Explain the interest coverage ratio, Managerial Accounting

Assignment Help:

Interest coverage ratio (or debt service ratio)

 Meaning: this ratio establishes a relationship among net profits before interest and taxes and interest on long debt.

Objective: the objective of computing this ratio is to calculate the debt servicing capacity of a firm so far as fixed interest on long term debt is concerned.

Components: there are two component by dividing the net profits before interest and taxes by interest on long term debt. This ratio is usually expressed as x number of times. In the form of a formula this ratio may be expressed.

 


Related Discussions:- Explain the interest coverage ratio

Consulting project, CONSULTING PROJECT Pricing and Production Decision...

CONSULTING PROJECT Pricing and Production Decisions at PoolOut Ltd  PoolOut Ltd manufactures and sells a single product called the "RainIn", which is a patent-protected au

Mgt acc., companyXYZusesthe job oder costing system.

companyXYZusesthe job oder costing system.

Transaction, Ask q1. On March 1, 2020, Tahir Muktar, a famous businessman i...

Ask q1. On March 1, 2020, Tahir Muktar, a famous businessman in Addis, opened a business named “Universal Garage” which is organized as a sole proprietorship. The business is estab

Orders per year , Lila Battle has determined that the annual demand for num...

Lila Battle has determined that the annual demand for number 6 screws is 100,000 screws. Lila, who works in her brother's hardware shop, is in charge of purchasing. She estimates t

Breakeven analysis, I am part of a marketing group, and we are working on a...

I am part of a marketing group, and we are working on a project for a local cable company,they currently serve 3,200 customers and sell 50 wireless boxes a month,what I need to do

Characteristics of current assets, Working Capital management is affected t...

Working Capital management is affected through two characteristics of current assets that are as follows (i) short life span (ii) swift transformation in the other asset forms.

Adjusted profit and loss method, Under this method, approximated profit is ...

Under this method, approximated profit is calculated depends on transactions of the ensuing period. Afterward, decrease or increase in working capital is determined adjusting the e

Extensions to linear programming, Extensions to Linear Programming In man...

Extensions to Linear Programming In many real situations the solutions to linear programming models make sense only if they have integer values. Rounding off the linear programmi

Types of factoring, Types of Factoring The factoring facilities can be ...

Types of Factoring The factoring facilities can be largely categorized in four groups that are as follows: 1)   Full service non-recourse (old line) 2)   Full service rec

Explain the methods of pricing, Explain the Methods of pricing The fol...

Explain the Methods of pricing The following methods are used for intra company transfer pricing: 1) Total cost method: transfer is made at absorption cost which is the t

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd