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Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a companys Operating Income (EBIT) by its Interest Expense. AutoZone Inc's Operating Income for the three months ended in Feb. 2016 was $383 Mil. AutoZone Inc's Interest Expense for the three months ended in Feb. 2016 was $-33 Mil. AutoZone Inc's interest coverage for the quarter that ended in Feb. 2016 was 11.66. The higher the ratio, the stronger the companys financial strength is.
Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a companys Operating Income (EBIT) by its Interest Expense:
|The company did not have earnings to cover the interest expense.|
|The company had no debt.|
AutoZone Inc's Interest Coverage for the fiscal year that ended in Aug. 2015 is calculated as
|Interest Coverage||=||-1||*||Operating Income (A: Aug. 2015 )||/||Interest Expense (A: Aug. 2015 )|
AutoZone Inc's Interest Coverage for the quarter that ended in Feb. 2016 is calculated as
|Interest Coverage||=||-1||*||Operating Income (Q: Feb. 2016 )||/||Interest Expense (Q: Feb. 2016 )|
* 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 companys financial strength is.
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 companys overage financial strength.
AutoZone Inc Annual Data
AutoZone Inc Quarterly Data
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