Rackspace Hosting (Rackspace Hosting) Interest Coverage : 6.88 (As of Sep. 2016)

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What is Rackspace Hosting 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. Rackspace Hosting's Operating Income for the three months ended in Sep. 2016 was $70 Mil. Rackspace Hosting's Interest Expense for the three months ended in Sep. 2016 was $-10 Mil. Rackspace Hosting's interest coverage for the quarter that ended in Sep. 2016 was 6.88. The higher the ratio, the stronger the company's financial strength is.

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

RAX's Interest Coverage is not ranked ^*
in the Software industry.
Industry Median: 29.37
* 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.

Rackspace Hosting Interest Coverage Historical Data

The historical data trend for Rackspace Hosting'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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Rackspace Hosting Interest Coverage Chart

Rackspace Hosting Annual Data

Trend

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Interest Coverage

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21.11

36.37

42.70

41.66

16.00

Rackspace Hosting Quarterly Data
	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16
Interest Coverage	Get a 7-Day Free Trial															14.10	10.51	7.73	6.24	6.88

Competitive Comparison of Rackspace Hosting's Interest Coverage

For the Information Technology Services subindustry, Rackspace Hosting'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.

Rackspace Hosting's Interest Coverage Distribution in the Software Industry

For the Software industry and Technology sector, Rackspace Hosting's Interest Coverage distribution charts can be found below:

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

Rackspace Hosting 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.

Rackspace Hosting's Interest Coverage for the fiscal year that ended in Dec. 2015 is calculated as

Here, for the fiscal year that ended in Dec. 2015, Rackspace Hosting's Interest Expense was $-13 Mil. Its Operating Income was $200 Mil. And its Long-Term Debt & Capital Lease Obligation was $657 Mil.

Interest Coverage	=	-1	*	Operating Income (A: Dec. 2015 )	/	Interest Expense (A: Dec. 2015 )
	=	-1	*	200	/	-12.5
	=	16.00

Rackspace Hosting's Interest Coverage for the quarter that ended in Sep. 2016 is calculated as

Here, for the three months ended in Sep. 2016, Rackspace Hosting's Interest Expense was $-10 Mil. Its Operating Income was $70 Mil. And its Long-Term Debt & Capital Lease Obligation was $644 Mil.

Interest Coverage	=	-1	*	Operating Income (Q: Sep. 2016 )	/	Interest Expense (Q: Sep. 2016 )
	=	-1	*	70.2	/	-10.2
	=	6.88

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

Rackspace Hosting (NYSE:RAX) 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 .

Rackspace Hosting Interest Coverage Related Terms

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

Rackspace Hosting (Rackspace Hosting) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Rackspace Hosting Inc (NYSE:RAX) » Definitions » Interest Coverage

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.rackspace.com

Rackspace Hosting Inc was incorporated in Delaware in March 2000. The Company, through its operating subsidiaries, is a provider of cloud computing services, managing web-based IT systems for small and medium-sized businesses as well as large enterprises. It offers a portfolio of integrated IT solutions for common business needs, including for ecommerce, web content management, website hosting, data services, office mail and collaboration, and private clouds. It also offers advisory services for technology strategy, security and compliance, application assessment and migration, and DevOps automation. It offers its solutions across a variety of IT form factors, including multi-tenant public cloud, dedicated single-tenant servers, private cloud, and hybrid cloud - all delivered with a commitment to open and standard technologies. Its marketing activities include web-based paid and natural search, participation in technology trade shows, conferences and customer events, advertisements in traditional and electronic (web and email-based) media, and targeted regional public relations activities. Its trademark includes Rackspace, Fanatical Support, and RackConnect. The Company is subject to U.S. federal income tax and various state, local, and international income taxes in numerous jurisdictions.

Executives

Alex Pinchev	officer: EVP, Global Sales & Marketing	BMC SOFTWARE INC, 2101 CITYWEST BLVD, HOUSTON TX 77042
Lila Tretikov	director	149 NEW MONTGOMERY STREET, FLOOR 6, SAN FRANCISCO CA 94105
John E Harper	director	2300 WEST PLANO PARKWAY, PLANO TX 75075
Joseph Saporito	officer: Chief Accounting Officer
Kevin Costello	director	C/O ARIBA INC, 807 11TH AVENUE, SUNNYVALE CA 94089
Graham M Weston	director, 10 percent owner	425 SOLEDAD SUITE 500, SAN ANTONIO TX 78205
Eugene V Defelice	officer: SVP, General Counsel	1506 COVENTRY LANE SOUTHLAKE TX 76092
Michael S Gilliland	director	3720 BEVERLY DRIVE, DALLAS TX 75205
Still George J Jr	director	NORWEST VENTURE PARTNERS, 525 UNIVERSITY AVENUE, SUITE 800, PALO ALTO CA 94301
A Lanham Napier	director, officer: CEO	701 W. CASTANO, SAN ANTONIO TX 78209
Palmer L Moe	director	5000 WALZEM SAN ANTONIO TX 78218
Wells Fargo & Company/mn	10 percent owner	420 MONTGOMERY STREET, SAN FRANCISCO CA 94163
Promod Haque	10 percent owner	C/O NORWEST VENTURE PARTNERS, 525 UNIVERSITY AVENUE, SUITE 800, PALO ALTO CA 94301
Norwest Venture Partners Viii Lp	10 percent owner	C/O NORWEST VENTURE PARTNERS 525 UNIVERSITY AVENUE, SUITE 800 PALO ALTO CA 94301
James J Goetz	10 percent owner	C/O SEQUOIA CAPITAL, 2800 SAND HILL RD, SUITE 101, MENLO PARK CA 94025