Switch to:
Buckeye Technologies, Inc. (NYSE:BKI)
Interest Coverage
95.15 (As of Mar. 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. Buckeye Technologies, Inc.'s Operating Income for the three months ended in Mar. 2013 was $29.9 Mil. Buckeye Technologies, Inc.'s Interest Expense for the three months ended in Mar. 2013 was $-0.3 Mil. Buckeye Technologies, Inc.'s interest coverage for the quarter that ended in Mar. 2013 was 95.15. The higher the ratio, the stronger the company’s financial strength is.

BKI' s 10-Year Interest Coverage Range
Min: 0   Max: 0
Current: 0

BKI's Interest Coverageis ranked lower than
141% of the 215 Companies
in the Global Paper & Paper Products industry.

( Industry Median: 6.61 vs. BKI: 0.00 )

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

Buckeye Technologies, Inc. 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

Buckeye Technologies, Inc. had no debt.

Buckeye Technologies, Inc.'s Interest Coverage for the fiscal year that ended in Jun. 2012 is calculated as

Here, for the fiscal year that ended in Jun. 2012, Buckeye Technologies, Inc.'s Interest Expense was $-0.8 Mil. Its Operating Income was $164.0 Mil. And its Long-Term Debt was $58.6 Mil.

Interest Coverage=-1*Operating Income (A: Jun. 2012 )/Interest Expense (A: Jun. 2012 )
=-1*164.039/-0.76
=215.84

Buckeye Technologies, Inc.'s Interest Coverage for the quarter that ended in Mar. 2013 is calculated as

Here, for the three months ended in Mar. 2013, Buckeye Technologies, Inc.'s Interest Expense was $-0.3 Mil. Its Operating Income was $29.9 Mil. And its Long-Term Debt was $62.3 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2013 )/Interest Expense (Q: Mar. 2013 )
=-1*29.877/-0.314
=95.15

* 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.

Buckeye Technologies, Inc. Annual Data

Jun03Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12
interest_coverage 0.14At Loss1.281.012.072.99At Loss8.3114.69215.84

Buckeye Technologies, Inc. Quarterly Data

Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13
interest_coverage 18.3926.8116.2713.29At Loss36.65No Debt59.2745.6995.15
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)
Free 7-day Trial
FEEDBACK