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Cerner Corporation (NAS:CERN)
Interest Coverage
0.00 (As of Dec. 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. Cerner Corporation's Operating Income for the three months ended in Dec. 2013 was $84 Mil. Cerner Corporation's Interest Expense for the three months ended in Dec. 2013 was $0 Mil. Cerner Corporation's interest coverage for the quarter that ended in Dec. 2013 was 0.00. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

Ben Graham prefers companies interest coverage is at least 5. Cerner Corporation has enough cash to cover all of its debt. Its financial situation is stable.

CERN' s 10-Year Interest Coverage Range
Min: 1.09   Max: 136.3
Current: 136.3

1.09
136.3

During the past 13 years, the highest interest coverage of Cerner Corporation was 136.30. The lowest was 1.09. And the median was 16.30.

CERN's Interest Coverageis ranked higher than
60% of the 1074 Companies
in the Global Health Information Services industry.

( Industry Median: 387.00 vs. CERN: 136.30 )

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

Cerner Corporation 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

Cerner Corporation had no debt.

Cerner Corporation's Interest Coverage for the fiscal year that ended in Dec. 2013 is calculated as

Here, for the fiscal year that ended in Dec. 2013, Cerner Corporation's Interest Expense was $-4 Mil. Its Operating Income was $576 Mil. And its Long-Term Debt was $112 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*576.012/-4.226
=136.30

Cerner Corporation's Interest Coverage for the quarter that ended in Dec. 2013 is calculated as

Here, for the three months ended in Dec. 2013, Cerner Corporation's Interest Expense was $0 Mil. Its Operating Income was $84 Mil. And its Long-Term Debt was $112 Mil.

Cerner Corporation 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.

Cerner Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage 12.1514.4313.2217.1026.4434.3852.0286.09112.80136.30

Cerner Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
interest_coverage 85.9995.5884.96At LossAt LossAt Loss142.34At LossAt LossAt Loss
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