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RCM Technologies Inc (NAS:RCMT)
Interest Coverage
145.57 (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. RCM Technologies Inc's Operating Income for the three months ended in Mar. 2014 was $2.0 Mil. RCM Technologies Inc's Interest Expense for the three months ended in Mar. 2014 was $-0.0 Mil. RCM Technologies Inc's interest coverage for the quarter that ended in Mar. 2014 was 145.57. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

RCM Technologies Inc has no debt.

RCMT' s 10-Year Interest Coverage Range
Min: 6.88   Max: 9999.99
Current: No Debt

6.88
9999.99

During the past 13 years, the highest interest coverage of RCM Technologies Inc was 9999.99. The lowest was 6.88. And the median was 46.29.

RCMT's Interest Coverageis ranked higher than
86% of the 119 Companies
in the Global Staffing & Outsourcing Services industry.

( Industry Median: 53.75 vs. RCMT: No Debt )

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

RCM Technologies 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

RCM Technologies Inc had no debt.

RCM Technologies 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, RCM Technologies Inc's Interest Expense was $0.0 Mil. Its Operating Income was $2.6 Mil. And its Long-Term Debt was $0.0 Mil.

RCM Technologies Inc had no debt.

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

Here, for the three months ended in Mar. 2014, RCM Technologies Inc's Interest Expense was $-0.0 Mil. Its Operating Income was $2.0 Mil. And its Long-Term Debt was $0.0 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2014 )/Interest Expense (Q: Mar. 2014 )
=-1*2.038/-0.014
=145.57

* 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.

RCM Technologies Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage 6.8810.5914.39150.99At Loss46.29147.89194.69No DebtNo Debt

RCM Technologies Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
interest_coverage 182.25161.45101.50No DebtNo Debt252.33107.13No DebtNo Debt145.57
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