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Cencosud SA (NYSE:CNCO)
Interest Coverage
3.52 (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. Cencosud SA's Operating Income for the three months ended in Dec. 2013 was $612 Mil. Cencosud SA's Interest Expense for the three months ended in Dec. 2013 was $-174 Mil. Cencosud SA's interest coverage for the quarter that ended in Dec. 2013 was 3.52. The higher the ratio, the stronger the company’s financial strength is.

CNCO' s 10-Year Interest Coverage Range
Min: 2.49   Max: 5.22
Current: 2.49

2.49
5.22

During the past 5 years, the highest interest coverage of Cencosud SA was 5.22. The lowest was 2.49. And the median was 3.62.

CNCO's Interest Coverageis ranked lower than
55% of the 734 Companies
in the Global Specialty Retail industry.

( Industry Median: 35.22 vs. CNCO: 2.49 )

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

Cencosud SA 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

Cencosud SA had no debt.

Cencosud SA'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, Cencosud SA's Interest Expense was $-467 Mil. Its Operating Income was $1,163 Mil. And its Long-Term Debt was $0 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*1163.13856085/-467.108295414
=2.49

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

Here, for the three months ended in Dec. 2013, Cencosud SA's Interest Expense was $-174 Mil. Its Operating Income was $612 Mil. And its Long-Term Debt was $0 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2013 )/Interest Expense (Q: Dec. 2013 )
=-1*612.013163597/-173.635872156
=3.52

* 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.

Cencosud SA Annual Data

Dec09Dec10Dec11Dec12Dec13
interest_coverage At LossAt LossAt LossAt LossAt Loss3.625.224.062.742.49

Cencosud SA Quarterly Data

Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12Sep13Dec13
interest_coverage 4.073.843.544.892.842.432.812.72No Debt3.52
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