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Higher One Holdings, Inc. (NYSE:ONE)
Interest Coverage
13.27 (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. Higher One Holdings, Inc.'s Operating Income for the three months ended in Dec. 2013 was $11.0 Mil. Higher One Holdings, Inc.'s Interest Expense for the three months ended in Dec. 2013 was $-0.8 Mil. Higher One Holdings, Inc.'s interest coverage for the quarter that ended in Dec. 2013 was 13.27. The higher the ratio, the stronger the company’s financial strength is.

ONE' s 10-Year Interest Coverage Range
Min: 27.87   Max: 178.63
Current: 61.47

27.87
178.63

During the past 6 years, the highest interest coverage of Higher One Holdings, Inc. was 178.63. The lowest was 27.87. And the median was 56.58.

ONE's Interest Coverageis ranked higher than
52% of the 677 Companies
in the Global Business Services industry.

( Industry Median: 21.89 vs. ONE: 61.47 )

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

Higher One Holdings, 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

Higher One Holdings, Inc. had no debt.

Higher One Holdings, Inc.'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, Higher One Holdings, Inc.'s Interest Expense was $-3.1 Mil. Its Operating Income was $25.9 Mil. And its Long-Term Debt was $98.2 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*25.852/-3.082
=8.39

Higher One Holdings, Inc.'s Interest Coverage for the quarter that ended in Dec. 2013 is calculated as

Here, for the three months ended in Dec. 2013, Higher One Holdings, Inc.'s Interest Expense was $-0.8 Mil. Its Operating Income was $11.0 Mil. And its Long-Term Debt was $98.2 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2013 )/Interest Expense (Q: Dec. 2013 )
=-1*11.012/-0.83
=13.27

* 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.

Higher One Holdings, Inc. Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage At LossAt LossAt LossAt Loss27.8740.6556.58178.6361.478.39

Higher One Holdings, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
interest_coverage 200.59161.63196.8661.7064.2334.4025.988.47At Loss13.27
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