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Noble Corporation PLC (NYSE:NE)
Interest Coverage
8.32 (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. Noble Corporation PLC's Operating Income for the three months ended in Dec. 2013 was $260 Mil. Noble Corporation PLC's Interest Expense for the three months ended in Dec. 2013 was $-31 Mil. Noble Corporation PLC's interest coverage for the quarter that ended in Dec. 2013 was 8.32. The higher the ratio, the stronger the company’s financial strength is.

NE' s 10-Year Interest Coverage Range
Min: 0.93   Max: 1193.32
Current: 10.55

0.93
1193.32

During the past 13 years, the highest interest coverage of Noble Corporation PLC was 1193.32. The lowest was 0.93. And the median was 8.97.

NE's Interest Coverageis ranked higher than
74% of the 136 Companies
in the Global Oil & Gas Drilling industry.

( Industry Median: 7.50 vs. NE: 10.55 )

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

Noble Corporation PLC 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

Noble Corporation PLC had no debt.

Noble Corporation PLC'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, Noble Corporation PLC's Interest Expense was $-106 Mil. Its Operating Income was $1,122 Mil. And its Long-Term Debt was $5,556 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*1121.558/-106.3
=10.55

Noble Corporation PLC's Interest Coverage for the quarter that ended in Dec. 2013 is calculated as

Here, for the three months ended in Dec. 2013, Noble Corporation PLC's Interest Expense was $-31 Mil. Its Operating Income was $260 Mil. And its Long-Term Debt was $5,556 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2013 )/Interest Expense (Q: Dec. 2013 )
=-1*259.526/-31.185
=8.32

* 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.

Noble Corporation PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage 5.4418.8557.37113.71434.911,193.3296.878.809.1410.55

Noble Corporation PLC Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
interest_coverage 14.1915.6513.6911.846.987.488.4210.2916.358.32
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