Solvency ratio:

These ratios are calculated to assess the ability of the firm to

meet its long term liabilities as and when they become
due.these ratios also reveal as to how much amount in a
business has been invested by proprietors and how much
amount has been raised from outside sources.
1.DEBT EQUITY RATIO :THIS RATIO EXPRESSES THE
RELATIONSHIP BETWEEN LONG TERM DEBTS AND
SHAREHOLDERS FUNDS.THE RATIO IS CALCULATED TO
ASCERTAIN THE SOUNDNESS
DEBT EQUITY RATIO- DEBT EQUITY
2011

2012

2013

2014

2015

0.05648:1

0.05706:1

0.06276:1

0.05571:1

0.05785:1

INTERPRETATION:IT MAY BE SEEN THAT THE COMPANY HAS

THE DEBT EQUITY RATIO IN THE SHORT RANGE OF 0.05 OVER
THE LAST SIX YEARS.THIS SHOWS THAT ITCIS HIGHLY
CONSERVATIVE AND MAKES VERY MINIMUM USE OF FINANCIAL
LEVERAGE.IT CAN BE SAID THAT ITCLEAVES A LOT OF SCOPE
OF RAISING BORROWED FUNDS FROM THE MARKET.THE LOWER
THIS RATIO THE BETTER IT IS FOR THE LONG TERM LENDERS OF
THE COMPANY.
2.LIABILITY TO EQUITY RATIO:THIS RATIO IS CALCULATED TO
EXPRESS THE RELATIONSHIP BETWEEN THE TOTAL
LIABILITY(CURRENT AND NON CURRENT) AND SHAREHOLDERS
EQUITY.
LIABILITY TO EQUITY RATIO-ALL LIABILITYSHAREHOLDERS
EQUITY
2011

2012

2013

2014

2015

0.59322:1

0.54143:1

0.52627:1

0.49376:1

0.49792:1

INTERPRETATIONS:IT MAY BE OBSERVED THAT THE LIABILITY

TO EQUITY RATIO IS ALMOST CONSTANT OVER THE PAST SIX
YEARS WITH A SUDDEN DECREASE FROM 2011 TO 2012
10.491

24.008

25.570

28.256

29.808

29.962