The western india plywoods ltd project report

Quick ratio is generally considered L is satisfactory level. So, the company is not following the standard ratio, it showing a decreasing trend. Hence the firm may face difficulties in paying off its liabilities in time. So, it has to increase its quick assets in order meet its short time obligations in time.

Debt equity ratio is used to ascertain a company's financial leverage. This ratio compares company's outsiders fund with shareholders' fund. The debt equity ratio of Western India Plywood Ltd shows that how much debt company is using to finance its assets relative to the shareholders' fund. It measures long term solvency of the business.

The debt equity ratio of WIP shows that there is a decreasing trend in ratios over the last five years. Lower the ratio company will be more financially stable. Since the company is having less outside debt than its own fund, it implies that the firm is less risky to creditors and investors. And the decreasing trend of debt to equity ratio indicates that the company is getting financially strong. Lower Debt to equity ratio shows that company reduced its debt long or increased company assets.

The proprietary ratio shows the financial firmness of the business enterprises. The proprietary ratio is very useful to analyse company's long term financial leverage, it shows the relationship between company's shareholders' fund to its total assets were the proprietor’s fund constitutes equity share capital and reserves and surplus. It can be used to gauge the soundness of the capital structure of the company; it can be ascertained by dividing the shareholders fund by its total assets.

The proprietary ratio shows a decreasing trend2014 to 2015 afterwards it got hiked. So in the last two years it can be seen that equity has more volume than debt fund, it says company has sufficient amount of own fund to support its operation It indicates company's long term solvency is satisfactory but it has to maintain the ratios accordingly in the coming years. A low proprietary ratio indicates that the company may be depending too much on debt capital rather than equity which may lead to risk of rise in interest and bankruptcy.

Stock turnover proportion ha productivity proportion that shows how effectively stock is managed by the organization, linking the cost of goods sold with average Inventory for a period. Western India Plywood Ltd is a manufacturing concern whose main raw material is timber which is very scarce and expensive, so the inventory turnover ratio tells how well the company utilize its stock, sells and replace its entire batch of inventories over a particular period.

The Inventory turnover Ratio of Western India Plywood Ltd shows a moderate level over the last four years. Since 2014 there has been a slight decline trend over these years in the year 2014 the ratio is 2.58 and decreased to 2.28 in the year 2018.

The accounts payable turnover or creditors' turnover ratio is useful for the creditor’s to analyse the liquidity position of the business. Creditors turnover ratio indicate liquidity, that shows company's ability to pay of its trade payables by comparing net purchases to average trade payables This ratio determines the period for which credit purchase remain outstanding.