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GuruFocus has detected 5 Warning Signs with Teva Pharmaceutical Industries Ltd $TEVA.
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Teva Pharmaceutical Industries Ltd (NYSE:TEVA)
Interest Coverage
N/A (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. Teva Pharmaceutical Industries Ltd's Operating Income for the three months ended in Dec. 2016 was $-137 Mil. Teva Pharmaceutical Industries Ltd's Interest Expense for the three months ended in Dec. 2016 was $0 Mil. GuruFocus does not calculate Teva Pharmaceutical Industries Ltd's interest coverage with the available data. The higher the ratio, the stronger the company’s financial strength is.

TEVA' s Interest Coverage Range Over the Past 10 Years
Min: 3.6   Max: 19.16
Current: 3.9

3.6
19.16
TEVA's Interest Coverage is ranked lower than
84% of the 721 Companies
in the Global Drug Manufacturers - Specialty & Generic industry.

( Industry Median: 88.12 vs. TEVA: 3.90 )

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.

Teva Pharmaceutical Industries Ltd'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, Teva Pharmaceutical Industries Ltd's Interest Expense was $-546 Mil. Its Operating Income was $2,154 Mil. And its Long-Term Debt was $32,524 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2016 )/Interest Expense (A: Dec. 2016 )
=-1*2154/-546
=3.95

Teva Pharmaceutical Industries Ltd's Interest Coverage for the quarter that ended in Dec. 2016 is calculated as

Here, for the three months ended in Dec. 2016, Teva Pharmaceutical Industries Ltd's Interest Expense was $0 Mil. Its Operating Income was $-137 Mil. And its Long-Term Debt was $32,524 Mil.

GuruFocus does not calculate Teva Pharmaceutical Industries Ltd's interest coverage with the available data.

* 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.

Teva Pharmaceutical Industries Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
interest_coverage 11.983.6011.9119.1613.296.215.2513.1712.413.95

Teva Pharmaceutical Industries Ltd Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
interest_coverage N/AAt Loss3.9016.151.45N/A3.913.445.10N/A
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