A PROJECT REPORT

ON
ANALYSIS OF FINANCIAL STATEMENTS OF TATA MOTORS LTD.

BY
NAIRUTI NANDKUMAR THORAT
(BBA) (2014-15)

IN PARTIAL FULFILLMENT OF
Bachelor of Business Administration
UNIVERSITY OF PUNE

MITSOM College

PUNE: 411038

(ii)

CERTIFICATE
This is to certify that Ms.

NAIRUTI NANDKUMAR THORAT

of MAEERs MITSOM College has successfully completed the project work titled
ANALYSIS OF FINANCIAL STATEMENT OF TATA MOTORS LTD. in partial
fulfilment of requirement for the award of Bachelor of Business Administration prescribed by the
University of Pune

This project is the record of authentic work carried out during the academic year
2014-15.

Mr. Hemant Bhise

Subject Teacher

(Dr.) Mr. R.M Chitnis

Principal

Internal Examiner

External Examiner

DECLARATION

I, Ms. NAIRUTI THORAT hereby declare that this project is the record of authentic work carried
out by me during the academic year 2014-2015 and has not been submitted to any other
University or Institute towards the award of any degree.

NAIRUTI THORAT

ACKNOWLEDGEMENT
I would like to extend my sincere thanks to Dr. R.M. Chitnis, Principal of MIT-SOM College,
who wholeheartedly allowed us in taking all the activities needed in preparation of this project. I
take the opportunity to express my profound gratitude and deep regards to my guide, Mrs.
Shreeya Rajpurohit for her exemplary guidance, monitoring and constant encouragement
throughout the course of this thesis. The blessing, help and guidance given by her time to time
shall carry me a long way in the journey of life on which I am about to embark.

I am highly indebted to all my teachers and colleagues in my college for providing necessary
stimulus for writing this project. I am also equally grateful to all those people whose writings and
works have helped me in completing this project. These individuals deserve praise for their
valuable comments, suggestions and untiring contribution.

However, I accept the sole responsibility for any possible error or omission and would be
extremely grateful to the readers of this project if they bring such mistakes to my notice.

NAIRUTI THORAT

ABSTRACT

Financial statement analysis which for a major part of financial management of a business is
defined as the process of identifying financial strengths and weakness of the firm by properly
establishing relationship between the items of the balance sheet and profit and loss account.
There are various techniques or methods that are used in analyzing financial statements such as
comparative statements, schedule of changes in working capital, common-size statements, trend
analysis, etc.
Financial statements are prepared to meet external reporting obligations and also for decision
making purposes. They play dominant role in setting the framework of managerial decisions. But
the information provided in the financial statements is not an end itself as no meaningful
conclusions can be drawn from these statements alone. However, the information provided in the
financial statements is of immense use in making decisions through analysis and interpretation of
financial statements.
The balance sheet and profit and loss account of TATA MOTORS LTD. has been taken for
analysis purpose. Though it is prepared for the project purpose, it would prove to be very useful
for anyone aspiring to know the magazine.

Special efforts have been made to clarify the basics of analysis of financial statements. The
simple and easy language would make possible for the reader to grasp the matter quickly. The
project is unique for its diversity in contents, clarity and precision of presentation and the overall
completeness of its concepts.

CONTENTS
Sr. No.

TOPIC

PAGE
No.

1.

LIST OF TABLES AND GRAPHS

2.

COMPANY PROFILE

3.

THEORETICAL BACKGROUND
FINANCIAL STATEMENTS
ANALYSIS OF FINANCIAL STATEMENTS
TECHNIQUES OF ANALYSIS OF FINANCIAL STATEMENTS

4.

Comparative Financial Statements

Common Size Financial Statements

Trend Analysis

Ratio Analysis

Funds Flow Statements

Cash Flow Statements

OBJECTIVES OF THE PROJECT

5.

FINANCIAL STSTEMENTS OF MARUTI SUZUKI

BALANCE SHEET
STATEMENT OF PROFIT AND LOSS

6.

ANALYSIS AND INTERPRETATTION OF FINANCIAL

STATEMENTS OF MARUTI SUZUKI
RATIO ANALYSIS
SUMMARIZED TABLE OF RATIOS
FUNDS FLOW ANALYSIS
CASH FLOW STATEMENT

7.

CONCLUSION

8.

BIBLIOGRAPHY

LIST OF TABLES AND GRAPHS

Sr. No.

TOPIC

1.

Current ratio

2.

Quick / Acid test ratio

3.

Super quick / Absolute liquidity ratio

4.

Stock turnover ratio

5.

Stock conversion period

6.

Debtors turnover ratio

7.

Debtors collection period

8.

Capital employed turnover ratio

9.

Fixed assets turnover ratio

10.

Return on capital employed

11.

Return on shareholders fund / Return on equity

12.

Return on total assets

13.

Earnings per share

14.

Gross profit ratio

15.

Net profit ratio

16.

Operating profit ratio

17.

Operating ratio

18.

Debt Equity ratio

19.

Proprietary ratio

20.

Capital gearing ratio

PAGE No.

COMPANY PROFILE

TATA MOTORS LTD.

Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive
Company) is an Indian multinational automotive manufacturing company headquartered in
Mumbai , Maharashtra , India and a subsidiary of the Tata Group. Its products include
passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles.
It is the world's 17th-largest motor vehicle manufacturing company, fourth-largest truck
manufacturer, and second-largest bus manufacturer by volume.
Tata Motors has auto manufacturing and assembly plants
in Jamshedpur, Pantnagar,Lucknow, Sanand, Dharwad, and Pune, in India, as well as in
Argentina, South Africa, Thailand, and the United Kingdom. It has research and
development centres in Pune, Jamshedpur, Lucknow, and Dharwad, India, and in South
Korea, Spain, and the United Kingdom. Tata Motors' principal subsidiaries include the
British premium car maker Jaguar Land Rover (the maker of Jaguar, Land Rover, and
Range Rover cars) and the South Korean commercial vehicle manufactuer Tata Daewoo.
Tata Motors has a bus-manufacturing joint venture with Marcopolo S.A. (Tata Marcopolo), a
construction-equipment manufacturing joint venture with Hitachi (Tata Hitachi Construction
Machinery), and a joint venture with Fiat which manufactures automotive components and
Fiat and Tata branded vehicles.
Founded in 1945 as a manufacturer of locomotives, the company manufactured its first
commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969.

Tata Motors entered the passenger vehicle market in 1991 with the launch of the Tata
Sierra, becoming the first Indian manufacturer to achieve the capability of developing a
competitive indigenous automobile.
In 1998, Tata launched the first fully indigenous Indian passenger car, the Indica, and in
2008 launched the Tata Nano, the world's most affordable car. Tata Motors acquired the
South Korean truck manufacturer Daewoo Commercial Vehicles Company in 2004 and
purchased Jaguar Land Rover from Ford in 2008.
Tata Motors is listed on the Bombay Stock Exchange, where it is a constituent of the BSE
SENSEX index, the National Stock Exchange of India, and the New York Stock Exchange.
Tata Motors is ranked 314th in the 2012 Fortune Global 500 ranking of the world's biggest
corporations.

Tata Motors Limited

Type

Public

Traded as

BSE: 500570 (BSE SENSEX Constituent)

NSE: TATAMOTORS
NYSE: TTM

Industry

Automotive

Founded

1945

Founder

Jamsetji Tata

Headquarters

Mumbai, Maharashtra, India

Area served

Worldwide

Key people

Cyrus Pallonji Mistry(Chairman)

Products

Automobiles

Commercial vehicles
Coaches
Buses
Construction equipment
Military vehicles
Automotive parts
Services

Automotive design, engineering and outsourcing services

Vehicle leasing
Vehicle service

Revenue

US$ 38.6 billion (FY 2013-14)

Operating income

US$ 3.86 billion (2014)

Profit

US$ 2.29 billion (2014)

Total assets

US$ 36.05 billion (2014)

Total equity

US$ 8.91 billion (2014)

Number of employees

66,593 (2014)

Parent

Tata Group

Divisions

Tata Motors Cars

Subsidiaries

Jaguar Land Rover

Tata Daewoo
Tata Hispano

Slogan

More Dreams Per Car

Website

www.tatamotors.com

THEORETICAL BACKGROUND
MEANING AND DEFINITION OF FINANCIAL STATEMENTS:
The financial statements are organized summaries of detailed information about the financial
position and performance and include Income statement and the Balance sheet. Financial
statements form a part of the process of financial reporting. A complete set of financial
statements normally includes a balance sheet, a statement of profit and loss (also known as
income statement), a cash flow statement and those notes and other statements and explanatory
material that are an integral part of the financial statements.
According to Harper W.M. Financial statement is a written report of the financial condition of a
firm. Financial statements include the balance sheet, income statement, statement of changes in
net worth and statement of cash flow.

MEANING OF ANALYSIS OF FINANCIAL STATEMENTS:

Financial statements are the blueprints of the financial affairs of the firm. It provides useful ,
meaningful and valuable information periodically regarding financial position and future
prospects of the business concern.
Analysis of financial statement is the systematic numerical calculation of the relationship
between one face with the other to measure the profitability, operational efficiency and the
growth potential of the business. Thus, the analysis of financial statements is basically a study of
the relationship among various financial facts and figures as given in a set of these statements.

TECHNIQUES OF ANALYSIS OF FINANCIAL STATEMENTS

Comparative financial statements

Common-size financial statements
Trend analysis
Ratio analysis
Funds flow statements
Cash flow statements

COMPARATIVE FINANCIAL STATEMENTS:

Comparative financial statements refer to those statements which summarize and present
accounting data for a number of years incorporating therein changes (both absolute and relative)
in individual terms of financial statements. These statements may include comparative balance
sheet and comparative profit and loss account.

COMMON-SIZE FINANCIAL STATEMENTS:

Common-size financial statements refer to vertical studies single statement for the relationship of
the components of the total. The common-size financial statement first convert each amount in
the statement to a percentage of the total amount of the group of which it is a part.

TRENDANALYSIS:
The term trend refers to any general tendency. Analysis of these general tendencies is called
trend analysis. Like comparative financial statements, trend analysis is also a horizontal type
of analysis of financial statements. The main advantage of trend analysis is that management can
more readily study the changes in financial statements between periods by establishing a base
year and other years in relation to the base year.

RATIO ANALYSIS:
Ratio analysis is a widely used tool of financial analysis. The systematic use of ratio helps to
interpret the financial statements so that the strengths and weaknesses of a firm as well as
its historical performance and current financial condition can be determined and assessed.
Following are the types of ratios:
A. LIQUIDITY / SHORT TERM SOLVENCY RATIOS:
Liquidity or short term solvency refers to the ability of the firm to pay off its short term
liabilities. Liquidity ratios are those ratios which are computed to evaluate the capacity of
the company to repay its short-term liabilities. These ratios indicate the short term
financial position of the company by relating short term resources with short term
obligations. Following are commonly used ratios.
1. Current ratio = Current assets / Current liabilities
2. Quick ratio / acid test ratio = Current assets (Stock + Prepaid expenses) /
Current liabilities bank overdraft
3. Superquick ratio / absolute liquidity ratio = Cash and bank balances + Marketable
Securities / Current liabilities Bank
Overdraft
B. ACTIVITY / TURNOVER / OPERATIONAL EFFICIENCY RATIOS:
Profit depends on the rate of turnover and the net margin. A good turnover is essential for
all the companies. The performance of a company is generally evaluated on the basis of the
turnover. Higher turnover means better performance which indicates optimum of
resources at its disposal. These ratios reveal how well and efficiently the assets of the
company are being utilized. Following are the turnover ratios:

1. Stock turnover ratio = COGS / Average stock

Where,
Average stock = Opening stock + Closing stock / 2
2. Debtors turnover ratio = Net credit sales / Average accounts receivable
Where,
Accounts receivable = Debtors + Bills Receivables
Average accounts receivable = Opening A/R + Closing A/R / 2
3. Creditors turnover ratio = Net credit purchases / Average accounts payable
Where,
Accounts payable = Creditors + Bills payable
Average accounts payable = Opening A/P + Closing A/P / 2
4. Working capital turnover ratio = COGS or net sales / Net working capital
5. Capital employed turnover ratio = COGS or net sales / Capital employed
6. Fixed assets turnover ratio = COGS or net sales / Net fixed assets
C. PROFIBILITY RATIOS:
Profitability ratios are the ratios which are computed to evaluate the performance and efficiency
of the business concern. Profitability ratios are mainly used by the owners i.e. shareholders and
management. Management employs profitability ratios to assess the operational performance of
the firm. Profitability ratios may be classified as under:
1. PROFIBILITY RATIOS RELATED TO INVESTMENT:
a. Return on capital employed = PBIT / Capital employed * 100
b. Return on shareholders fund = PAT / Shareholders funs * 100
c. Return on equity = PAT and Preference dividend / Shareholders fund * 100
d. Return on total assets = PAT and Preference dividend / Total assets * 100

e. Earnings per share = PAT and Preference dividend / No. of equity shares
f. Payout ratio = Equity dividend / PAT and Preference dividend * 100
g. Retained earnings ratio = Retained earnings / PAT and Preference dividend * 100
h. Dividend Coverage ratio = PAT and Preference dividend / equity dividend
2. PROFIBILITY RATIOS RELATED TO SALES:
a. Gross profit ratio = Gross profit / Net sales * 100
b. Net profit ratio = Net profit / Net sales * 100
c. Operating profit ratio = Operating profit / net sales * 100
d. Operating expenses ratio = COGS + Operating expenses / Net sales * 100
D. LONG TERM SOLVENCY / CAPITAL STRUCTURE RATIOS:
The term solvency ratio refers to those ratios which deal with the companys ability to meet
long-term liabilities. Long-term creditors include debenture holders, vendors selling equipment
on hire purchase basis and other financiers supplying long-term loans. The long term creditors
are primarily interested in ascertaining whether the company is sufficiently strong enough to
meet long term debts and whether the company is having adequate profits to pay its interest
obligations regularly. Following are some really important solvency ratios:
1. Debt Equity ratio = Total long term debt / Shareholders fund
2. Proprietary ratio = Shareholders fund / Total tangible assets
3. Capital gearing ratio = Long term loan + Debentures + Preference share capital /
Equity share capital + Reserves and surplus

FUNDS FLOW STATEMENTS:

If the flow of funds are summarized in the form of a statement is it called as the Funds flow
statement . The funds flow statements highlights the underlying financial movements and
reflects the changes in the financial position or working capital position at two different
dates. It includes only those transactions , which affect the current assets and current
liabilities . It clearly indicates inflows and outflow of working capital during the specific
period.
The objectives of the funds flow statements are as follows:

To indicate the results of financial management policies .

To lay emphasis on the most significant changes that have taken place during a
specific period of time.

To show as to how the general expansion in a business has been financed .

To give recognition to the fact that the business exists on flow of funds and is not a
static organization .

CASH FLOW STATEMENTS:

Cash flow statement is a statement which highlights the inflows and outflows of cash
during a specific period . It indicates the sources from which the cash has been generated
uses to which the has been put and the resultant change in the cash balance over the period.
It explains the reason for the change in the cash postion of the company. Transactions
which increase the cash position of a company are labeled as inflow of cash and those
which decrease the cash position as outflow of cash.
The following are a few advantages of the cash flow statements :

It is a tool in preparing and establishing cash budgets .

It is useful to the finance manager in exploring the possibility of repayment of long
term debts which depends upon availability of cash.

 The statements can be used for comparison between the previous year and projected
cash flows , to evaluate deviations .

It supplements the analysis provided by funds flow statement as cash is a

part of the working capital.

OBJECTIVES OF MY PROJECT
To ascertain the liquidity and solvency of the Company.
To measure the profitability of the Organization.
To examine the factors effecting financial and operational performance.
To analyze the present financial position as well as the future.
To measure the efficiency of management in administering/ monitoring the Assets of the
Company.
To ascertain the investment pattern of resources.
To identify diversion of funds if any
.
To evaluate the policies of management.
To understand the relationship between various items of financial statements.
To lay emphasis on the most significant changes that has taken place during a specified
period.

BALANCE SHEET
PARTICULARS
EQUITY AND LIABILITIES
SHAREHOLDER'S FUNDS
Share Capital
Reserves and Surplus
NON-CURRENT LIABILITIES
Long term Borrowings
Deferred Tax Liability
Other Long term Liabilities
Long term Provisions
CURRENT LIABILITIES
Short term Borrowings
Trade payables
Other Current Liabilities
Short term Provisions
TOTAL
ASSETS
NON-CURRENT ASSETS
Fixed Assets
Tangible Assets
Intangible Assets
Capital work-in-progress
Non-Current Investments
Long term Loans & Advances
Other Non-Current Assets
CURRENT ASSETS
Current Investments
Inventories
Trade Receivables
Cash & Bank Balances
Short term Loans & Advances
Other Current Assets

(All amounts in Rs. Crores)

31.3.2014

31.3.2013

31.3.2012

643.78
18532.87
19176.65

638.07
18496.77
19134.84

643.75
18732.91
19367.66

9746.45
43.11
1155.48
815.20
11760.24

8051.78
1963.91
1238.44
691.19
11945.32

8004.50
2105.41
1959.63
685.56
12755.10

4769.08
9672.36
2463.81
1892.91
18797.53
49734.42

6216.91
8455.02
4923.10
1509.58
21104.61
52184.77

3007.13
8705.53
7470.95
2954.56
22138.17
54260.93

12133.50
7745.29
1716.85
21595.64
18357.57
2918.30
123.85
42995.36

12287.71
6412.99
1507.84
20208.54
18171.71
3575.24
94.32
42049.81

11746.47
5399.42
1910.30
19056.19
17903.29
3488.11
100.42
40548.01

100.85
3862.53
1216.70
226.15
1223.77
109.06

1762.68
4455.03
1818.04
462.86
1532.09
104.26

2590.26
4588.23
2708.32
1840.96
1817.74
113.41

TOTAL

6739.06

10134.96

13712.92

49734.42

52184.77

54260.93

STATEMENT OF PROFIT AND LOSS

(All amounts in Rs. crores)
PARTICULARS
REVENUE FROM OPERATIONS
Revenue from operations :
Less: Excise Duty
Net Sale Of Products

31.3.2014

31.3.2013

31.3.2012

37758.00
(3469.89)
34288.11

49319.73
(4554.01)
44765.72

59220.94
(4914.38)
54306.56

Other Income

3833.03
38121.14

2088.20
46853.92

574.08
54880.64

27244.28
5864.45
(143.60)
2837.00
1387.76
1817.62
425.76
7773.65
(953.80)
46253.12
(600.80)

33894.82
6433.95
(623.84)
2691.45
1218.62
1606.74
234.25
8405.51
(907.13)
52954.37
(1926.27)

TOTAL REVENUE

EXPENSES
Cost of Material Consumed
20492.87
Purchase of Stock-in-Trade
5049.82
Change in inventories of Finished Goods & WIP
(371.72)
Employees Benefit Expenses
2877.69
Finance Costs
1337.52
Depreciation & Amortization
2070.30
Product Development Expense
428.74
Other Expenses
6987.53
Expenditure transferred to Capital account
(1009.11)
TOTAL EXPENSES
38607.08
PROFIT / LOSS BEFORE EXCEPTIONALS &
(485.94)
EXTRAORDINARY ITEMS AND TAX
Exceptinal Items :
Exchange loss including on revaluation
of
foreign currency borrowings deposits & loans
273.06
Provision for loan given & cost associated with
closure of operations
202.00
Diminution in value of investments
17.52
Employee separation Cost
47.28
Profit on sale of a division
539.86
PROFIT/ LOSS BEFORE TAX FROM

(1025.80)

263.12

455.24

245.00
(82.25)
425.87

130.00
585.24

174.93

1341.03

CONTINUING OPERATIONS
Tax credit
PROFIT AFTER TAX FOR THE YEAR
Ordinary shares (Face value of Rs. 2 each)
Basic
Diluted
A Ordinary Shares (Face Value of Rs. 2 each)
Basic
Diluted

(1360.32)

(126.88)

(98,80)

334.52

301.81

1242.23

1.03
1.03

0.93
0.93

3.90
3.77

1.13
1.13

1.03
1.03

4.00
3.87

Analysis and Interpretation of Financial

Statements

Ratio Analysis
I. LIQUIDITY RATIOS:
1. Current Ratio = Current Assets / Current Liabilities
Year
Current Assets
Current Liabilities
Current Ratio

2011-2012
13712.92
22138.17
0.61 : 1

2012-2013
10134.96
21104.61
0.48 : 1

2013-2014
6739.06
18797.53
0.35 : 1

Current Ratio
0.7
0.6
0.5
Current Ratio

0.4
0.3
0.2
0.1
0
2011-2012

2012-2013

2013-2014

INTERPRETATION:
The current ratio is 2:1. However, through the company's balance sheet we can analyze there is a
tremendous difference in the in current assets and current liabilities of the firm and a
considerable increase in the trade receivables of the firm. On the other hand, there is also a rapid
increase in the current liabilities of the firm. Thus, because of this there is a downward trend
observed in the current ratio of the firm.

2. Quick Ratio = Liquid Assets / Current liabilities

Liquid Assets = Current Assets Inventories
Current liabilities = Current liabilities Bank Overdraft
Year
Liquid Assets
Current liabilities
Quick Ratio

2011-2012
9124.69
21811.26
0.42 : 1

2012-2013
5679.93
21104.61
0.27 : 1

2013-2014
2876.53
17001.22
0.17 : 1

Quick ratio
0.45
0.4
0.35
0.3
Quick ratio

0.25
0.2
0.15
0.1
0.05
0
20111-2012

2012-2013

2013-2014

INTERPRETATIONS:
The ideal quick ratio is 1:1 which denotes for every liability the company should have a
correspondent asset. This ratio takes into consideration only the liquid assets of the company.
Liquid assets can be converted into cash in a short span of time. Inventories not being liquid
assets are deducted from the current assets. Therefore, after excluding inventories we find that
the current assets are less than the current liabilities. Such a situation is not desirable for the
company. The quick ratio is showing a decreasing trend.

3. Super quick or Absolute = Super quick Assets / Current Liabilities

Liquidity Ratio
Superquick Assets = Cash and Bank Balances + Marketable Securities
Current Liabilities = Current Liabilities Bank overdraft
Year
Super quick Assets
Current Liabilities
Super quick Ratio

2011-2012
4431.22
21811.26
0.20 : 1

2012-2013
2225.54
211004.61
0.10 : 1

2013-2014
327
17001.22
0.019 : 1

Superquick ratio
0.25
0.2
0.15

Superquick ratio

0.1
0.05
0
2011-2012

2012-2013

2013-2014

INTERPRETATIONS:
Current assets like cash and bank balances and marketable securities are included in this ratio.
These assets are the absolute liquid assets which can be converted into cash immediately. The
company has sufficient liquid assets to pay off its liabilities indicating a satisfactory liquidity
position of the company. However, in the year 2012-13 the current assets are less than the current
liabilities which is unfavorable as the idea ratio is 1:1.

II. Activity/ Turnover Ratios:

1. Stock Turnover ratio = COGS / Average Stock
COGS = cost of material consumed + purchase of stock in trade + change in inventories of
finished goods, WIP & stock in trade

Year
COGS
Average Stock
Stock Turnover Ratio

2011-2012
39704.93
4588.23
8.6 times

2012-2013
32965.13
4455.03
7.39 times

2013-2014
25914.41
3862.53
6.70 times

Stock Turnover Ratio

10
9
8
7
6

Stock Turnover Ratio

5
4
3
2
1
0
2011-12

2012-13

2013-14

INTERPRETATION:
Inventory turnover ratio helps to measure how quickly stock is converted into sales. A higher
stock turnover ratio indicates that more sales are being made against the investment in stocks.
However, in the above ratio the trend is not increasing substantially but is fluctuating within a

considerable range. Thus, the inventory turnover ratio of the company is neither too high nor low
but it indicates the requirement of a good inventory policy by the company.

2. Stock Conversion Period = 365 / Stock Turnover Ratio

Year
Stock Turnover Ratio
Stock Conversion

2011-2012
8.6 times
42.44 days

2012-2013
7.39 times
49.39 days

2013-2014
6.70 times
54.4 days

Period

Stock Conversion Period

60
50
40
Stock Conversion Period
30
20
10
0
2011-12

2012-13

2013-14

INTERPRETATION:
Stock conversion period indicates the time span required for converting the stocks into sales.
Generally, a shorter conversion period is desirable. The conversion period of the company is not
at all very satisfactory.

3. Debtors Turnover Ratio = Net Sales / Average Debtors

Assuming all net sales to be credit sales
Average Debtors = Trade receivables .
Year
Net Sales
Average Debtors
Debtors Turnover

2011-2012
54306.56
2708.32
20.05 times

2012-2013
44765.72
1818.04
24.62 times

2013-2014
34288.11
1216.70
28.18 times

Ratio

Debtors Turnover Ratio

30
25
20
Debtors Turnover Ratio
15
10
5
0
2011-12

2012-13

2013-14

INTERPRETATION:
Debtors turnover ratio measures the number of times the receivables are rotated in a year in
terms of sales. Higher debtors turnover ratio indicates speedy realization of debts. The company
is showing a increasing ratio which is very much considered desirable for the company. Thus the
company has chalked out an effective credit policy to realize its debts in a shorter span of time.

4. Debtors Collection Period = 365 / Debtors Turnover Ratio

Year
Debtors Turnover

2011-2012
20.05 times

2012-2013
24.62 times

2013-2014
28.18 times

Ratio
Debtors Collection

18.20 days

14.82 days

12.95 days

Period

Debtors Collection Period

20
18
16
14
12

Debtors Collection Period

10
8
6
4
2
0
2011-12

2012-13

2013-14

INTERPRETATION:
Debtors collection period represents the time segment which is generally required to recover the
debts from the customers and amounts realizable on bills. Generally, a shorter collection period
implies quick payment by debtors. There is a continuous decrease in the collection period
indicating that the company is able to realize all its bills.

5. Working Capital Turnover Ratio = COGS / Net Working Capital

Net working Capital = Current Assets Current Liabilities

Year
COGS
Current Assets
Current Liabilities
Net Working Capital
Working Capital

2011-2012
39704.93
13712.92
22138.17
56015
5.06 times

2012-2013
32965.13
10134.96
21104.61
45324
6.20 times

2013-2014
25914.41
6739.06
18797.53
40968
7.95 times

Turnover Ratio

Working Capital Turnover Ratio

9
8
7
6

Working Capital Turnover

Ratio

5
4
3
2
1
0
2010-11

2011-12

2012-13

INTERPRETATION:
Working capital ratio indicates the number of times working capital is being rotated to convert
raw materials into finished goods to final sales. The higher the ratio, the lower is the investment
in the working capital and greater are the profits. Continuous increase in the ratio indicates that
the company is utilizing its funds efficiently and converting its raw materials to final sales in a
short span of time thus earning higher profits.

6. Capital Employed Turnover Ratio = COGS / Capital Employed

Capital Employed = Share Capital + Reserves and Surplus + Long Term Borrowings

Year
COGS
Capital Employed
Capital Employed

2011-2012
39704.93
27372.16
1.45 times

2012-2013
32965.13
27186.62
1.21 times

2013-2014
25914.41
28923.1
0.89 times

Turnover ratio

Capital Employed Turnover Ratio

1.6
1.4
1.2
1

Capital Employed Turnover

Ratio

0.8
0.6
0.4
0.2
0
2011-12

2012-13

2013-14

INTERPRETATION:
Capital employed turnover ratio ensures whether the capital employed has been effectively used
and also shows the profitability and efficiency of the management. However, too high ratio may
indicate over trading resulting in paucity if funds, that is, capital resources are being stretched
too far to realize sales. Although the company is showing a declining trend, it indicates that the
company is trading satisfactorily and not exploiting its capital resources.

7. Fixed Assets Turnover Ratio = COGS / Net Fixed Assets

Net Fixed Assets = Fixed Assets Depreciation
Year
COGS

2011-2012
39704.93

2012-2013
32965.13

2013-2014
25914.41

Fixed Assets
Depreciation
Net Fixed Assets
Fixed Assets Turnover

19056.19
1606.74
17449.45
2.27 times

20208.54
1817.62
18390.92
1.79 times

21595.64
2070.30
19525.34
1.32 times

Ratio

Fixed Assets Turnover Ratio

2.5
2
1.5

Fixed Assets Turnover Ratio

1
0.5
0
2011-12

2012-13

2013-14

INTERPRETATION:
Fixed assets turnover ratio determines whether the investments made in the fixed assets have
really helped in generating sales. Higher the ratio the greater is the utilization of fixed assets in
terms of sales. In the above ratio, a decreasing trend is indicating inefficient utilization of fixed
assets in generating sales.

III. Profitability Ratios- Related to Investments

1. Return on Capital Employed = PBIT / Capital Employed * 100
Capital Employed = Equity Capital + Reserves and Surplus + Long
Term Borrowings
PBIT = PAT + finance cost
Year
PBIT

2011-2012
2460.85

2012-2013
1689.57

2013-2014
1672.04

Capital employed
Return on Capital

27372.16
9%

27186.62
6.21%

28923.1
5.78%

Employed

Return on Capital Employed

10.00%
9.00%
8.00%
7.00%
Return on Capital
Employed

6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2011-12

2012-13

2013-14

INTERPRETATION:
Return on capital employed is also known as return on investment. It is an indicator of the
earning capacity of the capital invested in the business. It measures profitability of total capital
committed in the business. In the above scenario, the ratio is showing a downward trend which
indicates that the management is failing to enhance the income of shareholders through use of
borrowed capital
2. Return on Shareholders Fund or = PAT / Shareholders fund * 100
Return on Equity
Year
PAT
Shareholders fund
Return on
Shareholders fund

2011-2012
1242.23
19367.66
6.41%

2012-2013
301.81
19134.84
1.58%

2013-2014
334.52
19176.65
1.74%

Return on Shareholder's fund

7.00%
6.00%
5.00%
Return on Shareholder's
fund

4.00%
3.00%
2.00%
1.00%
0.00%
2011-12

2012-13

2013-14

INTERPRETATION:
Return on shareholders fund ratio helps the shareholders and potential investors to judge the
earnings of the company and the adequacy of the return on the shareholders fund. A company
showing a higher return on shareholders fund is preferred by the potential investors. In the
present situation it can be seen that the company is using more of equity capital and is on the
stage of earning higher profits.

3. Return on Total Assets = PAT / Total Assets * 100

Year
PAT
Total Assets
Return on Total Assets

2011-2012
1242.23
54260.93
2.28%

2012-2013
301.81
52184.77
0.51%

2013-2014
334.52
49734.42
0.67%

Return on Total Assets

2.50%
2.00%
1.50%

Return on Total Assets

1.00%
0.50%
0.00%
2011-12

2012-13

2013-14

INTERPRETATION:
Return on total assets ratio measures the profitability and efficiency of the company. This ratio
shows how the assets of the company have been used to generate income. Higher the ratio better
is the efficiency of the management. The companys return on total assets is showing a sudden
downfall

indicating inefficient usage of its assets in generating income , and later shows a

slight rise in 2014.

4. Earnings Per Share = PAT / Number of Equity Shares

Assumption : no preference dividend has been paid.
Year
PAT
No. of Equity Shares
EPS

2011-2012
12420000000.23
3173546570
Rs.3.91

2012-2013
3010000000.81
3190115771
Rs.0.93

2013-2014
3340000000.52
3218680067
Rs.3.99

EPS
4.5
4
3.5
3
EPS

2.5
2
1.5
1
0.5
0
2011-12

2012-13

2013-14

INTERPRETATION:
EPS helps to assess the availability of total profits per share. It throws light on the overall
profitability and helps in determining the market price of equity shares. It reflects upon the
capacity of the business to pay dividend to its equity shareholders. A rapid decrease in the
earnings per share of the company disinterests potential investors to invest more in the company
and results in loss to earn higher returns.

PROFITABILITY RATIOS- RELATED TO INVESTMENTS

1. Gross Profit Ratio = Gross Profit / Net Sales * 100
Gross Profit = Nets sales COGS
Year
Gross Profit
Net Sales
GP Ratio

2011-2012
14601.63
54306.56
26.88%

2012-2013
11800.59
44765.72
26.36%

2013-2014
8373.7
34288.11
24.42%

Gross Profit Ratio

27.50%
27.00%
26.50%
26.00%
Gross Profit Ratio

25.50%
25.00%
24.50%
24.00%
23.50%
23.00%
2011-12

2012-13

2013-14

INTERPRETATIONS:
Gross profit ratio indicates the average margin on products sold. A high gross profit ratio implies
better profitability of the products sold by the company. Similarly, a lower gross profit ratio puts
the management into difficulty. The decrease in the gross profit ratio is due to the decrease in net
sales and increase in operating expenses over the years.

2. Net Profit Ratio = PAT / Net Sales * 100

Year
PAT
Net Sales
NP Ratio

2011-2012
1242.23
54306.56
2.28%

2012-2013
301.81
44765.72
0.67%

2013-2014
334.52
34288.11
0.97%

Net Profit Ratio

2.50%
2.00%
1.50%

Net Profit Ratio

1.00%
0.50%
0.00%
2011-12

2012-13

2013-14

INTERPRETATIONS:
Net profit is an indicator of overall profitability of the company. Higher the net profit ratio the
better is the business. In this case, the company is showing a sudden fall and then a slight
increase in its net profit ratio because of the decrease in the profit and in the net sales of the
company. This might be the result of ineffective management and inefficient utilization of its
resources and funds.

3. Operating Profit Ratio = Operating Profit / Net Sales * 100

Year
Operating Profit
Net Sales
Operating Profit Ratio

2011-2012
36579
54306.56
10.20%

2012-2013
25843
44765.72
7.45%

2013-2014
44052
34288.11
10.34%

Operating Profit Ratio

12.00%
10.00%
8.00%
Operating Profit Ratio
6.00%
4.00%
2.00%
0.00%
2010-11

2011-12

2012-13

INTERPRETATIONS:
Operating profit ratio is a better indicator of operational efficiency than the net profit ratio.
Higher the operating profit ratio better is the operational profitability of the business and
managerial efficiency. The operating profit ratio of the company has increased in this year
symbolizing that its revenue from operating activities is increasing gradually after a downfall
trying to move towards the path of success.

4. Operating Ratio = COGS+ Other Operating Expenses / Net Sales * 100

COGS = Cost of materials consumed+ purchase of stock-in-trade + changes in inventories of
finished goods and work-in-progress
Other Operating Expenses= Employee benefit expenses+ other expenses
Year
Other Operating

2011-2012
50801.89

2012-2013
43575.78

2013-2014
35779.63

Expenses +COGS
Net Sales
Operating Ratio

54306.56
93.5%

44765.72
97.34%

34288.11
104.34%

Operating ratio
106.00%
104.00%
102.00%
100.00%
Operating ratio

98.00%
96.00%
94.00%
92.00%
90.00%
88.00%
2011-12

2012-13

2013-14

INTERPRETATION:
Operating ratio measures the extent of cost incurred for making the sale. A higher operating ratio
indicates an unfavorable financial condition because it leaves a lesser margin for meeting the non
operating expenses, creation of reserves and payment of interest and dividend. The operating
ratio of the company in the current year was very high which is not desirable and there is a
gradual rise in every year.. This means the company is trying to decrease its operating expenses
and increase the net sales.

IV. CAPITAL STRUCTURE RATIOS:

1. Debt Equity Ratio = Total Debt / Shareholders Fund
Total Debt = Long Term Borrowings + Short Term Borrowings
Shareholders Fund = Share Capital + Reserves an Surplus
Year
Total Debt
Shareholders Fund
Debt Equity Ratio

2011-2012
11011.63
19367.66
0.5768

2012-2013
14268.69
14268.69
0.745

2013-2014
14515.53
19176.65
0.756

Debt - Equity Ratio

0.8
0.7
0.6
0.5

Debt - Equity Ratio

0.4
0.3
0.2
0.1
0
2011-12

2013-12

2013-14

INTERPRETATION:
The main purpose of calculating debt-equity ratio is to measure the relative interest of creditors
and shareholders. It reveals the extent to which debt financing has been used in the business. It
discloses to the creditors the extent of their interest to be covered by the net worth of the
company. The debt-equity ratio of the company is showing a gradual increase indicating an
unfavorable position as there is a pressure for higher claims by the creditors on the company.

2. Proprietary Ratio = Shareholders Fund / Total Tangible Assets

Total Tangible Assets = Total Assets Intangible Assets
Year
Shareholders Fund
Total Assets
Intangible Assets
Total Tangible Assets
Proprietary Ratio

2011-2012
19367.66
54260.93
5399.42
48861.51
0.396

2012-2013
14268.69
52184.77
6412.99
45771.78
0.418

2013-2014
19176.65
49734.42
7745.29
41989.13
0.456

Proprietary Ratio
0.48
0.46
0.44
Proprietary Ratio

0.42
0.4
0.38
0.36
2011-12

2012-13

2013-14

INTERPRETATION:
Proprietary ratio implies the proportion of shareholders fund in the total tangible assets
employed in the company. The ideal proprietary ratio should be above 50%. The proprietary ratio
is not preferable as it is not providing high safety to the creditors of all types. In the above
scenario the proprietary ratio is unfavorable .

3. Capital Gearing Ratio = Long Term Borrowings / Equity + Reserves and Surplus

In the year 2011-12, since there is no long term debt, the ratio cannot be calculated.
Year

2011-2012

2012-2013

2013-2014

Long Term Borrowings

8004.50

8051.78

9746.45

Equity + Reserves and

19367.66

19134.84

19176.65

0.41

0.42

0.50

Surplus
Capital Gearing Ratio

Capital Gearing Ratio

0.6
0.5
0.4
Capital Gearing Ratio
0.3
0.2
0.1
0
2011-12

2012-13

2013-14

INTERPRETATION:
The main emphasis of this ratio in on the indication of the proportion between owners funds and
non-owners funds. If the ratio is high, raising further long-term funds may be out of question,
while issue of equity may be an attractive option. On the other hand, if the ratio is low, the policy
of raising funds may be reversed.

FUNDS FLOW ANALYSIS

Statement showing changes in Working Capital for the year 2013-14

Particulars
Current Assets:
Current investments
Inventories
Trade Receivables
Cash & Bank Balances
Short Term Loans
&Advances
Other Current Assets

31/03/201
4

31/03/2013 Increase Decrease

100.85
3862.53
1216.7
226.15

1762.68
4455.03
1818.04
462.86

1661.83
592.5
601.34
236.71

1223.77
109.06

1532.09
104.26

308.32

Total

6739.06

10134.96

Current Liabilities:
Short Term Borrowings
Trade Payables
Other Current Liabilities
Short Term provisions

4769.08
9672.36
2463.18
1892.91

6216.91
8455.02
4923.1
1509.58

18797.53

21104.61

-12058.47

-10969.65

12058.47

1088.82
10969.65

Total
Working Capital
Net Increase /Decrease

4.8

1447.83
1217.34
2459.92
383.33

ADJUSTED PROFIT AND LOSS A/C

Particulars

Amount

Particulars

Amount

To transfer to Long

566

By Balance b/d

150429

Term Provisions
To Proposed Dividend

2417

By Funds from

39173

Operations
To Corporate
Dividend Tax
To Provision for Tax
To Balance c/d

411
1929
184279
189602

189602

Statement showing changes in Working Capital for the year 2012-13

Particulars
Current Assets:
Current investments
Inventories
Trade Receivables
Cash & Bank Balances
Short Term Loans
&Advances
Other Current Assets
Total
Current Liabilities:
Short Term Borrowings
Trade Payables
Other Current Liabilities
Short Term provisions
Total
Working Capital

Increas
31/03/2013 31/03/2012 e

Decrease

1762.68
4455.03
1818.04
462.86

2590.26
4588.23
2708.32
1840.96

827.58
133.2
890.28
1378.1

1532.09
104.26

1871.74
113.41

339.65
9.15

10134.96

13712.92

6216.91
8455.02
4923.1
1509.58

3007.13
8705.53
7470.95
2954.56

21104.61

22138.17

-10969.65

-8425.25

10969.65

2544.4
10969.65

Net Increase /Decrease

3209.78
250.51
2547.85
1444.98

ADJUSTED PROFIT AND LOSS A/C

Particulars
To transfer to Long

Amount
297

Particulars
By Balance b/d

Amount
137230

Term Provisions
To Proposed Dividend

2167

By Funds from

17344

To Corporate

351

Operations
Dividend Tax
To Provision for Tax
To Balance c/d

1330
150429
154574

154574

CASH FLOW STATEMENT

PARTICULARS
A. Cash flow from Operating Activities
Net Profit before Tax
Adjustments for:
Depreciation and Amortisation
Lease equalization adjusted in income
Interest income / Dividend income (Net)
Net loss/profit on sale of assets
Profit on sale of investments
Profit on sale of a division
Provisions for loans given & inter corporate
deposits
Provision for dimunition in value of investments
Exchange Differences
Tax credit
Operating Profit before Working Capital
Changes
Adjustments for Changes in Working Capital:
Trade payables
Finance Receivables
Provisions
Other current liabilities & non - current liabilities
Trade receivables
Inventories
Other current assets & non -current assets
Cash generated from Operating Activities
Taxes paid / net
Net Cash from Operating Activities
B. Cash Flow from Investing Activities
Purchase of Fixed Assets
Sale of Fixed Assets
Sale of Investments
Purchase of Investments
Advance towards investments
Realisation of loans
Sale of a Division
Loans to associates and Subsidiaries
Redemption of Investments
Short term inter corporate deposits
Fixed deposits

2014

2013

2012

334.52

301.81

1242.23

2070.30
(4.52)
(443.18)
20.29
(2052.33)
202.00

1817.62
(4.52)
(656.52)
2.96
(43.91)
(82.25)
250.29

1606.74
(4.52)
(674.32)
(1.79)
(29.78)
-

17.52
276.90
(1360.32)
(938.82)

(9.67)
199.39
(126.88)
1648.32

587.59
98.80
4303.59

1212.83
15.00
646.05
249.25
601.43
592.50
141.37
2519.52
(56.06)
2463.46

(249.93)
64.76
1880.6
(381.50)
890.28
129.42
(138.30)
2151.11
107.33
2258.44

(78.02)
144.97
204.04
171.32
(92.79)
(696.84)
33.80
3990.07
(336.48)
3653.59

(3105.42)
11.37
3978.48
(322.55)
(135.15)
297.83
(146.28)
(40.00)
230.25

(2605.39)
16.95
1378.95
(501.85)
(16.82)
110.00
(194.36)
31.75
(43.53)
574.15

(2852.56)
17.09
4146.98
(1616.00)
(147.86)
(86.92)
0.75
16.04
(202.93)

Interest Received
Realisation of margin money
Dividend received
Net Cash from Investing Activities
C. Cash Flow from Financing Activities

181.70
1602.68
2552.91

404.07
89.87
1660.65
991.50

331.11
358.4
180.63
144.72

Proceeds from Short term Borrowings

Repayment of Short term Borrowings
Proceeds from Long term Borrowings
Repayment of Long term Borrowings
Repayment of fixed deposits
Expenses on Foreign currency convertible notes
Brokerage and other Exp on Non convertible

8548.00
(8678.86)
2310.59
(2232.38)
(362.19)
(0.35)
(87.54)

11873.79
(10177.80)
2562.84
(3377.47)
(1868.38)
(0.23)
(93.02)

442.26
(7326.24)
2498.42
(74.94)
(1069.25)
(76.69)

Debentures
Premium paid on NCD
Net change in short term borrowings
Premium on redemption of FCCN
Interest Paid
Dividend Paid
Net cash used in financing activities

(658.05)
(1473.41)
(1749.90)
(648.81)
(5033.81)

(96.55)
1287.75
(886.95)
(1809.42)
(1460.41)
(4045.69)

316.61
(0.97)
(1482.23)
(1462.28)
(4235.59)

Net Increase/(Decrease) in Cash and Cash

(17.44)

(795.75)

(437.28)

Equivalents ( A+ B+C)
Cash and Cash Equivalents as at 1st April
Cash and Cash Equivalents as at 31st March
Cash and Cash Equivalents comprise

205.57
10.55
198.68

919.64
81.68
205.57

1352.14
4.78
919.64

CONCLUSION
BIBLIOGRAPHY
1.