Covid-19 impact: Auto biggies face low-liquidity risk, says study

The disruptions caused by the Covid-19 pandemic and subsequent lockdowns are leading to cash crunch in many companies. 

Domestic brokerage firm Equirus has analysed companies based on the debt-to-equity ratio and debt-to-Ebitda ratio to assess companies that are at high-risk or ones that are relatively comfortable. 

According to the brokerage, companies with debt/Ebitda of less than 0.7 are at low risk, those between 0.7 and 1.7 are at moderate risk, while those above 1.7 are at high risk. All large auto manufacturers fall in the low-risk bracket. 

The chart shows how firms fare depending on their debt-to-Ebitda ratio: