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INTERPRETATION: The current ratio shows that it has been higher than the stipulated standard rate 2:1 in the past four years. Hence its liquidity position is good. It indicates that DCI is following conservative policy. However, the ratio implies looking up of huge funds & there by affecting the profitability of the company. This aspect needs review of current asset for diversion of funds in procurement of more fixed assets, i.e. new dredgers, etc which plough back more profits to the company. QUICK RATIO: It is also known as acid test ratio. Generally quick ratio of 1:1 is considered to represent a satisfactory current financial condition .the ratio is greater importance for bank & financial institution but not for ordinary trading & manufacturing concerns. A good current ratio accompanied by a low quick ratio will indicate a disproportionately high investment on inventory. QUCK RATIO = cash & bank balance+ marketable securities & debentures Current liabilities TABLE.6. QUICK RATIO YEAR QUCK ASSET CURRENT RATIO LIABILITIES 2005-06 83959.5 17400.33 4.88:1 2006-07 87397.49 18797.18 4.65:1 2007-08 74882.99 23003.54 3.25:1 2008-09 ---- 29524.20 ---- Source: worked out from annual reports of DCI INTERPRETATION: The quick ratio in DCI is very comfortable & on higher side from 2005-06 to 2008-09.generally the specific quick ratio is 1:1 .the increasing quick ratio though indicates a good liquidity position yet it may suffer from shortage of funds if it has to pay its current obligation in time & its inventories are not turning over . In 2008-09 DCI did not take the quick ratio. NET WORKING CAPITAL (NWC): The difference between current asset &current liability excluding short term bank borrowing is called net working capital or net current asset .net working capital some tomes measure the firm’s liquidity. However, it measures the firm’s potential reservoir of funds. Net working capital ratio = net working capital Net asset Table .7 Net working capital ratio (NWC) Years Net working capital Net asset ( current asset –current liability) NWC ratio 2005-06 676003.39 676003.39 1.00 2006-07 70859.29 70859.29 1.00 2007-08 66359.99 66359.99 1.00 2008-09 69352.26 69352.26 1.00 Source: worked out from annual reports of DCI Interpretation: The NWC ratio in DCI indicates there is no deteriorating in liquidity. It shows constant or no changes in net working capital ratio. But the liquidity ratio can mislead since current asset & current liability can change quickly. DEBTORS TURN OVER RATIO: The debtor turnover ratio indicates the level of investment in “sundry debtors “as the compared to firms credit policy & normal credit terms of the company. The debtor’s turnover ratio for the past four years is given a tabular form below. www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 09, July-2013 Page 88
Debtors turnover = sales Debtors Or Debtors turnover ratio = income from operation Debtors TABEL.8. DEBTORS TURNOVER RATIO YEAR Income from operations Sundry debtors Ratio 2005-06 50689.89 19620.68 2.58 2006-07 57289.09 22972.14 2.49 2007-08 70531.72 29659.33 2.38 2008-09 68522.19 30895.01 2.21 Source: worked out from annual reports of DCI INTERPRETATION: The debtor’s turnover ratio is an indication of sound credit management policy. A debtor turnover ratio of 10 to 12 is considered ideal. The analysis of debtors’ turnover ratio of DCI reveals that in the year 2005-06 the position was better than the remaining years. Hence the company must take some steps to improve the debtor turnover ratio. CASH RATIO: Cash ratio is between the cash & bank balance & current liabilities .cash is the most liquid asset. Trade investment or marketable securities are equivalent of cash. Therefore they may be include in the computation of cash ratio .since DCI is not maintaining any marketable securities. So cash ratio is calculated as follow: Cash ratio = cash +bank balance Current liability TABLE.9. CASH RATIO YEAR Cash & bank balance Current liabilities Ratio 2005-06 47214.28 17400.33 2.71 2006-07 39855.44 18797.18 2.12 2007-08 27340.94 23003.54 1.19 2008-09 33184.38 29524.20 1.12 Source: worked out from annual reports of DCI INTERPRETATION: This cash ratio represents the DCI‘s cash management & it reveals the last four years from 2005-06 to 2008-09.The performance of cash & bank balance has reduced consistently .the current liabilities were increasing. The analysis of cash ratio of DCI for the past four years reveals that DCI do not have a very strong cash position, which is not a positive sign. WORKING CAPITAL TURNOVER RATIO: The actual fund utilized towards working capital needs begin the difference between current asset & current liabilities for the last four years are indicated as follow. Corresponding operational income & working capital turnover ratio are also indicated to know the efficiency of utilization of working capital funds. Working capital turn over = sales/income Working capital/net current asset TABLE.10. WORKING CAPITAL TURNOVER RATIO year Income Working capital Working capital turnover ratio 2005-06 50689.89 67601.39 0.75 2006-07 57289.09 79859.29 0.71 2007-08 70531.72 66359.99 1.06 2008-09 68522.19 69352.26 0.98 Source: worked out from annual reports of DCI www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 09, July-2013 Page 89
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Table of Contents Articles THE GLOB
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The capital market of a country can
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Figure 1: Components of Indian Fina
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esults as regards the stability of
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10. Hasan, M., K., Haque, M., & Law
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In the first stage of development,
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References: 1. Krishnamacharyulu CS
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and the additional procedures neede
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TO FIND THE RELATIONSHIP BETWEEN ST
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Table No.8: Association between Inv
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The foremost factor to be considere
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economic and social. Some people ma
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eliance, and transparency (Gain Raj
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loans/borrowings has been invested
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Pressure Nowadays, management is in
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The Impact of Macroeconomic Factors
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