Volume : IV, Issue : II, February - 2014

A Study on Liquidity Analysis of Selected Automobile Companies in India

Dr. S. S. Saravanan, J. Abarna

Abstract :

Liquidity ratios are used to determine a company’s ability to meet its short-term debt obligations. Investors often take a close look at liquidity ratios when performing fundamental analysis on a firm. Since a company that is consistently having trouble meeting its short-term debt is at a higher risk of bankruptcy, liquidity Ratios are a good measure of whether a company will be able to comfortably continue as a going concern. The liquidity is a vital factor in business operations. For the very survival of business, the firm should have requisite degree of liquidity. It should be neither excessive nor inadequate. Excessive liquidity means accumulation of ideal funds. Which may lead to lower profitability, increase speculation, and unjustified extension, extension of liberal credit terms, liberal dividend policy etc; whereas inadequate liquidity result in interruptions of business operations. A proper balance between these two extreme situations therefore should be maintained for efficient operation of business through skill full liquidity management.

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Article: Download PDF   DOI : 10.36106/ijar  

Cite This Article:

Dr.S.S.Saravanan, J.Abarna A Study on Liquidity Analysis of Selected Automobile Companies in India Indian Journal of Applied Research, Vol.IV, Issue. II

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