Do the corporate financial results for the March quarter show any improvement in corporate balance sheets, any signs of breaking away from this logjam? One important yardstick to find out whether the corporate debt problem is getting better is to look at the interest cover. Interest cover measures the extent to which a firm’s earnings are sufficient to pay interest charges. Apart from lower interest rates, the other way of being able to improve interest cover is by reducing borrowings, perhaps by selling off assets. The construction and real estate sector saw a small reduction in overall borrowings, with industrial construction and housing construction seeing the biggest drops.

Source: Mint June 13, 2017 02:26 UTC