If CR > 1, reducing both Current Assets (Cash) and Current Liabilities (Creditors) by the same amount increases the ratio. E.g., (150-50)/(100-50) = 100/50 = 2:1 (Improved from 1.5:1).

Proprietary Ratio = Shareholders' Funds / Total Assets. A high ratio means a larger portion of assets is funded by owners' equity, providing a greater safety margin for creditors.

Quick Ratio = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities. Inventory is considered less liquid because it takes time to sell.

DSCR measures the ability to pay debt obligations. The numerator represents operating cash flow available for debt service (Profit + Non-cash exp + Interest), and the denominator is the debt obligation.

Earnings Before Interest and Tax (EBIT) represents the profit available to service debt. Dividing this by Interest expense shows how easily a company can pay interest.

DuPont Analysis breaks ROE down into: 1. Net Profit Margin (Profitability), 2. Asset Turnover (Efficiency), and 3. Financial Leverage (Equity Multiplier). Current Ratio is a liquidity ratio, not part of the DuPont identity.

Interest Coverage Ratio = EBIT / Interest. A ratio of 8 means the company earns 8 times the amount needed to pay interest, showing high solvency and safety.

DSCR < 1 is a danger signal. It means Operating Cash Flow is insufficient to cover Interest + Principal repayments. The firm may default unless it borrows more or sells assets.

This ratio measures how many times a company sells and replaces its stock of goods during a period. Ideally, COGS is used; if unavailable, Sales can be used.

Operating Profit (EBIT) measures profit from core business operations, excluding non-operating items like interest and tax. The ratio expresses this as a percentage of sales.

CA/CL = 2/1. So CA = 2CL. Working Capital = CA - CL = 2CL - CL = CL. Given Working Capital = 60,000, so CL = 60,000. CA = 2 * CL = 1,20,000.