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P2 C5 ACCOUNTNG RATIOS AND ANALYSIS — Elements of Account STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceElements of AccountP2 C5 ACCOUNTNG RATIOS AND ANALYSIS1 Mark
Question
What is indicated by interest coverage ratio?
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Answer

Interest coverage ratio shows the relationship between profit before tax and interest on long term debts. This ratio also shows earning capacity.

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