Capital Structure and Financial Stability of Kerala Sidco

TG Tharika Sri lekha; M Babima

doi:10.34293/management.v13iS1-i1-May.10961

TG Tharika Sri lekha II MBA, Department of Management Studies, St. Xavier’s Catholic College of Engineering, (Autonomous), Chunkankadai, Nagercoil, Kanyakumari, Tamil Nadu, India
M Babima Assistant Professor, Department of Management Studies, St. Xavier Catholic College of Engineering (Autonomous), Chunkankadai, Nagercoil, Tamil Nadu, India

DOI: https://doi.org/10.34293/management.v13iS1-i1-May.10961

Keywords: Capital Structure, Financial Stability, Liquidity, Ratio Analysis, SIDCO, Solvency

Abstract

The present study aims to analyze the capital structure and financial stability of Kerala Small Industries Development Corporation (SIDCO) from the year 2020-24. The study has employed ratio analysis, trend analysis, comparative balance sheet analysis, Karl Pearson’s correlation coefficient and Altman Z-score analysis to analyze liquidity, solvency, debt position and financial stability. The result indicates that the level of dependence on borrowed money increased and shareholders’ funds decreased continuously throughout the study period. The state of weak liquidity, negative interest coverage, and increasing in the liabilities are a rise in the financial pressures of the organization. The Z score analysis also indicates that the company continued to stay in the financial distress zone during the period. The study suggests that, better financial planning, proper borrowing practice, and better utilization of the resources are essential in enhancing the long term financial stability of Kerala SIDCO.