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Scotts Miracle Gro Co (NYSE:SMG)
Interest Coverage
15.22 (As of Jun. 2015)

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. Scotts Miracle Gro Co's Operating Income for the three months ended in Jun. 2015 was $218 Mil. Scotts Miracle Gro Co's Interest Expense for the three months ended in Jun. 2015 was $-14 Mil. Scotts Miracle Gro Co's interest coverage for the quarter that ended in Jun. 2015 was 15.22. The higher the ratio, the stronger the company’s financial strength is.

SMG' s 10-Year Interest Coverage Range
Min: 1.19   Max: 8.22
Current: 6.65

1.19
8.22

During the past 13 years, the highest interest coverage of Scotts Miracle Gro Co was 8.22. The lowest was 1.19. And the median was 3.72.

SMG's Interest Coverageis ranked lower than
79% of the 110 Companies
in the Global Agricultural Inputs industry.

( Industry Median: 127.12 vs. SMG: 6.65 )

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

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt is 0, then

The company had no debt.

Scotts Miracle Gro Co's Interest Coverage for the fiscal year that ended in Sep. 2014 is calculated as

Here, for the fiscal year that ended in Sep. 2014, Scotts Miracle Gro Co's Interest Expense was $-47 Mil. Its Operating Income was $315 Mil. And its Long-Term Debt was $692 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2014 )/Interest Expense (A: Sep. 2014 )
=-1*314.6/-47.3
=6.65

Scotts Miracle Gro Co's Interest Coverage for the quarter that ended in Jun. 2015 is calculated as

Here, for the three months ended in Jun. 2015, Scotts Miracle Gro Co's Interest Expense was $-14 Mil. Its Operating Income was $218 Mil. And its Long-Term Debt was $738 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2015 )/Interest Expense (Q: Jun. 2015 )
=-1*217.7/-14.3
=15.22

* 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.

Scotts Miracle Gro Co Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
interest_coverage 4.696.383.921.194.748.224.843.945.296.65

Scotts Miracle Gro Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
interest_coverage 9.6714.89At LossAt Loss18.0915.70At LossAt Loss13.9515.22
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