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Wal-Mart Stores Inc  (NYSE:WMT) Interest Coverage: 9.74 (As of Jul. 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. Wal-Mart Stores Inc's Operating Income for the three months ended in Jul. 2017 was $5,969 Mil. Wal-Mart Stores Inc's Interest Expense for the three months ended in Jul. 2017 was $-613 Mil. Wal-Mart Stores Inc's interest coverage for the quarter that ended in Jul. 2017 was 9.74. The higher the ratio, the stronger the company's financial strength is.

NYSE:WMT' s Interest Coverage Range Over the Past 10 Years
Min: 9.32   Max: 12.33
Current: 9.32

9.32
12.33

NYSE:WMT's Interest Coverage is ranked lower than
69% of the 331 Companies
in the Global industry.

( Industry Median: 18.52 vs. NYSE:WMT: 9.32 )

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.

Wal-Mart Stores Inc Annual Data

Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17
Interest Coverage Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 12.33 11.51 11.03 9.46 9.62

Wal-Mart Stores Inc Quarterly Data

Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Oct17
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 8.41 10.61 8.76 9.74 8.17

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.

Wal-Mart Stores Inc's Interest Coverage for the fiscal year that ended in Jan. 2017 is calculated as

Here, for the fiscal year that ended in Jan. 2017, Wal-Mart Stores Inc's Interest Expense was $-2,367 Mil. Its Operating Income was $22,764 Mil. And its Long-Term Debt & Capital Lease Obligation was $42,018 Mil.

Interest Coverage=-1*Operating Income (A: Jan. 2017 )/Interest Expense (A: Jan. 2017 )
=-1*22764/-2367
=9.62

Wal-Mart Stores Inc's Interest Coverage for the quarter that ended in Jul. 2017 is calculated as

Here, for the three months ended in Jul. 2017, Wal-Mart Stores Inc's Interest Expense was $-613 Mil. Its Operating Income was $5,969 Mil. And its Long-Term Debt & Capital Lease Obligation was $40,469 Mil.

Interest Coverage=-1*Operating Income (Q: Jul. 2017 )/Interest Expense (Q: Jul. 2017 )
=-1*5969/-613
=9.74

* 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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