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Marvell Technology Group Ltd (NAS:MRVL)
Interest Coverage
No Debt (As of Apr. 2015)

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. Marvell Technology Group Ltd's Operating Income for the three months ended in Apr. 2015 was $13 Mil. Marvell Technology Group Ltd's Interest Expense for the three months ended in Apr. 2015 was $0 Mil. Marvell Technology Group Ltd has no debt. The higher the ratio, the stronger the company’s financial strength is.

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.

Marvell Technology Group Ltd's Interest Coverage for the fiscal year that ended in Jan. 2015 is calculated as

Here, for the fiscal year that ended in Jan. 2015, Marvell Technology Group Ltd's Interest Expense was $-1 Mil. Its Operating Income was $409 Mil. And its Long-Term Debt was $16 Mil.

Interest Coverage=-1*Operating Income (A: Jan. 2015 )/Interest Expense (A: Jan. 2015 )
=-1*408.819/-1.167
=350.32

Marvell Technology Group Ltd's Interest Coverage for the quarter that ended in Apr. 2015 is calculated as

Here, for the three months ended in Apr. 2015, Marvell Technology Group Ltd's Interest Expense was $0 Mil. Its Operating Income was $13 Mil. And its Long-Term Debt was $0 Mil.

Marvell Technology Group Ltd 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.

Marvell Technology Group Ltd Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
interest_coverage N/A0.10At Loss9.18192.916,258.28No DebtNo Debt149.62350.32

Marvell Technology Group Ltd Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
interest_coverage No DebtNo Debt6.30No Debt16.64No Debt9.82No Debt9.13No Debt
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