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Exxon Mobil Corporation (NYSE:XOM)
Interest Coverage
73.71 (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. Exxon Mobil Corporation's Operating Income for the three months ended in Sep. 2015 was $5,749 Mil. Exxon Mobil Corporation's Interest Expense for the three months ended in Sep. 2015 was $-78 Mil. Exxon Mobil Corporation's interest coverage for the quarter that ended in Sep. 2015 was 73.71. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

Ben Graham prefers companies interest coverage is at least 5. Exxon Mobil Corporation has enough cash to cover all of its debt. Its financial situation is stable.

XOM' s Interest Coverage Range Over the Past 10 Years
Min: 63.46   Max: 6412.33
Current: 88.34

63.46
6412.33

During the past 13 years, the highest interest coverage of Exxon Mobil Corporation was 6412.33. The lowest was 63.46. And the median was 179.61.

XOM's Interest Coverage is ranked higher than
73% of the 49 Companies
in the Global Oil & Gas Integrated industry.

( Industry Median: 9.54 vs. XOM: 88.34 )

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.

Exxon Mobil Corporation's Interest Coverage for the fiscal year that ended in Dec. 2014 is calculated as

Here, for the fiscal year that ended in Dec. 2014, Exxon Mobil Corporation's Interest Expense was $-286 Mil. Its Operating Income was $51,630 Mil. And its Long-Term Debt was $11,653 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2014 )/Interest Expense (A: Dec. 2014 )
=-1*51630/-286
=180.52

Exxon Mobil Corporation's Interest Coverage for the quarter that ended in Sep. 2015 is calculated as

Here, for the three months ended in Sep. 2015, Exxon Mobil Corporation's Interest Expense was $-78 Mil. Its Operating Income was $5,749 Mil. And its Long-Term Debt was $19,839 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2015 )/Interest Expense (Q: Sep. 2015 )
=-1*5749/-78
=73.71

* 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.

Exxon Mobil Corporation Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
interest_coverage 152.12178.70123.9263.46204.47296.59240.756,412.33180.52No Debt

Exxon Mobil Corporation Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
interest_coverage 272.87At Loss230.71221.11152.39130.0375.4081.8173.71No Debt
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