Switch to:
Phillips 66  (NYSE:PSX) Interest Coverage: 12.29 (As of Sep. 2017)

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. Phillips 66's Operating Income for the three months ended in Sep. 2017 was $1,376 Mil. Phillips 66's Interest Expense for the three months ended in Sep. 2017 was $-112 Mil. Phillips 66's interest coverage for the quarter that ended in Sep. 2017 was 12.29. The higher the ratio, the stronger the company's financial strength is.

NYSE:PSX' s Interest Coverage Range Over the Past 10 Years
Min: 7.45   Max: 3104
Current: 8.27

7.45
3104

NYSE:PSX's Interest Coverage is ranked lower than
55% of the 158 Companies
in the Global industry.

( Industry Median: 10.16 vs. NYSE:PSX: 8.27 )

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.

Phillips 66 Annual Data

Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Interest Coverage Premium Member Only Premium Member Only Premium Member Only 32.24 23.07 23.18 20.68 7.45

Phillips 66 Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
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 10.95 1.73 8.65 9.07 12.29

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.

Phillips 66's Interest Coverage for the fiscal year that ended in Dec. 2016 is calculated as

Here, for the fiscal year that ended in Dec. 2016, Phillips 66's Interest Expense was $-338 Mil. Its Operating Income was $2,519 Mil. And its Long-Term Debt & Capital Lease Obligation was $9,588 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2016 )/Interest Expense (A: Dec. 2016 )
=-1*2519/-338
=7.45

Phillips 66's Interest Coverage for the quarter that ended in Sep. 2017 is calculated as

Here, for the three months ended in Sep. 2017, Phillips 66's Interest Expense was $-112 Mil. Its Operating Income was $1,376 Mil. And its Long-Term Debt & Capital Lease Obligation was $9,495 Mil.

Interest Coverage=-1*Operating Income (Q: Sep. 2017 )/Interest Expense (Q: Sep. 2017 )
=-1*1376/-112
=12.29

* 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

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK