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Poseidon Concepts Corp (TSX:PSN)
Interest Coverage
26.60 (As of Sep. 2012)

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. Poseidon Concepts Corp's Operating Income for the three months ended in Sep. 2012 was C$14.12 Mil. Poseidon Concepts Corp's Interest Expense for the three months ended in Sep. 2012 was C$-0.53 Mil. Poseidon Concepts Corp's interest coverage for the quarter that ended in Sep. 2012 was 26.60. The higher the ratio, the stronger the company’s financial strength is.

TSX:PSN' s 10-Year Interest Coverage Range
Min: 0   Max: 0
Current: 0

TSX:PSN's Interest Coverageis ranked lower than
87% of the 290 Companies
in the Global Oil & Gas Equipment & Services industry.

( Industry Median: 11.41 vs. TSX:PSN: 0.00 )

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

Poseidon Concepts Corp 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

Poseidon Concepts Corp had no debt.

Poseidon Concepts Corp's Interest Coverage for the fiscal year that ended in Dec. 2011 is calculated as

Here, for the fiscal year that ended in Dec. 2011, Poseidon Concepts Corp's Interest Expense was C$-0.76 Mil. Its Operating Income was C$61.34 Mil. And its Long-Term Debt was C$0.00 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2011 )/Interest Expense (A: Dec. 2011 )
=-1*61.338/-0.757
=81.03

Poseidon Concepts Corp's Interest Coverage for the quarter that ended in Sep. 2012 is calculated as

Here, for the three months ended in Sep. 2012, Poseidon Concepts Corp's Interest Expense was C$-0.53 Mil. Its Operating Income was C$14.12 Mil. And its Long-Term Debt was C$55.54 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2012 )/Interest Expense (Q: Sep. 2012 )
=-1*14.124/-0.531
=26.60

* 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.

Poseidon Concepts Corp Annual Data

Dec07Dec08Dec09Dec10Dec11
interest_coverage At LossAt LossAt LossAt LossAt Loss3.8510.80At Loss27.5481.03

Poseidon Concepts Corp Quarterly Data

Jun10Sep10Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12
interest_coverage 0.823.40No Debt8,458.0095.99142.2449.3556.0265.5826.60
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