RATIO ANALYSIS OF WIPRO LTD FOR THE FINANCIAL YEAR 2019-20

1. Current ratio = Current assets

Current liablities

31/03/2020 = 45,713.30 = 2.77

16,443.80 1

31/03/2019 = 47,730.40 = 3.56

16,144.60 1

The generally accepted standard is 2:3 i.e. the current assets must be twice that of current liabilities.
Though the current ratio of Asian paints falls below the industry standards, yet it is satisfactory, as there
are enough current assets to cover the current liabilities.

2. Debt to equity ratio = debt

Equity

Debt = Total debt – Current liablities

Equity = Equity share capital + preference share capital + reserves and surplus

31/03/2020 = 2,408.90 - 16,443.80 = 0.302

1,142.70 + 45,311.00 1

31/03/2019 = 1,461.50 - 16,144.60 = 0.3034

1,206.80 + 48,185.20 1

Debt to equity ratio is computed to assess the long term financial soundness of business.
It is the relationship between the long term external equities and aide external debts and
internal debts of the enterprise normally debt to equity to equity ratio 2:3 is considered an
appropriate ratio. However the lower debt to equity ratios means that the company
depends more on shareholders’ funds then external equities in effect, lenders are at lower
risk and high safety.

3. Proprietary Ratio = shareholders’ funds

Total assets

31/03/2020 = 46453.7 = 0.7113

65,306.40
31/03/2019 = 49,392 = 0.7372
66,998.10

Proprietary ratio establishes the relationship between proprietor’s funds and assets. A
high ratio indicates adequate safety for creditors. A low ratio on the other hand indicates
inadequate safety. The company has been maintaining a decent proprietary ratio over the
two years, with more than 50% of the assets been financed with shareholders’ funds.