Sonic (SONC) Interest Coverage : 3.75 (As of Aug. 2018)

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What is Sonic Interest Coverage?

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 by its Interest Expense. Sonic's Operating Income for the three months ended in Aug. 2018 was $32.4 Mil. Sonic's Interest Expense for the three months ended in Aug. 2018 was $-8.6 Mil. Sonic's interest coverage for the quarter that ended in Aug. 2018 was 3.75. The higher the ratio, the stronger the company's financial strength is.

The historical rank and industry rank for Sonic's Interest Coverage or its related term are showing as below:

SONC's Interest Coverage is not ranked ^*
in the Restaurants industry.
Industry Median: 6.835
* Ranked among companies with meaningful Interest Coverage only.

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

Sonic Interest Coverage Historical Data

The historical data trend for Sonic's Interest Coverage can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Note: For Interest Coverage, "No debt" indicates no long-term debt. An indication of "No Debt" does not necessarily mean that the company has no long-term debt obligations; it could be due to missing data in the quarterly or annual report. Use caution when interpreting this information.

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Sonic Interest Coverage Chart

Sonic Annual Data

Trend

Aug09

Aug10

Aug11

Aug12

Aug13

Aug14

Aug15

Aug16

Aug17

Aug18

Interest Coverage

Get a 7-Day Free Trial

3.89

4.66

4.78

4.26

3.24

Sonic Quarterly Data
	Nov13	Feb14	May14	Aug14	Nov14	Feb15	May15	Aug15	Nov15	Feb16	May16	Aug16	Nov16	Feb17	May17	Aug17	Nov17	Feb18	May18	Aug18
Interest Coverage	Get a 7-Day Free Trial															5.26	2.90	1.80	4.33	3.75

Competitive Comparison of Sonic's Interest Coverage

For the Restaurants subindustry, Sonic's Interest Coverage, along with its competitors' market caps and Interest Coverage data, can be viewed below:

* 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. Note that "N/A" values will not show up in the chart.

Sonic's Interest Coverage Distribution in the Restaurants Industry

For the Restaurants industry and Consumer Cyclical sector, Sonic's Interest Coverage distribution charts can be found below:

* The bar in red indicates where Sonic's Interest Coverage falls into.

Sonic Interest Coverage 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 ⁽¹⁾.

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

Sonic's Interest Coverage for the fiscal year that ended in Aug. 2018 is calculated as

Here, for the fiscal year that ended in Aug. 2018, Sonic's Interest Expense was $-33.1 Mil. Its Operating Income was $107.1 Mil. And its Long-Term Debt & Capital Lease Obligation was $714.5 Mil.

Interest Coverage	=	-1	*	Operating Income (A: Aug. 2018 )	/	Interest Expense (A: Aug. 2018 )
	=	-1	*	107.067	/	-33.058
	=	3.24

Sonic's Interest Coverage for the quarter that ended in Aug. 2018 is calculated as

Here, for the three months ended in Aug. 2018, Sonic's Interest Expense was $-8.6 Mil. Its Operating Income was $32.4 Mil. And its Long-Term Debt & Capital Lease Obligation was $714.5 Mil.

Interest Coverage	=	-1	*	Operating Income (Q: Aug. 2018 )	/	Interest Expense (Q: Aug. 2018 )
	=	-1	*	32.444	/	-8.647
	=	3.75

The higher the ratio, the stronger the company's Financial Strength is.

Sonic (NAS:SONC) Interest Coverage 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 .

Sonic Interest Coverage Related Terms

Thank you for viewing the detailed overview of Sonic's Interest Coverage provided by GuruFocus.com. Please click on the following links to see related term pages.

Sonic (SONC) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Restaurants » Sonic Corp (NAS:SONC) » Definitions » Interest Coverage

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.sonicdrivein.com

Sonic Corp operates and franchises drive-in restaurants throughout the United States. The restaurants typically consist of a building that houses only a kitchen to go along with 16 to 24 parking spaces that have their own payment terminals, intercom speakers, and menu boards. Carhops serve customers in their cars. Many locations also have a drive-thru lane and patio seating as alternatives. Sonic franchises roughly 90% of its restaurants, and the royalty revenue the company earns on franchise sales contributes roughly a quarter of total company revenue. Company-operated stores provide the balance of total revenue. Sonic owns the property on which hundreds of its restaurants are located. For those properties that house franchised stores, franchisees lease from the company.

Executives

Steven A Davis	director	3776 SOUTH HIGH ST, COLUMBUS OH 43207
Lauren R Hobart	director	345 COURT STREET, CORAOPOLIS PA 15275
Tony Bartel	director	625 WESTPORT PARKWAY, GRAPEVINE TX 76051
Kathy L Taylor	director	C/O FREDERIC DORWART LAWYERS, 124 EAST FOURTH STREET, TULSA OK 74103
Pedro Claudia San	officer: President	300 JOHNNY BENCH DRIVE, OKLAHOMA CITY OK 73104
Kate S Lavelle	director	24089 3RD STREET, FAIRHOPE AL 36532
Federico F Pena	director	711 HIGH STREET, DES MOINES IA 50392-0300
J Larry Nichols	director	DEVON ENERGY CORP, 20 NORTH BROADWAY STE 1500, OKLAHOMA CITY OK 73102-8260
Southeastern Asset Management Inc/tn/	10 percent owner	6410 POPLAR AVENUE, SUITE 900, MEMPHIS TN 38119
Longleaf Partners Funds Trust	10 percent owner	C/O SOUTHEASTERN ASSET MANAGEMENT, 6410 POPLAR AVE, SUITE 900, MEMPHIS TN 38119
Todd Whitney Smith	officer: President and CMO	300 JOHNNY BENCH DRIVE, OKLAHOMA CITY OK 73104
Craig Jeffrey Miller	officer: Former Officer of Subsidiary	5008 HARTRIDGE WAY, GREENSBORO NC 27407
Robert M Rosenberg	director
Michael J Maples	director	2208 WINDSOR ROAD, AUSTIN TX 78703
Douglas N Benham	director