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Intel Corp (NAS:INTC)
Interest Coverage
12.35 (As of Mar. 2016)

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. Intel Corp's Operating Income for the three months ended in Mar. 2016 was $2,568 Mil. Intel Corp's Interest Expense for the three months ended in Mar. 2016 was $-208 Mil. Intel Corp's interest coverage for the quarter that ended in Mar. 2016 was 12.35. The higher the ratio, the stronger the company’s financial strength is.

INTC' s Interest Coverage Range Over the Past 10 Years
Min: 41.55   Max: N/A
Current: 21.49

INTC's Interest Coverage is ranked lower than
51% of the 572 Companies
in the Global Semiconductors industry.

( Industry Median: 29.28 vs. INTC: 21.49 )

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.


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.


Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Intel Corp's Interest Coverage for the fiscal year that ended in Dec. 2015 is calculated as

Here, for the fiscal year that ended in Dec. 2015, Intel Corp's Interest Expense was $-337 Mil. Its Operating Income was $14,002 Mil. And its Long-Term Debt was $20,036 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2015 )/Interest Expense (A: Dec. 2015 )
=-1*14002/-337
=41.55

Intel Corp's Interest Coverage for the quarter that ended in Mar. 2016 is calculated as

Here, for the three months ended in Mar. 2016, Intel Corp's Interest Expense was $-208 Mil. Its Operating Income was $2,568 Mil. And its Long-Term Debt was $21,775 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2016 )/Interest Expense (Q: Mar. 2016 )
=-1*2568/-208
=12.35

* 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.

Intel Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
interest_coverage 235.50547.731,119.255,711.00N/A426.27162.6450.3779.9341.55

Intel Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
interest_coverage 67.8478.4585.6684.0262.2654.6436.1434.1212.3510.46
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