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Which of the following is a measure of Debt Service capacity of a firm?

<p><strong>(a)Current Ratio, </strong></p> <p><strong>(b)Acid Test Ratio,</strong></p> <p><strong>(c) Interest Coverage Ratio</strong></p> <p><strong>(d) Debtors Turnover</strong></p>

Accounting Cost Accounting Financial Accounting Financial Analysis Financial Management
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Question ajoutée par VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date de publication: 2014/09/20
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Shamel Rashad, CMA
par Shamel Rashad, CMA , Advisor to the Chairman on Financial Control , Bavaria Egypt

C. Interest Coverage Ratio.

 

Also known as, Times Interest Earned, is a measure of a firm's ability to cover interest expenses associated with borrowed funds the company is carrying.

 

Calculated as follows:

Earnings Before Interest and Taxes (EBIT) / Interest Expenses

Ahmed Abd Alwahab Awad Ibrahim
par Ahmed Abd Alwahab Awad Ibrahim , Chief Accounting , ICCDP

(c) Interest Coverage Ratio

 

= EBIT / Interest Expense

OLA HALAH
par OLA HALAH , Marketing manager , Alaa aldeen company( Agent of NEW MAT for pendent ceiling)

(b)Acid Test Ratio

Almutaz Bakry Sidahmed
par Almutaz Bakry Sidahmed , Internal Audit Manager , Banan real estate

The answer is (C)

Nasir Hussain Kumbhar
par Nasir Hussain Kumbhar , Sr.Accounting and operation manager , JUBAILI AGROTEC LTD

interst coverage ratio,,,

Reham Hegazy
par Reham Hegazy , Computer & soft skills Instructor , Ministry of Defense-- Computer Center in north coast

(c) Interest Coverage Ratio =EBIT/Interest Expense

Interest Expenses is the total debt service costs

Mohamed Esam Mohamed Kamel
par Mohamed Esam Mohamed Kamel , Financial Analyst , Egyptian Water & Wastewater Regulatory Agency (EWRA)

Answer (c)

Anayatullah Tahir
par Anayatullah Tahir , Finance Manager , Etqan Projects

Option C .

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