Switch to:
Walgreen Co (NYSE:WAG)
Interest Coverage
29.31 (As of May. 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. Walgreen Co's Operating Income for the three months ended in May. 2014 was $1,026 Mil. Walgreen Co's Interest Expense for the three months ended in May. 2014 was $-35 Mil. Walgreen Co's interest coverage for the quarter that ended in May. 2014 was 29.31. The higher the ratio, the stronger the company’s financial strength is.

WAG' s 10-Year Interest Coverage Range
Min: 39.12   Max: 9999.99
Current: 0

39.12
9999.99

During the past 13 years, the highest interest coverage of Walgreen Co was 9999.99. The lowest was 39.12. And the median was 605.17.

WAG's Interest Coverageis ranked lower than
90% of the 380 Companies
in the Global Pharmaceutical Retailers industry.

( Industry Median: 13.78 vs. WAG: 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

Walgreen Co 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

Walgreen Co had no debt.

Walgreen Co's Interest Coverage for the fiscal year that ended in Aug. 2013 is calculated as

Here, for the fiscal year that ended in Aug. 2013, Walgreen Co's Interest Expense was $0 Mil. Its Operating Income was $3,940 Mil. And its Long-Term Debt was $4,477 Mil.

Walgreen Co had no debt.

Walgreen Co's Interest Coverage for the quarter that ended in May. 2014 is calculated as

Here, for the three months ended in May. 2014, Walgreen Co's Interest Expense was $-35 Mil. Its Operating Income was $1,026 Mil. And its Long-Term Debt was $3,747 Mil.

Interest Coverage=-1*Operating Income (Q: May. 2014 )/Interest Expense (Q: May. 2014 )
=-1*1026/-35
=29.31

* 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.

Walgreen Co Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
interest_coverage No DebtNo DebtNo DebtNo Debt312.8239.1240.6861.4839.36At Loss

Walgreen Co Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
interest_coverage At LossAt Loss15.8419.0552.8319.82At Loss22.5434.4629.31
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)
Free 7-day Trial
FEEDBACK