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Daktronics Inc (NAS:DAKT)
Interest Coverage
218.61 (As of Oct. 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. Daktronics Inc's Operating Income for the three months ended in Oct. 2014 was $12.2 Mil. Daktronics Inc's Interest Expense for the three months ended in Oct. 2014 was $-0.1 Mil. Daktronics Inc's interest coverage for the quarter that ended in Oct. 2014 was 218.61. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

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

DAKT' s 10-Year Interest Coverage Range
Min: 3.43   Max: 174.66
Current: 143.36

3.43
174.66

During the past 13 years, the highest interest coverage of Daktronics Inc was 174.66. The lowest was 3.43. And the median was 22.10.

DAKT's Interest Coverageis ranked higher than
61% of the 1625 Companies
in the Global Computer Systems industry.

( Industry Median: 124.89 vs. DAKT: 143.36 )

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

Daktronics 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

Daktronics Inc had no debt.

Daktronics Inc's Interest Coverage for the fiscal year that ended in Apr. 2014 is calculated as

Here, for the fiscal year that ended in Apr. 2014, Daktronics Inc's Interest Expense was $-0.3 Mil. Its Operating Income was $36.6 Mil. And its Long-Term Debt was $0.0 Mil.

Interest Coverage=-1*Operating Income (A: Apr. 2014 )/Interest Expense (A: Apr. 2014 )
=-1*36.557/-0.255
=143.36

Daktronics Inc's Interest Coverage for the quarter that ended in Oct. 2014 is calculated as

Here, for the three months ended in Oct. 2014, Daktronics Inc's Interest Expense was $-0.1 Mil. Its Operating Income was $12.2 Mil. And its Long-Term Debt was $0.0 Mil.

Interest Coverage=-1*Operating Income (Q: Oct. 2014 )/Interest Expense (Q: Oct. 2014 )
=-1*12.242/-0.056
=218.61

* 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.

Daktronics Inc Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
interest_coverage At LossAt Loss50.9226.87174.66At Loss106.1330.6786.20143.36

Daktronics Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
interest_coverage 123.08468.3638.189.6274.751,463.7557.53103.47200.25218.61
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