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a. The lower the interest cover, the higher the amount of profit available for payment of interest. b. The higher the cover, the higher the amount of profit available for payment of interest. c. Interest cover does not relate to the payment of interest. d. Interest cover is not an accounting ratio.
Its B.
Interest cover ratio determines the ability of the company to pay interest on its outstanding debts OR in layman terms we can say that it shows how many times a company can pay interest from its profit...
If the interest cover ratio is above1, this shows that a company has good coverage of its interest payments and vice versa.
B.
interest cover ratio = Profit before interest and tax (PBIT) / Interest.
