Switch to:
Tata Motors Ltd (NYSE:TTM)
Interest Coverage
2.12 (As of Sep. 2015)

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. Tata Motors Ltd's Operating Income for the three months ended in Sep. 2015 was $371 Mil. Tata Motors Ltd's Interest Expense for the three months ended in Sep. 2015 was $-175 Mil. Tata Motors Ltd's interest coverage for the quarter that ended in Sep. 2015 was 2.12. The higher the ratio, the stronger the company’s financial strength is.

TTM' s Interest Coverage Range Over the Past 10 Years
Min: 0.02   Max: 5.39
Current: 3.29

0.02
5.39
TTM's Interest Coverage is ranked lower than
74% of the 931 Companies
in the Global Auto Manufacturers industry.

( Industry Median: 10.47 vs. TTM: 3.29 )

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.

Tata Motors Ltd's Interest Coverage for the fiscal year that ended in Mar. 2015 is calculated as

Here, for the fiscal year that ended in Mar. 2015, Tata Motors Ltd's Interest Expense was $-778 Mil. Its Operating Income was $4,137 Mil. And its Long-Term Debt was $8,735 Mil.

Interest Coverage=-1*Operating Income (A: Mar. 2015 )/Interest Expense (A: Mar. 2015 )
=-1*4137.29403574/-778.081161322
=5.32

Tata Motors Ltd's Interest Coverage for the quarter that ended in Sep. 2015 is calculated as

Here, for the three months ended in Sep. 2015, Tata Motors Ltd's Interest Expense was $-175 Mil. Its Operating Income was $371 Mil. And its Long-Term Debt was $8,056 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2015 )/Interest Expense (Q: Sep. 2015 )
=-1*370.641123103/-175.218047749
=2.12

* 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.

Tata Motors Ltd Annual Data

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
interest_coverage 5.394.881.400.020.731.841.991.581.395.32

Tata Motors Ltd Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
interest_coverage 5.317.094.128.646.84At Loss2.424.732.124.62
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK