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?
- A4.4x
- B6.0x✓ Correct answer
- C3.75x
- D5.0x
Explanation
Why B — 6.0x
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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