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Gouverneur Bancorp Inc  (OTCPK:GOVB) Interest Coverage: 0.40 (As of Jun. 2008)

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. Gouverneur Bancorp Inc's Operating Income for the three months ended in Jun. 2008 was $0.35 Mil. Gouverneur Bancorp Inc's Interest Expense for the three months ended in Jun. 2008 was $-0.87 Mil. Gouverneur Bancorp Inc's interest coverage for the quarter that ended in Jun. 2008 was 0.40. 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.

* Premium members only.

Gouverneur Bancorp Inc Annual Data

Sep98 Sep99 Sep00 Sep01 Sep02 Sep03 Sep04 Sep05 Sep06 Sep07
Interest Coverage Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.50 0.86 0.70 0.59 0.38

Gouverneur Bancorp Inc Quarterly Data

Sep03 Dec03 Mar04 Jun04 Sep04 Dec04 Mar05 Jun05 Sep05 Dec05 Mar06 Jun06 Sep06 Dec06 Mar07 Jun07 Sep07 Dec07 Mar08 Jun08
Interest Coverage Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.43 0.44 0.37 0.38 0.40

Competitive Comparison
* 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.


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.


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

Gouverneur Bancorp Inc's Interest Coverage for the fiscal year that ended in Sep. 2007 is calculated as

Here, for the fiscal year that ended in Sep. 2007, Gouverneur Bancorp Inc's Interest Expense was $-3.87 Mil. Its Operating Income was $1.46 Mil. And its Long-Term Debt & Capital Lease Obligation was $33.15 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2007 )/Interest Expense (A: Sep. 2007 )
=-1*1.461/-3.872
=0.38

Gouverneur Bancorp Inc's Interest Coverage for the quarter that ended in Jun. 2008 is calculated as

Here, for the three months ended in Jun. 2008, Gouverneur Bancorp Inc's Interest Expense was $-0.87 Mil. Its Operating Income was $0.35 Mil. And its Long-Term Debt & Capital Lease Obligation was $27.95 Mil.

Interest Coverage=-1*Operating Income (Q: Jun. 2008 )/Interest Expense (Q: Jun. 2008 )
=-1*0.345/-0.87
=0.40

* 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 .


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