The appraisal of financial health of Voltas is presented below:

I. Liquidity Analysis:
The liquidity position of Voltas during the period of 2018-22 has shown to be upward for all the five
years, where in the initial year i.e. on 2018 the current ratio was 1.63which is way above one and in
the final year i.e. on 2022 the current ratio was 1.41 which shows that the current ratio of Voltas has
been constant for the three years accounting years. If we look at the quick ratio of the highest ratio i.e.
1.63 was seen in the year 2019 and it later shows a slight decrease in the ratio for the year 2018 which
was 1.30.
The next ratio in the liquidity analysis is the cash ratio. The cash ratio for Voltas in the initial year was
0.13 which was above the ideal ratio of 0.11. But in the next year, the ratio dropped to 0.07.
II. Solvency Analysis:
The solvency analysis shows that Voltas is in a good position with the total equity debt ratio to be 0
for all the five calculated years which shows that they haven’t taken any debt from any financial
institutions. A favorable proprietary ratio is considered to be 0.5 or above 0.5, which the company has
done a good job to maintain that ratio, with the highest ratio being 0.62 in the year 2022 and the
lowest was calculated as 0.53 in the year 2017 which shows company’s long term credibility.

III. Profitability Analysis:

The profitability analysis of Voltas has been very impressive over the years. A gross profit margin
ratio of 50 to 70% is considered to be healthy. If we compare these healthy ratios with the calculated
values, the ratios for all the three years is above 70%. The lowest ratio was calculated to be in the
year 2021 and highest one was 76.1% in the year 2019.
The operating profit ratio for Voltas has been decreasing over the years. An ideal ratio for operating
profits is about 15% to 20% but it should not be less than 5%. The operating profit ratio for the year
2018 was 18.23% which was the highest amongst the calculated ratios, it gradually dropped down to
12.6% for the year 2022, which shows that the company is earning very good profits from its
operations.
The net profitability ratio for Voltas has been fluctuating a lot over the calculated years. The highest
ratio calculated was 13.8% in the year 2019, whereas the lowest ratio was observed in the year 2021
to be 5.08%.
IV. Valuation Analysis
The Price to Book ratio has been decreasing over the years with 5.5% in 2018 to 3.99 in 2022 which
is higher than the ideal ratio. Whereas in the Price to Equity ratio, there has been many fluctuations
over the five years. The major fluctuation happened between the year 2020 and 2021 with the ratios of
42.71% and 86.43% respectively. The MCAP/SALES ratio has been constant for the majority of years
with the ratios ranging between 3.6 to 4.8. The lowest calculated ratio was found to be 2.8 in the year
2020. The EV/EBIDTA ratio for Voltas ranges between 12% to 23%. The ratio for 2021 was the
highest which again shows the evidence that the company did not perform well as compared to other
calculated years.

PEER COMPARISON
The Blue Star of India is one of the peer competitors of Voltas Ltd.
 Liquidity Analysis Solvency Analysis Profitability Valuation Analysis
Analysis
Current Ratio: Debt to Equity ratio: Gross Profit P/E ratio:
ratio:
2018- 1.09% 2018- 0.34 2018-3.94 2018- 51.7
2019- 1.07% 2019- 0.38 2019-4.76 2019- 48.6
2020- 0.91% 2020- 0.58 2020-2.72 2020- 21.5
2021- 1.05% 2021- 0.63 2021-2.70 2021- 80.9
2022- 0.98 % 2022- 0.54 2022-3.92 2022- 59.8
Quick Ratio: P/B ratio:
2018- 0.78 2018- 9.8
2019- 0.88 2019- 8.2
2020- 0.87 2020- 81.23
2021- 0.84 2021- 91.91
2022- 0.80 2022- 105.65

If we compare the Voltas company with Blue Star of India, Voltas is in a very good position as
compared to Blue Star whether it be in terms of overall Liquidity Analysis, solvency analysis,
Profitability analysis and Valuation analysis. Even though 2021 being the worst year for Voltas , it
has still performed well in terms of finances as compared to Blue Star of India and it has continued to
do so over the years.