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MOD-PAC Corporation (NAS:MPAC)
Interest Coverage
1.89 (As of Jun. 2013)

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. MOD-PAC Corporation's Operating Income for the three months ended in Jun. 2013 was $0.09 Mil. MOD-PAC Corporation's Interest Expense for the three months ended in Jun. 2013 was $-0.05 Mil. MOD-PAC Corporation's interest coverage for the quarter that ended in Jun. 2013 was 1.89. The higher the ratio, the stronger the company’s financial strength is.

MPAC' s 10-Year Interest Coverage Range
Min: 0   Max: 0
Current: 0

MPAC's Interest Coverageis ranked lower than
133% of the 174 Companies
in the Global Packaging & Containers industry.

( Industry Median: 7.62 vs. MPAC: 0.00 )

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

MOD-PAC Corporation 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

MOD-PAC Corporation had no debt.

MOD-PAC Corporation's Interest Coverage for the fiscal year that ended in Dec. 2012 is calculated as

Here, for the fiscal year that ended in Dec. 2012, MOD-PAC Corporation's Interest Expense was $-0.19 Mil. Its Operating Income was $2.79 Mil. And its Long-Term Debt was $1.80 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2012 )/Interest Expense (A: Dec. 2012 )
=-1*2.791/-0.189
=14.77

MOD-PAC Corporation's Interest Coverage for the quarter that ended in Jun. 2013 is calculated as

Here, for the three months ended in Jun. 2013, MOD-PAC Corporation's Interest Expense was $-0.05 Mil. Its Operating Income was $0.09 Mil. And its Long-Term Debt was $1.80 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2013 )/Interest Expense (Q: Jun. 2013 )
=-1*0.089/-0.047
=1.89

* 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.

MOD-PAC Corporation Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
interest_coverage 14.6113.69At LossAt LossAt LossAt LossAt Loss7.8114.5514.77

MOD-PAC Corporation Quarterly Data

Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13
interest_coverage 8.6515.6921.6312.32At LossAt Loss29.7935.4611.181.89
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