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Company:- Gujarat Pipavav Port Ltd. Solvency Ratios:- The solvency ratio indicates whether a companys cash flow is sufficient to meet its short-term and long-term liabilities. The lower a company's solvency ratio, the greater the probability that it will default on its debt obligations.
Conclusions 1)Debt equity ratio nearly doubled in 08 and 09 which can be explain by increased amount of debt in balance sheet and negative profits from year 2003 to 2011, however profit increased by more than 200% in dec 11. 2) Debt Assets ratio stabilized after being worsen due to hight debt and large depreciation in total assest calue, in dec 09. 3) Company is barely manages to cover its interest costs and fixed cost however shown a dramatically positive trend in 2011 n 2012 due to high EBIT.
(Rs. Million)
04-Mar 12 mths
Result:- 2.2074
Analysis:- Z score is in the medium range. Though company is out of crisis zone, it is mandatory to take precautionary steps and keep tab of the figures to avoid bankruptcy. However looking at the nature of business and history of the company, as company had never defaulted on its interest payment even in the years of negative cash cycle(2003, 2004 and 2006,2007), I see not much risk in providing finance to this firm.