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Which of the following is NOT added back to Net Profits After Taxes to produce the numerator
in Coverage Ratio?
profits taxes
interest on debt
cost of materials
depreciation
profits taxes
interest on debt
cost of materials
depreciation
Solution
Which of the following is NOT added back to Net Profits After Taxes to produce the numerator
in Coverage Ratio?
cost of materials
Note :
Interest Coverage Ratio = EBIT/Interest Expenses
EBITDA Coverage Ratio = (EBITDA + Lease Payments)/(Interest Payments + Principal
Repayments + Lease Payments)
Therefore only cost of materials is not added back to Net Profits After Taxes to produce the
numerator in Coverage Ratio

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