Ratio Analysis
RATIO ANALYSIS 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):- It shows the relationship between size of current assets and size of current liabilities. Current Ratio=Current Assets (C.A)/Current Liabilities (C.L) The standard of current ratio is (2/1) means company must have “2” or twice assets to be paid out “1” liability. In this case company’s current ratio is 0.98 means it has 0.98 assets to be out “1” liability. So this company is not performing well and it is not up-to the mark (rule of thumb).It’s Current Assets are (2,049,482,448) and Current Liabilities are (2,092,801,374). Though it is not up to the mark but still it’s condition in 2007 is better as compared to 2008 and 2009. Moreover it’s liabilities is low compared with other years which means that company is satisfying it’s liabilities. By the satisfying of liabilities it gains the trust of creditors and stakeholders. Another reason is that it gave high amount of loans and advances to the others. Higher amount of loans and advances means that company was giving loans and advances to the others thereby gaining or earning income or profit from them in the form of interest. But the drawback of this company was his cash in bank, company’s condition could be more better by investing it’s idle cash in the business rather to keep it in bank. Quick Ratio (Q.R):- It shows the relation between Quick Assets (most liquid current asset) and Current Liabilities. Quick Ratio=Quick Assets (Q.A)/Current Liabilities (C.L) The standard of quick ratio is (1/1) means company must have “1” assets to be paid out “1” liability. In this case company’s quick ratio is 0.66 means it has 0.66 assets to be paid out “1” liability. So this is not
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2007
Current Ratio (C.R):- It shows the relationship between size of current assets and size of current liabilities. Current Ratio=Current Assets (C.A)/Current Liabilities (C.L) The standard of current ratio is (2/1) means company must have “2” or twice assets to be paid out “1” liability. In this case company’s current ratio is 0.98 means it has 0.98 assets to be out “1” liability. So this company is not performing well and it is not up-to the mark (rule of thumb).It’s Current Assets are (2,049,482,448) and Current Liabilities are (2,092,801,374). Though it is not up to the mark but still it’s condition in 2007 is better as compared to 2008 and 2009. Moreover it’s liabilities is low compared with other years which means that company is satisfying it’s liabilities. By the satisfying of liabilities it gains the trust of creditors and stakeholders. Another reason is that it gave high amount of loans and advances to the others. Higher amount of loans and advances means that company was giving loans and advances to the others thereby gaining or earning income or profit from them in the form of interest. But the drawback of this company was his cash in bank, company’s condition could be more better by investing it’s idle cash in the business rather to keep it in bank. Quick Ratio (Q.R):- It shows the relation between Quick Assets (most liquid current asset) and Current Liabilities. Quick Ratio=Quick Assets (Q.A)/Current Liabilities (C.L) The standard of quick ratio is (1/1) means company must have “1” assets to be paid out “1” liability. In this case company’s quick ratio is 0.66 means it has 0.66 assets to be paid out “1” liability. So this is not