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Weatherford International PLC (NYSE:WFT)
Interest Coverage
At Loss (As of Dec. 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. Weatherford International PLC's Operating Income for the three months ended in Dec. 2015 was $-1,034 Mil. Weatherford International PLC's Interest Expense for the three months ended in Dec. 2015 was $-117 Mil. Weatherford International PLC did not have earnings to cover the interest expense. The higher the ratio, the stronger the company’s financial strength is.

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.

Weatherford International PLC's Interest Coverage for the fiscal year that ended in Dec. 2015 is calculated as

Here, for the fiscal year that ended in Dec. 2015, Weatherford International PLC's Interest Expense was $-468 Mil. Its Operating Income was $-1,546 Mil. And its Long-Term Debt was $5,879 Mil.

Weatherford International PLC did not have earnings to cover the interest expense.

Weatherford International PLC's Interest Coverage for the quarter that ended in Dec. 2015 is calculated as

Here, for the three months ended in Dec. 2015, Weatherford International PLC's Interest Expense was $-117 Mil. Its Operating Income was $-1,034 Mil. And its Long-Term Debt was $5,879 Mil.

Weatherford International PLC did not have earnings to cover the interest expense.

* 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.

Weatherford International PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
interest_coverage 12.238.878.121.921.932.920.611.011.01At Loss

Weatherford International PLC Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
interest_coverage 1.85At Loss1.030.202.610.260.42At LossAt LossAt Loss
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