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Chesapeake Energy Corp (NYSE:CHK)
Interest Coverage
0.00 (As of Mar. 2015)

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. Chesapeake Energy Corp's Operating Income for the three months ended in Mar. 2015 was $-5,040 Mil. Chesapeake Energy Corp's Interest Expense for the three months ended in Mar. 2015 was $-51 Mil. Chesapeake Energy Corp's interest coverage for the quarter that ended in Mar. 2015 was 0.00. The higher the ratio, the stronger the company’s financial strength is.

CHK' s 10-Year Interest Coverage Range
Min: 1.32   Max: 147.63
Current: 39.07

1.32
147.63

During the past 13 years, the highest interest coverage of Chesapeake Energy Corp was 147.63. The lowest was 1.32. And the median was 5.93.

CHK's Interest Coverageis ranked higher than
54% of the 315 Companies
in the Global Oil & Gas E&P industry.

( Industry Median: 23.88 vs. CHK: 39.07 )

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.

Chesapeake Energy Corp's Interest Coverage for the fiscal year that ended in Dec. 2014 is calculated as

Here, for the fiscal year that ended in Dec. 2014, Chesapeake Energy Corp's Interest Expense was $-89 Mil. Its Operating Income was $3,477 Mil. And its Long-Term Debt was $11,154 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2014 )/Interest Expense (A: Dec. 2014 )
=-1*3477/-89
=39.07

Chesapeake Energy Corp's Interest Coverage for the quarter that ended in Mar. 2015 is calculated as

Here, for the three months ended in Mar. 2015, Chesapeake Energy Corp's Interest Expense was $-51 Mil. Its Operating Income was $-5,040 Mil. And its Long-Term Debt was $10,623 Mil.

Chesapeake Energy Corp did not have earnings to cover the interest expense.

* 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.

Chesapeake Energy Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
interest_coverage 8.0611.346.525.38At Loss147.6366.39At Loss9.1139.07

Chesapeake Energy Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
interest_coverage 9.8210.3311.2210.903.9518.7922.5969.06137.29At Loss
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