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1
2. having low quick ratio may have a good liquidity position if
it has fast moving inventories.
3 current
ratio
2 quick ratio
1
0
2006 2007 2008
2
This ratio is also used for the purpose to get an idea of the
cushion available to outsiders on the liquidation of the firm.So
the debt ratios tell us the relative proportions of capital
contribution by creditors & by owners.
50
40
Debt-to-Equity
30 ratio
20 Total
Capitalization
10
ratio
0
2006 2007 2008
COVERAGE RATIO
As this ratio tells the no. of times interest is earned & also
indicates the ability to cover interest charges.The ratio is
an index of the financial strength of an enterprise.A high
ratio assures the lender a regular & periodical interest
income.But the weakness of ratio may create some
problems to the financial manager in raising funds from
debt sources.
3
600
500
400
Interest
300
Coverage
200 ratio
100
0
2006 2007 2008
4
60
50
40
30 Debtors
turnove r ratio
20
10
0
2006 2007 2008
1.6
1.4
1.2
1
0.8 Creditors
0.6 turnover ratio
0.4
0.2
0
2006 2007 2008
5
Inventory Turnover ratio=Cost of goods sold / Avg.
inventory
3.3
3.2
3.1
3
2.9 Inventory
2.8 turnove r ratio
2.7
2.6
2.5
2006 2007 2008
6
1.6
1.4
1.2
1
0.8 Total as sets
0.6 turnove r ratio
0.4
0.2
0
2006 2007 2008
PROFITABILITY RATIOS
7
50
40
30
GP m argin
20 ratio
10
0
2006 2007 2008
15
10 NP m argin
ratio
5
0
2006 2007 2008
8
This ratio measures the overall profitability of a firm also
indicates the extent to which the primary objective of a
business is achieved which is to maximize its earnings.
35
30
25
20
15 ROE
10
5
0
2006 2007 2008