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Cal-Maine Foods Inc (NAS:CALM)
Interest Coverage
N/A (As of Feb. 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. Cal-Maine Foods Inc's Operating Income for the three months ended in Feb. 2016 was $86 Mil. Cal-Maine Foods Inc's Interest Expense for the three months ended in Feb. 2016 was $0 Mil. GuruFocus does not calculate Cal-Maine Foods Inc's interest coverage with the available data. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

Ben Graham prefers companies interest coverage is at least 5. Cal-Maine Foods Inc has enough cash to cover all of its debt. Its financial situation is stable.

CALM' s Interest Coverage Range Over the Past 10 Years
Min: 0.57   Max: 101.74
Current: 1534.44

0.57
101.74
CALM's Interest Coverage is ranked higher than
89% of the 1211 Companies
in the Global Packaged Foods industry.

( Industry Median: 11.65 vs. CALM: 1534.44 )

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.

Cal-Maine Foods Inc's Interest Coverage for the fiscal year that ended in May. 2015 is calculated as

Here, for the fiscal year that ended in May. 2015, Cal-Maine Foods Inc's Interest Expense was $-2 Mil. Its Operating Income was $235 Mil. And its Long-Term Debt was $41 Mil.

Interest Coverage=-1*Operating Income (A: May. 2015 )/Interest Expense (A: May. 2015 )
=-1*235.335/-2.313
=101.74

Cal-Maine Foods Inc's Interest Coverage for the quarter that ended in Feb. 2016 is calculated as

Here, for the three months ended in Feb. 2016, Cal-Maine Foods Inc's Interest Expense was $0 Mil. Its Operating Income was $86 Mil. And its Long-Term Debt was $21 Mil.

GuruFocus does not calculate Cal-Maine Foods Inc's interest coverage with the available data.

* 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.

Cal-Maine Foods Inc Annual Data

May06May07May08May09May10May11May12May13May14May15
interest_coverage 0.578.3329.0017.1213.4712.1817.5713.2838.90101.74

Cal-Maine Foods Inc Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
interest_coverage 59.2182.7678.3077.08116.56205.20N/AN/AN/AN/A
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