What is Kang's interest coverage ratio closest to?
A)2.3 times
B)8.2 times
C)9.2 times
D)10.2 times

Question

Quizplus · Accepted Answer

The interest coverage ratio is calculated by dividing earnings before interest and taxes (EBIT) by interest expense. Kang's interest coverage ratio is 10.2 times, which means that for every dollar of interest expense, Kang is earning $10.20 of EBIT. This indicates a strong ability to meet interest payments and suggests low financial risk for lenders. Option D is the closest to the calculated interest coverage ratio.

What Is Kang's Interest Coverage Ratio Closest To