The debt ratio of the 1,000 largest companies has more than halved in two decades

Samsung Electronics Headquarters in South Seoul (Yonhap)

The debt ratio of South Korea’s top 1,000 companies by revenue has more than halved over the past 21 years, indicating a sharp increase in their financial health, a company tracker said on Wednesday. ‘company.

The average debt ratio of these large companies stood at 160% in 2021, up from 323% in 2000, according to the Korea CXO Institute.

A key barometer of financial strength, the ratio is calculated by dividing a company’s total liabilities by its equity. The lower the number, the healthier a company’s financial strength.

In South Korea, companies with a debt ratio below 200% are generally considered to be in good financial health.

In 2019, the debt ratio of these large companies stood at 153%, the lowest level in the last 20 years. The ratio soared to nearly 590% in 1997, when Asia’s fourth-largest economy was hit hard by a currency crisis.

Last year, 60 companies had a debt ratio of 400% or more, considered to belong to a high-risk group. The figure was down from 157 in 2000.

The transportation industry, including airlines and shipping companies, posted the highest debt ratio of 162.7% in 2021, with the electronics industry registering the lowest tally of 47, 3%.

Global tech giant Samsung Electronics Co. had a debt ratio of 30%, with Asiana Airlines Inc., the smaller of South Korea’s two full-service carriers, reaching more than 2,200%.

Daewoo Shipbuilding & Marine Engineering Co., plagued by a protracted strike by contractors, had a debt ratio of 546.6% at the end of March this year, down from 390.7% at the end of 2021, according to the institute. (Yonhap)


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John A. Bogar