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Fortune Brands Home & Security Inc (NYSE:FBHS)
Interest Coverage
14.44 (As of Sep. 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. Fortune Brands Home & Security Inc's Operating Income for the three months ended in Sep. 2015 was $160 Mil. Fortune Brands Home & Security Inc's Interest Expense for the three months ended in Sep. 2015 was $-11 Mil. Fortune Brands Home & Security Inc's interest coverage for the quarter that ended in Sep. 2015 was 14.44. The higher the ratio, the stronger the company’s financial strength is.

FBHS' s Interest Coverage Range Over the Past 10 Years
Min: 0.58   Max: 44.86
Current: 15.55

0.58
44.86

During the past 6 years, the highest interest coverage of Fortune Brands Home & Security Inc was 44.86. The lowest was 0.58. And the median was 16.85.

FBHS's Interest Coverage is ranked lower than
61% of the 494 Companies
in the Global Home Furnishings & Fixtures industry.

( Industry Median: 36.70 vs. FBHS: 15.55 )

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.

Fortune Brands Home & Security Inc'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, Fortune Brands Home & Security Inc's Interest Expense was $-10 Mil. Its Operating Income was $404 Mil. And its Long-Term Debt was $644 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2014 )/Interest Expense (A: Dec. 2014 )
=-1*403.5/-10.4
=38.80

Fortune Brands Home & Security Inc's Interest Coverage for the quarter that ended in Sep. 2015 is calculated as

Here, for the three months ended in Sep. 2015, Fortune Brands Home & Security Inc's Interest Expense was $-11 Mil. Its Operating Income was $160 Mil. And its Long-Term Debt was $1,338 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2015 )/Interest Expense (Q: Sep. 2015 )
=-1*160.3/-11.1
=14.44

* 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.

Fortune Brands Home & Security Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14
interest_coverage At LossAt LossAt LossAt Loss0.581.71At Loss18.5944.8638.80

Fortune Brands Home & Security Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
interest_coverage 62.6546.4834.7636.4759.7640.4724.7519.7921.3714.44
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