LIQUIDITY AND PROFITABILITY ANALYSIS OF SELECT ELECTRICAL MACHINERY COMPANIES IN INDIA
DOI:
https://doi.org/10.57030/23364890.cemj.30.4.253Keywords:
Profit, Liquidity, Sales volume.Abstract
This research is based on secondary data collected from the Centre for Monitoring the Indian Economy's official directory and database, such as 'PROWESS IQ’. The samples are selected based on purposive sampling and the study includes sales volume the top 10 companies out of 258 companies that are listed in Electrical Machinery Industry in India. The study covers a period of ten financial years, from 2011-12 to 2020-21, and uses techniques tools such as Mean, Standard Deviation, Coefficient of Variation, Ratio Analysis and Altman Z-Score. The primary goal of a business enterprise is to make a profit. Profit is a powerful intermediate guiding light for influencing a company capital. The objectives of this study are to analyse liquidity and understand profitability position. As a result shows Current Assets are stronger (2.21) than the Current Liabilities (1), Liquid Assets are (1.79) more than the Current Liabilities 1.00, high mean value (24.91) Inventory Turnover Ratio implies that higher Sales, Working Capital Turnover Ratio (4.45) indicates a company with a strong financial foundation in terms of liquidity. Mean value (5.71) Debtors Turnover Ratio is too high, indicated that the companies in financial distress and unable to pay the Debtors, (18.85) highest Gross Profit Ratio indicates that the company's profit, (2.97) Net Profit Ratio indicates that the business Selling and Distribution expenses are under control. Voltamp Transformers Ltd, Cummins Generator Technologies India Pvt. Ltd and Schneider Electric Infrastructure Ltd Companies is placed in too healthy zone. The Powerica Ltd, C & S Electric Ltd and Kirloskar Electric Co. Ltd companies are in “Distress Zone”. The researcher recommends improving the current ratio to increase current assets by raising shareholder funds and to improve net profit decrease in operating cost. These measures will help selected Electrical Machinery companies in India increase their profitability in the future.