FINANCIAL RATIO ANALYSIS

LIQUIDITY RATIOS
CURRENT RATIO
It is a specific category of liquidity ratio used to assess a company's ability to repay
short-term loans within the same fiscal year.

Comparing year on year data, the company is not certainly doing well. Regular decrease
in the ratio shows the disability of the company to cover current debts issued upon it. It
does not hold a good position to realize its short-term cash needs.

QUICK RATIO

The quick ratio is a measure of a company's capacity to satisfy short-term obligations

with its most liquid assets and is an indicative of its short-term liquidity position.
 The company has no inventories and prepaid expenses so the current ratio and quick
ratio is same.

Debtor Turnover Ratio

A very high DTR shows us the company has very aggressively grown in terms of collecting
money from debtors. It is able to retrieve money easily which shows a good reputation among
the industry.

The receivables turnover ratio is an accounting metric that measures how well a company
collects its accounts receivable, or money owed by customers or clients.

The company over the course of time reduced its debtor collection period which implies
maybe stricter collection policies or increased staff and technology to help in improved
management.
Profitability Ratios
Return on Equity-
The return on equity (ROE) is a financial performance indicator that is computed by dividing
net income by shareholders' equity.

ROE ratio for the given 2 years lies in between the good percentage cap of 45-55%.
Moreover, recently the company’s ability to generate profits from its shareholder’s
investment is at the topmost cap of 52% which is an excellent sign.

Net Profit margin-

Net profit margin is the portion of each sales rupee that is left over after all costs and
expenses, including as interest and taxes, have been subtracted.

The company is generating an outstanding amount of profit margin. According to the given
data, the company has seen increased higher profit margins implying that the company has
more money to spend more indirect expenses costs such as interest expenses and other
onetime expenses.
Solvency Ratios
Debt to Asset
The debt-to-total-assets ratio shows how much of a business is owned by creditors
(people it has borrowed money from) compared with how much of the company's
assets are owned by shareholders.

It defines the total debt on company over total assets. Our company ratio is (0.006:1),
it means that most of the company's assets are financed through equity.

Debt to Equity / Leverage

It’s a metric used by company to measure its financing used in operations from debt
to total equity.

The debt to equity ratio for EaseMyTrip is very less, which shows very less of its financing is
from borrowing money, which subjects the company to be very less risky.
 Interest Coverage

The interest coverage ratio, a debt and profitability measure, is used to assess how
easily a business can pay the interest on its existing debt. The interest coverage ratio is
computed by dividing a company's earnings before interest and taxes (EBIT) by its
interest expense over a specific time period.

It tells the company’s ability to pay debts from its outstanding shares. Over the 2-year time
period it increased from (25.69:1) to (93.68:1) as it increased its long-term borrowings. But
eventually these financial activities will provide high returns in future.

Efficiency Ratio
Asset Turnover Ratio

Asset turnover ratios are used to gauge how well a company's assets produce income
or sales. By dividing net sales or revenue by the average total assets, one may
determine the asset turnover ratio.

Asset Turnover Ratio

0.60 0.55
0.50
0.42
0.40

0.30

0.20

0.10

0.00
2022 2021

The company has a low asset turnover ratio (0.55:1), it indicates it is not efficiently
using its assets to generate sales.