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TJX Companies (NYSE:TJX)
Interest Coverage
70.95 (As of Jan. 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. TJX Companies's Operating Income for the three months ended in Jan. 2014 was $943 Mil. TJX Companies's Interest Expense for the three months ended in Jan. 2014 was $-13 Mil. TJX Companies's interest coverage for the quarter that ended in Jan. 2014 was 70.95. The higher the ratio, the stronger the company’s financial strength is.

TJX' s 10-Year Interest Coverage Range
Min: 4.24   Max: 415.12
Current: 76.08

4.24
415.12

During the past 13 years, the highest interest coverage of TJX Companies was 415.12. The lowest was 4.24. And the median was 39.43.

TJX's Interest Coverageis ranked higher than
74% of the 776 Companies
in the Global Apparel Stores industry.

( Industry Median: 34.17 vs. TJX: 76.08 )

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

TJX Companies 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

TJX Companies had no debt.

TJX Companies's Interest Coverage for the fiscal year that ended in Jan. 2014 is calculated as

Here, for the fiscal year that ended in Jan. 2014, TJX Companies's Interest Expense was $-46 Mil. Its Operating Income was $3,351 Mil. And its Long-Term Debt was $1,274 Mil.

Interest Coverage=-1*Operating Income (A: Jan. 2014 )/Interest Expense (A: Jan. 2014 )
=-1*3350.57/-46.091
=72.69

TJX Companies's Interest Coverage for the quarter that ended in Jan. 2014 is calculated as

Here, for the three months ended in Jan. 2014, TJX Companies's Interest Expense was $-13 Mil. Its Operating Income was $943 Mil. And its Long-Term Debt was $1,274 Mil.

Interest Coverage=-1*Operating Income (Q: Jan. 2014 )/Interest Expense (Q: Jan. 2014 )
=-1*943.295/-13.296
=70.95

* 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.

TJX Companies Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
interest_coverage 39.4335.0382.22At Loss38.0640.4044.9552.4276.0872.69

TJX Companies Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
interest_coverage 56.4763.9859.5457.3188.06112.8088.2666.0070.5070.95
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