Abstract
Recently domestic recession of construction industry brought negative effects on many Korean construction firms. The firms started recognizing financial soundness as the highest priority. Management decisions were made based upon analysis results in terms of profitability and risk instead of simple number of contracts or sales amount. The firms should be able to identify financial risk factors and come up with strategies in a timely manner through analyzing key performance indicators. This study analyzed key financial ratios that affected the financial soundness of the construction firms by comparing the workout group and healthy group. As a result, the stability, activity, and productivity were derived as the most significant indicators, and equity ratio, total asset turnover ratio, and labor equipment ratio has been drawn into the most meaningful financial ratios. It is essential for the Korean construction firms to maintain healthy financial condition and increase productivity by enhancing management capabilities of the enterprises.
Published Version
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