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M&T Bank Corp (NYSE:MTB)
Interest Coverage
4.78 (As of Mar. 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. M&T Bank Corp's Operating Income for the three months ended in Mar. 2015 was $375 Mil. M&T Bank Corp's Interest Expense for the three months ended in Mar. 2015 was $-78 Mil. M&T Bank Corp's interest coverage for the quarter that ended in Mar. 2015 was 4.78. The higher the ratio, the stronger the company’s financial strength is.

MTB' s 10-Year Interest Coverage Range
Min: 0.47   Max: 6.05
Current: 5.67

0.47
6.05

During the past 13 years, the highest interest coverage of M&T Bank Corp was 6.05. The lowest was 0.47. And the median was 0.87.

MTB's Interest Coverageis ranked higher than
82% of the 1239 Companies
in the Global Banks - Regional - US industry.

( Industry Median: 1.65 vs. MTB: 5.67 )

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.

M&T Bank Corp's Interest Coverage for the fiscal year that ended in Dec. 2014 is calculated as

Here, for the fiscal year that ended in Dec. 2014, M&T Bank Corp's Interest Expense was $-280 Mil. Its Operating Income was $1,589 Mil. And its Long-Term Debt was $9,007 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2014 )/Interest Expense (A: Dec. 2014 )
=-1*1588.862/-280.431
=5.67

M&T Bank Corp's Interest Coverage for the quarter that ended in Mar. 2015 is calculated as

Here, for the three months ended in Mar. 2015, M&T Bank Corp's Interest Expense was $-78 Mil. Its Operating Income was $375 Mil. And its Long-Term Debt was $10,509 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2015 )/Interest Expense (Q: Mar. 2015 )
=-1*375.416/-78.499
=4.78

* 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.

M&T Bank Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
interest_coverage 1.180.820.570.910.782.363.044.526.055.67

M&T Bank Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
interest_coverage 5.725.627.316.384.825.336.365.575.624.78
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