Listed firms' debt-repaying ability improves

By Kang Yoon-seung

SEOUL, June 17 (Yonhap) -- The ability of South Korean listed companies to pay back their debts improved in the first quarter of this year due mainly to an increase in operating profits, data showed Monday.

The average interest coverage ratio of 569 firms listed on the main bourse came to 4.45 in the January-March period, compared to 3.83 tallied a year earlier, according to the data compiled by the Korea Exchange (KRX).

The ratio, or a firm's operating profit divided by its interest costs, measures the company's ability to pay interest on outstanding debt.

A reading higher than 1 means the firm earns more than it has to pay in interest, although a drop in the reading indicates the firm's debt-repayment ability has deteriorated.

The combined interest burden of the companies examined shed 9.08 percent on-year to 3.3 trillion won (US$2.9 billion), while their operating profit gained 5.72 percent to 14.8 trillion won over the cited period.

The number of companies with no interest costs stood at 44 in the first quarter, moving up from 37 tallied a year earlier, the data showed. The tallied firms close their books in December.

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