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Development of financial strategy
Example 6
Which of the following financial ratios is likely to be of LEAST interest to
a lender when assessing the creditworthiness of a borrower?
A Interest cover
B Gearing
C Operating profit margin
D EBITDA to finance charges ratio
Solution
The answer is (C).
Lenders are particularly interested in the level of gearing (B) and the ability of
the borrower to meet its interest commitments ((A) and (D)).
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