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Investors Real Estate Trust (NYSE:IRET)
Interest Coverage
1.14 (As of Jul. 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. Investors Real Estate Trust's Operating Income for the three months ended in Jul. 2014 was $16.8 Mil. Investors Real Estate Trust's Interest Expense for the three months ended in Jul. 2014 was $-14.7 Mil. Investors Real Estate Trust's interest coverage for the quarter that ended in Jul. 2014 was 1.14. The higher the ratio, the stronger the company’s financial strength is.

IRET' s 10-Year Interest Coverage Range
Min: 0.14   Max: 1.45
Current: 0.56

0.14
1.45

During the past 13 years, the highest interest coverage of Investors Real Estate Trust was 1.45. The lowest was 0.14. And the median was 0.50.

IRET's Interest Coverageis ranked lower than
53% of the 671 Companies
in the Global REIT - Diversified industry.

( Industry Median: 2.60 vs. IRET: 0.56 )

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

Investors Real Estate Trust 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

Investors Real Estate Trust had no debt.

Investors Real Estate Trust's Interest Coverage for the fiscal year that ended in Apr. 2014 is calculated as

Here, for the fiscal year that ended in Apr. 2014, Investors Real Estate Trust's Interest Expense was $-59.1 Mil. Its Operating Income was $33.1 Mil. And its Long-Term Debt was $997.7 Mil.

Interest Coverage=-1*Operating Income (A: Apr. 2014 )/Interest Expense (A: Apr. 2014 )
=-1*33.116/-59.142
=0.56

Investors Real Estate Trust's Interest Coverage for the quarter that ended in Jul. 2014 is calculated as

Here, for the three months ended in Jul. 2014, Investors Real Estate Trust's Interest Expense was $-14.7 Mil. Its Operating Income was $16.8 Mil. And its Long-Term Debt was $1,017.6 Mil.

Interest Coverage=-1*Operating Income (Q: Jul. 2014 )/Interest Expense (Q: Jul. 2014 )
=-1*16.767/-14.664
=1.14

* 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.

Investors Real Estate Trust Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
interest_coverage 0.210.190.200.240.141.031.061.141.350.56

Investors Real Estate Trust Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
interest_coverage 1.281.121.291.331.571.091.291.19At Loss1.14
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