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Focus Media Holding, Ltd. (NAS:FMCN)
Interest Coverage
69.35 (As of Dec. 2012)

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. Focus Media Holding, Ltd.'s Operating Income for the three months ended in Dec. 2012 was $97.9 Mil. Focus Media Holding, Ltd.'s Interest Expense for the three months ended in Dec. 2012 was $-1.4 Mil. Focus Media Holding, Ltd.'s interest coverage for the quarter that ended in Dec. 2012 was 69.35. The higher the ratio, the stronger the company’s financial strength is.

FMCN' s 10-Year Interest Coverage Range
Min: 0   Max: 0
Current: 0

FMCN's Interest Coverageis ranked lower than
118% of the 148 Companies
in the Global Advertising Agencies industry.

( Industry Median: 83.82 vs. FMCN: 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

Focus Media Holding, 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

Focus Media Holding, Ltd. had no debt.

Focus Media Holding, Ltd.'s Interest Coverage for the fiscal year that ended in Dec. 2012 is calculated as

Here, for the fiscal year that ended in Dec. 2012, Focus Media Holding, Ltd.'s Interest Expense was $-5.1 Mil. Its Operating Income was $315.7 Mil. And its Long-Term Debt was $200.0 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2012 )/Interest Expense (A: Dec. 2012 )
=-1*315.694/-5.067
=62.30

Focus Media Holding, Ltd.'s Interest Coverage for the quarter that ended in Dec. 2012 is calculated as

Here, for the three months ended in Dec. 2012, Focus Media Holding, Ltd.'s Interest Expense was $-1.4 Mil. Its Operating Income was $97.9 Mil. And its Long-Term Debt was $200.0 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2012 )/Interest Expense (Q: Dec. 2012 )
=-1*97.921/-1.412
=69.35

* 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.

Focus Media Holding, Ltd. Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
interest_coverage No DebtNo DebtNo Debt263.535,754.20At LossNo DebtNo Debt340.8462.30

Focus Media Holding, Ltd. Quarterly Data

Sep10Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12
interest_coverage No DebtNo DebtNo DebtNo DebtNo DebtAt Loss47.8151.0977.0969.35
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