The Current Ratio for the Year 2006
-
Upload
drnagunuri-srinivas -
Category
Documents
-
view
215 -
download
0
Transcript of The Current Ratio for the Year 2006
-
7/29/2019 The Current Ratio for the Year 2006
1/3
1) The current ratio for the year 2006-07 i.e. 8.39 which is very high
than the ideal on i.e., 2:1. So it indicates that there is much licking of
capital in current assets which is not a good sign.
2) A quick ratio is 1:1 considered as ideal But, this quick ratio considerable in the
year 2012 it is much higher in all the year of study. It is very high especially in the
financial year 2006-07 which is 5.55 .
3) We found that the net profit ratio of the SUDHAKAR POLYMERS LIMITED is high
in the year 2008-09 i.e., 2.09% and the operating ratio in the year 2006-07 is low
which a good high is.
4) The Study shows the gross profit ratio is in a fluctuating character and it is
fluctuating through the year 2011-12.
5) The inventory turnover or stock velocity of the unit i.e., the number of times the
stock has been turned over during the period.
6) It is indicated the number of times debtors turnover each year is high ratio is
considered congenial for the business as it implies better cash flow.
7) A high capital turnover ratio indicates utilization of the units fixed assets. A ratio
around 5 is considered as ideal. This company has low working capital turnover
ratio.
8) Companys reserves & surpluses initially increased, but later on they fell down
due to loss accursed in 2008-09.
9) Company working capital was very low in the year 2007-08 but in the year 2008-
09 it increased to 19.92% clue to increase in the current assets.
-
7/29/2019 The Current Ratio for the Year 2006
2/3
10) During these periods company took some loans from out side chase fixed assets.
11) Sundry debtors increased during all the periods with slow rates due to increase in
the credit sales.
12) During all the periods companys sales were increased.
13) Expenditure of the company also increased due to increased in production & other
expenditures.
14) Profitability of the company was good.
-
7/29/2019 The Current Ratio for the Year 2006
3/3
Companys current ratio is not satisfactory so it should increase current assets in
comparison to current liabilities.
As companys fixed assets turnover ratio is continuously decreasing it means it
has
under utilization of available resources. So it can expand its activity level without
any
additional capital investment.
Liquid ratio is decreasing it may result in difficulties of meeting current obligation.
Company utilized its resources efficiently having high inventory turnover ratio and
operating with reduced cost.
It can reduce the need of working capital by availing credit period from suppliers.
Company is not making optimum utilization of fixed assets as its fixed assets
turnover ratio is continuously decreasing.
Recently proportion of debt in comparision to equity capital is higher in Mar09
which results in cash outflow in the form of interest.