Business Studies

Business Finance

Medium

The Debt Service Coverage ratio is:

(Profit after tax + Depreciation + Interest + Non Cash exp.) / (Pref. Div + Interest + Repayment obligation)

(Profit before tax + Depreciation + Non Cash exp.) / (Pref. Div + Interest + Payment obligation)

(Profit before tax - Depreciation + Interest + Cash exp.) / (Pref. Div + Interest + Payment obligation)

(Profit after tax + Interest + Cash exp.) / (Pref. Div + Interest + Repayment obligation)

✅ Correct Option: 1

Debt Service Coverage Ratio measures cash available to meet debt obligations. It is computed as $\frac{\text{Profit after tax} + \text{Depreciation} + \text{Interest} + \text{Non-cash expenses}}{\text{Preference dividend} + \text{Interest} + \text{Repayment obligation}}$ . A higher ratio indicates better ability to service debt and supports higher use of debt in the capital structure. Hence option 1.

2026: 21 May Shift 2

The impact of tax rate on cost of debt is:

2026: 6 June Shift 1

Ms Pooja has a manufacturing business of winter clothes in Raipur, Chattisgarh with an annual demand of 50,000 units. Suggest the factors that she needs to consider while deciding on the requirement of fixed capital for the business.

(A) Scale of operations

(B) Choice of Technique

(D) Business Cycle

Choose the correct answer from the options given below:

2025: 3 June Shift 1

The management is considering adjusting the mix to increase debt in order to take advantage of low-interest rates, but this will increase the ______ risk for the company.

2026: 31 May Shift 1

"Father asked Sehaj to prepare a financial blueprint for the organization's future operations." Identify the financial concept discussed here.

2025: 15 May Shift 2

The factors affecting choice of capital structure are:

Cash flow position
Tax Rate
Nature of Business
Cost of debt

Choose the correct answer from the options given below:

2024

Financial management aims at choosing the best investment and financing alternatives by focusing on their costs and benefits. Its objective is to:

The Debt Service Coverage ratio is:

Solution

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