Switch to:
Cintas Corp (NAS:CTAS)
Interest Coverage
11.37 (As of Nov. 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. Cintas Corp's Operating Income for the three months ended in Nov. 2014 was $181 Mil. Cintas Corp's Interest Expense for the three months ended in Nov. 2014 was $-16 Mil. Cintas Corp's interest coverage for the quarter that ended in Nov. 2014 was 11.37. The higher the ratio, the stronger the company’s financial strength is.

CTAS' s 10-Year Interest Coverage Range
Min: 7.64   Max: 34.41
Current: 8.61

7.64
34.41

During the past 13 years, the highest interest coverage of Cintas Corp was 34.41. The lowest was 7.64. And the median was 13.84.

CTAS's Interest Coverageis ranked lower than
51% of the 664 Companies
in the Global Business Services industry.

( Industry Median: 25.87 vs. CTAS: 8.61 )

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

Cintas 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

Cintas Corp had no debt.

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

Here, for the fiscal year that ended in May. 2014, Cintas Corp's Interest Expense was $-66 Mil. Its Operating Income was $567 Mil. And its Long-Term Debt was $1,300 Mil.

Interest Coverage=-1*Operating Income (A: May. 2014 )/Interest Expense (A: May. 2014 )
=-1*567.01/-65.822
=8.61

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

Here, for the three months ended in Nov. 2014, Cintas Corp's Interest Expense was $-16 Mil. Its Operating Income was $181 Mil. And its Long-Term Debt was $1,300 Mil.

Interest Coverage=-1*Operating Income (Q: Nov. 2014 )/Interest Expense (Q: Nov. 2014 )
=-1*181.175/-15.929
=11.37

* 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.

Cintas Corp Annual Data

May05May06May07May08May09May10May11May12May13May14
interest_coverage 19.9017.0911.4710.938.148.048.867.648.608.61

Cintas Corp Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
interest_coverage 8.398.538.169.328.459.289.157.559.8611.37
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK