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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.

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

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

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

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

 Jun03 Jun04 Jun05 Jun06 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 interest_coverage 0.14 At Loss 1.28 1.01 2.07 2.99 At Loss 8.31 14.69 215.84

Buckeye Technologies, Inc. Quarterly Data

 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 interest_coverage 18.39 26.81 16.27 13.29 At Loss 36.65 At Loss 59.27 45.69 95.15
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