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Australia and New Zealand Banking Group Ltd (OTCPK:ANZBY)
Interest Coverage
0.62 (As of Mar. 2015)

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. Australia and New Zealand Banking Group Ltd's Operating Income for the six months ended in Mar. 2015 was $3,971 Mil. Australia and New Zealand Banking Group Ltd's Interest Expense for the six months ended in Mar. 2015 was $-6,375 Mil. Australia and New Zealand Banking Group Ltd's interest coverage for the quarter that ended in Mar. 2015 was 0.62. The higher the ratio, the stronger the company’s financial strength is.

ANZBY' s 10-Year Interest Coverage Range
Min: 0.18   Max: 0.66
Current: 0.66

0.18
0.66

During the past 13 years, the highest interest coverage of Australia and New Zealand Banking Group Ltd was 0.66. The lowest was 0.18. And the median was 0.42.

ANZBY's Interest Coverageis ranked lower than
74% of the 1239 Companies
in the Global Banks - Global industry.

( Industry Median: 1.65 vs. ANZBY: 0.66 )

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

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

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

The company had no debt.

Australia and New Zealand Banking Group Ltd'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, Australia and New Zealand Banking Group Ltd's Interest Expense was $-14,208 Mil. Its Operating Income was $9,320 Mil. And its Long-Term Debt was $12,303 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2014 )/Interest Expense (A: Sep. 2014 )
=-1*9320.07233273/-14207.9566004
=0.66

Australia and New Zealand Banking Group Ltd's Interest Coverage for the quarter that ended in Mar. 2015 is calculated as

Here, for the six months ended in Mar. 2015, Australia and New Zealand Banking Group Ltd's Interest Expense was $-6,375 Mil. Its Operating Income was $3,971 Mil. And its Long-Term Debt was $6,958 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2015 )/Interest Expense (Q: Mar. 2015 )
=-1*3971.42857143/-6375.28957529
=0.62

* 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.

Australia and New Zealand Banking Group Ltd Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
interest_coverage 0.370.340.310.180.270.420.410.430.570.66

Australia and New Zealand Banking Group Ltd Semi-Annual Data

Sep10Mar11Sep11Mar12Sep12Mar13Sep13Mar14Sep14Mar15
interest_coverage 0.450.420.390.440.430.530.610.610.690.62
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