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Beximco Co.

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Ratio Analysis of Financial Statements |

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Working Capital
Working capital is the excess of current assets over the current liabilities. It is calculated by deducting current liabilities from current assets.
Working capital = Current assets - Current liabilities

2005 | 2006 | Current assets | Current liabilities | Current assets | Current liabilities | 672,355,277 | 384,140,329 | 979,254,859 | 658,881,691 | Working capital =288,214,948 | Working capital = 320,373,168 | Current ratio
The current ratio is a widely used measure for evaluating company’s liquidities & short-term debt- paying ability:
Current ratio = Current assets Current liabilities 2005 | 2006 | Current assets | Current liabilities | Current assets | Current liabilities | 672,355,277 | 384,140,329 | 979,254,859 | 658,881,691 | Current ratio =1.75 | Current ratio = 1.49 |

Comment
The ideal current ratio of an organization is 1.2 times. The current ratio of Renata Ltd. in 2005 is 1.75 times and in 2006 is 1.49 times, which is lower than the previous year 2005. So liquidity and short-term debt paying ability is worse than the previous year. But the Renata Ltd. has liquidity ability 1.49 to pay the short term debt for 1 which is higher from the probable ideal ratio.

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Acid-Test Ratio
The acid-test ratio is a measure of a company’s immediate short-term liquidity. Acid test ratio = (Current assets – Inventories) Current liabilities

2005 | 2006 | Current assets - Inventories | Current liabilities | Current assets - Inventories | Current liabilities | 672,355,277 – 388.384.007 | 384,140,329 |

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