# How do you analyze a balance sheet with ratios?

## How do you analyze a balance sheet with ratios?

Your current ratio should ideally be above 1:1.

1. Current Ratio = Current Assets / Current Liabilities.
2. Quick Ratio = (Current Assets – Current Inventory) / Current Liabilities.
3. Working Capital = Current Assets – Current Liabilities.
4. Debt-to-equity Ratio = Total Liabilities / Total Shareholder Equity.

## What is debt ratio of Infosys?

21.29. 17.29. Total Debt/Equity (X) 0.00. 0.00.

What is the financial position of Infosys?

RETURN ON ASSETS

BalanceSheet – Infosys Ltd.
Rs (in Crores)
Net Block 14599.00 9157.00
Capital Work in Progress 906.00 1442.00
Investments 24155.00 17899.00

What ratio is used in a balance sheet?

There are three types of ratios derived from the balance sheet: liquidity, solvency, and profitability. Liquidity ratios show the ability to turn assets into cash quickly. Solvency ratios show the ability to pay off debts. Profitability ratios show the ability to generate income.

### What is a strong balance sheet ratio?

A ratio of less than 1 suggests that a company cannot currently meet its obligations with its current liquidity. The debt ratio is simply total debt divided by total assets. A debt ratio of less than 1 tells us the company has more assets than debt, so the lower the ratio, the stronger the balance sheet.

### How do you Analyse a balance sheet?

The main technique is financial ratio analysis. Financial ratio analysis uses formulas to gain insight into a company and its operations. For a balance sheet, using financial ratios (like the debt-to-equity ratio) can provide a good sense of the company’s financial condition, along with its operational efficiency.

Why is Infosys not in debt?

Infosys is a debt-free company. It doesn’t have any outstanding debt or fixed deposits. The company presently generates sufficient cash internally to finance all its operational, financing and investment requirements.

What is interest coverage ratio of Infosys?

The following section summarizes insights on Infosys Limited’s Interest Coverage Ratio: Mar 2012 Mar 2014 Mar 2016 Mar 2018 Mar 2021 110.0x 130.0x 150.0x. Infosys’s latest twelve months interest coverage ratio is 134.0x. Infosys’s interest coverage ratio increased in 2021 (128.0x, +12.7%).

## What is a healthy balance sheet?

The balance sheet is one of the fundamental financial statements. A strong balance sheet indicates a company is liquid, which means it has enough cash on hand to handle its liabilities. Having a large amount of cash is not the only determining factor when deciding whether a balance sheet is strong.

## What is a bad balance sheet?

The debt ratio is simply total debt divided by total assets. A debt ratio of less than 1 tells us the company has more assets than debt, so the lower the ratio, the stronger the balance sheet. Here again, a higher debt-to-equity ratio is a sign of a weaker balance sheet.