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Which of the following defines the calculation of interest cover?
Suggested Answer: A
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27 comments · newest first
AN
Anglea
10 months ago
B makes more sense to me, not sure about A.
NA
Nakisha
10 months ago
Totally agree, A is the correct one!
CH
Chuck
11 months ago
Wait, is it really just A? Seems too simple.
TE
Terry
11 months ago
I thought it was C at first, but A sounds right now!
IL
Ilona
11 months ago
It's definitely A, that's the standard formula.
AN
Anastacia
11 months ago
I vaguely recall that interest cover is calculated using profit before interest and tax, so I would lean towards A, but I hope I’m not mixing it up!
AL
Alyce
12 months ago
I'm not entirely sure, but I feel like it could be B too? It’s confusing because they both involve profit and finance costs.
DE
Dewitt
12 months ago
I remember practicing a similar question, and I think it was definitely about profit before interest and tax, so A sounds right to me.
LA
Lavonna
12 months ago
I think interest cover is about how much profit we have to cover our finance costs, so it might be A?
GA
Galen
1 year ago
Ugh, finance questions are not my strong suit. I'll try to eliminate the options that don't make sense, then take an educated guess on the right answer.
BU
Bulah
1 year ago
Okay, I've got this. Interest cover is about how well a company can pay its interest expenses, so it's going to be a ratio of profit to finance costs. I'll carefully consider each option.
LU
Lucina
1 year ago
Hmm, I'm a bit unsure about this one. I'll need to review my notes on financial ratios to make sure I understand the concept of interest cover.
PA
Paris
1 year ago
This looks like a straightforward finance question. I'll focus on understanding the key terms like "interest cover" and think through the logic of the different options.
TE
Temeka
1 year ago
I'm feeling a bit like a finance ninja today. A is the correct answer, no doubt about it. Time to show off my accounting skills!
IS
Isabella
1 year ago
D is the way to go, my friends. Profit after tax is what really matters, so that's the number you want to compare to your finance costs.
RO
Roslyn
1 year ago
I disagree, B is the right choice. Finance costs divided by profit before interest and tax is the calculation for interest cover.
GE
Georgene
1 year ago
I think A is the correct answer. It's profit before interest and tax divided by finance costs.
MU
Muriel
1 year ago
Haha, this is a no-brainer! Of course, it's A. Who would divide profit after tax by finance costs? That's just silly.
FR
Freeman
1 year ago
User 1: I agree, it's definitely A. That's the correct formula for interest cover.
TR
Tracie
1 year ago
I'm going with B. Dividing finance costs by profit before interest and tax gives you the number of times those costs are covered, which is what interest cover is all about.
ST
Stephaine
1 year ago
Option A seems to be the correct answer. Interest cover is a measure of a company's ability to meet its interest payments, so it makes sense to divide profit before interest and tax by finance costs.
KA
Kayleigh
1 year ago
User 2: I agree, it makes sense to divide profit before interest and tax by finance costs.
RA
Ramonita
1 year ago
User 1: I think option A is the right answer.
VA
Valentin
1 year ago
I believe it's A because interest cover is about how well a company can pay its interest expenses.
FR
Franchesca
1 year ago
I'm not sure, but I think it's either A or B.
CA
Catarina
1 year ago
I agree with Tammara, A seems correct.
TA
Tammara
1 year ago
I think the answer is A.