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GuruFocus has detected 4 Warning Signs with Molson Coors Brewing Co $TAP.
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Molson Coors Brewing Co (NYSE:TAP)
Interest Coverage
22.58 (As of Dec. 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. Molson Coors Brewing Co's Operating Income for the three months ended in Dec. 2016 was $2,509 Mil. Molson Coors Brewing Co's Interest Expense for the three months ended in Dec. 2016 was $-111 Mil. Molson Coors Brewing Co's interest coverage for the quarter that ended in Dec. 2016 was 22.58. The higher the ratio, the stronger the company’s financial strength is.

TAP' s Interest Coverage Range Over the Past 10 Years
Min: 4.34   Max: 12.18
Current: 12.46

4.34
12.18
TAP's Interest Coverage is ranked lower than
59% of the 190 Companies
in the Global Beverages - Brewers industry.

( Industry Median: 21.79 vs. TAP: 12.46 )

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

The company had no debt.


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

Molson Coors Brewing Co's Interest Coverage for the fiscal year that ended in Dec. 2016 is calculated as

Here, for the fiscal year that ended in Dec. 2016, Molson Coors Brewing Co's Interest Expense was $-272 Mil. Its Operating Income was $3,309 Mil. And its Long-Term Debt was $11,388 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2016 )/Interest Expense (A: Dec. 2016 )
=-1*3309.4/-271.6
=12.18

Molson Coors Brewing Co's Interest Coverage for the quarter that ended in Dec. 2016 is calculated as

Here, for the three months ended in Dec. 2016, Molson Coors Brewing Co's Interest Expense was $-111 Mil. Its Operating Income was $2,509 Mil. And its Long-Term Debt was $11,388 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2016 )/Interest Expense (Q: Dec. 2016 )
=-1*2509.1/-111.1
=22.58

* 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

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 local exchange's currency.

Molson Coors Brewing Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
interest_coverage 4.755.227.817.847.524.424.385.014.3412.18

Molson Coors Brewing Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
interest_coverage 0.105.014.2910.270.302.925.146.614.3422.58
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