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Scott is a credit analyst with one of the credit rating agencies in Indi
a. He was looking in Oil and Gas Industry companies and has presented brief financials for following 4 entities:
Which of the four entities has best interest coverage ratios?
Suggested Answer: C
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34 comments · newest first
LI
Lillian
11 months ago
B Ltd has been improving, but still not the best.
MA
Marshall
11 months ago
Wait, are we sure about those numbers?
JO
Josefa
12 months ago
I think D Ltd might surprise us, though.
DO
Dorthy
12 months ago
Totally agree, A Ltd is looking strong!
KA
Kara
1 year ago
A Ltd has the highest interest coverage ratio.
MY
Myong
1 year ago
I need to double-check the financials; I’m uncertain if it’s A Ltd or D Ltd that has the best ratio based on what we studied.
NA
Naomi
1 year ago
I feel like C Ltd might have a better interest coverage ratio, but I could be mixing it up with another company.
DO
Dong
1 year ago
I think we had a similar question in our last mock exam, and I believe it was about comparing financial ratios.
AL
Alaine
1 year ago
I remember we practiced calculating interest coverage ratios, but I’m not sure which entity has the highest one here.
VO
Vonda
1 year ago
This is a good opportunity to demonstrate my analytical skills. I'll methodically work through the data, calculate each ratio, and identify the entity with the strongest interest coverage.
LO
Loreen
1 year ago
I'm feeling a little lost here. Calculating and comparing those ratios seems tricky. I better make sure I have a solid grasp of the concept before trying to solve this.
QU
Queen
1 year ago
Okay, I got this. I just need to find the EBIT and interest expense for each company, then divide EBIT by interest expense to get the coverage ratio. The one with the highest ratio is the answer.
TA
Tammara
1 year ago
Hmm, I'm a bit unsure about how to approach this. I'll need to make sure I understand how to properly calculate the interest coverage ratio for each company. Maybe I should review my notes on that formula first.
DE
Dexter
1 year ago
This looks like a straightforward question on calculating and comparing interest coverage ratios. I'll need to carefully review the financial data for each entity and determine which one has the highest ratio.
AL
Alyce
2 years ago
C Ltd for the win! Their interest coverage is off the charts compared to the others. Though I have to say, the negative ratio for B Ltd is truly impressive - they've managed to defy the laws of finance!
DE
Delpha
1 year ago
C Ltd seems like a solid choice based on their financial performance.
MI
Mignon
1 year ago
It's surprising to see B Ltd with a negative ratio, they must be really struggling financially.
SA
Samira
1 year ago
I agree, C Ltd definitely has the best interest coverage ratios among the four entities.
ME
Melvin
2 years ago
Hmm, D Ltd has a pretty decent 5.4 coverage ratio, but C Ltd's 8.0 is just too good to ignore. I guess D Ltd is the silver medalist in this competition.
AN
Annita
1 year ago
Definitely, C Ltd seems to be the winner in this scenario.
JO
Josefa
1 year ago
I think A Ltd and B Ltd are not even in the running with their lower ratios.
ME
Merilyn
1 year ago
Yes, D Ltd's 5.4 is good, but C Ltd definitely takes the lead.
IZ
Izetta
1 year ago
I agree, C Ltd's interest coverage ratio of 8.0 is impressive.
AR
Aron
2 years ago
I think A Ltd has the best interest coverage ratios because their financials look more stable.
FL
Floyd
2 years ago
The interest coverage ratio for C Ltd is clearly the highest, so it's the obvious answer. Though I do have to wonder, what kind of crazy business is B Ltd running to have a negative coverage ratio?
VI
Vicente
1 year ago
I know, it's surprising that B Ltd has a negative coverage ratio. They must be in trouble.
AD
Adolph
1 year ago
C Ltd has the best interest coverage ratio.
DO
Domingo
2 years ago
I disagree, I believe C Ltd has the best interest coverage ratios.
IN
Inocencia
2 years ago
Based on the interest coverage ratios shown, C Ltd has the highest ratio at 8.0, which indicates it has the best ability to cover its interest payments. This makes C Ltd the best choice.
SH
Shaunna
1 year ago
Definitely, C Ltd seems to be the most financially stable choice.
DA
Dana
1 year ago
So, we should consider C Ltd as the best option based on the interest coverage ratios.
CO
Cory
1 year ago
I agree, C Ltd's ratio is the highest among the four entities.
GE
Geoffrey
2 years ago
I think C Ltd has the best interest coverage ratio.
MA
Marica
2 years ago
I think D Ltd has the best interest coverage ratios.