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Keurig Green Mountain Inc (NAS:GMCR)
Interest Coverage
94.78 (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. Keurig Green Mountain Inc's Operating Income for the three months ended in Jun. 2014 was $231 Mil. Keurig Green Mountain Inc's Interest Expense for the three months ended in Jun. 2014 was $-2 Mil. Keurig Green Mountain Inc's interest coverage for the quarter that ended in Jun. 2014 was 94.78. The higher the ratio, the stronger the company’s financial strength is.

GMCR' s 10-Year Interest Coverage Range
Min: 0.5   Max: 52.67
Current: 42.1

0.5
52.67

During the past 13 years, the highest interest coverage of Keurig Green Mountain Inc was 52.67. The lowest was 0.50. And the median was 11.84.

GMCR's Interest Coverageis ranked higher than
75% of the 947 Companies
in the Global Packaged Foods industry.

( Industry Median: 15.78 vs. GMCR: 42.10 )

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

Keurig Green Mountain 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

Keurig Green Mountain Inc had no debt.

Keurig Green Mountain 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, Keurig Green Mountain Inc's Interest Expense was $-18 Mil. Its Operating Income was $765 Mil. And its Long-Term Debt was $236 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2013 )/Interest Expense (A: Sep. 2013 )
=-1*765.227/-18.177
=42.10

Keurig Green Mountain Inc's Interest Coverage for the quarter that ended in Jun. 2014 is calculated as

Here, for the three months ended in Jun. 2014, Keurig Green Mountain Inc's Interest Expense was $-2 Mil. Its Operating Income was $231 Mil. And its Long-Term Debt was $254 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2014 )/Interest Expense (Q: Jun. 2014 )
=-1*231.347/-2.441
=94.78

* 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.

Keurig Green Mountain Inc Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
interest_coverage 52.6731.948.014.487.4319.9026.216.4024.7542.10

Keurig Green Mountain Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
interest_coverage 24.7621.0733.2631.8455.6149.1137.7686.5086.9794.78
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