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Keurig Green Mountain Inc  (NAS:GMCR) Interest Coverage: 71.66 (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. Keurig Green Mountain Inc's Operating Income for the three months ended in Dec. 2015 was \$161 Mil. Keurig Green Mountain Inc's Interest Expense for the three months ended in Dec. 2015 was \$-2 Mil. Keurig Green Mountain Inc's interest coverage for the quarter that ended in Dec. 2015 was 71.66. 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.

Historical Data

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

Keurig Green Mountain Inc Annual Data

 Sep06 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Interest Coverage 6.40 24.75 42.10 81.02 406.71

Keurig Green Mountain Inc Quarterly Data

 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Interest Coverage 198.64 868.25 418.03 1,126.26 71.66

Competitive Comparison
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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

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

Keurig Green Mountain Inc's Interest Coverage for the fiscal year that ended in Sep. 2015 is calculated as

Here, for the fiscal year that ended in Sep. 2015, Keurig Green Mountain Inc's Interest Expense was \$-2 Mil. Its Operating Income was \$765 Mil. And its Long-Term Debt & Capital Lease Obligation was \$448 Mil.

 Interest Coverage = -1 * Operating Income (A: Sep. 2015 ) / Interest Expense (A: Sep. 2015 ) = -1 * 765.424 / -1.882 = 406.71

Keurig Green Mountain Inc's Interest Coverage for the quarter that ended in Dec. 2015 is calculated as

Here, for the three months ended in Dec. 2015, Keurig Green Mountain Inc's Interest Expense was \$-2 Mil. Its Operating Income was \$161 Mil. And its Long-Term Debt & Capital Lease Obligation was \$597 Mil.

 Interest Coverage = -1 * Operating Income (Q: Dec. 2015 ) / Interest Expense (Q: Dec. 2015 ) = -1 * 160.813 / -2.244 = 71.66

* 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 .

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