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American Pacific Corporation (NAS:APFC)
Interest Coverage
30.51 (As of Sep. 2013)

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. American Pacific Corporation's Operating Income for the three months ended in Sep. 2013 was $17.5 Mil. American Pacific Corporation's Interest Expense for the three months ended in Sep. 2013 was $-0.6 Mil. American Pacific Corporation's interest coverage for the quarter that ended in Sep. 2013 was 30.51. The higher the ratio, the stronger the company’s financial strength is.

APFC' s 10-Year Interest Coverage Range
Min: 0.14   Max: 9999.99
Current: 13.71

0.14
9999.99

During the past 13 years, the highest interest coverage of American Pacific Corporation was 9999.99. The lowest was 0.14. And the median was 2.37.

APFC's Interest Coverageis ranked higher than
59% of the 669 Companies
in the Global Specialty Chemicals industry.

( Industry Median: 22.96 vs. APFC: 13.71 )

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

American Pacific Corporation 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

American Pacific Corporation had no debt.

American Pacific Corporation'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, American Pacific Corporation's Interest Expense was $-3.0 Mil. Its Operating Income was $41.1 Mil. And its Long-Term Debt was $49.5 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2013 )/Interest Expense (A: Sep. 2013 )
=-1*41.089/-2.996
=13.71

American Pacific Corporation's Interest Coverage for the quarter that ended in Sep. 2013 is calculated as

Here, for the three months ended in Sep. 2013, American Pacific Corporation's Interest Expense was $-0.6 Mil. Its Operating Income was $17.5 Mil. And its Long-Term Debt was $49.5 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2013 )/Interest Expense (Q: Sep. 2013 )
=-1*17.485/-0.573
=30.51

* 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.

American Pacific Corporation Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
interest_coverage No DebtNo Debt0.271.992.300.170.650.752.7613.71

American Pacific Corporation Quarterly Data

Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13
interest_coverage At Loss7.031.051.854.234.073.868.7523.5330.51
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