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Matador Resources Co (NYSE:MTDR)
Interest Coverage
30.15 (As of Dec. 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. Matador Resources Co's Operating Income for the three months ended in Dec. 2013 was $23.2 Mil. Matador Resources Co's Interest Expense for the three months ended in Dec. 2013 was $-0.8 Mil. Matador Resources Co's interest coverage for the quarter that ended in Dec. 2013 was 30.15. The higher the ratio, the stronger the company’s financial strength is.

MTDR' s 10-Year Interest Coverage Range
Min: 10.63   Max: 9999.99
Current: 10.63

10.63
9999.99

During the past 5 years, the highest interest coverage of Matador Resources Co was 9999.99. The lowest was 10.63. And the median was 3253.67.

MTDR's Interest Coverageis ranked higher than
73% of the 568 Companies
in the Global Oil & Gas E&P industry.

( Industry Median: 15.61 vs. MTDR: 10.63 )

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

Matador Resources Co 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

Matador Resources Co had no debt.

Matador Resources Co's Interest Coverage for the fiscal year that ended in Dec. 2013 is calculated as

Here, for the fiscal year that ended in Dec. 2013, Matador Resources Co's Interest Expense was $-5.7 Mil. Its Operating Income was $60.4 Mil. And its Long-Term Debt was $200.0 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*60.445/-5.687
=10.63

Matador Resources Co's Interest Coverage for the quarter that ended in Dec. 2013 is calculated as

Here, for the three months ended in Dec. 2013, Matador Resources Co's Interest Expense was $-0.8 Mil. Its Operating Income was $23.2 Mil. And its Long-Term Debt was $200.0 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2013 )/Interest Expense (Q: Dec. 2013 )
=-1*23.154/-0.768
=30.15

* 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.

Matador Resources Co Annual Data

Dec09Dec10Dec11Dec12Dec13
interest_coverage At LossAt LossAt LossAt LossAt LossNo Debt3,253.67At LossAt Loss10.63

Matador Resources Co Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
interest_coverage 36.7425.5923.05At LossAt LossAt LossAt Loss16.7212.0930.15
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