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ITT Corp (NYSE:ITT)
Interest Coverage
10,000.00 (As of Sep. 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. ITT Corp's Operating Income for the three months ended in Sep. 2014 was $120 Mil. ITT Corp's Interest Expense for the three months ended in Sep. 2014 was $0 Mil. ITT Corp's interest coverage for the quarter that ended in Sep. 2014 was 10,000.00. The higher the ratio, the stronger the company’s financial strength is.

ITT' s 10-Year Interest Coverage Range
Min: 1.32   Max: 1515
Current: 29.14

1.32
1515

During the past 13 years, the highest interest coverage of ITT Corp was 1515.00. The lowest was 1.32. And the median was 8.55.

ITT's Interest Coverageis ranked higher than
63% of the 1333 Companies
in the Global Diversified Industrials industry.

( Industry Median: 30.94 vs. ITT: 29.14 )

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

ITT Corp 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

ITT Corp had no debt.

ITT Corp's Interest Coverage for the fiscal year that ended in Dec. 2013 is calculated as

Here, for the fiscal year that ended in Dec. 2013, ITT Corp's Interest Expense was $-6 Mil. Its Operating Income was $184 Mil. And its Long-Term Debt was $0 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*183.6/-6.3
=29.14

ITT Corp's Interest Coverage for the quarter that ended in Sep. 2014 is calculated as

Here, for the three months ended in Sep. 2014, ITT Corp's Interest Expense was $0 Mil. Its Operating Income was $120 Mil. And its Long-Term Debt was $0 Mil.

ITT Corp 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.

ITT Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage 11.669.679.298.508.599.03At LossAt Loss1,515.0029.14

ITT Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
interest_coverage 16.76No DebtNo DebtNo DebtNo DebtNo Debt56.00No DebtNo DebtNo Debt
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