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Firms’ ability to repay debt improves in Dec quarter
A Mint analysis of Capitaline data showed that the interest coverage ratio of 324 companies in the BSE 500 index rose to an 11-quarter high of 4.46 in the December quarter, compared with 3.87 in the September quarter and 3.30 in the December quarter of the previous fiscal.Premium
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Steady earnings growth boosted Indian companies’ ability to service debt in the December quarter despite a higher interest outgo, an analysis of corporate earnings showed.
Companies raised revenue and squeezed costs in the past two quarters, analysts said, resulting in significant operating leverage. As business rebounded, working capital requirements grew as well, leading to a higher interest outgo.
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