Current Ratio
Current ratio measures short-term solvency of the company to meet its short term obligation. Curretn ratio in the year 1983 was 1.64:1. It signifies that a decline in the value of current assets will adversely affect the ability of the firm to meet its obligation and from point of view of the creditors its more risky venture. While in year 2000 it is 2.03:1 which means there is sufficient cushion and even with half of the shrinkage in value it will able to meet its obligation in full and is less risky. The company since last few years has maintained the perfect balance and its current ratio is almost around 2:1. However it may be seen that the percentage of cash in total current assets has been declining while there is higher percentage of slow moving inventories and slow paying receivables which would affect the real liquidity of the company to meet obligations as and when they become due.
In case of current ratio (including investments) we have considered investments in quotes shares, debentures and units as marketable securities. The company had made major investments in equity shares in year 2000 when there was a boom in capital market. As a result of this, the current ratio has gone upto 2.76:1. However lately the company seems to have beneficial moved out of the equity investments in the period of recession.
Current ratio (icl ST loans) includes working capital advances and other short term loans in current liability. The company has generally resorted to long term funds rather than going for the short term loans as a result of which the company ability to maintain short term solvency is maintained around 1.7 :1.
Inventory Turnover Ratio
Quick Ratio
It measures the ability of the firm to convert its current assets quickly into cash inorder to meet its current liabilities. The company recently has maintained the quick ratio at the level of 1.5:1 which depicts firm satisfactory ability to service short term liabilities. Due to much higher quick ratio of around 1.88:1 the company has reduced it cash and bank balance considerably in last 2 years.
Current ratio measures short-term solvency of the company to meet its short term obligation. Curretn ratio in the year 1983 was 1.64:1. It signifies that a decline in the value of current assets will adversely affect the ability of the firm to meet its obligation and from point of view of the creditors its more risky venture. While in year 2000 it is 2.03:1 which means there is sufficient cushion and even with half of the shrinkage in value it will able to meet its obligation in full and is less risky. The company since last few years has maintained the perfect balance and its current ratio is almost around 2:1. However it may be seen that the percentage of cash in total current assets has been declining while there is higher percentage of slow moving inventories and slow paying receivables which would affect the real liquidity of the company to meet obligations as and when they become due.
In case of current ratio (including investments) we have considered investments in quotes shares, debentures and units as marketable securities. The company had made major investments in equity shares in year 2000 when there was a boom in capital market. As a result of this, the current ratio has gone upto 2.76:1. However lately the company seems to have beneficial moved out of the equity investments in the period of recession.
Current ratio (icl ST loans) includes working capital advances and other short term loans in current liability. The company has generally resorted to long term funds rather than going for the short term loans as a result of which the company ability to maintain short term solvency is maintained around 1.7 :1.
Inventory Turnover Ratio
Quick Ratio
It measures the ability of the firm to convert its current assets quickly into cash inorder to meet its current liabilities. The company recently has maintained the quick ratio at the level of 1.5:1 which depicts firm satisfactory ability to service short term liabilities. Due to much higher quick ratio of around 1.88:1 the company has reduced it cash and bank balance considerably in last 2 years.