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Republic Services Inc (NYSE:RSG)
Interest Coverage
4.40 (As of Sep. 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. Republic Services Inc's Operating Income for the three months ended in Sep. 2014 was $382 Mil. Republic Services Inc's Interest Expense for the three months ended in Sep. 2014 was $-87 Mil. Republic Services Inc's interest coverage for the quarter that ended in Sep. 2014 was 4.40. The higher the ratio, the stronger the company’s financial strength is.

RSG' s 10-Year Interest Coverage Range
Min: 2.15   Max: 6.36
Current: 3.36

2.15
6.36

During the past 13 years, the highest interest coverage of Republic Services Inc was 6.36. The lowest was 2.15. And the median was 5.31.

RSG's Interest Coverageis ranked lower than
52% of the 92 Companies
in the Global Waste Management industry.

( Industry Median: 7.42 vs. RSG: 3.36 )

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

Republic Services 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

Republic Services Inc had no debt.

Republic Services 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, Republic Services Inc's Interest Expense was $-360 Mil. Its Operating Income was $1,210 Mil. And its Long-Term Debt was $7,002 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2013 )/Interest Expense (A: Dec. 2013 )
=-1*1210.3/-360
=3.36

Republic Services Inc's Interest Coverage for the quarter that ended in Sep. 2014 is calculated as

Here, for the three months ended in Sep. 2014, Republic Services Inc's Interest Expense was $-87 Mil. Its Operating Income was $382 Mil. And its Long-Term Debt was $7,020 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2014 )/Interest Expense (Q: Sep. 2014 )
=-1*382.4/-87
=4.40

* 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.

Republic Services Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
interest_coverage 5.905.895.425.652.152.673.033.533.403.36

Republic Services Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
interest_coverage 3.923.413.133.062.013.914.463.524.354.40
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