TOKYO (Reuters) - Japan's Olympus Corp (>> Olympus Corp) aims to boost its shareholders' equity ratio, a key measure of capital stability, by roughly seven-fold to 30 percent in five years, indicating the scandal-tainted company may have to raise capital.

Olympus, the world's leading maker of diagnostic endoscopes, is struggling to recover from a $1.7 billion accounting fraud uncovered last year by its then-CEO, Michael Woodford.

Shareholders' equity in Olympus was 4.6 percent of its total assets as of end-March, far below the 20 percent level widely regarded as indicative of financial stability for a company.

"We will realize stable operations by swiftly improving the shareholders' equity ratio," President Hiroyuki Sasa told a news conference on Friday to detail the company's medium-term strategy.

Sasa also said the company will focus on its core businesses and consider selling, shrinking, or shedding peripheral divisions.

To mend its dented balance sheet, Olympus has considered bringing in a strategic investor, with Sony Corp (>> Sony Corporation), Fujifilm Holdings Corp (>> Fuji Film Holdings), Terumo Corp (>> Terumo) and Panasonic Corp (>> Panasonic Corp) identified as possible candidates.

Panasonic denied on Thursday a media report that it would invest up to 50 billion yen in Olympus, while Fujifilm said it is still interested in a tie-up.

Olympus shares ended down 3.6 percent on Friday ahead of the announcements. They had slumped as much as 80 percent after the accounting fraud unfolded in October, but have since recovered to about half of the pre-scandal level, valuing the company at around 365 billion yen ($4.6 billion). ($1 = 79.5700 Japanese yen)

(Reporting by Yoko Kubota; Writing by Muralikumar Anantharaman)