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PPG Industries Inc (NYSE:PPG)
Interest Coverage
11.46 (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. PPG Industries Inc's Operating Income for the three months ended in Jun. 2014 was $550 Mil. PPG Industries Inc's Interest Expense for the three months ended in Jun. 2014 was $-48 Mil. PPG Industries Inc's interest coverage for the quarter that ended in Jun. 2014 was 11.46. The higher the ratio, the stronger the company’s financial strength is.

PPG' s 10-Year Interest Coverage Range
Min: 2.61   Max: 15.75
Current: 7.77

2.61
15.75

During the past 13 years, the highest interest coverage of PPG Industries Inc was 15.75. The lowest was 2.61. And the median was 8.04.

PPG's Interest Coverageis ranked higher than
51% of the 669 Companies
in the Global Specialty Chemicals industry.

( Industry Median: 23.21 vs. PPG: 7.77 )

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

PPG Industries 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

PPG Industries Inc had no debt.

PPG Industries 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, PPG Industries Inc's Interest Expense was $-196 Mil. Its Operating Income was $1,522 Mil. And its Long-Term Debt was $3,372 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*1522/-196
=7.77

PPG Industries Inc's Interest Coverage for the quarter that ended in Jun. 2014 is calculated as

Here, for the three months ended in Jun. 2014, PPG Industries Inc's Interest Expense was $-48 Mil. Its Operating Income was $550 Mil. And its Long-Term Debt was $2,958 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2014 )/Interest Expense (Q: Jun. 2014 )
=-1*550/-48
=11.46

* 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.

PPG Industries Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage 12.3115.7515.4913.333.172.616.167.977.497.77

PPG Industries Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
interest_coverage 4.6111.109.481.156.8911.1311.172.048.6411.46
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