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Avago Technologies Ltd Interest Coverage: 118.0 ( as of Apr13)

* All numbers are in millions except for per share data AVGO 10-Y Financials »

Definition

Interest Coverage is a ratio that measures the burden of the debt a company carries and how easily the company can pay off its debt. It is calculated by dividing a company’s Operating Income (EBIT) by its Interest Expense:

Interest Coverage = Operating Income / Interest Expense

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

Formula

Interest Coverage = Operating Income / Interest Expense

Avago Technologies Ltd interest_coverage Calculation

* All numbers are in millions except for per share data

Avago Technologies Ltd Annual Data

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Avago Technologies Ltd Quarterly Data

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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
* All numbers are in millions except for per share data

Avago Technologies Ltd Annual Data

This information is for Premium Members Only.


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Oct07Oct08Oct09Oct10Oct11Oct12
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Avago Technologies Ltd Quarterly Data

This information is for Premium Members Only.


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Jan11Apr11Jul11Oct11Jan12Apr12Jul12Oct12Jan13Apr13
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Financial Dictionary

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