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Series 79: Collection, Analysis & Evaluation of Data
Series 79 practice questionmediumCoverage Ratios

A company’s EBITDA is $30 million, depreciation and amortization are $8 million, and interest expense is $5 million. What is its EBITDA/interest coverage ratio?

  1. A4.4x
  2. B6.0x✓ Correct answer
  3. C3.75x
  4. D5.0x
Explanation

Why B6.0x

EBITDA/interest = $30M / $5M = 6.0x. Depreciation and amortization are not relevant here, so A and C are incorrect. D reflects a miscalculation.

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