Corporate sector facing balance sheet recession

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.

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.

graph 1

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition