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Richardson Electronics (NAS:RELL)
Interest Coverage
10,000.00 (As of Aug. 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. Richardson Electronics's Operating Income for the three months ended in Aug. 2014 was $-0.5 Mil. Richardson Electronics's Interest Expense for the three months ended in Aug. 2014 was $0.0 Mil. Richardson Electronics's interest coverage for the quarter that ended in Aug. 2014 was 10,000.00. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

Richardson Electronics has no debt.

RELL' s 10-Year Interest Coverage Range
Min: 0.67   Max: 9999.99
Current: No Debt

0.67
9999.99

During the past 13 years, the highest interest coverage of Richardson Electronics was 9999.99. The lowest was 0.67. And the median was 2.20.

RELL's Interest Coverageis ranked higher than
80% of the 1615 Companies
in the Global Electronics Distribution industry.

( Industry Median: 111.15 vs. RELL: 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

Richardson Electronics 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

Richardson Electronics had no debt.

Richardson Electronics's Interest Coverage for the fiscal year that ended in May. 2014 is calculated as

Here, for the fiscal year that ended in May. 2014, Richardson Electronics's Interest Expense was $0.0 Mil. Its Operating Income was $-4.2 Mil. And its Long-Term Debt was $0.0 Mil.

Richardson Electronics had no debt.

Richardson Electronics's Interest Coverage for the quarter that ended in Aug. 2014 is calculated as

Here, for the three months ended in Aug. 2014, Richardson Electronics's Interest Expense was $0.0 Mil. Its Operating Income was $-0.5 Mil. And its Long-Term Debt was $0.0 Mil.

Richardson Electronics 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.

Richardson Electronics Annual Data

May05May06May07May08May09May10May11May12May13May14
interest_coverage 1.141.341.48At LossAt LossAt LossNo DebtNo DebtNo DebtNo Debt

Richardson Electronics Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
interest_coverage No DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo DebtNo Debt
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