Introduction:

One of the main objectives of power sector reforms was to improve the financial health of power utilities. Various state governments took initiatives to restructure their power sector to improve the final performance of the sector. Punjab was one of the states who took reform initiatives in late 90s. Financial performance has two aspects. One the operation efficiency that how efficiently the business is being run. Two, whether the tariff charged from consumers is adequate to recover the cost of supplying electricity.

In this research paper, ratio analysis that a very crucial tool to analyze the financial viability of any institution has been used as technique of analysis. While using the ratio analysis, we examine the relationship between the various items of the financial statement of that institution. The main use of the method of ratio analysis is to measure the financial health of Power utilities in Punjab. Some special ratios like current ratio, quick ratio, working capital ratio and some others are used to analyse the performance of power utilities. Mathematically, a ratio shows the arithmetic relationship between two or more selected variables.

Ratio analysis can may be used to study the various parameters related to financial performance. At the outset, it is used to measure the overall operating efficiency. Secondly, ability of any institution to meet its current liabilities and its solvency position is also studied. It can also be used to make a comparative analysis by making a comparison with similar firms operating in the market. In sum up historically, it has been used as a measurement of overall efficiency of the firms.

This paper is divided into four Sections including the current section, Section I which deals with introduction. In the Section II major short-term ratios have been computed and analysed. In the section III, a focus on long term ratios has also been done. Section IV draws the Conclusions and suggestions.

Country: India

DOI: https://doi.org/10.61161/ijarcsms.v13i2.3

Pages: 13-20

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