If Degree of Financial Leverage (DFL) = 5/4, which one of the following will be the interest coverage ratio?

CA Intermediate · Financial Management and Strategic Management · RTP · January 2026
If Degree of Financial Leverage (DFL) = 5/4, which one of the following will be the interest coverage ratio?
(A) 5
(B) 4
(C) 3/4
(D) 1.33

Suggested Answer and Working Notes:

Correct Answer: Option (A)

5

Topics: Part-A: Financial Management

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