Hercules Capital Financial Strength

Hercules Capital Financial Strength 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:

Hercules Capital's Interest Expense for the months ended in Dec. 2020 was $-17.2 Mil. Its Operating Income for the months ended in Dec. 2020 was $0.0 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Dec. 2020 was $1,296.0 Mil.

Hercules Capital's Interest Coverage for the quarter that ended in Dec. 2020 is

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

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

Hercules Capital's Debt to Revenue Ratio for the quarter that ended in Dec. 2020 is

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.

Altman Z-Score does not apply to banks and insurance companies.

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

Hercules Capital  (NYSE:HTGC) Financial Strength Explanation