Interpretation of Ratios Current Ratio The number of times that the short term assets can cover the

short term debt. Higher the ratio better it is. Current ratio of jet airways is 1.09 which states that it takes 1.09 times to cover its short term debts. & in case of Kingfisher airlines current ratio is just 0.713 which is too low indicating company ay not have funds to meet its short term liabilities. Quick Ratio It indicates the ability to meet short term payments using the most liquid assets. The ideal ratio is 1:1. Jet airways ratio is 0.938 which can be seen satisfactory. But ratio of kingfisher is just 0.668 which is too low compared to standard ratio because company may have a cash flow problem. Debt-Equity ratio Indicates the amount of debt in total capital structure of the company. Debt equity ratio of jet airways is 3.921indicating high amount of debt involved in capital structure whereas kingfisher is indicating its ratio 1.261 which seems to be satisfactory.

Capital gearing ratio It Shows extent of fixed financial obligation of firm A jet airway is having such ratio around 3.95 which is more than 1 so the company is highly geared. Kingfisher Company indicating its ratio of 4.028 which reflects that high proportion of funds is obtained from borrowings. Interest coverage ratio This focuses on funds earned are sufficient enough to pay interest obligation. Interest coverage of 3 times is desirable by lenders. Interest coverage by jet airways is just 1.633 times showing its inefficiency of funds to pay off interest obligation on time. Kingfisher Inventory Turnover ratio It determines how often stock turns in the business. Stock turnover ratio of jet is 2.07 times which intimates that company should take efforts to improve the efficiency of inventory management by using technique like JIT, ABC etc. whereas kingfisher rotates its inventory 8.42 times in a year to convert it into cash which seems to be good. Debtors Collection period Jet takes 27 days whereas kingfisher takes 25 days to convert its debtors into cash.

Fixed assets turnover ratio

Jet indicates its ratio 0.94 times & kingfisher indicates at 3.94 times. Here, high fixed assets turnover is preferred since it indicates a better efficiency in fixed assets utilization. Total Assets turnover ratio 0.69 & 1.37 are the respective total assets turnover ratios of jet airways & kingfisher in year 2011. It indicates the efficiency of kingfisher in using its total assets to generate its sales as higher the ratio better it is.