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

SEOUL, July 20 (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 improvement in their financial health, it said on Wednesday. a business monitoring body.

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.


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John A. Bogar