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Cato Corp (NYSE:CATO)
Interest Coverage
10,000.00 (As of Jul. 2014)

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. Cato Corp's Operating Income for the three months ended in Jul. 2014 was $23.7 Mil. Cato Corp's Interest Expense for the three months ended in Jul. 2014 was $0.0 Mil. Cato Corp's interest coverage for the quarter that ended in Jul. 2014 was 10,000.00. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

Cato Corp has no debt.

CATO' s 10-Year Interest Coverage Range
Min: 7.33   Max: 4594.05
Current: 1081.25

7.33
4594.05

During the past 13 years, the highest interest coverage of Cato Corp was 4594.05. The lowest was 7.33. And the median was 896.20.

CATO's Interest Coverageis ranked higher than
83% of the 775 Companies
in the Global Apparel Stores industry.

( Industry Median: 35.08 vs. CATO: 1081.25 )

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

Cato Corp 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

Cato Corp had no debt.

Cato Corp's Interest Coverage for the fiscal year that ended in Jan. 2014 is calculated as

Here, for the fiscal year that ended in Jan. 2014, Cato Corp's Interest Expense was $-0.1 Mil. Its Operating Income was $81.1 Mil. And its Long-Term Debt was $0.0 Mil.

Interest Coverage=-1*Operating Income (A: Jan. 2014 )/Interest Expense (A: Jan. 2014 )
=-1*81.094/-0.075
=1,081.25

Cato Corp's Interest Coverage for the quarter that ended in Jul. 2014 is calculated as

Here, for the three months ended in Jul. 2014, Cato Corp's Interest Expense was $0.0 Mil. Its Operating Income was $23.7 Mil. And its Long-Term Debt was $0.0 Mil.

Cato Corp had no debt.

* 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.

Cato Corp Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
interest_coverage 73.46360.631,709.154,558.22857.45979.802,401.034,594.05821.591,081.25

Cato Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
interest_coverage No DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo Debt
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