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SHORT TERM SOLVENCY ANALYSIS OF LEAD AUTOMOBILE PLAYERS IN INDIA PART 5

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The current ratio of Tata Motors stood at an average of 0.54:1 which reveals that the company is having shortage of working capital due to which it can face difficulty to meet its current liabilities on time.
Table no. 3 and figure no. 3 portray a comparison between current ratio of Maruti Suzuki and Tata Motors. The above analysis interprets that both the companies are not able to maintain a satisfactory current ratio than standard. The current ratio of Maruti Suzuki and Tata Motors stood at an average of 1.48:1 and 0.54:1 during the study period which means that both the companies are not able maintain a standard current ratio of 2:1. When current assets are less than twice the current liabilities it means that the company is having shortage of working capital due to which it may not be able to meet its current liabilities on time. The above analysis also reveals that Maruti Suzuki is in a better position to meet its short term liabilities on time as compared to Tata Motors, because the former is having a better current ratio than the latter.
5. HYPOTHESIS TESTING ON CURRENT RATIO (MARUTI SUZUKI AND TATA MOTORS)
To test whether there is a significant difference between current ratio of Maruti Suzuki and Tata Motors the following hypothesis is framed and tested through t-test at 95% confidence level:
H0 There is no significant difference between current ratio of Maruti Suzuki and Tata Motors
H1 There is a significant difference between current ratio of Maruti Suzuki and Tata Motors
Since the calculated value of t two tail at at.05 level of significance is less than table value of t, alternate hypothesis is rejected and null hypothesis is accepted that there is no significant difference between current ratio of Maruti Suzuki and Tata Motors.

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