Series 79 practice questionmediumInterest Coverage
A company’s EBITDA is $30 million and annual interest expense is $6 million. What is its interest coverage ratio?
- A5.00✓ Correct answer
- B6.00
- C0.20
- D4.00
Explanation
Why A — 5.00
Interest coverage = EBITDA / Interest = $30M / $6M = 5.0. Other choices result from reversing the ratio or arithmetic errors.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 995+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Collection, Analysis & Evaluation of Data questions
- If a company issues $100 million of bonds at a yield of 6%, and the corporate tax rate is 25%, what is the company’s…
- Which of the following best describes the impact of convertible debt on a company’s capital structure?
- A company is considering issuing additional debt. Which of the following is the most likely risk associated with this…
- When calculating WACC, why is it preferable to use market values rather than book values for debt and equity?
- In advising a client considering an acquisition funded 100% by debt, which of the following should an investment banker…
- According to the Modigliani-Miller theorem with corporate taxes, what is the effect of increasing leverage on a firm’s…
- Under FINRA Rule 5110, which of the following must an investment banker consider when advising a public company on a…
- An investment banker is helping a client determine its optimal capital structure. Which of the following is most likely…