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Australia and New Zealand Banking Group Ltd (OTCPK:ANZBY)
Interest Coverage
0.52 (As of Mar. 2016)

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. 2016 was $2,912 Mil. Australia and New Zealand Banking Group Ltd's Interest Expense for the six months ended in Mar. 2016 was $-5,643 Mil. Australia and New Zealand Banking Group Ltd's interest coverage for the quarter that ended in Mar. 2016 was 0.52. The higher the ratio, the stronger the company’s financial strength is.

Warning Sign:

Ben Graham prefers companies interest coverage is at least 5. Australia and New Zealand Banking Group Ltds earnings cannot cover its interest expense. If the situation continues, the company may have to issue more debt.

ANZBY' s Interest Coverage Range Over the Past 10 Years
Min: 0.18   Max: 0.66
Current: 0.61

0.18
0.66
ANZBY's Interest Coverage is ranked lower than
74% of the 1585 Companies
in the Global Banks - Global industry.

( Industry Median: 1.62 vs. ANZBY: 0.61 )

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


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.


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

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

Here, for the fiscal year that ended in Sep. 2015, Australia and New Zealand Banking Group Ltd's Interest Expense was $-11,228 Mil. Its Operating Income was $7,433 Mil. And its Long-Term Debt was $12,004 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2015 )/Interest Expense (A: Sep. 2015 )
=-1*7433.30980946/-11227.9463656
=0.66

Australia and New Zealand Banking Group Ltd's Interest Coverage for the quarter that ended in Mar. 2016 is calculated as

Here, for the six months ended in Mar. 2016, Australia and New Zealand Banking Group Ltd's Interest Expense was $-5,643 Mil. Its Operating Income was $2,912 Mil. And its Long-Term Debt was $7,599 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2016 )/Interest Expense (Q: Mar. 2016 )
=-1*2912.22805701/-5642.91072768
=0.52

* 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

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
interest_coverage 0.340.310.180.270.420.410.430.570.660.66

Australia and New Zealand Banking Group Ltd Semi-Annual Data

Sep11Mar12Sep12Mar13Sep13Mar14Sep14Mar15Sep15Mar16
interest_coverage 0.390.440.430.530.610.610.690.620.700.52
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