Financial Statements

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Financial Statements

From the following details, calculate interest coverage ratio: Net Profit after tax Rs. 1,20,000; 15% Long-term debt 20,00,000; and Tax rate 40%.

1.67 times

1.75 times

1.89 times

1.95 times

✅ Correct Option: 1

Profit before tax $= \frac{1,20,000}{1 - 0.40} = 2,00,000$ .

Interest on debt $= 20,00,000 \times 15\% = 3,00,000$ .

Net profit before interest and tax $= 2,00,000 + 3,00,000 = 5,00,000$ .

Interest Coverage Ratio $= \frac{5,00,000}{3,00,000} = 1.67$ times.

2025: 27 May Shift 1

The two basic measures of liquidity are:

2022: 8 Aug Shift 2

Debt-equity ratio is a sub-part of:

2026: 21 May Shift 2

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	The ratio provides a measure of the capacity of the business to meet its short-term obligations without any flaw.	I. Total Assets to Debt Ratio
B.	This ratio measures the extent of the coverage of long-term debts by assets.	II. Interest Coverage Ratio
C.	This ratio indicates the number of times receivables are turned over and converted into cash in an accounting period.	III. Quick Ratio
D.	It is a ratio which deals with the servicing of interest on loans. It is a measure of security of interest payable on long-term debts.	IV. Trade Receivables Turnover Ratio

Choose the correct answer from the options given below:

2026: 24 May Shift 1

"Ratio analysis is indispensable part of interpretation of results revealed by the financial statements." Which of the following is not an objective of Ratio Analysis?

2022: 8 Aug Shift 2

Long-term solvency is indicated by:

2025: 2 June Shift 2

Operating expense ratio is

From the following details, calculate interest coverage ratio: Net Profit after tax Rs. 1,20,000; 15% Long-term debt 20,00,000; and Tax rate 40%.

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