Business Studies

Business Finance

Easy

The number of times earnings before interest and taxes of a company covers the interest obligation is indicated by which ratio?

Debt Coverage Ratio

Interest Coverage Ratio

Return on Investment

Cost of debt

✅ Correct Option: 2

Option 1 -> Debt Coverage Ratio measures the ability to service total debt obligations, not specifically the relationship between EBIT and interest expense.

Option 2 -> Interest Coverage Ratio is calculated as EBIT divided by Interest Expense, showing exactly how many times interest can be covered by earnings.

Option 3 -> Return on Investment measures profitability of investments, not the coverage of interest obligations by earnings.

Option 4 -> Cost of debt represents the effective interest rate paid on borrowings, not a coverage measurement.

Hence, Option 2: Interest Coverage Ratio -> This ratio is specifically designed to measure how many times a company's earnings before interest and taxes (EBIT) can cover its interest obligations, calculated as EBIT ÷ Interest Expense -> correct

2023: 29 May Shift 2

Identify the rights provided to consumers by the Consumer Protection Act 2019

A. Right to Safety

B. Right to be Informed

C. Right to choose

D. Right to be heard

E. Right to be assured

Choose the correct answer from the options given below:

2022: 28 May Shift 2

Identify the correct statements in the context of financial decision :

(A) Financial decision includes investment decision, financing decision and dividend decision

(B) Short term investment decision is also known as 'capital budgeting decision'

(D) Investment decision includes raising funds from equity or debt

(E) Investment decision includes short term and long term investment decision

Choose the correct answer from the options given below :

2026: 11 May Shift 2

The financial planning strives to achieve the following objectives:

A. To ensure availability of funds whenever required

B. To raise funds only through long-term sources of capital such as equity or preference shares

C. To see that the firm does not raise resources unnecessarily

D. To ensure idle funds at the disposal of an enterprise.

Choose the correct answer from the options given below:

2025: 14 May Shift 1

Arrange the following current assets, in descending order of liquidity.

(A) Cash in hand

(B) Bills receivable

(D) Finished goods inventory

Choose the correct answer from the options given below:

2025: 27 May Shift 2

Match List-I with List-II

List-I	List-II
Concept	Meaning
(A) Working Capital	(I) It refers to the mix between owners and borrowed funds for the sources of business finance.
(B) Financial Management	(II) It is essentially preparation of a financial blueprint for an organization's future operations.
(C) Capital Structure	(III) This investment facilitates smooth day-to-day operations of the organization.
(D) Financial Planning	(IV) It is concerned with optimal procurement as well as usage of finance.

Choose the correct answer from the options given below:

2026: 31 May Shift 1

Match the LIST-I with LIST-II

LIST-I (Factor affecting Fixed capital requirements)	LIST-II (Explanation)
A. Choice of Technique	I. Organizations that use assets which are prone to obsolescence require higher fixed capital.
B. Level of Collaboration	II. A developed financial market may provide leasing facilities as an alternative to outright purchase.
C. Financing Alternatives	III. Certain business organisations share each other's facilities.
D. Technology Upgradation	IV. A capital-intensive organisation requires higher investment in plant.

Choose the correct answer from the options given below:

The number of times earnings before interest and taxes of a company covers the interest obligation is indicated by which ratio?

Solution

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