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Golub Capital BDC Inc (NAS:GBDC)
Interest Coverage
2.69 (As of Jun. 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. Golub Capital BDC Inc's Operating Income for the three months ended in Jun. 2014 was $15.07 Mil. Golub Capital BDC Inc's Interest Expense for the three months ended in Jun. 2014 was $-5.61 Mil. Golub Capital BDC Inc's interest coverage for the quarter that ended in Jun. 2014 was 2.69. The higher the ratio, the stronger the company’s financial strength is.

Warning Sign:

Ben Graham prefers companies interest coverage is at least 5. Golub Capital BDC Inc interest coverage is 3.57, which is low.

GBDC' s 10-Year Interest Coverage Range
Min: 2.59   Max: 6.63
Current: 3.57

2.59
6.63

During the past 5 years, the highest interest coverage of Golub Capital BDC Inc was 6.63. The lowest was 2.59. And the median was 3.57.

GBDC's Interest Coverageis ranked lower than
67% of the 1016 Companies
in the Global Asset Management industry.

( Industry Median: 257.78 vs. GBDC: 3.57 )

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

Golub Capital BDC 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

Golub Capital BDC Inc had no debt.

Golub Capital BDC Inc's Interest Coverage for the fiscal year that ended in Sep. 2013 is calculated as

Here, for the fiscal year that ended in Sep. 2013, Golub Capital BDC Inc's Interest Expense was $-12.43 Mil. Its Operating Income was $44.40 Mil. And its Long-Term Debt was $0.00 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2013 )/Interest Expense (A: Sep. 2013 )
=-1*44.395/-12.427
=3.57

Golub Capital BDC Inc's Interest Coverage for the quarter that ended in Jun. 2014 is calculated as

Here, for the three months ended in Jun. 2014, Golub Capital BDC Inc's Interest Expense was $-5.61 Mil. Its Operating Income was $15.07 Mil. And its Long-Term Debt was $0.00 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2014 )/Interest Expense (Q: Jun. 2014 )
=-1*15.073/-5.609
=2.69

* 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.

Golub Capital BDC Inc Annual Data

Sep09Sep10Sep11Sep12Sep13
interest_coverage At LossAt LossAt LossAt LossAt Loss5.606.633.482.593.57

Golub Capital BDC Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
interest_coverage 2.742.332.623.203.164.043.923.242.942.69
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