Ratio Evaluation

 Ratio Examination Essay

RATIO RESEARCH

Ratios| 2007| 2008| 2009

Current Ratio| 0. 98| 0. 79| 0. 91

Quick Ratio| 0. 66| 0. 41| 0. 46

Working Capital| (43318926)| (480192556)| (199882615)

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2007

Current Ratio (C. R): --

This shows the relationship between scale current property and size of current financial obligations. Current Ratio=Current Assets (C. A)/Current Financial obligations (C. L) The standard of current ratio is (2/1) means organization must have " 2” or perhaps twice possessions to be paid for " 1” liability. In cases like this company's current ratio is usually 0. 98 means it includes 0. 98 assets to get out " 1” the liability. So this firm is not performing very well and it is not really up-to the mark (rule of thumb). It's Current Assets happen to be (2, 049, 482, 448) and Current Liabilities are (2, 092, 801, 374). Though not necessarily up to the mark but nonetheless it's symptom in 2007 is way better as compared to 2008 and 2009. Moreover it's liabilities is usually low in comparison with other years which means that firm is rewarding it's debts. By the rewarding of financial obligations it benefits the trust of creditors and stakeholders. Another reason is that it gave high amount of loans and improvements to the others. Higher amount of loans and advances means that business was giving loans and advances for the others therefore gaining or perhaps earning cash flow or cash in on them in the form of interest. However the drawback of this business was his cash in financial institution, company's state could be more better simply by investing is actually idle profit the business somewhat to keep it in bank. Speedy Ratio (Q. R): -

It shows the relation between Quick Property (most water current asset) and Current Liabilities. Speedy Ratio=Quick Assets (Q. A)/Current Liabilities (C. L) The typical of quick ratio is (1/1) means company need to have " 1” assets being paid out " 1” liability. In this case business quick proportion is 0. 66 means it has 0. 66 possessions to be paid " 1” liability. So this is not really doing well in fact it is not up-to the mark (rule of thumb). Really Quick Resources are (1, 393, 722, 057) and Current Financial obligations are (2, 092, 801, 374). Even though it is not the mark yet it's efficiency in 2007 is better when compared with 2008 and 2009. There are plenty of reasons that company‘s products on hand is low. Low products on hand may be due to low prices, popular, good administration, new technology, strong marketing strategies and so forth Also it offers low prepayments which clearly indicates it is investing really cash in the business in order to increase. It's receivables (11, 779, 550) and cash (252, 964, 526) both are in huge amount that is the reason of high quick ratio to the others. Seed money (W. C): -

The standard of working capital is positive (+ve) means company should have positive working capital in order to attract the trust of creditors and stakeholders. In such a case company terribly lack positive working capital but it can amount is definitely negative which will clearly signifies the bad current condition of the company. Nevertheless we review it with the 2008 and 2009 it takes less quantity or revenue or salary to recover. Working capital will be great on the moment there is overabundance Current Assets over Current Liabilities yet here seed money is adverse means is actually Current Financial obligations are higher than Current Assets. Another reason can be it's control and other payables, and Deferred Liabilities happen to be in enormous figure that gets the T. C (working capital) in negative. However it is clear by it's sales tax (high) that company revenue in that yr is develop up. Really revenue that why improved. 2008

Current Ratio (C. R): --

That shows the partnership between scale current resources and size of current financial obligations. Current Ratio=Current Assets (C. A)/Current Financial obligations (C. L) The standard of current percentage is (2/1) means organization must have " 2” or twice resources to be paid for " 1” liability. In cases like this company's current ratio is definitely 0. seventy nine means it includes 0. 79 assets being out " 1” legal responsibility. So...

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