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Tesco PLC  (OTCPK:TSCDY) Interest Coverage: 3.88 (As of Aug. 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. Tesco PLC's Operating Income for the six months ended in Aug. 2017 was $1,146 Mil. Tesco PLC's Interest Expense for the six months ended in Aug. 2017 was $-295 Mil. Tesco PLC's interest coverage for the quarter that ended in Aug. 2017 was 3.88. The higher the ratio, the stronger the company's financial strength is.

OTCPK:TSCDY' s Interest Coverage Range Over the Past 10 Years
Min: 1.97   Max: 11.16
Current: 2.93

1.97
11.16

OTCPK:TSCDY's Interest Coverage is ranked lower than
92% of the 331 Companies
in the Global industry.

( Industry Median: 18.52 vs. OTCPK:TSCDY: 2.93 )

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.

Tesco PLC Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
Interest Coverage Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.55 5.89 0.00 2.21 1.97

Tesco PLC Semi-Annual Data

Feb08 Aug08 Feb09 Aug09 Feb10 Aug10 Feb11 Aug11 Feb12 Aug12 Feb13 Aug13 Feb14 Aug14 Feb15 Aug15 Feb16 Aug16 Feb17 Aug17
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 1.51 2.94 1.90 2.04 3.88

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.

Tesco PLC's Interest Coverage for the fiscal year that ended in Feb. 2017 is calculated as

Here, for the fiscal year that ended in Feb. 2017, Tesco PLC's Interest Expense was $-646 Mil. Its Operating Income was $1,271 Mil. And its Long-Term Debt & Capital Lease Obligation was $11,791 Mil.

Interest Coverage=-1*Operating Income (A: Feb. 2017 )/Interest Expense (A: Feb. 2017 )
=-1*1271.25/-646.25
=1.97

Tesco PLC's Interest Coverage for the quarter that ended in Aug. 2017 is calculated as

Here, for the six months ended in Aug. 2017, Tesco PLC's Interest Expense was $-295 Mil. Its Operating Income was $1,146 Mil. And its Long-Term Debt & Capital Lease Obligation was $11,189 Mil.

Interest Coverage=-1*Operating Income (Q: Aug. 2017 )/Interest Expense (Q: Aug. 2017 )
=-1*1146.37305699/-295.336787565
=3.88

* 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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