1. Ramit is using ICR (Interest Coverage Ratio) as the indicator of the interest paying capacity of his company. However one of his old school days? friends Shobhit tells him to use DSCR (Debt Service Coverage Ratio) as the indicator to judge it.
Do you agree with his friend?
Give reason for your answer
2. Raman has decided to finance his new business using debt. For this he is going to different banks in order to find out the cheapest rate of interest, he can get the loan for. Identify the factor.
3. As part of secondary research, Arm Pvt. Ltd. is keenly observing financial statements of other companies to check their debt equity ratio to understand the composition of balance sheet. Identify the factor
4. Loan from banks and financial institutions are governed by norms and policies of RBI and raising money through stock exchange is regulated by SEBI. XYZ Ltd. will have to accept all norms either they choose equity or debt. Identify the factor.
5. A firm has decided not to issue equity this year. The reason they have given is the involvement of costs like printing charges, brokerage, advertising costs and underwriter?s commission. The company says all these costs will add on to become substantial. Identify the concept.
6. A company is choosing debt because tax is a deductible expense. Identify the concept.