S. Korea's large firms see their reserve ratios jump

SEOUL, March 22 (Yonhap) -- South Korea's major companies posted a high reserve
ratio last year, indicating that they remain reluctant to engage in capital
spending in the uncertain economic environment, a financial information provider
said Sunday.
The average reserve ratio of the country's largest 75 companies in terms of
market capitalization stood at 2,258 as of December last year, according to
FNGuide.
The reserve ratio measures a corporation's capital surplus and retained earnings
against paid-in capital and is a good indicator of a company's financial
stability.
However, the higher the ratio is, the more a company is unwilling to spend. The
data show that despite their increased earnings, companies still remained
unwilling to spend more, FNGuide said.
The South Korean economy, Asia's fourth-largest, shrank 3.4 percent in the fourth
quarter of last year, the first contraction in 11 years, as exports dropped and
domestic demand remained weak.
By company, SK Telecom, the country's leading mobile operator, had the highest
reserve ratio of 28,539, followed by Lotte Confectionery Co. with 25,509 and
Samsung Electronics Co. with 7,367.
sam@yna.co.kr
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