Interest coverage indicates how many times the interest could be paid from available earnings, thereby providing a sense of the safety margin a company has for paying its interest for any period. A company that sustains earnings well above its interest requirements is in an excellent position to weather possible financial storms. By contrast, a company that barely manages to cover its interest costs may easily fall into bankruptcy if its earnings suffer for even a single month. This is especially true for cyclical industry!
Formula(Above)
Ezra (Above)
Ezra's interest converage after deducting for one off items is a mere 5.06% and Jaya's is 52.5%. No wonder Jaya can still give off dividends and Ezra has not declared any dividends. Even if we give Ezra a chance, and don't deduct their one off items, its coverage is only 26.1%, half of Jaya's! Tsk Tsk Tsk. No wonder you are in the top volume for 2 days consecutively.
And hello...dear readers..look at how these 2 companies are still so optimistic about the oil and gas industry. Do they watch CNBC or have they been living in a cave? As usual the management talk!
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team
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