Overall financial health is good. Profitability ratios are above industry benchmarks. Key concern: Debtor Days at 52 (vs target 30) is tying up ₹13.3L in working capital. Recommend tightening credit terms for Mehta Exports and Rao Imports LLP. Debt levels are conservative — there is headroom to raise working capital credit if needed.
| Ratio | Value | Formula | Interpretation |
|---|---|---|---|
| Current Ratio | 2.4 : 1 | Current Assets / Current Liabilities | ₹2.4 available per ₹1 of current liability. Healthy. |
| Quick Ratio | 1.3 : 1 | (CA − Stock) / Current Liabilities | Adequate liquidity without relying on stock liquidation. |
| Cash Ratio | 0.54 : 1 | Cash & Bank / Current Liabilities | Moderate — depends on collections for obligations. |
| Ratio | Value | Formula | Interpretation |
|---|---|---|---|
| Gross Profit Margin | 27.3% | (Sales − COGS) / Sales × 100 | Above textile industry average of ~22%. Strong. |
| Net Profit Margin | 9.4% | Net Profit / Sales × 100 | Good for manufacturing. Watch overhead cost creep. |
| EBITDA Margin | 14.2% | EBITDA / Revenue × 100 | Healthy operational efficiency. |
| Return on Equity | 45.8% | Net Profit / Shareholder Equity × 100 | Exceptional — business is generating strong returns. |
| Return on Assets | 18.6% | Net Profit / Total Assets × 100 | Good asset utilisation. |
| Ratio | Value | Formula | Interpretation |
|---|---|---|---|
| Debtor Days | 52 days | (Debtors / Sales) × 365 | Above ideal 30 days. Collections need tightening. |
| Creditor Days | 28 days | (Creditors / Purchases) × 365 | Paying suppliers faster than collecting — monitor closely. |
| Inventory Turnover | 7.2× | COGS / Average Stock | Good stock movement. Minimal dead stock. |
| Asset Turnover | 1.98× | Net Sales / Total Assets | Strong revenue per rupee of assets. |
| Ratio | Value | Formula | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.30 : 1 | Total Debt / Equity | Conservative leverage. Comfortable for lenders. |
| Interest Coverage | 8.4× | EBIT / Interest Expense | Can comfortably service debt — 8× coverage. |
| Debt Service Ratio | 3.2× | Net Income / Total Debt Service | Strong ability to repay principal + interest. |