CURRENT RATIO

The current ratio is a liquidity ratio that measures a company’s ability to pay short-
term obligations or those due within one year. It tells investors and analysts how a company
can maximize the current assets on its balance sheet to satisfy its current debt and other
payables.
Current Assets
Current ratio = -------------------------------
Current Liabilities

Current Assets = Total CA, loans & Advances

Current Liabilities = Total CL & provisions
TABLE NO: 4.1
CURRENT RATIO
Year Current assets Current Liabilities Ratio
2016-2017 99.98 77.07 1.29
2017-2018 99.75 77.03 1.29
2018-2019 97.03 85.11 1.14
2019-2020 107.28 94.82 1.13
2020-2021 77.23 75.4 1.02

Source: Annual report

Interpretation

The above table 4.1 indicates that the current ratio is 1.29 in the year of 2016-17. It
remains 1.29 in the year of 2017-18. It has decreased to 1.14 in the year of 2018-19. It has
further decreased to 1.13 and 1.02 in the year of 2019-20 and 2020-21 respectively. The
standard current ratio is 2:1. The company has to properly maintain its current assets and
current liabilities since it is below the standard 2:1.
QUICK RATIO

The quick ratio, also known as the acid-test ratio, measures the ability of a company
to pay all of its outstanding liabilities when they come due with only assets that can be
quickly converted to cash. These include cash, cash equivalents, marketable securities, short-
term investments, and current account receivables.
Quick Assets
Quick ratio = -------------------------------
Current Liabilities
TABLE NO: 4.2
QUICK RATIO
Year Quick Assets Current Liabilities Ratio
2016-2017 61.05 72.58 0.84
2017-2018 64.24 73.73 0.87
2018-2019 62.61 81.99 0.76
2019-2020 53.85 91.82 0.58
2020-2021 33.33 73.47 0.45

Quick assets = Total CA, loans & Advances – Inventories

Current liabilities = Total CL & provision

Source: Annual report

Interpretation

The above table 4.2 indicates that the quick ratio is 0.84 in the year of 2016-17. It has
increased to 0.87 in the year of 2017-18. It has decreased to 0.76 in the year of 2018-19. It
has further decreased to 0.58 in the year of 2019-2020 and it is decreased to 0.45 in the year
of 2020-21. The standard quick ratio is 1:1. The company has to improve its quick assets and
current liabilities since it is below 1:1.
WORKING CAPITAL RATIO

The working capital ratio, also called the current ratio, is a liquidity ratio that
measures a firm’s ability to pay off its current liabilities with current assets. The working
capital ratio is important to creditors because it shows the liquidity of the company.
Net working capital
Working capital ratio = -------------------------------
Net assets
TABLE NO: 4.3
WORKING CAPITAL RATIO
Year Net working capital Net assets Ratio
2016-2017 22.91 117.92 0.19
2017-2018 22.72 127.80 0.18
2018-2019 11.92 124.38 0.10
2019-2020 12.46 133.73 0.09
2020-2021 1.83 132.51 0.01

Source: Annual report

Interpretation

The above table 4.1 indicates that the Working capital ratio is 0.19 in the year of
2016-17. It has decreased to 0.18 in the year of 2017-18. It has decreased to 0.10 in the year
of 2018-19. It has further decreased to 0.09 and 0.01in the year of 2019-20 and 2020-21
respectively. The standard working capital ratio is 1.5 and 2. The company has to maintain
appropriate working capital ratio since it is below the standard.