At least eight-point-seven percent of Korea’s top 500 firms have been found to be making less than their interest payment amounts for over three years.
After analyzing yearly balance sheets and business reports of 380 of the top 500 firms, corporate performance tracker CEO Score said that the interest coverage ratio(ICR) of 33 firms stood below one.
While the 33 firms failed to generate more operating profit to pay interests on loans for three years, eleven-point-three percent of the firms in the top 500 were found to have been unable to meet the threshold for two years.
A firm with an ICR of less than one for three years after dividing its earnings by interest payments is considered potentially insolvent.