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Cenovus Energy Inc (NYSE:CVE)
Interest Coverage
9.96 (As of Jun. 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. Cenovus Energy Inc's Operating Income for the three months ended in Jun. 2014 was $649 Mil. Cenovus Energy Inc's Interest Expense for the three months ended in Jun. 2014 was $-65 Mil. Cenovus Energy Inc's interest coverage for the quarter that ended in Jun. 2014 was 9.96. The higher the ratio, the stronger the company’s financial strength is.

CVE' s 10-Year Interest Coverage Range
Min: 2.97   Max: 14.19
Current: 4.78

2.97
14.19

During the past 6 years, the highest interest coverage of Cenovus Energy Inc was 14.19. The lowest was 2.97. And the median was 5.43.

CVE's Interest Coverageis ranked higher than
82% of the 158 Companies
in the Global Oil & Gas Integrated industry.

( Industry Median: 18.20 vs. CVE: 4.78 )

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

Cenovus Energy Inc 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

Cenovus Energy Inc had no debt.

Cenovus Energy Inc'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, Cenovus Energy Inc's Interest Expense was $-337 Mil. Its Operating Income was $1,611 Mil. And its Long-Term Debt was $4,568 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*1610.60329068/-337.294332724
=4.78

Cenovus Energy Inc's Interest Coverage for the quarter that ended in Jun. 2014 is calculated as

Here, for the three months ended in Jun. 2014, Cenovus Energy Inc's Interest Expense was $-65 Mil. Its Operating Income was $649 Mil. And its Long-Term Debt was $4,672 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2014 )/Interest Expense (Q: Jun. 2014 )
=-1*648.975791434/-65.1769087523
=9.96

* 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.

Cenovus Energy Inc Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage At LossAt LossAt LossAt Loss14.194.762.977.016.074.78

Cenovus Energy Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
interest_coverage 5.818.865.882.154.865.296.582.406.829.96
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