A banker is reviewing your proposal for grant of long term loan and working capital facilities. What are the key ratios he is likely to review to assess serviceability of the credit facilities? Also provide formulas for

Answer 6(c) A banker is likely to review the following ratios: Current Ratio = Current Assets / Current Liabilities. Quick Ratio = (Current Assets - Inventory) / Current Liabilities. Debt Equity Ratio = Debt : Equity, i.e., Total liabilities / Total shareholders' equity. Interest Service Coverage Ratio = Earnings before interest and depreciation / Interest. Debt Service Coverage Ratio = Earnings before interest and depreciation / (Interest + Current portion of long-term debt). OR Net Operating Income / Total Debt Service where: Net Operating Income = Revenue - COE COE = Certain operating expenses Total Debt Service = Current debt obligations