Ratio Analysis of Cheart Cement Company

LIQUIDITY RATIO
A liquid form is one that can easily make its short term obligations as they come due . given that current assets represent short term resources and current liabilities represents short term obligations how might you go about accessing a firm liquidity.

The liquidity of a business firm is measured by its ability to satisfy its short term obligations as the come due liquidity refers to   the solvency of the firms over all financial position the   ease with which it can pay it bills the   measures of liquidity are

                                  2007                                                                         2008
NWC = Current Assets âˆ' Current Liabilities           NWC = Current Assets âˆ' Current Liabilities              

        = 1,240,430 - 542,025                                                     = 1,719,948 - 1,597,703            
        = 698,405                                                                         = 122,245
                                           

Curent ratio: Curent assets /curent liabilities
2007:                                                                                                       2008:
=1240430/542052                                                                                   = 1719948/ 1597703
= 2.288                                                                                                     = 1.07  
 


The current ratio of 2008 is less as compared to 2007 because the amount of current liability is more as compared to the current liability amount in 2007 so it has affected current ratio

Acid test Ratio = Current assets- inventory/current liabilities
2007:                                                                                               2008:
=1240430 â€" 117288/542025                                                           =1719948-207491/1597703
=2.07... [continues]

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