Influence Of Solvency And Liquidity On The Financial Performance Of Selected Automobile Companies In India

This study investigates the impact of liquidity and solvency on the financial performance of selected automobile companies for a period from 2015 to 2024. The sample includes the top eight automobile companies in India ranked by market capitalization and listed on the National Stock Exchange (NSE). The data were analyzed using Correlation and multiple linear regressions. The study found that liquidity ratios and solvency ratios are correlated with financial performance (ROA). Notably, the Shareholders' Equity Ratio (ER) exhibits a significant positive correlation with Return on Asset (ROA) and the Debt-Equity Ratio (DER) showed a strong negative correlation with ROA, indicating that higher leverage diminishes financial performance. The result of regression analysis indicated that solvency ratios significantly influence financial performance, specifically, Shareholders' Equity Ratio (ER) showing a strong effect on ROA. This study provides valuable insights for investors, policymakers, and other stakeholders regarding the financial health of companies.