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Question 60 Chapter 4 of +2-B
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Table of Contents
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 |
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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)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
