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Versum Materials Inc  (NYSE:VSM) Interest Coverage: 7.30 (As of Mar. 2019)

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. Versum Materials Inc's Operating Income for the three months ended in Mar. 2019 was $96 Mil. Versum Materials Inc's Interest Expense for the three months ended in Mar. 2019 was $-13 Mil. Versum Materials Inc's interest coverage for the quarter that ended in Mar. 2019 was 7.30. The higher the ratio, the stronger the company's financial strength is.

NYSE:VSM' s Interest Coverage Range Over the Past 10 Years
Min: 6.88   Max: 2436
Current: 7.82

6.88
2436

NYSE:VSM's Interest Coverage is ranked lower than
71% of the 1021 Companies
in the Global industry.

( Industry Median: 29.84 vs. NYSE:VSM: 7.82 )

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.

Versum Materials Inc Annual Data

Sep13 Sep14 Sep15 Sep16 Sep17 Sep18
Interest Coverage Premium Member Only 541.67 2,436.00 692.75 6.88 8.17

Versum Materials Inc Quarterly Data

Sep13 Sep14 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19
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 8.22 8.23 8.21 7.57 7.30

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.


Versum Materials Inc Distribution

* The bar in red indicates where Versum Materials Inc's Interest Coverage falls into.



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.

Versum Materials Inc's Interest Coverage for the fiscal year that ended in Sep. 2018 is calculated as

Here, for the fiscal year that ended in Sep. 2018, Versum Materials Inc's Interest Expense was $-48 Mil. Its Operating Income was $395 Mil. And its Long-Term Debt & Capital Lease Obligation was $974 Mil.

Interest Coverage=-1*Operating Income (A: Sep. 2018 )/Interest Expense (A: Sep. 2018 )
=-1*394.6/-48.3
=8.17

Versum Materials Inc's Interest Coverage for the quarter that ended in Mar. 2019 is calculated as

Here, for the three months ended in Mar. 2019, Versum Materials Inc's Interest Expense was $-13 Mil. Its Operating Income was $96 Mil. And its Long-Term Debt & Capital Lease Obligation was $972 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2019 )/Interest Expense (Q: Mar. 2019 )
=-1*96.4/-13.2
=7.30

* 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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