Question 60 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question 60 Chapter 4 of +2-B

Question 60 Chapter 4 of +2-B

Interest Coverage Ratio

60. From the following information, calculate Interest Coverage Ratio:

  Rs.
10,000 Equity Shares of Rs. 10 each 1,00,000
8% Preference Shares 70,000
10% Debentures 50,000
Long-term loans from Bank 50,000
Interest on Long-term Loans from Bank  5,000
Profit after Tax  75,000
Tax 9,000

 

The solution of Question 60 Chapter 4 of +2-B: –

Total Interest Amount = Interest on Debentures + Interest on Long-term loans from Bank
  = Rs. 5,000 + Rs. 5,000
  = Rs. 10,000
Profit before Interest and Tax = Profit after Tax + Tax + Interest
  = Rs. 75,000 + 9,000 + Rs. 5,000 +Rs. 5,000
  = Rs. 94,000



Proprietary Ratio Net Profit before Interest and Tax = Rs.94,000
Interest Rs.10,000
  = 9.4 Times    

 

 

Balance Sheet: Meaning, Format & Examples

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Also, Check out the solved question of previous Chapters: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

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2 Book 3 min 225x300 - Question 60 Chapter 4 of +2-B  - T.S. Grewal 12 Class
T.S. Grewal’s Analysis of Financial Statements

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