Current Ratio

1.2
1.03
1
0.83 0.8
0.8

0.6

0.4

0.2

2020 2021 2022

INTERPRETATION: The given current ratio values for a company over three consecutive
years are 0.83, 0.8, and 1.03. These ratios indicate that the company has been facing
challenges in meeting its short-term obligations. The first year's current ratio of 0.83 shows a
deficiency in current assets compared to current liabilities. The second year's ratio further
declines to 0.8, indicating a worsening situation. However, in the third year, there is a slight
improvement with a current ratio of 1.03, indicating that the company's current assets are
slightly higher than its current liabilities. Despite this improvement, the margin to meet short-
term obligations comfortably is still narrow, the company has still experienced liquidity
challenges.
 Quick Ratio

0.83
1.03

0.8

2020 2021 2022

INTERPRETATION: The company's quick ratio has been 0.83, 0.8, and 1.03 over three
consecutive years. A quick ratio below 1.0 suggests a difficulty in meeting short-term
obligations without additional financing. The decline from 0.83 to 0.8 indicates further
challenges in liquidity. However, the increase to 1.03 in the third year shows an improvement
in the company's ability to cover immediate financial obligations. Overall, the trend suggests
initial liquidity challenges followed by an improvement in the company's financial position.

NOTE: Since there the amount of investment and prepaid expenses and bank overdraft is Rs.
0, the quick assets are same as current assets & quick liabilities are same as current liabilities.
 Absolute Cash Ratio

1.03

1 0.8

0.83

0 0.2 0.4 0.6 0.8 1 1.2

2022 2021 2020

INTERPRETATION: Over the course of three consecutive years, the company's absolute
cash ratio showed a mixed trend. In the first year, the ratio was 0.83, indicating a relatively
lower ability to meet current liabilities using absolute cash. The ratio remained similar or
slightly decreased in the second year, suggesting a continued need for improvement in cash
flow management. However, in the third year, the ratio increased to 1.03, indicating an
improved ability to cover short-term obligations with absolute cash. This suggests that the
company may have strengthened its cash position and effectively managed its cash flow
during that period. Overall, while there was some volatility, the company showed a slight
improvement in its ability to pay off current liabilities using absolute cash.

NOTE: Since there the amount of investment, bills receivable, prepaid expenses and bills
payable is Rs. 0, the Absolute Assets are same as current assets & the denominator are same
as current liabilities.
 Debt to Equity Ratio

0.76

1.39

1.05

2020 2021 2022

INTERPRETATION: The company's debt to equity ratio has increased over three consecutive
years, from 0.70 to 1.17 and then to 1.20. This indicates that the company has been relying
more on debt financing compared to equity. A higher debt to equity ratio suggests a higher
level of financial leverage and increased financial risk. It means that a larger portion of the
company's assets is financed by debt, which can be concerning as it may lead to higher
interest payments and financial obligations. However, it's important to consider industry
norms and specific circumstances when interpreting the ratio.
 Debt to Total Asset Ratio
0.7
0.65
0.61
0.6

0.51
0.5

0.4

0.3

0.2

0.1

0
2020 2021 2022

INTERPRETATION: The company's debt to equity ratio has increased over three consecutive
years, from 0.70 to 1.17 and then to 1.20. This indicates that the company has been relying
more on debt financing compared to equity. A higher debt to equity ratio suggests a higher
level of financial leverage and increased financial risk. It means that a larger portion of the
company's assets is financed by debt, which can be concerning as it may lead to higher
interest payments and financial obligations.
 Proprietary Ratio

0.39

1 0.35

0.39

0.32 0.33 0.34 0.35 0.36 0.37 0.38 0.39 0.4

2022 2021 2020

INTERPRETATION: The proprietary ratio measures the proportion of a company's total

assets financed by shareholders' equity. A higher ratio indicates a stronger financial position
and less reliance on debt. In the given scenario, the company's proprietary ratio remained
relatively stable at 0.28 for two consecutive years, suggesting consistent equity financing.
However, there was a decrease from 0.34 to 0.28 in the first year, indicating a slight decline
in equity funding relative to total assets.
 Equity Ratio

0.6

0.5 0.49
0.4 0.54 0.44
0.3

0.2

0.1

2020 2021 2022

INTERPRETATION: The declining equity ratio for the company over the past three years
(0.54, 0.49, and 0.44) suggests that the company has been relying more on debt or other
forms of financing rather than equity to fund its assets. This could be due to increasing debt,
poor profitability, or equity dilution. It indicates potential financial risks, higher interest
expenses, and a weaker financial position.

Net Profit Ratio 12.84%

12.08%

14.00% 8.46%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
1

2020 2021 2022

INTERPRETATION: Based on the net profit ratios provided (8.46%, 12.08%, and 12.84%)
for three consecutive years, we can summarize the following: The company has consistently
generated a positive net profit, indicating its ability to generate revenue exceeding expenses,
taxes, and interest payments. The net profit ratio has been increasing over the years, implying
improved cost management and profitability. The company has maintained a relatively
healthy net profit margin, suggesting good cost control and a reasonable return on sales.
Overall, the company has shown consistent profitability and improvement in profitability
over the three-year period.

BALANCE SHEET
INTERPRETATION: The company's balance sheet totals have shown a consistent increase
over three consecutive years. From 122,042.00 to 133,232.00 and then to 162,870.00, there
has been a steady growth in the company's assets, liabilities, and equity. This suggests that the
company has been acquiring more assets or reducing its liabilities during this period.
However, without further information, it is difficult to assess the company's financial health,
profitability, or overall performance.

P/L A/c
INTERPRETATION: In summary, the given profit and loss figures for three consecutive
years (5291.00, 8393.00, 16702.00) indicate that the company has experienced consistent and
significant growth in profits. The company's profits more than doubled from the first to the
second year and nearly doubled again from the second to the third year. This suggests that the
company is enjoying a period of strong financial performance, potentially due to expanding
operations or improved efficiency. The consistent growth in profits reflects the company's
ability to generate increasing revenue and effectively manage expenses.
CASH FLOW
INTERPRETATION: For the Cash Flow Statement we can see the company had a cash
inflow from Operating Activities for the years 2019-20, 2020-21 & 2021-22. As for the
Investing and Financing Activities the company had a negative balance for the both the years
2019-20; 2020-21 & is a positive balance for the year 2021-22. Overall, the company is doing
fine and is with a profit.