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SanDisk Corp  (NAS:SNDK) Interest Coverage: 5.67 (As of Mar. 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. SanDisk Corp's Operating Income for the three months ended in Mar. 2016 was $137 Mil. SanDisk Corp's Interest Expense for the three months ended in Mar. 2016 was $-24 Mil. SanDisk Corp's interest coverage for the quarter that ended in Mar. 2016 was 5.67. 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.

SanDisk Corp Annual Data

Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15
Interest Coverage Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 11.31 5.78 15.93 12.42 4.95

SanDisk Corp Quarterly Data

Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16
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 1.65 4.86 8.02 5.97 5.67

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.

SanDisk Corp's Interest Coverage for the fiscal year that ended in Dec. 2015 is calculated as

Here, for the fiscal year that ended in Dec. 2015, SanDisk Corp's Interest Expense was $-125 Mil. Its Operating Income was $617 Mil. And its Long-Term Debt & Capital Lease Obligation was $1,238 Mil.

Interest Coverage=-1*Operating Income (A: Dec. 2015 )/Interest Expense (A: Dec. 2015 )
=-1*616.625/-124.653
=4.95

SanDisk Corp's Interest Coverage for the quarter that ended in Mar. 2016 is calculated as

Here, for the three months ended in Mar. 2016, SanDisk Corp's Interest Expense was $-24 Mil. Its Operating Income was $137 Mil. And its Long-Term Debt & Capital Lease Obligation was $0 Mil.

Interest Coverage=-1*Operating Income (Q: Mar. 2016 )/Interest Expense (Q: Mar. 2016 )
=-1*137.111/-24.197
=5.67

* 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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