A Study on Ratio Analysis in Home First Finance Company India Ltd at Rajahmundry (KEY IJP************914)

• Edara Hemalatha

Abstract

Abstract: Financial ratio is most important tool for accounting analysis. In this paper, researcher will study on ratio analysis, its usefulness, its effectiveness with using various past published papers and articles. This study examines the financial performance of Home First Finance Company India Ltd at Rajahmundry from 2019 to 2023, focusing on key financial ratios to assess liquidity, capital structure, profitability, and asset utilization.. The company's current ratio showed a positive trend from 2019 to 2023, indicating a stronger liquidity position, but revealed potential weaknesses in 2022-2023 due to increased current liabilities. The return on equity increased significantly during the study period, attributed to effective equity measures and inventory management. The return on assets also improved, driven by increased revenue. However, in cross-company comparisons, the return on capital employed decreased from 2019 to 2023. The total asset turnover ratio improved from 2019 to 2022 but declined in 2023 due to excess loan variations. The fixed asset turnover ratio showed improvement, reflecting better revenue generation against asset balances. Overall, while the company demonstrated strong performance in several areas, recent trends indicate areas that require attention to maintain financial health.Introduction:Financial Management is the specific area of finance dealing with the financial decision corporations make and the tools and analysis used to make the decisions and techniques. Both share the same goal of enhancing firm value by ensuring that return on capital exceeds cost of capital without taking excessive financial risks.Capital investment decisions comprise the long-term choices about which projects receive investment, whether to finance that investment with equity or debt and when or whether to pay dividends to shareholders. Short-term corporate finance decisions are called working capital management and deal with balance of current assets and current liabilities by managing cash, inventories, and short-term borrowings and lending.Corporate finance is closely related to managerial finance, which is slightly broader in scope, describing the financial techniques available to all forms of business enterprise, corporate or not.