Practice question · Estimate
EBIT 450, interest expense 90. Estimate the interest cover ratio.
Estimate on a scale from 0 to 10x (10).
Hints
- Interest cover = EBIT / interest expense.
- .
Show the answer
5 (answers within ±0.3 count)
Why
. The firm earns five times its interest bill, comfortably above the danger zone (below 1.5). Lenders sleep well.
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