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Flextronics International, Ltd. (NAS:FLEX)
Interest Coverage
2.79 (As of Dec. 2013)

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. Flextronics International, Ltd.'s Operating Income for the three months ended in Dec. 2013 was $168 Mil. Flextronics International, Ltd.'s Interest Expense for the three months ended in Dec. 2013 was $-60 Mil. Flextronics International, Ltd.'s interest coverage for the quarter that ended in Dec. 2013 was 2.79. The higher the ratio, the stronger the company’s financial strength is.

FLEX' s 10-Year Interest Coverage Range
Min: 1.52   Max: 14.57
Current: 0

1.52
14.57

During the past 13 years, the highest interest coverage of Flextronics International, Ltd. was 14.57. The lowest was 1.52. And the median was 3.69.

FLEX's Interest Coverageis ranked lower than
136% of the 1525 Companies
in the Global Contract Manufacturers industry.

( Industry Median: 74.64 vs. FLEX: 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

Flextronics International, Ltd. 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

Flextronics International, Ltd. had no debt.

Flextronics International, Ltd.'s Interest Coverage for the fiscal year that ended in Mar. 2013 is calculated as

Here, for the fiscal year that ended in Mar. 2013, Flextronics International, Ltd.'s Interest Expense was $0 Mil. Its Operating Income was $320 Mil. And its Long-Term Debt was $1,651 Mil.

Flextronics International, Ltd. had no debt.

Flextronics International, Ltd.'s Interest Coverage for the quarter that ended in Dec. 2013 is calculated as

Here, for the three months ended in Dec. 2013, Flextronics International, Ltd.'s Interest Expense was $-60 Mil. Its Operating Income was $168 Mil. And its Long-Term Debt was $2,001 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2013 )/Interest Expense (Q: Dec. 2013 )
=-1*168.468/-60.4
=2.79

* 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.

Flextronics International, Ltd. Annual Data

Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13
interest_coverage At Loss3.952.333.696.85At LossAt Loss8.72At LossAt Loss

Flextronics International, Ltd. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
interest_coverage 8,863.597.00At Loss17.1216.010.61At LossAt LossAt Loss2.79
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