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Hewlett-Packard Co (NYSE:HPQ)
Interest Coverage
0.00 (As of Jan. 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. Hewlett-Packard Co's Operating Income for the three months ended in Jan. 2014 was $1,997 Mil. Hewlett-Packard Co's Interest Expense for the three months ended in Jan. 2014 was $0 Mil. Hewlett-Packard Co's interest coverage for the quarter that ended in Jan. 2014 was 0.00. The higher the ratio, the stronger the company’s financial strength is.

HPQ' s 10-Year Interest Coverage Range
Min: 11.39   Max: 22.73
Current: 11.48

11.39
22.73

During the past 13 years, the highest interest coverage of Hewlett-Packard Co was 22.73. The lowest was 11.39. And the median was 15.15.

HPQ's Interest Coverageis ranked lower than
54% of the 1525 Companies
in the Global Computer Systems industry.

( Industry Median: 74.64 vs. HPQ: 11.48 )

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

Hewlett-Packard Co 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

Hewlett-Packard Co had no debt.

Hewlett-Packard Co's Interest Coverage for the fiscal year that ended in Oct. 2013 is calculated as

Here, for the fiscal year that ended in Oct. 2013, Hewlett-Packard Co's Interest Expense was $-621 Mil. Its Operating Income was $7,131 Mil. And its Long-Term Debt was $16,608 Mil.

Interest Coverage=-1*Operating Income (A: Oct. 2013 )/Interest Expense (A: Oct. 2013 )
=-1*7131/-621
=11.48

Hewlett-Packard Co's Interest Coverage for the quarter that ended in Jan. 2014 is calculated as

Here, for the three months ended in Jan. 2014, Hewlett-Packard Co's Interest Expense was $0 Mil. Its Operating Income was $1,997 Mil. And its Long-Term Debt was $17,971 Mil.

Hewlett-Packard Co had no debt.

* 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.

Hewlett-Packard Co Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
interest_coverage At LossAt LossAt Loss16.42At Loss14.0622.7313.92At Loss11.48

Hewlett-Packard Co Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
interest_coverage 1.989.2411.34At LossAt Loss9.798.7010.0818.67At Loss
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