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Microsoft Corp (NAS:MSFT)
Interest Coverage
0.00 (As of Jun. 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. Microsoft Corp's Operating Income for the three months ended in Jun. 2015 was $-2,053 Mil. Microsoft Corp's Interest Expense for the three months ended in Jun. 2015 was $-247 Mil. Microsoft Corp's interest coverage for the quarter that ended in Jun. 2015 was 0.00. The higher the ratio, the stronger the company’s financial strength is.

MSFT' s 10-Year Interest Coverage Range
Min: 23.25   Max: 9999.99
Current: 23.25

23.25
9999.99

During the past 13 years, the highest interest coverage of Microsoft Corp was 9999.99. The lowest was 23.25. And the median was 10000.00.

MSFT's Interest Coverageis ranked lower than
71% of the 1145 Companies
in the Global Software - Infrastructure industry.

( Industry Median: 10000.00 vs. MSFT: 23.25 )

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.

Microsoft Corp's Interest Coverage for the fiscal year that ended in Jun. 2015 is calculated as

Here, for the fiscal year that ended in Jun. 2015, Microsoft Corp's Interest Expense was $-781 Mil. Its Operating Income was $18,161 Mil. And its Long-Term Debt was $27,808 Mil.

Interest Coverage=-1*Operating Income (A: Jun. 2015 )/Interest Expense (A: Jun. 2015 )
=-1*18161/-781
=23.25

Microsoft Corp's Interest Coverage for the quarter that ended in Jun. 2015 is calculated as

Here, for the three months ended in Jun. 2015, Microsoft Corp's Interest Expense was $-247 Mil. Its Operating Income was $-2,053 Mil. And its Long-Term Debt was $27,808 Mil.

Microsoft Corp did not have earnings to cover the interest expense.

* 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.

Microsoft Corp Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
interest_coverage No DebtNo Debt210.10535.87159.5992.0757.2762.3946.5023.25

Microsoft Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
interest_coverage 69.8350.6153.6859.0339.8538.3636.3048.0031.25At Loss
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