ratio of this company is nearly 10 times, it means that the company will be able to pay the interest on long-term loans regularly.
