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132.85 (1y: -15%)
Market Cap 60.45 B P/E(ttm)
Enterprise Value P/B
GLD- (USA)
SPDR Gold Trust (ETF)
  • Currently 1/5
Business Predictability Rank: 1-Star (On Watch)
Back Testing Results:
Average gain of all 1-Star stocks: 1.1% per year.
% of Stocks that are in still loss if held for 10yrs: 45%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$132.85
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Definition

Interest Coverage is a ratio that measures the burden of the debt a company carries and how easily the company can pay off its debt. It is calculated by dividing a company’s Operating Income (EBIT) by its Interest Expense:

Interest Coverage = Operating Income / Interest Expense

The higher the ratio, the stronger the company’s financial strength is.

Formula

Interest Coverage = Operating Income / Interest Expense

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 Dictionary

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