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Old Republic International Corporation (NYSE:ORI)
Interest Coverage
18.13 (As of Jun. 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. Old Republic International Corporation's Operating Income for the three months ended in Jun. 2014 was $100 Mil. Old Republic International Corporation's Interest Expense for the three months ended in Jun. 2014 was $-6 Mil. Old Republic International Corporation's interest coverage for the quarter that ended in Jun. 2014 was 18.13. The higher the ratio, the stronger the company’s financial strength is.

ORI' s 10-Year Interest Coverage Range
Min: 0.86   Max: 87.09
Current: 31.15

0.86
87.09

During the past 13 years, the highest interest coverage of Old Republic International Corporation was 87.09. The lowest was 0.86. And the median was 32.84.

ORI's Interest Coverageis ranked higher than
91% of the 127 Companies
in the Global Insurance - Diversified industry.

( Industry Median: 6.97 vs. ORI: 31.15 )

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

Old Republic International Corporation 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

Old Republic International Corporation had no debt.

Old Republic International Corporation'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, Old Republic International Corporation's Interest Expense was $-22 Mil. Its Operating Income was $673 Mil. And its Long-Term Debt was $569 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*672.8/-21.6
=31.15

Old Republic International Corporation's Interest Coverage for the quarter that ended in Jun. 2014 is calculated as

Here, for the three months ended in Jun. 2014, Old Republic International Corporation's Interest Expense was $-6 Mil. Its Operating Income was $100 Mil. And its Long-Term Debt was $566 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2014 )/Interest Expense (Q: Jun. 2014 )
=-1*99.7/-5.5
=18.13

* 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.

Old Republic International Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage 74.1379.6769.71At LossAt LossAt Loss0.86At LossAt Loss31.15

Old Republic International Corporation Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
interest_coverage At LossAt LossAt LossAt Loss14.5752.9127.7229.6552.1118.13
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