Habib Sugar Mills Limited
Liquidity Ratios:
Liquidity ratio is a financial measure that shows how easily a company can pay its short term
debt using its most easily accessible assets, like cash. It helps to access whether the company has
enough resources to cover its immediate bills without having to sell long term assets.
Current Ratio:
Current ratios show if a company has enough short term assets to cover its short term liabilities.
A ratio above 1 indicates that the company has more assets than liabilities, suggesting it can pay
its debts.
Formula: Current Assets
Current Liabilities
Current Ratio of Year 2023
Current Assets: (Rupees in thousands) 13,487,612
Current Liabilities: (Rupees in thousands) 6,141,721
13,487,612
6,141,721
= 2.19
Current Ratio of Year 2022
Current Assets: (Rupees in thousands) 8,986,899
,Current Liabilities: (Rupees in thousands) 3,835,046
8,986,899
3,835,046
= 2.34
Interpretation
2023= 2.19
For every 1 unit of liability, the company has 2.19 units of assets to cover it. This
indicates a healthy ability to meet short term obligations but shows a slight
decrease from the previous year.
2022= 2.34
For every 1unit of liability, the company had 2.34 units of assets, suggesting even
more comfort in paying its short term debts.
Quick Ratio:
Quick ratio is a stricter measure than the current ratio because it doesn’t count inventory as an
asset. Instead, it only looks at more easily available assets like cash and money owned by
customers.
Formula: Current Assets- Inventory
Current Liabilities
Quick Ratio of Year 2023
Current Assets: (Rupees in thousands) 13,487,612
Inventory: (Rupees in thousands) 3,957,133
Current Liabilities: (Rupees in thousands) 6,141,721
13,487,612- 3,957,133
, 6,141,721
=1.55
Quick Ratio of Year 2022
Current Assets: (Rupees in thousands) 8,986,899
Inventory: (Rupees in thousands) 5,004,293
Current Liabilities: (Rupees in thousands) 3,835,046
8,986,899- 5,004,293
3,835,046
=1.03
Interpretation
2023= 1.55
For every 1 unit of liability, the company has 1.55 units of liquid assets to cover it. This indicates
a strong ability to meet short term obligations without relying on inventory, which is a good sign
of financial health.
2022= 1.03
For every 1 unit of liability, the company had only 1.03 units of assets. While still above 1, this
suggests that the company had just enough liquidity to cover short term debts without much
safety net.
Summary
Ratio 2023 2022 Comments (Comparative Analysis)
Current 2.19 2.34 2023: For every 1 unit of liability, the company has 2.19 units of assets. The ratio shows a
Ratio healthy ability to meet short-term obligations, but there's a slight decrease from 2022.
2022: The ratio was slightly higher at 2.34, indicating even more ability to cover short-term
Liquidity Ratios:
Liquidity ratio is a financial measure that shows how easily a company can pay its short term
debt using its most easily accessible assets, like cash. It helps to access whether the company has
enough resources to cover its immediate bills without having to sell long term assets.
Current Ratio:
Current ratios show if a company has enough short term assets to cover its short term liabilities.
A ratio above 1 indicates that the company has more assets than liabilities, suggesting it can pay
its debts.
Formula: Current Assets
Current Liabilities
Current Ratio of Year 2023
Current Assets: (Rupees in thousands) 13,487,612
Current Liabilities: (Rupees in thousands) 6,141,721
13,487,612
6,141,721
= 2.19
Current Ratio of Year 2022
Current Assets: (Rupees in thousands) 8,986,899
,Current Liabilities: (Rupees in thousands) 3,835,046
8,986,899
3,835,046
= 2.34
Interpretation
2023= 2.19
For every 1 unit of liability, the company has 2.19 units of assets to cover it. This
indicates a healthy ability to meet short term obligations but shows a slight
decrease from the previous year.
2022= 2.34
For every 1unit of liability, the company had 2.34 units of assets, suggesting even
more comfort in paying its short term debts.
Quick Ratio:
Quick ratio is a stricter measure than the current ratio because it doesn’t count inventory as an
asset. Instead, it only looks at more easily available assets like cash and money owned by
customers.
Formula: Current Assets- Inventory
Current Liabilities
Quick Ratio of Year 2023
Current Assets: (Rupees in thousands) 13,487,612
Inventory: (Rupees in thousands) 3,957,133
Current Liabilities: (Rupees in thousands) 6,141,721
13,487,612- 3,957,133
, 6,141,721
=1.55
Quick Ratio of Year 2022
Current Assets: (Rupees in thousands) 8,986,899
Inventory: (Rupees in thousands) 5,004,293
Current Liabilities: (Rupees in thousands) 3,835,046
8,986,899- 5,004,293
3,835,046
=1.03
Interpretation
2023= 1.55
For every 1 unit of liability, the company has 1.55 units of liquid assets to cover it. This indicates
a strong ability to meet short term obligations without relying on inventory, which is a good sign
of financial health.
2022= 1.03
For every 1 unit of liability, the company had only 1.03 units of assets. While still above 1, this
suggests that the company had just enough liquidity to cover short term debts without much
safety net.
Summary
Ratio 2023 2022 Comments (Comparative Analysis)
Current 2.19 2.34 2023: For every 1 unit of liability, the company has 2.19 units of assets. The ratio shows a
Ratio healthy ability to meet short-term obligations, but there's a slight decrease from 2022.
2022: The ratio was slightly higher at 2.34, indicating even more ability to cover short-term
