Title: A Study of Indian Automobile Company’s Financial Performance and the Impact of Working Capital Management
Abstract: A high fast ratio shows that the company's short-term commitments can be readily met. The ability of a corporation to meet its short-term commitments with cash on hand defines its liquidity. A high quick ratio may imply that the company is sitting on cash that may be better used to improve profitability. A higher current ratio indicates an over-investment in liquid assets and a lack of usage of short-term loans. A lower ratio suggests that the firm may struggle to meet its short-term commitments and may be risky to invest in. A high current ratio is sometimes suggestive of a corporation having a large inventory of assets, which are notoriously difficult to sell rapidly. A low current ratio implies that the firm is poor in collecting receivables, which may result in a low cash position or big current liabilities. As a consequence, the company's capacity to meet its short-term commitments may suffer. A company's current ratio may be improved by reducing its current liabilities and maintaining an acceptable inventory level.