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Australia and New Zealand Banking Group Ltd (OTCPK:ANZBY)
Interest Coverage
0.61 (As of Mar. 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. Australia and New Zealand Banking Group Ltd's Operating Income for the six months ended in Mar. 2014 was $4,385 Mil. Australia and New Zealand Banking Group Ltd's Interest Expense for the six months ended in Mar. 2014 was $-7,131 Mil. Australia and New Zealand Banking Group Ltd's interest coverage for the quarter that ended in Mar. 2014 was 0.61. The higher the ratio, the stronger the company’s financial strength is.

ANZBY' s 10-Year Interest Coverage Range
Min: 0.18   Max: 0.64
Current: 0.57

0.18
0.64

During the past 13 years, the highest interest coverage of Australia and New Zealand Banking Group Ltd was 0.64. The lowest was 0.18. And the median was 0.41.

ANZBY's Interest Coverageis ranked higher than
54% of the 1455 Companies
in the Global Banks - Regional - Australia industry.

( Industry Median: 1.21 vs. ANZBY: 0.57 )

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

Australia and New Zealand Banking Group Ltd 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

Australia and New Zealand Banking Group Ltd had no debt.

Australia and New Zealand Banking Group Ltd's Interest Coverage for the fiscal year that ended in Sep. 2013 is calculated as

Here, for the fiscal year that ended in Sep. 2013, Australia and New Zealand Banking Group Ltd's Interest Expense was $-15,113 Mil. Its Operating Income was $8,592 Mil. And its Long-Term Debt was $6,203 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2013 )/Interest Expense (A: Sep. 2013 )
=-1*8592.38095238/-15113.3333333
=0.57

Australia and New Zealand Banking Group Ltd's Interest Coverage for the quarter that ended in Mar. 2014 is calculated as

Here, for the six months ended in Mar. 2014, Australia and New Zealand Banking Group Ltd's Interest Expense was $-7,131 Mil. Its Operating Income was $4,385 Mil. And its Long-Term Debt was $6,315 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2014 )/Interest Expense (Q: Mar. 2014 )
=-1*4384.90214352/-7131.40726934
=0.61

* 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

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
interest_coverage 0.450.370.340.310.180.270.420.410.430.57

Australia and New Zealand Banking Group Ltd Semi-Annual Data

Sep09Mar10Sep10Mar11Sep11Mar12Sep12Mar13Sep13Mar14
interest_coverage 0.350.390.450.420.390.440.430.530.610.61
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