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AECOM Technology Corp (NYSE:ACM)
Interest Coverage
10.13 (As of Sep. 2014)

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. AECOM Technology Corp's Operating Income for the three months ended in Sep. 2014 was $103 Mil. AECOM Technology Corp's Interest Expense for the three months ended in Sep. 2014 was $-10 Mil. AECOM Technology Corp's interest coverage for the quarter that ended in Sep. 2014 was 10.13. The higher the ratio, the stronger the company’s financial strength is.

ACM' s 10-Year Interest Coverage Range
Min: 1.19   Max: 9999.99
Current: 8.64

1.19
9999.99

During the past 13 years, the highest interest coverage of AECOM Technology Corp was 9999.99. The lowest was 1.19. And the median was 10.42.

ACM's Interest Coverageis ranked higher than
60% of the 698 Companies
in the Global Engineering & Construction industry.

( Industry Median: 11.91 vs. ACM: 8.64 )

Definition

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

AECOM Technology Corp did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt is 0, or Interest Expense is positive, then

AECOM Technology Corp had no debt.

AECOM Technology Corp's Interest Coverage for the fiscal year that ended in Sep. 2014 is calculated as

Here, for the fiscal year that ended in Sep. 2014, AECOM Technology Corp's Interest Expense was $-41 Mil. Its Operating Income was $353 Mil. And its Long-Term Debt was $940 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2014 )/Interest Expense (A: Sep. 2014 )
=-1*352.882/-40.842
=8.64

AECOM Technology Corp's Interest Coverage for the quarter that ended in Sep. 2014 is calculated as

Here, for the three months ended in Sep. 2014, AECOM Technology Corp's Interest Expense was $-10 Mil. Its Operating Income was $103 Mil. And its Long-Term Debt was $940 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2014 )/Interest Expense (Q: Sep. 2014 )
=-1*102.52/-10.12
=10.13

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

The higher the ratio, the stronger the company’s financial strength is.


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.


Related Terms

Operating Income, Interest Expense, Financial Strength


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

AECOM Technology Corp Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
interest_coverage 13.949.7846.96At LossAt LossAt Loss10.421.198.438.64

AECOM Technology Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
interest_coverage 8.10At Loss5.876.789.5511.98At Loss6.519.3410.13
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