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SanDisk Corp (NAS:SNDK)
Interest Coverage
5.67 (As of Mar. 2016)

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. SanDisk Corp's Operating Income for the three months ended in Mar. 2016 was \$137 Mil. SanDisk Corp's Interest Expense for the three months ended in Mar. 2016 was \$-24 Mil. SanDisk Corp's interest coverage for the quarter that ended in Mar. 2016 was 5.67. The higher the ratio, the stronger the companys financial strength is.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

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

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

SanDisk Corp's Interest Coverage for the fiscal year that ended in Dec. 2015 is calculated as

Here, for the fiscal year that ended in Dec. 2015, SanDisk Corp's Interest Expense was \$-125 Mil. Its Operating Income was \$617 Mil. And its Long-Term Debt was \$1,238 Mil.

 Interest Coverage = -1 * Operating Income (A: Dec. 2015 ) / Interest Expense (A: Dec. 2015 ) = -1 * 616.625 / -124.653 = 4.95

SanDisk Corp's Interest Coverage for the quarter that ended in Mar. 2016 is calculated as

Here, for the three months ended in Mar. 2016, SanDisk Corp's Interest Expense was \$-24 Mil. Its Operating Income was \$137 Mil. And its Long-Term Debt was \$0 Mil.

 Interest Coverage = -1 * Operating Income (Q: Mar. 2016 ) / Interest Expense (Q: Mar. 2016 ) = -1 * 137.111 / -24.197 = 5.67

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

SanDisk Corp Annual Data

 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 interest_coverage 96.21 183.85 At Loss 6.73 16.40 11.31 5.78 15.93 12.42 4.95

SanDisk Corp Quarterly Data

 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 interest_coverage 16.82 14.72 14.22 13.65 7.99 1.65 4.86 8.02 5.97 5.67
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