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Aircastle Ltd (NYSE:AYR)
Interest Coverage
0.49 (As of Sep. 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. Aircastle Ltd's Operating Income for the three months ended in Sep. 2016 was $28.4 Mil. Aircastle Ltd's Interest Expense for the three months ended in Sep. 2016 was $-57.5 Mil. Aircastle Ltd's interest coverage for the quarter that ended in Sep. 2016 was 0.49. The higher the ratio, the stronger the company’s financial strength is.

Warning Sign:

Ben Graham prefers companies interest coverage is at least 5. Aircastle Ltd interest coverage is 1.27, which is low.

AYR' s Interest Coverage Range Over the Past 10 Years
Min: 0.15   Max: 2.05
Current: 1.27

0.15
2.05
AYR's Interest Coverage is ranked lower than
90% of the 247 Companies
in the Global Rental & Leasing Services industry.

( Industry Median: 15.48 vs. AYR: 1.27 )

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.

Aircastle Ltd's Interest Coverage for the fiscal year that ended in Dec. 2015 is calculated as

Here, for the fiscal year that ended in Dec. 2015, Aircastle Ltd's Interest Expense was $-243.7 Mil. Its Operating Income was $312.9 Mil. And its Long-Term Debt was $4,041.2 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2015 )/Interest Expense (A: Dec. 2015 )
=-1*312.884/-243.682
=1.28

Aircastle Ltd's Interest Coverage for the quarter that ended in Sep. 2016 is calculated as

Here, for the three months ended in Sep. 2016, Aircastle Ltd's Interest Expense was $-57.5 Mil. Its Operating Income was $28.4 Mil. And its Long-Term Debt was $4,547.7 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2016 )/Interest Expense (Q: Sep. 2016 )
=-1*28.373/-57.541
=0.49

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 local exchange's currency.

Aircastle Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
interest_coverage 2.051.150.600.630.361.450.150.981.521.28

Aircastle Ltd Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
interest_coverage 0.740.185.320.650.38At Loss3.060.400.290.49
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