The main question this ratio addresses is: "Does your business have enough current assets

to meet the payment schedule of its current debts with a margin of safety for possible
losses in current assets?"
A generally acceptable current ratio is 2 to 1. But whether or not a specific ratio is
satisfactory depends on the nature of the business and the characteristics of its current
assets and liabilities.

Quick ratio- The Quick Ratio is a much more conservative measure of short-term
liquidity than the Current Ratio. It helps answer the question: "If all sales revenues should
disappear, could my business meet its current obligations with the readily convertible quick
funds on hand?"

Debt equity -A high debt to equities ratio here means less protection for
creditors, a low ratio, on the other hand, indicates a wider safety cushion (i.e., creditors feel
the owner's funds can help absorb possible losses of income and capital).
A high debt to equities ratio here means less protection for creditors, a low ratio, on the
other hand, indicates a wider safety cushion (i.e., creditors feel the owner's funds can help
absorb possible losses of income and capital).
Capital Gearing Ratio -calculated to show the proportion of fixed interest (dividend)
bearing capital to funds belonging to equity shareholders i.e. equity funds or net worth.

Proprietary Ratio:It indicates the proportion of total assets financed by shareholders

Interest Coverage Ratio: This ratio indicates the extent to which earnings may fall without
causing any embarrassment to the firm regarding the payment of interest charges. A high
interest coverage ratio means that an enterprise can easily meet its interest obligations
even if earnings before interest and taxes suffer a considerable decline

Fixed Assets Turnover Ratio: It measures the efficiency with which the firm uses its fixed
assets. A high fixed assets turnover ratio indicates efficient utilisation of fixed assets in
generating sales. A firm whose plant and machinery are old may show a higher fixed assets
turnover ratio than the firm which has purchased them recently.

Working Capital Turnover Ratio: Working Capital Turnover is further segregated into
Inventory Turnover, Debtors Turnover, and Creditors Turnover.

Inventory/ Stock Turnover Ratio: . It measures the efficiency with which a firm utilizes or
manages its inventory.

Receivables (Debtors) Turnover Ratio: The speed with which these receivables are collected affects the liquidity
position of the firm. The debtor’s turnover ratio throws light on the collection and credit policies of the firm. It
measures the efficiency with which management is managing its accounts receivables.
Payables Turnover Ratio: A low creditor’s turnover ratio reflects liberal credit terms granted
by supplies. While a high ratio shows that accounts are settled rapidly.

In determining the credit policy, debtor’s turnover and average collection period provide a
unique guideline.
The firm can compare what credit period it receives from the suppliers and what it offers to
the customers. Also it can compare the average credit period offered to the customers in the
industry to which it belongs.
The above three ratios i.e. Inventory Turnover Ratio/ Receivables Turnover Ratio is also
relevant to examine liquidity of an organization.

Gross Profit (G.P) Ratio/ Gross Profit Margin: Gross profit margin depends on the
relationship between price/ sales, volume and costs. A high Gross Profit Margin is a
favourable sign of good management.

Operating Profit Ratio:Operating profit ratio measures the percentage of each sale in rupees
that remains after the payment of all costs and expenses except for interest and taxes. This
ratio is followed closely by analysts because it focuses on operating results.
 Return on Capital Employed (ROCE): ROCE should always be higher than the rate at which
the company borrows.

Return on Equity (ROE): This ratio reveals how profitably of the owners’ funds have been
utilised by the firm. Return on equity is one of the most important indicators of a firm’s
profitability and potential growth. Companies that boast a high return on equity with little
or no debt are able to grow without large capital expenditures, allowing the owners of the
business to withdraw cash and reinvest it elsewhere

Price- Earnings Ratio (P/E Ratio): The price earnings ratio indicates the expectation of equity
investors about the earnings of the firm generally taken as a summary measure of growth
potential of an investment, risk characteristics, shareholders orientation, corporate image
and degree of liquidity.
It indicates the payback period to the investors or prospective investors
Non-current assets to net worth ratio isa measure of the extent of a company's investment
in low-liquid non-current assets. This ratio is important for comparison analysis because it is
less dependent on industry (structure of company assets) than debt ratio or debt-to-equity
ratio.

A short average collection period suggests a tight credit policy and effective management of accounts
receivable, which both allow the firm to meet its short-term obligations.
Conversely, a long ACP indicates that the company should tighten its credit policy and improve the
management of accounts receivable to be able to meet its short-term obligations.
If this period will be high, it will create the risk for our liquidity position because some creditor can demand and in long period, we can forget to pay. One month or tw

The above three ratf this period will be low, it will be good for our liquidity because more
smartly, we will pay our creditors, more amount of credit purchase, we can get.

If this period will be high, it will create the risk for our liquidity position because some creditor can
demand and in long period, we can forget to pay. One month or two month is best time period of our
creditors. So, our average payment period should be between 30 to 60 days.
os i.e. Inventory Turnover Ratio/ Receivables Turnover Ratio is also relevant to examine liquidity of an
organization

enerally, a high fixed assets turnover ratio indicates better utilization of fixed assets and a
low ratio means inefficient or under-utilization of fixed assets
 LIQUIDITY RATIO
RATIO F0RMULA 2016-2017 2017-2018
Current Ratio Current 3.19 2.88
assets/Current
Ideal ratio 2:1 liabilities The current ratio has
This ratio tells whether a
decreased by 0.31
company has enough assets
to meet the payment but is still more than
schedule of its current debts the ideal ratio thus
with a margin of safety for indicating a good
possible losses in current liquidity position
assets

Quick Ratio Quick 3.00 1.17

Ideal ratio 1:1
Much more conservative
measure than current ratio
assets/current
liability The quick ratio has
decreased by 1.83,
but is still more than
ideal ratio indicating
a strong short term
liquidity position
SOLVENCY RATIO
RATIO 2016-2017 2017-2018

Debt Equity Ratio 0.36 0.06

0.30
This ratio indicates the
proportion of debt fund in A low ratio debt equity ratio indicates a
relation to equity wider safety cushion for creditors.

Proprietary Ratio 0.66 0.82

0.16
It indicates the proportion of
total assets financed by
shareholders There is an increase in proprietary ratio
by 0.16 due to decrease in debt equity
ratio
RATIO 2016-2017 2017-2018 ANALYSIS

Interest coverage ratio 8.1691 19.9

Or “times interest earned ratio”
indicates the firm’s ability to meet 10.39
interest (and other fixed-charges)
obligations Higher ratio means that an
enterprise can easily meet its
interest obligations even if EBIT
suffers a considerable decline.

Fixed assets to net worth 0.66 0.70

Ideal Ratio 0.75
This ratio indicates the extent to
0.04
which the owners' cash is frozen The fixed assets to net worth
in the form of fixed assets and the ratio has increased by 0.04 but
extent to which funds are is still within limits, making the
available for the company's company less vulnerable to un
operations expected events and sudden
changes
RATIO 2016-2017 2017-2018 ANALYSIS

Current assets to net worth ratio 0.24 0.419

shows the stockholders’ funds 0.179
invested in current assets.

Capital gearing ratio 0.26 0.053

Show the proportion of fixed
0.207
interest (dividend) bearing capital to
funds belonging to equity
shareholders

RATIO 2016-2017
Stock turnover ratio
Establishes the relationship
between the cost of goods
sold during the year and
average inventory held during
the year
Debtors turnover ratio
The debtor’s turnover ratio
throws light on the collection
and credit policies of the firm,
the speed with which
receivables are collected
Avg. collection period
measures the average number
of days it takes to collect an
account receivable
ACTIVITY RATIO
2017-2018
13.04 10.61
A high ratio is good from
the view point of liquidity
while a low ratio would
indicate that inventory is
not used/ sold and stays in
a shelf or in the warehouse
for a long time.
809.34 552
It measures the efficiency
with which management is
managing its accounts
receivables
0.45 0.661
An increase in ratio shows
relaxation in credit policies
of the company
RATIO FORMULA 2016-2017 2017-2018
Creditors turnover ratio Net credit 44.39 44.15
This ratio shows the velocity of purchases/avg. A low creditor’s turnover
payables payment by the firm creditors ratio reflects liberal
credit terms granted by
supplies. While a high
ratio shows that
accounts are settled
rapidly.

Average payment period 365/ creditors 8.22 8.266

The average payment period turnover ratio Ask??
measures the average number
of days it takes pay an account
payable

Working capital turnover Net sales/working 5.83 11.82

ratio
measures how well a company
is utilizing its working capital to
support a given level of sales
capital An increase in turnover
ratio indicates that
management has
become more efficient
in using the Co’s working
capital to support sales
RATIO
Fixed assets turnover
ratio
It measures the efficiency
with which the firm uses its
fixed assets.
Current assets turnover
ratio
It measures the efficiency
using the current assets by
the firm.
Total assets turnover
ratio
This ratio indicates the
firm’s ability of generating
sales/ Cost of Goods Sold
per rupee of long term
investment
FORMULA 2016-2017 2017-2018
Net sales/ net fixed 4.66 4.61
assets A slight decrease may imply
that there is inefficient or
under utilisation of assets
Net sales/ current 4.00 7.711
assets The increasing trend of this
ratio is a good sign because
this means that the
company is working on
improvement of its policies
in inventory, accounts
receivable and other
current assets management
Net sales/ total 2.05 2.67
assets An increase in the ratio
represents more efficient
utilisation of owner’s and
long- term creditors’ funds
PROFITABILITY RATIO
RATIO 2016-2017 2017-2018 ANALYSIS
Gross profit ratio 12.59 13.62
It measures the percentage of 1.03
each sale in rupees remaining
after payment for the goods sold. A high Gross Profit Margin is a
favourable sign of good
management

Net profit ratio 4.06 5.228

It measures the relationship .
between net profit and sales of 1.168
the business A high net profit ratio will ensure
positive returns of the business

Operating profit ratio 8.37 7.88

Operating profit ratio is also
calculated to evaluate operating 0.49
performance of business.
Operating profit ratio measures the
percentage of each sale in rupees
that remains after the payment of
all costs and expenses except for
interest and taxes
RATIO
Return on equity
This ratio reveals how
profitably the owners’ funds
have been utilised by the
firm.
Measures the percentage
return generated to equity
shareholders
Return on capital
employed
shows how much profit each
Rupee of employed capital
generates
2016-2017 2017-2018 ANALYSIS
12.59 16.91
4.32
Companies that boast a high return
on equity with little or no debt are
able to grow without large capital
expenditures, allowing the owners
of the business to withdraw cash
and reinvest it elsewhere
20.43 23.95
3.52
A higher ratio would be more
favorable because it means that
more Rupees of profits are
generated by each Rupee of
capital employed.
RATIO 2016-2017 2017-2018 ANALYSIS

EARNING PER SHARE 7.73 12.57

4.84
The profitability of a firm from
point of view of ordinary
shareholders can be measured in
terms of number of equity shares

PRICE EARNING RATIO NA 128

128
• The price earnings ratio
indicates the expectation of
equity investors about the It relates earnings to market price
earnings of the firm. and is generally taken as a
• It indicates the payback period summary measure of growth
to the investors or prospective potential of an investment, risk
investors characteristics, shareholders
orientation, corporate image and
degree of liquidity.