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Nuance Communications Inc (NAS:NUAN)
Interest Coverage
0.02 (As of Mar. 2014)

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. Nuance Communications Inc's Operating Income for the three months ended in Mar. 2014 was $1 Mil. Nuance Communications Inc's Interest Expense for the three months ended in Mar. 2014 was $-34 Mil. Nuance Communications Inc's interest coverage for the quarter that ended in Mar. 2014 was 0.02. The higher the ratio, the stronger the company’s financial strength is.

NUAN' s 10-Year Interest Coverage Range
Min: 0.35   Max: 9999.99
Current: 0.35

0.35
9999.99

During the past 13 years, the highest interest coverage of Nuance Communications Inc was 9999.99. The lowest was 0.35. And the median was 1.23.

NUAN's Interest Coverageis ranked lower than
66% of the 1026 Companies
in the Global Software - Application industry.

( Industry Median: 690.23 vs. NUAN: 0.35 )

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

Nuance Communications Inc 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

Nuance Communications Inc had no debt.

Nuance Communications Inc's Interest Coverage for the fiscal year that ended in Sep. 2013 is calculated as

Here, for the fiscal year that ended in Sep. 2013, Nuance Communications Inc's Interest Expense was $-138 Mil. Its Operating Income was $48 Mil. And its Long-Term Debt was $2,108 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2013 )/Interest Expense (A: Sep. 2013 )
=-1*48.482/-137.767
=0.35

Nuance Communications Inc's Interest Coverage for the quarter that ended in Mar. 2014 is calculated as

Here, for the three months ended in Mar. 2014, Nuance Communications Inc's Interest Expense was $-34 Mil. Its Operating Income was $1 Mil. And its Long-Term Debt was $2,118 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2014 )/Interest Expense (Q: Mar. 2014 )
=-1*0.654/-33.987
=0.02

* 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.

Nuance Communications Inc Annual Data

Dec03Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
interest_coverage At Loss1.240.481.070.591.220.801.431.480.35

Nuance Communications Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
interest_coverage 0.641.541.831.720.180.370.770.10At Loss0.02
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