LIQUIDITY RATIOS:
These ratios footfall the firms ability to satisfy its short-term obligations. thither are two key ratios in this segment.
It is in like manner called as the Acid Test Ratio.
Working Capital = original Assets ? Current Liabilities
Current Ratio Analysis:
Current ratio is a financial ratio that measures whether or not a club has enough resources to fix its debt over the next business round of golf (usually 12 months) by comparing firms legitimate assets to its current liabilities.
unexceptionable current ratio values vary from industry to industry. Generally, a current ratio of 2:1 is considered to be acceptable. The higher(prenominal) the current ratio is, the more capable the company is to pay its obligations. Current ratio is also affected by seasonality.
If current ratio is bel low gear 1 (current liabilities exceed current assets), because the company may have problems paying its bills on time. However, low values do not indicate a scathing problem but should concern the management. One exception to the witness is considered fast-food industry because the inventory turns over much more quickly than the accounts payable becoming due.
Current ratio gives an idea of companys in operation(p) efficiency.
A high ratio indicates safe liquidity, but also it can be a signal that the company has problems getting paid on its receivable or have dour inventory turnover, both symptoms that the company may not be efficiently using its current assets.
As far as Indian Oil is concerned, their current ratio analyses for the last 5 years are shown in the following figure:
2010: 0.76 2009: 0.61 2008: 0.84 2007: 0.79 2006: 0.83
exposition:
Working Capital Analysis:
winningsability Ratios:
Net Profit Margin-
Often referred to as a companys profit margin, bottom notation is the most mentioned term when discussing a companys profitability. While undeniably an distinguished number, investors can easily see from...If you want to get a full essay, order it on our website: Ordercustompaper.com
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