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Question No 25 Chapter 7 – UNIMAX Class 12 Part 2 – 2021
25. From the following details, from the financial statements of Kiya Ltd for the year ended 31st March 2022. Calculate interest coverage ratio.
Net profit after tax 18,00,000
1,20,000, 10% debentures of 1,000 each.
Tax rate 40%
| Interest coverage ratio | = | Net profit interest and tax |
| Fixed interest charges |
If profit after tax is 60, the profit before tax is 100.
If profit after tax is 1,80,000, the profit before tax is Interest 18,00,000 x 100/(60 ) = 30,00,000
| Profit before tax | = 30,00,000 |
| Add 10% Int. on debentures | = 12,00,000 |
| 1,20,00,00 |
= | 42,000 |
| 1 |
||
| Interest coverage ratio | = | 42,00,000 |
| 12,00,000 | ||
| Ans. | = | 3. 5 times |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Question No 25 Chapter 7 – UNIMAX Class 12 Part 2 – 2021", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Unimax Accountancy Class 12 Part 2 - 2023.
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