Series 79 practice questionmediumCoverage Ratios
A company has EBITDA of $12 million, depreciation and amortization of $2 million, and interest expense of $3 million. What is its EBITDA/interest coverage ratio?
- A4.0x✓ Correct answer
- B5.0x
- C3.0x
- D2.0x
Explanation
Why A — 4.0x
EBITDA/interest = $12M / $3M = 4x, so A is correct. Depreciation and amortization do not factor into the EBITDA coverage ratio.
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