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Alphabet Inc  (NAS:GOOG) Financial Strength: 8 (As of Jun. 2017)

Alphabet Inc has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Alphabet Inc's Interest Coverage for the quarter that ended in Jun. 2017 was 196.76. Alphabet Inc's debt to revenue ratio for the quarter that ended in Jun. 2017 was 0.15. As of today, Alphabet Inc's Altman Z-Score is 16.12.


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.

Alphabet Inc Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Financial Strength Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

Alphabet Inc Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
Financial Strength 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 0.00 0.00 0.00 0.00 0.00

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

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

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:

Alphabet Inc's Interest Expense for the months ended in Jun. 2017 was $-21 Mil. Its Operating Income for the months ended in Jun. 2017 was $4,132 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jun. 2017 was $3,955 Mil.

Alphabet Inc's Interest Coverage for the quarter that ended in Jun. 2017 is

Interest Coverage=-1*Operating Income (Q: Jun. 2017 )/Interest Expense (Q: Jun. 2017 )
=-1*4132/-21
=196.76

The higher the ratio, the stronger the company's financial strength is.

Good Sign:

Ben Graham prefers companies interest coverage is at least 5. Alphabet Inc has enough cash to cover all of its debt. Its financial situation is stable.

2. Debt to revenue ratio. The lower, the better.

Alphabet Inc's Debt to Revenue Ratio for the quarter that ended in Jun. 2017 is

Debt to Revenue Ratio=Total Debt (Q: Jun. 2017 ) / Revenue (Q: Jun. 2017 )
=(Current Portion of Long-Term Debt + Long-Term Debt & Capital Lease Obligation) / Revenue
=(0 + 3955) / 26010
=0.15

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Alphabet Inc has a Z-score of 16.12, indicating it is in Safe Zones. This implies the Z-Score is strong.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Alphabet Inc has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.


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