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Estee Lauder Cos Inc (NYSE:EL)
Interest Coverage
26.36 (As of Sep. 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. Estee Lauder Cos Inc's Operating Income for the three months ended in Sep. 2014 was $348 Mil. Estee Lauder Cos Inc's Interest Expense for the three months ended in Sep. 2014 was $-13 Mil. Estee Lauder Cos Inc's interest coverage for the quarter that ended in Sep. 2014 was 26.36. The higher the ratio, the stronger the company’s financial strength is.

EL' s 10-Year Interest Coverage Range
Min: 5.53   Max: 9999.99
Current: 35.98

5.53
9999.99

During the past 13 years, the highest interest coverage of Estee Lauder Cos Inc was 9999.99. The lowest was 5.53. And the median was 27.36.

EL's Interest Coverageis ranked higher than
73% of the 1065 Companies
in the Global Household & Personal Products industry.

( Industry Median: 16.07 vs. EL: 35.98 )

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

Estee Lauder Cos 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

Estee Lauder Cos Inc had no debt.

Estee Lauder Cos Inc's Interest Coverage for the fiscal year that ended in Jun. 2014 is calculated as

Here, for the fiscal year that ended in Jun. 2014, Estee Lauder Cos Inc's Interest Expense was $-51 Mil. Its Operating Income was $1,828 Mil. And its Long-Term Debt was $1,325 Mil.

Interest Coverage=-1*Operating Income (A: Jun. 2014 )/Interest Expense (A: Jun. 2014 )
=-1*1827.6/-50.8
=35.98

Estee Lauder Cos Inc's Interest Coverage for the quarter that ended in Sep. 2014 is calculated as

Here, for the three months ended in Sep. 2014, Estee Lauder Cos Inc's Interest Expense was $-13 Mil. Its Operating Income was $348 Mil. And its Long-Term Debt was $1,319 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2014 )/Interest Expense (Q: Sep. 2014 )
=-1*348/-13.2
=26.36

* 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.

Estee Lauder Cos Inc Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
interest_coverage 52.2926.0319.2812.145.537.7717.0521.4720.6535.98

Estee Lauder Cos Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
interest_coverage 1.2025.2448.7419.4511.2233.3052.9327.7730.1726.36
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