One in five South Korean firms listed on the local bourse was not able to cover interest costs with their earnings in the first half of the year, a report showed Monday.

   The average interest coverage ratio of 469 firms listed on the main Seoul bourse came to 4.72 times in the January-June period, little changed from 4.71 times seen a year earlier, according to the report by the Korea Exchange and the Korea Listed Companies Association.

   But the number of listed firms with their interest coverage ratio below 1 rose 23 percent from 81 to 100 over the cited period, the report said.

   The ratio measures a firm's operating profit divided by its interest costs incurred from borrowing and indicates the company's ability to cover its financial burden. A reading higher than 1 means a firm earns more than it has to pay in interest.

   The combined interest cost of the tallied companies totaled 1.23 trillion won (US$1.14 billion) in the first half, down 2.31 percent from a year ago, and their operating profit slipped 2.23 percent on-year to 5.81 trillion won, the report said.

   Listed firms that close their books in March and those who use the K-IFRS system, such as Samsung Electronics Co. and LG Electronics Inc., were excluded from the tally.

Source: Yonhap News (August 29, 2011)