ID :
209335
Mon, 09/26/2011 - 03:55
Auther :
Shortlink :
https://oananews.org//node/209335
The shortlink copeid
Marginalized firms increase in Q2
SEOUL, Sept. 26 (Yonhap) -- Three out of every 10 South Korean firms failed to earn enough profit to cover financial costs in the second quarter, data showed Monday, indicating that the slowing economic momentum has hit corporate profitability.
A total of 30.2 percent out of 1,491 firms said their average interest coverage ratio stayed below 100 percent in the second quarter, up from 26.1 percent tallied in the previous year, according to data by the Bank of Korea.
The interest coverage ratio measures a firm's capacity to cover financial costs with operating profit and a reading below 100 percent means that a firm cannot repay a large part of interest with operating profit.
The proportion of firms that cannot cover financial costs with income at all reached 21.5 percent in the second quarter, up from 19.2 percent the previous year, according to the data.
The data came as the growth of the South Korean economy is showing signs of slowing amid gloomier prospects for the global economy.
The local currency's recent downward trend and banks' reluctance to lend to smaller firms are making it more difficult for companies to do business, experts said.
Asia's fourth-largest economy grew 0.9 percent in the April-June period from three months earlier, down from 1.3 percent expansion in the first quarter. The economic outlook is growing dimmer as a sputtering U.S. economy and the eurozone debt crisis are raising fears about a global double-dip, which would inevitably crimp Korea's exports.
The BOK said if the U.S. growth falls by 1 percentage points, the growth of the Korean economy declines by 0.4 percentage point.
A total of 30.2 percent out of 1,491 firms said their average interest coverage ratio stayed below 100 percent in the second quarter, up from 26.1 percent tallied in the previous year, according to data by the Bank of Korea.
The interest coverage ratio measures a firm's capacity to cover financial costs with operating profit and a reading below 100 percent means that a firm cannot repay a large part of interest with operating profit.
The proportion of firms that cannot cover financial costs with income at all reached 21.5 percent in the second quarter, up from 19.2 percent the previous year, according to the data.
The data came as the growth of the South Korean economy is showing signs of slowing amid gloomier prospects for the global economy.
The local currency's recent downward trend and banks' reluctance to lend to smaller firms are making it more difficult for companies to do business, experts said.
Asia's fourth-largest economy grew 0.9 percent in the April-June period from three months earlier, down from 1.3 percent expansion in the first quarter. The economic outlook is growing dimmer as a sputtering U.S. economy and the eurozone debt crisis are raising fears about a global double-dip, which would inevitably crimp Korea's exports.
The BOK said if the U.S. growth falls by 1 percentage points, the growth of the Korean economy declines by 0.4 percentage point.
