Question

Which of the following leverage/coverage ratios does not have a benchmark?                         a.    Interest coverage

Which of the following leverage/coverage ratios does not have a benchmark?

                        a.    Interest coverage

                        b.    Debt-to-equity

                        c.    Debt-to-EBITDA

                        d.    Debt-to-total capital  

Homework Answers

Answer #1

Out of All four ratio,

A. Interest Coverage ration does not have a Benchmark.

As ,The interest coverage ratio (ICR) is a measure of a company's ability to meet its interest payments. Interest coverage ratio is equal to earnings before interest and taxes (EBIT) for a time period, often one year, divided by interest expenses for the same time period. The interest coverage ratio is a measure of the number of times a company could make the interest payments on its debt with its EBIT. It determines how easily a company can pay interest expenses on outstanding debt.

Interest coverage ratio is also known as interest coverage, debt service ratio or debt service coverage ratio.

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