pyq/2020/prelims/62

What is the importance of the term “Interest Coverage Ratio” of a firm in India?

1. It help in understanding the present risk of a firm that a bank is going to give loan to.

2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to.

3. The higher a borrowing firm’s level of Interest Coverage Ratio, the worse is its ability to service its debt.

Select the correct answer using the code given below:

(A) 1 and 2 only

(B) 2 only

(C) 1 and 3 only

(D) 1, 2 and 3