Tower Pharmaceuticals plc produced draft financial statements for the most recent year. A subsequent check of the underlying financial records revealed that a bad debt recovered during the year had been reported as interest receivable.

What will be the effect$($increase$/$decrease$/$no effect$)$ of correcting for this error on the interest cover ratio and gearing$$ ratio?

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Part $1$

$$Interest cover ratio Gearing ratio$$

A$.$

$$Decrease$$

Increase

B$.$

$$Increase$$

No effect

C$.$

$$No effect$$

Decrease

D$.$

$$Increase$$

Decrease