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Qualcomm Inc (NAS:QCOM)
Interest Coverage
10,000.00 (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. Qualcomm Inc's Operating Income for the three months ended in Jun. 2014 was $2,075 Mil. Qualcomm Inc's Interest Expense for the three months ended in Jun. 2014 was $0 Mil. Qualcomm Inc's interest coverage for the quarter that ended in Jun. 2014 was 10,000.00. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

Qualcomm Inc has no debt.

QCOM' s 10-Year Interest Coverage Range
Min: 0.68   Max: 1064.5
Current: 314.35

0.68
1064.5

During the past 13 years, the highest interest coverage of Qualcomm Inc was 1064.50. The lowest was 0.68. And the median was 146.79.

QCOM's Interest Coverageis ranked higher than
67% of the 405 Companies
in the Global Communication Equipment industry.

( Industry Median: 172.00 vs. QCOM: 314.35 )

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

Qualcomm 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

Qualcomm Inc had no debt.

Qualcomm 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, Qualcomm Inc's Interest Expense was $-23 Mil. Its Operating Income was $7,230 Mil. And its Long-Term Debt was $0 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2013 )/Interest Expense (A: Sep. 2013 )
=-1*7230/-23
=314.35

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

Here, for the three months ended in Jun. 2014, Qualcomm Inc's Interest Expense was $0 Mil. Its Operating Income was $2,075 Mil. And its Long-Term Debt was $0 Mil.

Qualcomm Inc had no debt.

* 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.

Qualcomm Inc Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
interest_coverage 1,064.50795.33672.50262.09169.5592.7586.6744.0963.13314.35

Qualcomm Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
interest_coverage 52.2176.7877.13261.00268.14239.571,588.00497.67663.33No Debt
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