To calculate the requested ratios, we'll use the provided financial data for both

companies, Aimur and Sokoralu. Let's calculate each ratio and interpret their
meanings:

1. Current Ratio:
Current Ratio = Current Assets / Current Liabilities

For Aimur:
Current Assets = Inventories + Receivables + Prepaid Expenses = 3,31,000 + 3,50,000
+ 1,94,000 = 8,75,000
Current Liabilities = Payables + Short-term Debts = 3,82,000 + 60,000 = 4,42,000

Current Ratio (Aimur) = 8,75,000 / 4,42,000 = 1.98

For Sokoralu:
Current Assets = Inventories + Receivables + Prepaid Expenses = 3,31,000 + 3,50,000
+ 1,94,000 = 8,75,000
Current Liabilities = Payables + Short-term Debts = 3,82,000 + 60,000 = 4,42,000

Current Ratio (Sokoralu) = 8,75,000 / 4,42,000 = 1.98

Interpretation: The current ratio measures a company's ability to pay its short-
term obligations. A ratio higher than 1 indicates that the company has sufficient
current assets to cover its current liabilities. Both Aimur and Sokoralu have a
current ratio of 1.98, which suggests they have good liquidity to meet their short-
term obligations.

2. Acid-Test Ratio:
Acid-Test Ratio = (Current Assets - Inventories) / Current Liabilities

For Aimur:
Acid-Test Ratio (Aimur) = (8,75,000 - 3,31,000) / 4,42,000 = 5,44,000 / 4,42,000 =
1.23

For Sokoralu:
Acid-Test Ratio (Sokoralu) = (8,75,000 - 3,31,000) / 4,42,000 = 5,44,000 /
4,42,000 = 1.23

Interpretation: The acid-test ratio, also known as the quick ratio, measures a
company's ability to pay its short-term obligations using its most liquid assets. A
ratio higher than 1 indicates good liquidity. Both Aimur and Sokoralu have an acid-
test ratio of 1.23, suggesting they have sufficient liquid assets to meet their
short-term liabilities.

3. Net Profit Ratio:

Net Profit Ratio = (Net Profit after Tax / Sales) * 100

For Aimur:
Net Profit Ratio (Aimur) = (1,23,000 / 32,00,000) * 100 = 0.384 * 100 = 38.4%

For Sokoralu:
Net Profit Ratio (Sokoralu) = (1,23,000 / 32,00,000) * 100 = 0.384 * 100 = 38.4%

Interpretation: The net profit ratio measures the profitability of a company by

expressing net profit as a percentage of sales. Both Aimur and Sokoralu have a net
profit ratio of 38.4%. This indicates that they earn a net profit of 38.4% for each
unit of sales.

4. Return on Total Assets:

Return on Total Assets = (Net Profit after Tax / Total Assets) * 100

For Aimur:
Total Assets = Fixed Assets = 15,99,000

Return on Total Assets (Aimur) = (1,23,000 / 15,99,000) * 100 = 0.769 * 100 = 76.9%

For Sokoralu:
Total Assets = Fixed Assets = 15,99,000

Return on Total Assets (Sokoralu) = (1,23,000 / 15,99,000) * 100 = 0.769 * 100 =

76.9%

Interpretation: The return on total assets ratio measures the profitability

generated by a company's total assets. Both Aimur and Sokoralu have a return on
total assets ratio of 76.9%. This suggests that they generate a return of 76.9% on
their total assets.

5. Return on Equity:
Return on Equity = (Net Profit after Tax / Equity Capital) * 100

For Aimur:
Return on Equity (Aimur) = (1,23,000 / 10,00,000) * 100 = 0.123 * 100 = 12.3%

For Sokoralu:
Return on Equity (Sokoralu) = (1,23,000 / 10,00,000) * 100 = 0.123 *Apologies,
there seems to be a typo in the calculation. Let me correct it:

5. Return on Equity:
Return on Equity = (Net Profit after Tax / Equity Capital) * 100

For Aimur:
Return on Equity (Aimur) = (1,23,000 / 10,00,000) * 100 = 0.123 * 100 = 12.3%

For Sokoralu:
Return on Equity (Sokoralu) = (1,23,000 / 10,00,000) * 100 = 0.123 * 100 = 12.3%

Interpretation: The return on equity ratio measures the profitability generated for
each unit of equity capital invested by the shareholders. Both Aimur and Sokoralu
have a return on equity ratio of 12.3%. This indicates that they generate a return
of 12.3% on the equity capital invested in the company.

6. Earnings per Share:

Earnings per Share = (Net Profit after Tax / Number of Shares)

For Aimur:
Number of Shares = Equity Capital / Face Value per Share = 10,00,000 / 10 =
1,00,000

Earnings per Share (Aimur) = 1,23,000 / 1,00,000 = 1.23

For Sokoralu:
Number of Shares = Equity Capital / Face Value per Share = 10,00,000 / 10 =
1,00,000

Earnings per Share (Sokoralu) = 1,23,000 / 1,00,000 = 1.23

Interpretation: Earnings per share represents the portion of a company's profit

allocated to each outstanding share. Both Aimur and Sokoralu have an earnings per
share of 1.23, indicating that for each share held, the shareholders earn a profit
of 1.23.

7. Inventory Turnover:
Inventory Turnover = Sales / Average Inventory

For Aimur:
Average Inventory = (Opening Inventory + Closing Inventory) / 2 = (3,31,000 +
3,31,000) / 2 = 3,31,000

Inventory Turnover (Aimur) = 32,00,000 / 3,31,000 = 9.67 times

For Sokoralu:
Average Inventory = (Opening Inventory + Closing Inventory) / 2 = (3,31,000 +
3,31,000) / 2 = 3,31,000

Inventory Turnover (Sokoralu) = 32,00,000 / 3,31,000 = 9.67 times

Interpretation: The inventory turnover ratio measures how efficiently a company

manages its inventory. Both Aimur and Sokoralu have an inventory turnover of 9.67
times, indicating that they sell and replace their inventory approximately 9.67
times during the given period.

8. Receivables Turnover:
Receivables Turnover = Sales / Average Receivables

For Aimur:
Average Receivables = (Opening Receivables + Closing Receivables) / 2 = (3,50,000 +
3,50,000) / 2 = 3,50,000

Receivables Turnover (Aimur) = 32,00,000 / 3,50,000 = 9.14 times

For Sokoralu:
Average Receivables = (Opening Receivables + Closing Receivables) / 2 = (3,50,000 +
3,50,000) / 2 = 3,50,000

Receivables Turnover (Sokoralu) = 32,00,000 / 3,50,000 = 9.14 times

Interpretation: The receivables turnover ratio measures how quickly a company

collects its accounts receivable. Both Aimur and Sokoralu have a receivables
turnover of 9.14 times, indicating that, on average, they collect their receivables
approximately 9.14 times during the given period.

9. Interest Coverage:
Interest Coverage = Earnings Before Interest and Taxes (EBIT) / Interest Expense

For Aimur:
EBIT = Net Profit after Tax + Interest Expense = 1,23,000 + 0 = 1,23,000 (assuming
no interest expense)

Interest Coverage (Aimur) = 1,23,000 / 0 = undefined

For Sokoralu:
EBIT = Net Profit after Tax + Interest Expense = 1,23,000 + 0 = 1,23,000 (assuming
no interest expense)

Interest Coverage (Sokoralu) = 1,23,000 / 0 = undefined

Interpretation: The interest coverage ratio measures a company's ability to cover

its interest expenses with