Analysis of Current Ratio and Gross Margin Ratio for a Company

BUSINESS STRATEGY 1
BUSINESS STRATEGY

BUSINESS STRATEGY 2
The following table shows the calculated ratios:
Particulars 2016 2015 change in %
Current ratio: 1.364661663 2.832454611 51.82%
Current assets
5,87,813.0
0
8,33,243.0
0
Current liabilities
4,30,739.0
0
2,94,177.0
0
Gross margin ratio: 0.389647746 0.415571637 6.24%
Gross profit
4,61,920.0
0
6,73,214.0
0
Net sales
11,85,481.0
0
16,19,971.0
0
The current ratio is the ratio which shows the short term liquidity position of the company.
The higher this ratio is, the better it is for the company (My accounting course, 2018). Now,
the above calculated ratio shows a decrease of 51.82% which is not good for the company.
The fall in this ratio means that the company would soon face the problem of meeting its
short term liabilities. The company would face in the issues with making the payments to the
suppliers etc. this is happening with the company since the amounts of the current assets have