alleryStart learning →An interest coverage ratio below one means what?
AInterest is not covered
BDebt is fully repaid
CInterest is overpaid
DEquity is negative
Answer & Solution
Correct answer: A. Interest is not covered
The firm is not earning enough from operations to meet interest, so it must use cash or borrow.
Keep practising Analysis of Financial Statements
Browse all Analysis of Financial Statements questions for CA Final, or explore more Financialreporting topics.
Related questions
Sales rose from Rs 8,00,000 to Rs 10,00,000. A horizontal analysis shows what percentage iSales are Rs 15,00,000 and average total assets Rs 5,00,000. Asset turnover?Average total assets are Rs 12,00,000 and average equity is Rs 4,00,000. Equity multiplierIn a common-size income statement, net profit is Rs 2,00,000 and gross sales Rs 10,00,000.Gross profit is Rs 3,00,000 on revenue of Rs 12,00,000. Gross profit ratio?A firm's D/E ratio is 1.5. Its debt-to-capital ratio is?Debt is Rs 6,00,000 and equity is Rs 3,00,000. What is the debt-to-equity ratio?Net income is Rs 90,000 and average shareholders' equity is Rs 6,00,000. ROE?