Ratio Analysis of Square Textiles Limited
Current Ratio:A liquidity ratio that measures a companys ability
to pay its short term obligations. It is calculated by dividing
current assets by current liabilities.The Current Ratio formula
is:
Computation:
In 2007
Current Ratio = 1.34
In 2008
Current Ratio = 1.26
Quick Ratio:An indicator of a companys short-term liquidity.
This quick ratio measures a companys ability to meet its short term
obligations with its most liquid assets.
The Quick Ratio Formula is:
In 2007
Quick Ratio = 0.55
In 2008
Quick Ratio = 0.64
Receivables Turnover:An accounting measure used to quantify a
firms effectiveness in extending credit as well as collecting
debts. The receivables turnover ratio is an activity ratio,
measuring how efficiently a firm uses its assets.The Receivables
turnover formula is:
Receivables Turnover =0.61 timesAverage days sales
uncollected:
Inventory TurnoverMeasure of relative size of inventoryThe
Inventory Turnover Formula is:
In 2008
Inventory turnover = 3 times
Average Days Inventory on hand:The Average Days Inventory on
hand Formula is:
In 2008Average Days Inventory on hand = 121.6 or 122 days
