What is the importance of the term “Interest Coverage Ratio” of a firm in India?
- It helps in understanding the present risk of a firm that a bank is going to give a loan to.
- It helps in evaluating the emerging risk of a firm that a bank is going to give a loan to.
- The higher a borrowing firm’s level of Interest Coverage Ratio, the worse is its ability to service its debt.
(a) 1, 2 and 3
(b) 1 and 3 only
(c) 2 only
(d) 1 and 2 only