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Prelims Mains
PRELIMS 2020 · INDIAN ECONOMY

What is the importance of the term “Interest Coverage Ratio” of a firm in India? 1. It he…

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2020 paper Indian Economy

Question

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.

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