LIQUIDITY AND SOLVENCY ANALYSIS: A CASE STUDY OF AUTO MANUFACTURING INDUSTRY IN INDIA

Abstract
Liquidity is the more important aspect to run the business without any interruption. The main objectives of this paper are to test whether there is any significant difference between one variable to another variable and know the relationship in each other with a suitable suggestions to strengthen liquidity position of the automobile industry. The data obtained from the annual reports of the automobile industry and the study period was the 2002-03 to 2014-15 and the SPSS 16.0 version was applied to derive the results with a help of the statistical techniques of paired sample statistics, paired samples correlation and paired sample test. The study found that the more liquidity possessed by the Maruti Suzuki, followed by the Ashok Leyland, Mahindra & Mahindra, TVS Motor, Tata Motors and Hero Motor Corporation and some of the pairs positively correlated with a lesser relationship and the study also found that there was a significant difference from one variable to another variable within a pair regarding the current ratio as well as the quick ratio. But regarding quick ratio, its highest ratio was represented from the Maruti Suzuki, followed by the Mahindra & Mahindra, Ashok Leyland Tata Motors to Maruti Suzuki, TVS Motor and Hero Motor Corporation and they have a positively correlated except a few cases and also found that there was a significant difference from other except in the case of TVS Motor to Tata Motors . Hence, it is suggested that every company should maintain the optimum liquidity position to earn a maximum return even though the existing liquidity position was satisfactory.

Authors
K. Kanaka Raju
Andhra University, India

Keywords
Liquidity Analysis, Solvency Analysis, Maruti Suzuki, Ashok Leyland, Mahindra and Mahindra, Tata Motors and Hero Motor Corporation
Published By :
ICTACT
Published In :
ICTACT Journal on Management Studies
( Volume: 2 , Issue: 2 )
Date of Publication :
May 2016

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