UPSC CSE Prelims 2020 Q62 — Indian Economy PYQ with Answer

What is the importance of the term “Interest Coverage Ratio” of a firm in India?

1. It helps 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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