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GuruFocus has detected 1 Warning Sign with Monster Beverage Corp $MNST.
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Monster Beverage Corp (NAS:MNST)
Interest Coverage
No Debt (As of Dec. 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. Monster Beverage Corp's Operating Income for the three months ended in Dec. 2016 was $252 Mil. Monster Beverage Corp's Interest Expense for the three months ended in Dec. 2016 was $0 Mil. Monster Beverage Corp has no debt. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

Monster Beverage Corp has no debt.

MNST' s Interest Coverage Range Over the Past 10 Years
Min: 48.81   Max: No Debt
Current: 862.06

MNST's Interest Coverage is ranked higher than
82% of the 119 Companies
in the Global Beverages - Soft Drinks industry.

( Industry Median: 24.46 vs. MNST: 862.06 )

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.

Monster Beverage Corp's Interest Coverage for the fiscal year that ended in Dec. 2016 is calculated as

Here, for the fiscal year that ended in Dec. 2016, Monster Beverage Corp's Interest Expense was $0 Mil. Its Operating Income was $1,085 Mil. And its Long-Term Debt was $0 Mil.

Monster Beverage Corp had no debt.

Monster Beverage Corp's Interest Coverage for the quarter that ended in Dec. 2016 is calculated as

Here, for the three months ended in Dec. 2016, Monster Beverage Corp's Interest Expense was $0 Mil. Its Operating Income was $252 Mil. And its Long-Term Debt was $0 Mil.

Monster Beverage Corp had no debt.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 local exchange's currency.

Monster Beverage Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
interest_coverage No DebtNo DebtNo DebtNo DebtNo Debt244.0748.81446.01No DebtNo Debt

Monster Beverage Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
interest_coverage 182.95199.09No Debt360.7386.69No DebtNo Debt1,299.65280.01No Debt
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