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GuruFocus has detected 1 Warning Sign with CSS Industries Inc $CSS.
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CSS Industries Inc (NYSE:CSS)
Interest Coverage
168.40 (As of Dec. 2016)

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. CSS Industries Inc's Operating Income for the three months ended in Dec. 2016 was $14.5 Mil. CSS Industries Inc's Interest Expense for the three months ended in Dec. 2016 was $-0.1 Mil. CSS Industries Inc's interest coverage for the quarter that ended in Dec. 2016 was 168.40. The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

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

CSS' s Interest Coverage Range Over the Past 10 Years
Min: 9.63   Max: No Debt
Current: 209.93

CSS's Interest Coverage is ranked higher than
70% of the 784 Companies
in the Global Specialty Retail industry.

( Industry Median: 25.75 vs. CSS: 209.93 )

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.

CSS Industries Inc's Interest Coverage for the fiscal year that ended in Mar. 2016 is calculated as

Here, for the fiscal year that ended in Mar. 2016, CSS Industries Inc's Interest Expense was $0.0 Mil. Its Operating Income was $26.2 Mil. And its Long-Term Debt was $0.0 Mil.

CSS Industries Inc had no debt.

CSS Industries Inc's Interest Coverage for the quarter that ended in Dec. 2016 is calculated as

Here, for the three months ended in Dec. 2016, CSS Industries Inc's Interest Expense was $-0.1 Mil. Its Operating Income was $14.5 Mil. And its Long-Term Debt was $0.5 Mil.

Interest Coverage=-1*Operating Income (Q: Dec. 2016 )/Interest Expense (Q: Dec. 2016 )
=-1*14.482/-0.086
=168.40

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 local exchange's currency.

CSS Industries Inc Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
interest_coverage 10.6718.319.63At Loss20.81132.06No Debt146.353,805.71No Debt

CSS Industries Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
interest_coverage 911.88353.98No DebtNo DebtNo Debt390.28No DebtNo DebtNo Debt168.40
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