Ratio Analysis of Tcs Wipro Infosys
CURRENT RATIO
It is a liquidity ratio that measures a company's ability to pay short-term obligations.
Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
By putting to test a company's financial strength, deduces company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables).
The higher the current ratio, the more capable the company is of paying its obligations.
An acceptable current ratio varies by industry. Generally, the more liquid the current assets, the smaller the current ratio can be without cause for concern.
For most companies, 1.5 is an acceptable current ratio.
A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. As the number approaches or falls below 1 (which means the company has a negative working capital), investors and stakeholders need to take a close look at the business and make sure there are no liquidity issues. Companies that have ratios around or below 1 should only be those which have inventories that can immediately be converted into cash.
On the other hand a very high current ratio means that firm has much cash on hand, and that the management may be doing a poor job of investing it.
As seen in services industries, ITES companies generally tend to have a very high current ratio (2+) due to less debts and more retained incomes.
While all the three companies show high current ratios of over 2, Infosys has the highest current ratio of 3.28.
DEBT TO ASSETS RATIO
Long term financial strength or soundness of a firm is measured in terms of its ability to pay interest regularly or repay principal on due dates or at the time of maturity taking into account its assets.
The debt/asset ratio shows the proportion of a company's assets which are financed through debt.
If the ratio is less than one, most of the company's assets are financed through
It is a liquidity ratio that measures a company's ability to pay short-term obligations.
Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
By putting to test a company's financial strength, deduces company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables).
The higher the current ratio, the more capable the company is of paying its obligations.
An acceptable current ratio varies by industry. Generally, the more liquid the current assets, the smaller the current ratio can be without cause for concern.
For most companies, 1.5 is an acceptable current ratio.
A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. As the number approaches or falls below 1 (which means the company has a negative working capital), investors and stakeholders need to take a close look at the business and make sure there are no liquidity issues. Companies that have ratios around or below 1 should only be those which have inventories that can immediately be converted into cash.
On the other hand a very high current ratio means that firm has much cash on hand, and that the management may be doing a poor job of investing it.
As seen in services industries, ITES companies generally tend to have a very high current ratio (2+) due to less debts and more retained incomes.
While all the three companies show high current ratios of over 2, Infosys has the highest current ratio of 3.28.
DEBT TO ASSETS RATIO
Long term financial strength or soundness of a firm is measured in terms of its ability to pay interest regularly or repay principal on due dates or at the time of maturity taking into account its assets.
The debt/asset ratio shows the proportion of a company's assets which are financed through debt.
If the ratio is less than one, most of the company's assets are financed through