Switch to:
Keurig Green Mountain Inc (NAS:GMCR)
Interest Coverage
71.66 (As of Dec. 2015)

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 Dec. 2015 was $161 Mil. Keurig Green Mountain Inc's Interest Expense for the three months ended in Dec. 2015 was $-2 Mil. Keurig Green Mountain Inc's interest coverage for the quarter that ended in Dec. 2015 was 71.66. The higher the ratio, the stronger the company’s financial strength is.

GMCR' s Interest Coverage Range Over the Past 10 Years
Min: 4.48   Max: 406.71
Current: 233.73

4.48
406.71

During the past 13 years, the highest interest coverage of Keurig Green Mountain Inc was 406.71. The lowest was 4.48. And the median was 22.33.

GMCR's Interest Coverage is ranked higher than
74% of the 1019 Companies
in the Global Packaged Foods industry.

( Industry Median: 16.98 vs. GMCR: 233.73 )

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

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt is 0, then

The company had no debt.

Keurig Green Mountain Inc's Interest Coverage for the fiscal year that ended in Sep. 2015 is calculated as

Here, for the fiscal year that ended in Sep. 2015, Keurig Green Mountain Inc's Interest Expense was $-2 Mil. Its Operating Income was $765 Mil. And its Long-Term Debt was $448 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2015 )/Interest Expense (A: Sep. 2015 )
=-1*765.424/-1.882
=406.71

Keurig Green Mountain Inc's Interest Coverage for the quarter that ended in Dec. 2015 is calculated as

Here, for the three months ended in Dec. 2015, Keurig Green Mountain Inc's Interest Expense was $-2 Mil. Its Operating Income was $161 Mil. And its Long-Term Debt was $597 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2015 )/Interest Expense (Q: Dec. 2015 )
=-1*160.813/-2.244
=71.66

* 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

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
interest_coverage 8.014.487.4319.9026.216.4024.7542.1081.02406.71

Keurig Green Mountain Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
interest_coverage 37.7686.5086.9794.7862.94198.64868.25418.031,126.2671.66
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK