South Korean listed companies’ ability to pay back their debt deteriorated last year as their earnings declined amid increased bond issues, data showed Monday.

The average interest coverage ratio of 616 firms listed on the main bourse came to 4.67 in 2011, down from 5.51 a year earlier, according to the data by the Korea Exchange and the Korea Listed Companies Association.

The ratio, a firm’s operating profit divided by its interest costs, measures the company’s ability to pay interest on outstanding debt. A reading higher than 1 means the firm earns more than it has to pay in interest, while a drop in the reading indicates the firm’s debt-repayment ability has turned worse.

According to the data, the combined interest cost of the companies rose 0.81 percent on-year to 13.97 trillion won ($12.3 billion) in 2011, while their operating profit dropped 14.6 percent to 65.2 trillion won.

Of the total, 467 companies were able to cover interest costs with their operating profits last year, down 42 firms from the previous year.

The number of companies with no interest costs totaled 25 last year, down from 30 a year earlier, the data showed. (Yonhap News)