American Capital (American Capital) Interest Coverage : 10.40 (As of Sep. 2016)

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What is American Capital Interest Coverage?

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income by its Interest Expense. American Capital's Operating Income for the three months ended in Sep. 2016 was $52.0 Mil. American Capital's Interest Expense for the three months ended in Sep. 2016 was $-5.0 Mil. American Capital's interest coverage for the quarter that ended in Sep. 2016 was 10.40. The higher the ratio, the stronger the company's financial strength is.

The historical rank and industry rank for American Capital's Interest Coverage or its related term are showing as below:

ACAS's Interest Coverage is not ranked ^*
in the Asset Management industry.
Industry Median: 38.09
* Ranked among companies with meaningful Interest Coverage only.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

American Capital Interest Coverage Historical Data

The historical data trend for American Capital's Interest Coverage can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Note: For Interest Coverage, "No debt" indicates no long-term debt. An indication of "No Debt" does not necessarily mean that the company has no long-term debt obligations; it could be due to missing data in the quarterly or annual report. Use caution when interpreting this information.

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American Capital Interest Coverage Chart

American Capital Annual Data

Trend

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Interest Coverage

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3.37

6.49

5.27

3.39

4.78

American Capital Quarterly Data
	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16
Interest Coverage	Get a 7-Day Free Trial															5.14	4.52	6.27	4.73	10.40

Competitive Comparison of American Capital's Interest Coverage

For the Asset Management subindustry, American Capital's Interest Coverage, along with its competitors' market caps and Interest Coverage data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

American Capital's Interest Coverage Distribution in the Asset Management Industry

For the Asset Management industry and Financial Services sector, American Capital's Interest Coverage distribution charts can be found below:

* The bar in red indicates where American Capital's Interest Coverage falls into.

American Capital Interest Coverage Calculation

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

If Interest Expense is negative and Operating Income is positive, then

Interest Coverage

-1

Operating Income

Interest Expense

Else if Interest Expense is negative and Operating Income is negative, then

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt & Capital Lease Obligation is 0, then

The company had no debt ⁽¹⁾.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

American Capital's Interest Coverage for the fiscal year that ended in Dec. 2015 is calculated as

Here, for the fiscal year that ended in Dec. 2015, American Capital's Interest Expense was $-79.0 Mil. Its Operating Income was $378.0 Mil. And its Long-Term Debt & Capital Lease Obligation was $1,053.0 Mil.

Interest Coverage	=	-1	*	Operating Income (A: Dec. 2015 )	/	Interest Expense (A: Dec. 2015 )
	=	-1	*	378	/	-79
	=	4.78

American Capital's Interest Coverage for the quarter that ended in Sep. 2016 is calculated as

Here, for the three months ended in Sep. 2016, American Capital's Interest Expense was $-5.0 Mil. Its Operating Income was $52.0 Mil. And its Long-Term Debt & Capital Lease Obligation was $0.0 Mil.

Interest Coverage	=	-1	*	Operating Income (Q: Sep. 2016 )	/	Interest Expense (Q: Sep. 2016 )
	=	-1	*	52	/	-5
	=	10.40

The higher the ratio, the stronger the company's Financial Strength is.

American Capital (NAS:ACAS) Interest Coverage Explanation

Ben Graham requires that a company has a minimum interest coverage of 5 with the companies he invested. If the interest coverage is less than 2, the company is burdened by debt. Any business slow or recession may drag the company into a situation where it cannot pay the interest on its debt.

Interest Coverage is an important factor when GuruFocus ranks a company's overage Financial Strength .

American Capital Interest Coverage Related Terms

Thank you for viewing the detailed overview of American Capital's Interest Coverage provided by GuruFocus.com. Please click on the following links to see related term pages.

American Capital (American Capital) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » American Capital Ltd (NAS:ACAS) » Definitions » Interest Coverage

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.american-capital.com

American Capital Ltd was founded in 1986 and incorporated in Delaware. On August 29, 1997, it completed an initial public offering and became a non-diversified closed end investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. It is an asset management and private equity firm. The Company originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by it or sponsored by other private equity funds and provide capital directly to early stage and mature private and small public companies. Its business objectives are to increase its net earnings and net asset value by making investments with attractive current yields and/or potential for equity appreciation and realized gains. Its investments can be divided into the following six business lines: American Capital One Stop Buyouts, Sponsor Finance Investments, Direct and Other Investments, European Capital, Asset Management and Structured Products. The Company competes with strategic buyers, private equity funds, mezzanine debt funds and other buyers and financing sources, including traditional financial services companies such as finance companies, commercial banks, investment banks and other equity and non-equity based investment funds. The Company and its portfolio companies are subject to regulation by laws at the local, state, federal and foreign level, including with respect to securities laws, tax and accounting standards.

Executives

Susan K Nestegard	director	AMERICAN CAPITAL, LTD., 2 BETHESDA METRO, 14TH FLOOR, BETHESDA MD 20814
Gordon Obrien	officer: See Remarks	1400 TOASTMASTER DRIVE, ELGIN IL 60120
Peterson Kenneth D Jr	director	2 BETHESDA METRO CENTER, 14TH FLOOR, BETHESDA MD 20814
Samuel Allan Flax	officer: EVP, GC and Secretary	2 BETHESDA METRO CENTER, 14TH FLOOR, BETHESDA MD 20814
Alvin N Puryear	director	2 BETHESDA METRO CENTER, 14TH FLOOR, BETHESDA MD 20814
Malon Wilkus	director, officer: Chairman and CEO	2 BETHESDA METRO CENTER, 14TH FLOOR, BETHESDA MD 20814
John R Erickson	officer: See Remarks	2 BETHESDA METRO CENTER, 14TH FLOOR, BETHESDA MD 20814
Kristen L Manos	director	855 EAST MAIN AVENUE, ZEELAND MI 49454-0302
Ira Wagner	officer: Pres., European Priv Fin	2 BETHESDA METRO CENTER, 14TH FLOOR, BETHESDA MD 20814
Paulson Advantage Plus Master Ltd.	10 percent owner	C/O MAPLES CORPORATE SERVICES LIMITED, P.O. BOX 309, UGLAND HOUSE, S. CHURCH ST, GRAND CAYMAN E9 KY1-1104
Paulson Advantage Master Ltd.	10 percent owner	C/O MAPLES CORPORATE SERVICES LIMITED, P.O. BOX 309, UGLAND HOUSE, S. CHURCH ST, GRAND CAYMAN E9 KY1-1104
Paulson International Ltd.	10 percent owner	C/O MAPLES CORPORATE SERVICES LIMITED, P.O. BOX 309, UGLAND HOUSE, S. CHURCH ST, GRAND CAYMAN E9 KY1-1104
Paulson Partners Enhanced L.p.	10 percent owner	1133 AVENUE OF THE AMERICAS, NEW YORK NY 10036
Paulson Enhanced Ltd	10 percent owner	C/O MAPLES CORPORATE SERVICES LIMITED, P.O. BOX 309, UGLAND HOUSE, S. CHURCH ST, GRAND CAYMAN E9 KY1-1104
Paulson & Co. Inc.	10 percent owner	1133 AVENUE OF THE AMERICAS, 33RD FLOOR, NEW YORK NY 10036