SHORT TERM SOLVENCY ANALYSIS OF LEAD AUTOMOBILE PLAYERS IN INDIA PART 4

Andrew Jack
Posted by Andrew Jack July 15, 2017

The above table no. 1 and figure no. 1 exhibits that current ratio of “Maruti Suzuki” stood at an average of 1.48:1 for the study period 2010-11 to 2014-15. The current ratio of the company fluctuates from 0.93:1 to 1.76:1 during the study period. In the year 2013-14 the company is able to maintain highest current ratio of 1.76:1 and the lowest current ratio was witnessed in the year 2014-15. During the entire study period, it was in 2013-14 when the company had maximum amount of current assets i.e. Rs. 14171.7 crores, and the maximum amount of current liabilities was witnessed in the year 2014-15 i.e. Rs. 8823.00 crores. The company’s current assets and current liabilities stood at an average of Rs. 10145.94 crores and Rs. 6870.50 crores

respectively. A current ratio of 2:1 is considered to be satisfactory, which means that current assets are twice the current liabilities. If current assets are less than, twice the current liabilities it reflects that a firm may find it difficult to pay its current liabilities on time. Since, the current ratio of Maruti Suzuki stood at an average of 1.48:1 it reveals that the company’s current ratio is less than standard and the company needs to improve it.Table 2 and Figure 2 reveal that the current ratio of “Tata Motors” stood at an average of 0.53:1 for the study period 2010-11 to 2014-15. During the study period the current assets of the company stood at an average of Rs. 10650.10 crores whereas the current liabilities of the company stood at an average of Rs. 19741.10 crores. The current ratio of Tata Motors ranges from 0.36:1 to 0.87:1 during the study period. It is in the year 2010-11 when the company is able to maintain highest current ratio of 0.87:1 and the lowest current ratio was witnessed in the year 2013-14 i.e. 0.36:1. During the entire study period, it was in 2010-11 when the company had maximum amount of current assets i.e. Rs. 14090.61 crores and maximum amount of current liabilities was held by the company in 2011-12 i.e. Rs. 22177.47 crores.