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Express Scripts Holding Co (NAS:ESRX)
Interest Coverage
8.56 (As of Jun. 2015)

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. Express Scripts Holding Co's Operating Income for the three months ended in Jun. 2015 was $1,133 Mil. Express Scripts Holding Co's Interest Expense for the three months ended in Jun. 2015 was $-132 Mil. Express Scripts Holding Co's interest coverage for the quarter that ended in Jun. 2015 was 8.56. The higher the ratio, the stronger the company’s financial strength is.

ESRX' s 10-Year Interest Coverage Range
Min: 2.78   Max: 396
Current: 6.18

2.78
396

During the past 13 years, the highest interest coverage of Express Scripts Holding Co was 396.00. The lowest was 2.78. And the median was 8.55.

ESRX's Interest Coverageis ranked lower than
79% of the 19 Companies
in the Global Health Care Plans industry.

( Industry Median: 13.26 vs. ESRX: 6.18 )

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

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt is 0, then

The company had no debt.

Express Scripts Holding Co's Interest Coverage for the fiscal year that ended in Dec. 2014 is calculated as

Here, for the fiscal year that ended in Dec. 2014, Express Scripts Holding Co's Interest Expense was $-583 Mil. Its Operating Income was $3,602 Mil. And its Long-Term Debt was $11,013 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2014 )/Interest Expense (A: Dec. 2014 )
=-1*3602.4/-582.9
=6.18

Express Scripts Holding Co's Interest Coverage for the quarter that ended in Jun. 2015 is calculated as

Here, for the three months ended in Jun. 2015, Express Scripts Holding Co's Interest Expense was $-132 Mil. Its Operating Income was $1,133 Mil. And its Long-Term Debt was $14,584 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2015 )/Interest Expense (Q: Jun. 2015 )
=-1*1132.7/-132.3
=8.56

* 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.

Express Scripts Holding Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
interest_coverage 17.268.639.7916.507.7012.397.724.515.966.18

Express Scripts Holding Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
interest_coverage 3.917.876.876.595.707.174.887.727.108.56
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