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Liquidity Ratios Analysis (2011-2016)

The document analyzes various liquidity ratios for a company over 5 years from 2011-2012 to 2015-2016. It shows that the current ratio, which measures a company's ability to pay short-term debts, fluctuated over the years but was highest in 2015. The quick ratio, which measures a company's ability to pay debts without relying on inventory, was above 2 for all years and peaked in 2015-2016. Net working capital, the difference between current assets and current liabilities, varied year to year but was highest in 2014-2015. The asset turnover ratio, which measures how efficiently a company uses its assets, remained relatively steady around 1.13 each year.

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Ritu Singh
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54 views4 pages

Liquidity Ratios Analysis (2011-2016)

The document analyzes various liquidity ratios for a company over 5 years from 2011-2012 to 2015-2016. It shows that the current ratio, which measures a company's ability to pay short-term debts, fluctuated over the years but was highest in 2015. The quick ratio, which measures a company's ability to pay debts without relying on inventory, was above 2 for all years and peaked in 2015-2016. Net working capital, the difference between current assets and current liabilities, varied year to year but was highest in 2014-2015. The asset turnover ratio, which measures how efficiently a company uses its assets, remained relatively steady around 1.13 each year.

Uploaded by

Ritu Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Liquidity Analysis

CURRENT RATIO
YEAR
2011-2012

:-

1.94

2012-2013

:-

1.55

2013-2014

:-

1.98

2014-2015

:-

2.16

2015-1016

:-

2.11

ratio of current assets to current liabilities.


current ratio is always 2:1 it means the current assets two
time of current liability.
After observing the figure the current ratio is fluctuating.
In the year 2015 ratio is showing good shine.
Hear ratio is increase as a increasing rate from 2011 to
2015.

QUICK RATIO
YEAR
2011-2012

:-

2.50

2012-2013

:-

2.02

2013-2014

:-

2.53

2014-2015

:-

2.95

2015-2016

:-

3.06

Companys Quick Assets is more than Quick Liabilities for all


these 5 years.
In 2015-2016 the ratio is increasing because of increase in
bank and cash balance.
So all the years has quick ratio exceeding 2, the firm is in
position to meet its immediate obligation in all the years.
In 2012-2013 quick ratio is decreased because the increase in
quick assets is less proportionate to the increased quick
liabilities.
The Quick ratio was at its peak in 2015-2016, while was lowest
in the 2012-2013.

NET WORKING CAPITAL


YEAR
2011-2012

:-

118.08

2012-2013

:-

97.56

2013-2014

:-

127.39

2014-2015

:-

176.44

2015-2016

:-

151.88

This ratio represents that part of the long term funds


represented by the net worth and long term debt, which
are permanently blocked in the current assets.
It is being fluctuating year by year because of assets
increasing and decreasing faster than liabilities

ASSETS TURN OVER RATIO


YEAR
2011-2012

:-

1.14

2012-2013

:-

1.15

2013-2014

:-

1.25

2014-2015

:-

1.11

2015-2016

:-

1.01

The total assets turnover ratio is almost same in all years.


The Assets turnover Ratio is near by 1.13 in all 5 years which
shows effective utilization of assets from the companys view
point.
In the year 2013-2014 ratio is increased because of companys
total assets is increased, sales are increased. So the ratio is
increased but in current year it is decreased because sale
increasing and Assets increasing.

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