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Question
If Profit before Interest and Tax is ₹5,00,000 and interest on Long-term Funds is ₹1,00,000, find Interest Coverage Ratio.
Solution
Net Profit before Interest and Tax = 5,00,000
Interest = 1,00,000
Interest Coverage Ratio
= `"Net Profit before Interest and Tax"/"Interest"`
`= 500000/100000 = 5 "times"`
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