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Samsung Electronics' headquarters in southern Seoul (Yonhap) |
The debt ratio of South Korea's leading 1,000 companies by sales has more than halved over the past 21 years, pointing to a sharp increase in their financial health, a corporate tracker said Wednesday.
The average debt-to-equity ratio of those big companies stood at 160 percent in 2021, compared with 323 percent in 2000, according to the Korea CXO Institute.
A key barometer of financial soundness, the ratio is calculated by dividing a company's total liabilities by its stockholders' equity. The lower the figure, the healthier the financial soundness of a company.
In South Korea, corporations with a debt ratio of less than 200 percent are usually considered to be in good financial shape.
In 2019, those large companies' debt ratio came to 153 percent, the lowest tally in the past 20 years. The ratio soared to nearly 590 percent in 1997, when Asia's fourth-largest economy was hit hard by a foreign exchange crisis.
Last year, 60 companies had a debt ratio of 400 percent or higher, seen as belonging to a high-risk group. The figure was down from 157 in 2000.
The transportation industry, including airlines and shipping lines, posted the highest debt ratio of 162.7 percent in 2021, with the electronics industry reporting the lowest tally of 47.3 percent.
Global tech behemoth Samsung Electronics Co. had a debt ratio of 30 percent, with that of cash-strapped Asiana Airlines Inc., the smaller of South Korea's two full-service air carriers, reaching more than 2,200 percent.
Daewoo Shipbuilding & Marine Engineering Co., dogged by a prolonged strike by subcontract workers, had a debt ratio of 546.6 percent as of end-March this year, compared with 390.7 percent at the end of 2021, according to the institute. (Yonhap)
