Switch to:
BHP Billiton Ltd (NYSE:BHP)
Interest Coverage
20.74 (As of Jun. 2015)

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. BHP Billiton Ltd's Operating Income for the six months ended in Jun. 2015 was $8,670 Mil. BHP Billiton Ltd's Interest Expense for the six months ended in Jun. 2015 was $-418 Mil. BHP Billiton Ltd's interest coverage for the quarter that ended in Jun. 2015 was 20.74. The higher the ratio, the stronger the company’s financial strength is.

BHP' s Interest Coverage Range Over the Past 10 Years
Min: 14.27   Max: 129.33
Current: 20.38

14.27
129.33

During the past 13 years, the highest interest coverage of BHP Billiton Ltd was 129.33. The lowest was 14.27. And the median was 33.83.

BHP's Interest Coverage is ranked lower than
70% of the 638 Companies
in the Global Industrial Metals & Minerals industry.

( Industry Median: 10000.00 vs. BHP: 20.38 )

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.

BHP Billiton Ltd's Interest Coverage for the fiscal year that ended in Jun. 2015 is calculated as

Here, for the fiscal year that ended in Jun. 2015, BHP Billiton Ltd's Interest Expense was $-418 Mil. Its Operating Income was $8,670 Mil. And its Long-Term Debt was $27,969 Mil.

Interest Coverage=-1*Operating Income (A: Jun. 2015 )/Interest Expense (A: Jun. 2015 )
=-1*8670/-418
=20.74

BHP Billiton Ltd's Interest Coverage for the quarter that ended in Jun. 2015 is calculated as

Here, for the six months ended in Jun. 2015, BHP Billiton Ltd's Interest Expense was $-418 Mil. Its Operating Income was $8,670 Mil. And its Long-Term Debt was $27,969 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2015 )/Interest Expense (Q: Jun. 2015 )
=-1*8670/-418
=20.74

* 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.

BHP Billiton Ltd Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
interest_coverage 20.0761.2525.2814.27101.68129.3353.8629.2543.8920.74

BHP Billiton Ltd Semi-Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
interest_coverage 20.0761.2525.2814.27101.68129.3353.8629.2543.8920.74
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK