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Debt ratio of top 100 firms hits 10-year high: survey

TAIPEI--The average debt-to-equity ratio of Taiwan's largest 100 firms hit a 10-year high in 2011, according to the results of a survey published Tuesday, a warning sign of potential financial troubles ahead for the debt-ridden firms in the current economic turmoil.

The survey, published by the Taipei-based China Credit Information Service, shows that the average debt ratio of the top 100 firms hit 436.45 percent in 2011, a 10-year high.

China Credit Information Service cited past financial troubles in publicly listed firms during periods of economic downturn and noted that the current slow economic growth and the sluggish stock market performance could also put firms with high debt ratios at risk in the near future.

The bursting of the 2000 dot-com bubble led to financial troubles for construction firm Hualon Corp., Pacific Wire and Cable Group, and Bao Chen Construction Co. the following year, the survey said.

Later, in 2007, the U.S. subprime mortgage crisis triggered the financial collapse of Cosmos Bank and its debt-ridden parent company, Prince Motors Group, the survey continued.

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