PRACTICE OF LIQUIDITY AND SOLVENCY: DOES IT WORK IN HINDALCO INDUSTRIES LIMITED?

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R. SATHISHKUMAR, D. UMAMAHESWARI, N. JAYANTHI,

Abstract

The standard theory has developed in the area of accounting and finance to strengthen and support the current practice in the world but it is questionable whether it is most suitable to the current situation and also it should be justifiable in the practical aspects too. Therefore, the present study is undertaken to examine the applicability of standard theory norms of liquidity and solvency by taking Hindalco Industries Limited as a case. The experiment applied the standard ratios in the last 15 years of the company’s financial data from 2009 to 2021 in order to determine the practice of standards developed in the field of liquidity and solvency. The study found that the company has adopted the standards developed in liquidity and solvency to some extent only. In many years, it fails to follow the standards and it is not in a position to maintain the theoretical aspects. Therefore, it is highly questionable to adopt standards in the practical and competitive world and it is in the hands of practitioners to examine the revision of existing standards or they have to instruct the industries to adhere to the developed standards.

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