Interest coverage ratio shows how easily a company can pay interest on outstanding debt. The ratio is calculated by dividing a company's operating profit by the company's interest expenses of the same period.

 

The main reason the publicly listed companies saw their debt-payment ability improve was largely due to a decline in interest expense after an interest rate cut, as well as an uptick in operating income. Their aggregate interest expenses in the first half were 7,074.0 billion won, down 9.31 percent from 6,415.1 billion won in the first half in 2012. Their operating income for the same six months was 31,871.4 billion won, 9.19 percent higher than 29,188.6 billion won during the same period last year.

 

The latest survey was based on data on 695 publicly listed firms that close their books in December. But the actual number of respondents was 571, except 124 firms that did not submit comparable data.