Assertion (A): Financial planning aims to avoid shortages and unnecessary surplus. Reason (R): Interest coverage ratio uses EBIT and interest.

For the following practice assertion–reason questions, choose: (A) Both A and R are true, and R correctly explains A. (B) Both are true, but R does not correctly explain A. (C) A is true, but R is false. (D) A is false, but R is true.

Answer – (B) Both are true; the ratio formula does not explain the objective of planning.