Dell (DELL) Interest Coverage : 4.69 (As of Jul. 2013)

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What is Dell Interest Coverage?

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 by its Interest Expense. Dell's Operating Income for the three months ended in Jul. 2013 was $272.00 Mil. Dell's Interest Expense for the three months ended in Jul. 2013 was $-58.00 Mil. Dell's interest coverage for the quarter that ended in Jul. 2013 was 4.69. The higher the ratio, the stronger the company's financial strength is.

The historical rank and industry rank for Dell's Interest Coverage or its related term are showing as below:

DELL's Interest Coverage is not ranked ^*
in the Hardware industry.
Industry Median: 12.79
* Ranked among companies with meaningful Interest Coverage only.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Dell Interest Coverage Historical Data

The historical data trend for Dell's Interest Coverage can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Note: For Interest Coverage, "No debt" indicates no long-term debt. An indication of "No Debt" does not necessarily mean that the company has no long-term debt obligations; it could be due to missing data in the quarterly or annual report. Use caution when interpreting this information.

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Dell Interest Coverage Chart

Dell Annual Data

Trend

Jan04

Jan05

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Interest Coverage

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34.30

13.58

17.25

15.88

11.16

Dell Quarterly Data
	Oct08	Jan09	Apr09	Jul09	Oct09	Jan10	Apr10	Jul10	Oct10	Jan11	Apr11	Jul11	Oct11	Jan12	Apr12	Jul12	Oct12	Jan13	Apr13	Jul13
Interest Coverage	Get a 7-Day Free Trial															12.69	8.92	10.91	3.59	4.69

Competitive Comparison of Dell's Interest Coverage

For the Computer Hardware subindustry, Dell's Interest Coverage, along with its competitors' market caps and Interest Coverage data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Dell's Interest Coverage Distribution in the Hardware Industry

For the Hardware industry and Technology sector, Dell's Interest Coverage distribution charts can be found below:

* The bar in red indicates where Dell's Interest Coverage falls into.

Dell Interest Coverage Calculation

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 & Capital Lease Obligation is 0, then

The company had no debt ⁽¹⁾.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Dell's Interest Coverage for the fiscal year that ended in Jan. 2013 is calculated as

Here, for the fiscal year that ended in Jan. 2013, Dell's Interest Expense was $-270.00 Mil. Its Operating Income was $3,012.00 Mil. And its Long-Term Debt & Capital Lease Obligation was $5,242.00 Mil.

Interest Coverage	=	-1	*	Operating Income (A: Jan. 2013 )	/	Interest Expense (A: Jan. 2013 )
	=	-1	*	3012	/	-270
	=	11.16

Dell's Interest Coverage for the quarter that ended in Jul. 2013 is calculated as

Here, for the three months ended in Jul. 2013, Dell's Interest Expense was $-58.00 Mil. Its Operating Income was $272.00 Mil. And its Long-Term Debt & Capital Lease Obligation was $4,075.00 Mil.

Interest Coverage	=	-1	*	Operating Income (Q: Jul. 2013 )	/	Interest Expense (Q: Jul. 2013 )
	=	-1	*	272	/	-58
	=	4.69

The higher the ratio, the stronger the company's Financial Strength is.

Dell (DELISTED:DELL) Interest Coverage 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 .

Dell Interest Coverage Related Terms

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Dell (DELL) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Dell Inc (DELISTED:DELL) » Definitions » Interest Coverage

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Address

Website

http://www.dell.com

Dell Inc is a Delaware Corporation, which was founded in 1984. The Company offers a range of technology solutions, including servers and networking products, storage products, services, software and peripherals, mobility products, and desktop PCs. The Company sells its products and services directly to customers through dedicated distribution channels, such as retailers, distributors, and resellers. Its business segments are Large Enterprise, Public, Small and Medium Business ('SMB'), and Consumer. Large Enterprise customers include large global and national corporate businesses. Public customers, which include educational institutions, government, health care, and law enforcement agencies, operate in their own communities. SMB segment is focused on helping small and medium-sized businesses get the most out of their technology by offering scalable products, services, and solutions. Consumer segment is focused on delivering what customers want from the total technology experience of entertainment, mobility, gaming, and design. The Company designs, develops, manufactures, markets, sells, and supports a range of products, solutions, and services. The Company also provides various customer financial services to its Commercial and Consumer customers. Its enterprise solutions include servers, networking, and storage products. The Company's services include a range of configurable IT and business services, including infrastructure technology, consulting and applications, and product-related support services. The Company offers Dell-branded printers and displays and a multitude of competitively priced third-party peripheral products such as printers, televisions, notebook accessories, mice, keyboards, networking and wireless products, digital cameras, and other products. The Company also sells a range of third-party software products, including operating systems, business and office applications, anti-virus and related security software, entertainment software, and products in various other categories. Client Products offers a variety of mobility and desktop products, including notebooks, workstations, tablets, smartphones, and desktop PCs, to its Commercial and Consumer customers. The Company offers or arranges various financing options and services for its Commercial and Consumer customers in the U.S. and Canada through Dell Financial Services ('DFS'). DFS offers a range of financial services, including originating, collecting, and servicing customer receivables related to the purchase of Dell products. DFS offers private label credit financing programs to qualified Consumer and Commercial customers and offers leases and fixed-term financing to Commercial customers. The Company sells its products and services directly to customers and through various other sales distribution channels, such as retailers, third-party solution providers, system integrators, and third-party resellers. Its customers include large global and national corpora