Page 98 - DUT Annual Report 2023

Financial Sustainability
Liquidity Ratios
Figure 32. Liquidity ratios
Liquidity ratios measure the university’s ability to meet its short-term financial obligations as they fall due. A high acid test ratio and current ratio indicate a good liquidity position.
Acid Test Ratio
The acid test ratio compares the total current assets, excluding inventory, to total current liabilities. The acid test ratio of the university is 8.26:1(2022: 10.18:1) which exceeds the norm of 1:1.
Current Ratio
The current ratio indicates the university’s ability to settle its current liabilities from its current assets. The current ratio of the university is 8.27:1 (2022: 10.19:1) which exceeds the accepted norm of 2:1.
Cash and Cash Equivalents and Other Financial Assets Ratio
The cash and cash equivalents and other financial assets ratios effectively compare cash and cash equivalents and other financial assets with total current liabilities. The university’s cash and cash equivalents and other financial assets ratio is 7.17:1 (2022: 9.23:1).
Solvency Ratio
The solvency ratio measures the ability of the university to meet its long-term financial obligations – total assets (less property, plant and equipment and intangible assets) to total liabilities.
The university’s ratio is 2.66:1 (2022: 2.68:1). This is greater than the norm of 1:1, which is indicative of the financial stability of the university. The formula used excludes property, plant and equipment, and intangible assets because it is generally very illiquid.
Debt Equity Ratio
The ratio indicates the degree of financial leverage being used by the university and includes both short-term and long- term debt. The debt-equity is 11.15% (2022: 8.61%), which is below the 40% borrowing limit as per the university’s policy.
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DUT ANNUAL REPORT 2023