A STUDY ON CAPITAL STRUCTURE AND SOLVENCY POSITION OF TVS SRICHAKRA LIMITED USING RATIO ANALYSIS FROM 2013-2017

Abstract

This paper analysed the “Capital Structure Pattern and solvency position of TVS Srichakra private limited”. A study on long-term solvency, assessment of debt-equity, debt to total fund and examination of the use of debt and equity capital in TVS Srichakra Private Limited through the application of ratio analysis has been undertaken. The time period considered for evaluating the study is five years i.e. from 2013 to 2017. The TVS Srichakra Private Limited had shown an inclination in strengthening long term funds consisting of both shareholders’ funds as well as long term borrowed funds in order to finance its assets requirement. TVS Srichakra Private Limited mostly depended on equity financing. So, the financial risk of the company is low, but it could fail to enjoy the advantages of financial gearing. TVS Srichakra Private Limited should raise the debt funds to bring the optimum capital structure for improving the financial performance of the company. A higher interest coverage ratio is desirable, but too high ratio is some of the years of the study indicate that the TVS Srichakra Private Limited is very conservative in using debt, and it is not using debt to the best advantage of the shareholders.