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Education Management Corp (NAS:EDMC)
Interest Coverage
0.00 (As of Mar. 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. Education Management Corp's Operating Income for the three months ended in Mar. 2014 was $-469 Mil. Education Management Corp's Interest Expense for the three months ended in Mar. 2014 was $-31 Mil. Education Management Corp's interest coverage for the quarter that ended in Mar. 2014 was 0.00. The higher the ratio, the stronger the company’s financial strength is.

EDMC' s 10-Year Interest Coverage Range
Min: 1.35   Max: 766.31
Current: 0

1.35
766.31

During the past 13 years, the highest interest coverage of Education Management Corp was 766.31. The lowest was 1.35. And the median was 14.48.

EDMC's Interest Coverageis ranked lower than
120% of the 76 Companies
in the Global Education & Training Services industry.

( Industry Median: 63.85 vs. EDMC: 0.00 )

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

Education Management 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

Education Management Corp had no debt.

Education Management Corp's Interest Coverage for the fiscal year that ended in Jun. 2013 is calculated as

Here, for the fiscal year that ended in Jun. 2013, Education Management Corp's Interest Expense was $-125 Mil. Its Operating Income was $-126 Mil. And its Long-Term Debt was $1,273 Mil.

Education Management Corp did not have earnings to cover the interest expense.

Education Management Corp's Interest Coverage for the quarter that ended in Mar. 2014 is calculated as

Here, for the three months ended in Mar. 2014, Education Management Corp's Interest Expense was $-31 Mil. Its Operating Income was $-469 Mil. And its Long-Term Debt was $1,272 Mil.

Education Management 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.

Education Management Corp Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
interest_coverage 53.73766.3117.211.351.692.083.454.15At LossAt Loss

Education Management Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
interest_coverage 4.85At LossAt Loss0.312.71At LossAt LossAt Loss0.92At Loss
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