1. Corporate sector facing balance sheet recession

Corporate sector facing balance sheet recession

Corporate debt-to-equity is at an all-time high and debt service ratio is at a new low.

By: | Published: May 27, 2016 7:33 AM

Corporate debt-to-equity is at an all-time high and debt service ratio is at a new low. The BSE 500 index companies have about four times their operating income to pay interest expenses compared to around 10 times in the boom years, shows a Morgan Stanley research.

Interest to sales is approaching is at an all-time high, hurting net margins and impeding debt serviceability. Similarly, excess return on capital (ROCE minus the prime lending rate) is at an all-time low and in negative territory.

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