A Ratio Analysis Report on FINAL of Tata

8/9/2019 A Ratio Analysis Report on FINAL of Tata

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INTRODUCTION OF THE COMPANY 6

1 LITERATURE REVIEW 8

2 RESEARCH METHODOLOGY 9

3 THEORITICAL FRAME WORK OF RATIO 11

4 RATIO ANALYSIS 15

5 CONCLUSION AND RECOMENDATION 31

6APPENDIXESBaa!"# $%##&

P'()*& a!+ ($$ A,"

32

- REFERENCES 36

EXECUTIVE SUMMARY

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The report included the ratio anaysisof TATA MOTORS. To see the prefoance of the

copany !ith the help of the ratio anaylsis the in"estor can easily easure copanies

sta#ility. . $or this analysis to #e conducted% data is needed. &alance sheet and profit and loss

account of the copany are used !hich is purely a secondary data '(i"en in appendi)es* to

a+e such analysis. The tie period ta+en for conductin( this analysis is fro 2,,9 to 2,13

i.e. fi"e years. The conclusion ade fro this analysis is that TATA MOTORS has #eendeclinin( and is perforin( not !ell in last t!o years% the copany is (oin( at declinin( sa(e

as per the all ratio.

$or this study fi"e years- coparati"e ncoe Stateent / &alance Sheet ha"e #een ta+en

for calculatin( ratio analysis. Main o#0ecti"e in underta+in( this pro0ect is to suppleent

acadeic +no!led(e !ith a#solute practical e)posure to day to day functions of the sector.

$inancial analysis !hich is the topic of this pro0ect refers to an assessent of the

"ia#ility% sta#ility and profita#ility of a #usiness. This iportant analysis is perfored usually

#y finance professionals in order to prepare financial or annual reports. These financial

reports are ade !ith usin( the inforation ta+en fro financial stateents of the copany

and it is #ased on the si(nificant tool of Ratio Analysis. These reports are usually presented to

top ana(eent as one of their #asis in a+in( crucial #usiness decisions.

OB.ECTIVES OF THE STUDY/0

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There ha"e #een "arious o#0ecti"es for this study%

A detailed analysis of the financial stateents that is the #alance sheet and the incoestateent of TATA MOTORS

The understandin( and assessent of financial ratios #ased on the stateents of the copany.

To reco(nie the position of the copany throu(h those ratios and data a"aila#le. This

reco(nition is a leadin( factor in chan(es of each and e"ery copany and the #ase and root of

lots of ana(eent decisions.

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INTRODUCTION

Ta&a M(&('$ L**+ 'forerly TELCO% short for Tata n(ineerin( and 4ocooti"e

opany* is an ndian ultinational autooti"eanufacturin( copany headuartered

in Mu#ai% Maharashtra% ndia and a su#sidiary of the Tata 7roup. ts products include

passen(er cars% truc+s% "ans% coaches% #uses and ilitary "ehicles. t is the !orlds ei(hteenth

lar(est otor "ehicle anufacturin( copany% fourthlar(est truc+ anufacturer and second

lar(est #us anufacturer #y "olue. $ounded in 19:5 as a anufacturer of locooti"es% the

copany anufactured its first coercial "ehicle in 195: in a colla#oration !ith ;ailer

&en A7% !hich ended in 1969. Tata Motors entered the passen(er "ehicle ar+et in 1991

!ith the launch of the Tata Sierra% #ecoin( the first ndian anufacturer to achie"e the

capa#ility of de"elopin( a copetiti"e indi(enous autoo#ile. Tata launched the ndica in

1998% the first fully indi(enous ndian passen(er car. Althou(h initially criticised #y auto

analysts% its e)cellent fuel econoy% po!erful en(ine and an a((ressi"e ar+etin( strate(y

ade it one of the #est sellin( cars in the history of the ndian autoo#ile industry. A ne!er"ersion of the car% naed ndica et!or+ after Maruti

Suu+i and Gyunduai

Tata Daewoo

n 2,,:% Tata Motors acuired ;ae!oo oercial


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• To e)pand the product portfolio Tata Motors recently introduced the 25MT 7o"us fro ;ae!oo@s 'South Dorea* 'T;a"istar into the ndian ar+et.

Ta&a H*$a!(

Tata Gispano Motors arrocera% S.A. is a #us and coach ca#in anufacturer #ased in

Lara(oa% Ara(on% Spain and a !holly o!ned su#sidiary of Tata Motors. Tata Gispano has

plants in Lara(oa% Spain and asa#lanca% Morocco. Tata Motors first acuired a 21J sta+e

in Gispano arrocera SA in 2,,5% and acuired the reainin( =9J for an undisclosed su in

2,,9% a+in( it a fully o!ned su#sidiary% su#seuently renaed Tata Gispano

Jaguar Land Rover

a(uar 4and Ro"er B4 is a &ritish preiu autoa+er headuartered in Khitley% o"entry%

Cnited Din(do and has #een a !holly o!ned su#sidiary of Tata Motors since une 2,,8%

!hen it !as acuired fro $ord Motor opany.E25F ts principal acti"ity is the de"elopent%

anufacture and sale of a(uar lu)ury and sports cars and 4and Ro"er preiu four !heel

dri"e "ehicles. t also o!ns the currently dorant ;ailer% 4anchester and Ro"er #rands.E26F

a(uar 4and Ro"er has t!o desi(n centres and three asse#ly plants in the CD. Cnder Tata

o!nership% a(uar 4and Ro"er has launched ne! "ehicles includin( the Ran(e Ro"er

"oue% a(uar $Type and the fourth(eneration Ran(e Ro"er .

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http://en.wikipedia.org/wiki/National_Highway_Development_Projecthttp://en.wikipedia.org/wiki/Hispano_Carrocerahttp://en.wikipedia.org/wiki/Whitley,_Coventryhttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-25http://en.wikipedia.org/wiki/Tata_Motors#cite_note-25http://en.wikipedia.org/wiki/Jaguar_Carshttp://en.wikipedia.org/wiki/Land_Roverhttp://en.wikipedia.org/wiki/Daimler_Companyhttp://en.wikipedia.org/wiki/Lanchester_Motor_Companyhttp://en.wikipedia.org/wiki/Rover_(marque)http://en.wikipedia.org/wiki/Tata_Motors#cite_note-26http://en.wikipedia.org/wiki/Tata_Motors#cite_note-26http://en.wikipedia.org/wiki/Range_Rover_Evoquehttp://en.wikipedia.org/wiki/Range_Rover_Evoquehttp://en.wikipedia.org/wiki/Range_Rover_(L405)http://en.wikipedia.org/wiki/National_Highway_Development_Projecthttp://en.wikipedia.org/wiki/Hispano_Carrocerahttp://en.wikipedia.org/wiki/Whitley,_Coventryhttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-25http://en.wikipedia.org/wiki/Jaguar_Carshttp://en.wikipedia.org/wiki/Land_Roverhttp://en.wikipedia.org/wiki/Daimler_Companyhttp://en.wikipedia.org/wiki/Lanchester_Motor_Companyhttp://en.wikipedia.org/wiki/Rover_(marque)http://en.wikipedia.org/wiki/Tata_Motors#cite_note-26http://en.wikipedia.org/wiki/Range_Rover_Evoquehttp://en.wikipedia.org/wiki/Range_Rover_Evoquehttp://en.wikipedia.org/wiki/Range_Rover_(L405)


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R#*# () *'a&'#/

The conoic Ties 'Septe#er15%2,13*% stated that% Auto a0or Tata Motors today said it

!ill (o ahead !ith planned in"estent of Rs 3%,,, crore durin( the fiscal to support (ro!thin future despite the econoic slo!do!n. As of no!% there is no chan(e in our plan. Ke !ill

continue !ith our (ae plan of in"estent that !e had planned durin( the #e(innin( of this

fiscal and !e !ill continue to stay !ith that in"estent% Tata Motors Senior


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RESEARCH METHODOLOGY

RESEARCH DESIGN/0

A research desi(n is the !ay or the ethods or the procedure follo!ed to conduct an

scientific research. Soe of the types of research desi(n are e)ploratory research desi(n%descripti"e research desi(n and causal research desi(n. ach has its o!n eanin(. ausal

research desi(n helps us to +no! a cause and effect relation #et!een t!o "aria#les% !hereas

e)ploratory research desi(n is used to find ne! ideas and insi(ht. ;escripti"e research desi(n

is a type of research ethod that is used !hen one !ants to (et inforation on the current

status of a person or an o#0ect. in this study there only one copany and no ne! ideas are to

#e found. The a0or focus !ould #e on to +no! current financial position of TATA

MOTORS. $or this a descripti"e type of research desi(n is used.

TIME PERIOD/0

;ata fro 2,,9 to 2,13 are collected to analye the perforance of the Asho+ 4eyland.

OB.ECTIVES OF THE STUDY/0

There ha"e #een "arious o#0ecti"es for this study%

A detailed analysis of the financial stateents that is the #alance sheet and the incoe

stateent of TATA MOTORS

The understandin( and assessent of financial ratios #ased on the stateents of the copany.

To reco(nie the position of the copany throu(h those ratios and data a"aila#le. This

reco(nition is a leadin( factor in chan(es of each and e"ery copany and the #ase and root of

lots of ana(eent decisions.

DATA COLLECTION METHOD/ 0

There are t!o !ays one can collect data i.e. throu(h priary source '!hich eans (eneratin(

one@s o!n inforation #y sur"eys or inter"ie!s etc.* or throu(h secondary source '!hich are

readily a"aila#le li+e inforation in ne!spaper% a(aines% !e#sites etc.*. $or this reportonly secondary data are used as the #asic o#0ecti"e is to study TATA MOTORS financial

position% there is no need to conduct a sur"ey or inter"ie!s% !hich are sources of priary

data.

TYPE OF DATA/0

;ata included in the #alance sheet% profit and loss account of the copany are used.

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METHOD OF ANALYSIS/0

o study can ha"e ero liitations. So this report is no e)ception either.

1* Secondary data is ne"er cent percent correct. So if the data used in the report for

e"aluation are incorrect or incoplete the results !ould #e isleadin(.

2* Alteration of data at source of ori(in can alter the results.

3* Tie constraints.

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THEOROTICAL FRAMEWORK OF RATIO

FINANCIAL RATIO ANALYSIS

Ratio analysis is such a si(nificant techniue for financial analysis. t indicates relation of

t!o atheatical e)pressions and the relationship #et!een t!o or ore thin(s.

F*!a!"*a 'a&*( is a ratio of selected "alues on an enterprises financial stateent.

There are any standard ratios used to e"aluate the o"erall financial condition of a

corporation or other or(aniation. $inancial ratios are used #y ana(ers !ithin a fir% #y

current and potential stoc+holders of a fir% and #y a fir-s creditor. $inancial analysts usefinancial ratios to copare the stren(ths and !ea+nesses in "arious copanies.


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To deterine the financial condition and perforance of a fir% its ratios ay #e copared

!ith a"era(e ratios of the industry to !hich the fir #elon(s. This ethod is +no!n as the

industry analysis that helps to ascertain the financial standin( and capa#ility of the fir in the

industry to !hich it #elon(s.

ndustry ratios are iportant standards in "ie! of the fact that each industry has its o!n

characteristics% !hich influence the financial and operatin( relationships. &ut there are certain

practical difficulties for this ethod. $irst findin( a"era(e ratios for the industries is such a

headache and difficult. Second% industries include copanies of !ea+ and stron( so the

a"era(es include the also. Soeties spread ay #e so !ide that the a"era(e ay #e little

utility. Third% the a"era(e ay #e eanin(less and the coparison not possi#le if the firs

!ith in the sae industry !idely differ in their accountin( policies and practices. Go!e"er if

it can #e standardied and e)treely stron( and e)treely !ea+ firs #e eliinated then the

industry ratios !ill #e "ery useful.

W%a& +(#$ 'a&*( a!a$*$ $7

After such a discussion and entionin( that these ratios are one of the ost iportant tools

that is used in finance and that alost e"ery #usiness does and calculate these ratios% it is

lo(ical to e)press that ho! coe these calculations are of so iportance.

Khat are the points that those ratios put li(ht on the And ho! can these nu#ers help us in

perforin( the tas+ of ana(eent

The ans!er to these uestions isH

Ke can use ratio analysis to tell us !hether the #usinessH

1. is profita#le

2. has enou(h oney to pay its #ills and de#ts

3. could #e payin( its eployees hi(her !a(es% reuneration or so on

:. is a#le to pay its ta)es

5. is usin( its assets efficiently or not

6. has a (earin( pro#le or e"erythin( is fine

=. is a candidate for #ein( #ou(ht #y another copany or in"estor

&ut as it is o#"ious there are any different aspects that these ratios can deonstrate. So for

usin( the first !e ha"e to decide !hat !e !ant to +no!% then !e can decide !hich ratios

!e need and then !e ust #e(in to calculate the.

W%*"% Ra&*( )(' %(/

As #efore entioned there are "arieties of people interested to +no! and read these

inforation and analyses% ho!e"er different people for different needs. And it is #ecause each

of these (roups ha"e different type of uestions that could #e ans!ered #y a specific nu#er

and ratio.

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Therefore !e can say there are different ratios for different (roups% these (roups !ith the

ratio that suits the is listed #elo!H

1. I!#$&('$/ These are people !ho already ha"e shares in the #usiness or they are

!illin( to #e part of it. So they need to deterine !hether they should #uy shares in

the #usiness% hold on to the shares they already ha"e or sell the shares they alreadyo!n. They also !ant to assess the a#ility of the #usiness to pay di"idends. As a result

the Return on apital ployed Ratio is the one for this (roup.

2. L#!+#'$/ This (roup consists of people !ho ha"e (i"en loans to the copany so they

!ant to #e sure that their loans and also the interests !ill #e paid and on the due tie.

7earin( Ratios !ill suit this (roup.

3. Ma!a8#'$/ Mana(ers i(ht need se(ental and total inforation to see ho! they fit

into the o"erall picture of the copany !hich they are rulin(. And Brofita#ility Ratios

can sho! the !hat they need to +no!.

:. E(##$/ The eployees are al!ays concerned a#out the a#ility of the #usiness to

pro"ide reuneration% retireent #enefits and eployent opportunities for the%

therefore these inforation ust #e find out fro the sta#ility and profita#ility of

their eployers !ho are responsi#le to pro"ide the eployees their need. Return on

apital ployed Ratio is the easureent that can help the.

5. S*#'$ a!+ (&%#' &'a+# "'#+*&('$/ &usinesses supplyin( (oods and aterials to

other #usinesses !ill definitely read their accounts to see that they dont ha"e

pro#les% after all% any supplier !ants to +no! if his custoers are (oin( to pay the

#ac+ and they !ill study the 4iuidity Ratio of the copanies.

6. C$&(#'$/ are interested to +no! the Brofita#ility Ratio of the #usiness !ith !hich

they are (oin( to ha"e a lon( ter in"ol"eent and are dependent on the continuance

of presence of that.

=. G(#'!#!&$ a!+ &%#*' a8#!"*#$/ are concerned !ith the allocation of resources

and% the acti"ities of #usinesses. To re(ulate the acti"ities of the% deterine ta)ation

policies and as the #asis for national incoe and siilar statistics% they calculate the

Brofita#ility Ratio of #usinesses.

8. L("a "(!*&/ $inancial stateents ay assist the pu#lic #y pro"idin(inforation a#out the trends and recent de"elopents in the prosperity of the #usiness

and the ran(e of its acti"ities as they affect their area so they are interested in lots of

ratios.

9. F*!a!"*a a!a$&$/ they need to +no! "arious atters% for e)aple% the accountin(

concepts eployed for in"entories% depreciation% #ad de#ts and so on. therefore they

are interested in possi#ly all the ratios.

1,. R#$#a'"%#'$/ researchers deands co"er a "ery !ide ran(e of lines of enuiry

ran(in( fro detailed statistical analysis of the incoe stateent and #alance sheet

data e)tendin( o"er any years to the ualitati"e analysis of the !ordin( of thestateents dependin( on their nature of research.

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BALANCE SHEET OF COMPANY

Baa!"# $%##& () Ta&a M(&('$

Ma'

913

Ma'

912

Ma'

911

Ma'

91:

Ma'

9:;

S('"#$ O)

F!+$

T(&a S%a'#

Ca*&a

63*& S%a'#

Ca*&a

63


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D#'#"*a&*(! 44 - 5 2 :

N#& B(" 1


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PROFIT AND LOSS

P'()*& a!+ ($$ a""(!& Ta&a M(&('

Ma'

913

Ma'

912

Ma'

911

Ma'

91:

Ma'

9:;

I!"(#

Sa#$ T'!(#' 4;?31;=

-3

5;?22:=

;4

52?:6-=


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P(#' F#

C($&

4


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Ta 0126=


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CLASSIFICATION OF RATIOS

n isolation% a financial ratio is a useless piece of inforation. n conte)t% ho!e"er% a financial

ratio can (i"e a financial analyst an e)cellent picture of a copanys situation and the trends

that are de"elopin(. A ratio (ains utility #y coparison to other data and standards.

$inancial ratios uantify any aspects of a #usiness and are an inte(ral part of financial

stateent analysis. $inancial ratios are cate(oried accordin( to the financial aspect of the

#usiness !hich the ratio easures. Althou(h these cate(ories are not fi)ed in all o"er the

!orld ho!e"er there are alost the sae% 0ust !ith different naesH

1. P'()*&a@**& 'a&*($ !hich use ar(in analysis and sho! the return on sales and

capital eployed.

2. Ra () R#&'! Ra&*( ROR (' O#'a P'()*&a@**& Ra&*(H The rate of return

ratios are thou(ht to #e the ost iportant ratios #y soe accountants and analysts.

One reason !hy the rate of return ratios is so iportant is that they are the ratios that

!e use to tell if the ana(in( director is doin( their 0o# properly.

3. L*>*+*& 'a&*($ easure the a"aila#ility of cash to pay de#t% !hich (i"e a picture of

a copanys short ter financial situation.

:. S(#!" (' G#a'*!8 'a&*($ easures the percenta(e of capital eployed that is

financed #y de#t and lon( ter finance. The hi(her the (earin(% the hi(her the

dependence on #orro!in( and lon( ter financin(. The lo!er the (earin( ratio% the

hi(her the dependence on euity financin(. Traditionally% the hi(her the le"el of

(earin(% the hi(her the le"el of financial ris+ due to the increase "olatility of profits. t

should #e noted that the ter N4e"era(e is used in soe te)ts.‖

5. T'! (#' Ra&*($ (' a"&**& 8'( ratios indicate efficiency of or(aniation to

"arious +inds of assets #y con"ertin( the to the for of sales.

6. I!#$&('$ 'a&*($ usually interested #y in"estors.

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F*!a!"*a a!a$*$ () TATA MOTORS

1. CRR>T RATOH

The t!o liuidity ratios% the current ratio and the acid test ratio% are the ost iportant ratios

in alost the !hole of ratio analysis and they are also the siplest to use. 4iuidity ratios

pro"ide inforation a#out a fir-s a#ility to eet its short ter financial o#li(ations. They

are of particular interest to those e)tendin( short ter credit to the fir. T!o freuentlyused

liuidity ratios are current and uic+ ratio.

Khile liuidity ratios are ost helpful for shortter creditorssuppliers and #an+ers% they are

also iportant to financial ana(ers !ho ust eet o#li(ations to suppliers of credit and

"arious (o"ernent a(encies. A copanys a#ility to turn shortter assets into cash to co"er

de#ts is of the utost iportance !hen creditors are see+in( payent. &an+ruptcy analysts

and ort(a(e ori(inators freuently use the liuidity ratios to deterine !hether a copany

!ill #e a#le to continue as a (oin( concern. A coplete liuidity ratio analysis can help

unco"er !ea+nesses in the financial position of the #usiness. 7enerally% the hi(her the "alue

of the ratio% the lar(er the ar(in of safety that the copany possesses to co"er shortter

de#ts.

urrent Assetsurrent ratio P

urrent 4ia#ilities

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

C''#!& A$$#&$ ::23.18 5939.6= =133.,6 8:11.63 6=35.93

C''#!& L*a@**&*#$ 1,968.95 169,9.3, 15=:,.69 212=1.:5 1658,.:=

CURRENT

RATIO

,.:, ,.35 ,.:5 ,.39 ,.:,

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2009 2010 2011 2012 20130

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0.4

0.35

0.45

0.39 0.4

Current ratio

Current rato

A>A4A?SSH

As per the fi(ure sho!n the copany current lia#ilities are ore than copany assets%for the

(ood position the ratio should #e a#o"e the one%#ut hers the tataotors current ratio is less

than one%the assets sta#ilities are less than lia#lities

2. QCD OR A; TST RATOH

The essence of this ratio is a test that indicates !hether a fir has enou(h shortter assets to

co"er its iediate lia#ilities !ithout sellin( in"entory. So it is the #ac+in( a"aila#le to

lia#ilities that ust #e paid alost iediately. There are t!o ters of liuid asset and liuid

lia#ilities in this forula% 4iuid asset is all current assets e)cept the in"entories and prepaid

e)penses% #ecause prepaid e)penses cannot #e con"erted to cash. The liuid lia#ilities include

all current lia#ilities e)cept #an+ o"erdraft and cash credit since they are not reuired to #e

paid off iediately.

4iuid Assets

Quic+ or Acid test Ratio P

4iuid 4ia#ilities

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

L*>*+ A$$#&$ 2193.3= 3,,:.,8 3%2:1.6= 3%823.:, 2%28,.9,

L*>*+ L*a@**&*#$ 1,968.95 169,9.3, 15=:,.69 212=1.:5 1658,.:=

UICK RATIO ,.2, ,.18 ,.2, ,.18 ,.1:

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2009 2010 2011 2012 2013

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

!u"# rato

A>A4?SSH

The a#o"e (raph su((ests that the copany has ore liuid lia#ilities than liuid assets% it is

#ad si(n for the copany% copany should not #e a#le to eet the liuid lia#ilities !hich are

hi(her as copare to liuid assets. The copany liuid assets are continuously sho!s

ne(ati"e ipact on liuid assets

3. TCR> OT ASSTS TCR> Oet Sales

urrent Assets turn o"er ratio P

urrent Assets

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R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

N#& Sa#$ 25%66,.6= 35%3=3.29 :=%95=.2: 5:%21=.22 ::%=65.=2

C''#!& A$$#&$ ::23.18 5939.6= =133.,6 8:11.63 6=35.93

CURRENT

ASSETS

TURNOVER

RATIO

5.8, 5.95 6.=2 6.:: 6.6:

2009 2010 2011 2012 2013

5.2

5.4

5.6

5.8

6

6.2

6.4

6.6

6.8

5.8

5.95

6.72

6.44

6.64

Current Asset Turnover Ratio

Current $%%et Turnover

Rato

A>A4?SSH

As per the (raph sho!n the copanies current turno"er ratio is rapidly is increase #ut 2,11 is

at hi(hest 6.=2TMS

. KORD>7 ABTA4 TCR>O


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The forula related isH

>et Sales

Kor+in( apital turno"er ratio P

Kor+in( apital

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

N#& Sa#$ 25%66,.6= 35%3=3.29 :=%95=.2: 5:%21=.22 ::%=65.=2

W('*!8 Ca*&a 6%5:5.== 1,%969.63 8%6,=.63 12%859.82 9%8::.5:

WORKING CAPITAL

TURNOVER RATIO

3.92 3.22 5.58 :.22 :.55

2009 2010 2011 2012 2013

0

1

2

3

4

5

6

3.92

3.22

5.58

4.224.55

Working Capital Turnover Ratio

A!a$*$/

The (raph sho!s that !hen shareholder@s in"ested their oney in to the #usiness% it helps to

increase the sales. At the year startin( in increasin( continuously% it eans that 1 rupees the

shareholders in"estin( the result sho!s direct ipact on sales% the net sales in increasin(

reasoned ay #e reuireent of !or+in( capital or achinery etc. &ut in the last year it (i"es

decreasin( trend.

. ABTA4 MB4O?; TCR>O


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The capital eployed turno"er ratio tells us the state of the relationship #et!een the

shareholders in"estent in the #usiness and the sales that the ana(eent of the #usiness

has #een a#le to (enerate fro it.

>et Sales

apital eployed turno"er ratio P apital ployed

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

N#& Sa#$ 25%66,.6= 35%3=3.29 :=%95=.2: 5:%21=.22 ::%=65.=2

Ca*&a E(#+ 25%559.83 31%:29.69 35%912.,5 3,%3=9.29 33%:,3.53

CURRENT

EMPLOYEDTURNOVER RATIO

1.,,

TMS

1.13 TMS 1.3: TMS 1.=8 TMS 1.3: TMS

2009 2010 2011 2012 2013

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

11.13

1.34

1.78

1.34

Current Employed Turnover Ratio

Current $%%et% Turnover

Rato

.

A!a$*$/

The (raph sho!s that !hen shareholder@s in"ested their oney in to the #usiness% it helps to

increase the sales. At the year startin( in increasin( continuously% it eans that 1 rupees the

shareholders in"estin( the result sho!s direct ipact on sales% the net sales in increasin(

reasoned ay #e reuireent of !or+in( capital or achinery etc.. &ut in the last year it

(i"es ne(ati"e trend.

7 RATOH

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2009 2010 2011 2012 20130

5

10

15

20

25

30

35

25.6129.14

25.05

17.35

22.36

Debt equity ratio

De't e(ut) rato

A!a$*$/

The (raph sho!s that copany shareholders ha"e lesser contri#ution than creditors. The hu(e

aount of de#t is the reason #ehind that% it is not (ood for the copany to increase his de#t

and not fully utilie the shareholder@s funds. Gi(h aount of de#t increase the interest upon

it% indirectly it affect to the incoe and profit.

BROBRTR? RATOH

t is priarily the ratio #et!een the proprietor-s funds and total assets. t indicates the

relationship #et!een o!ners fund and total assets. And sho!s the e)tent to !hich the o!ner

s-fund are sun+ in assets or different +inds of it.

NOTE/ O!ner-s funds is eual to Shareholders $unds

Broprietors fundBroprietary ratio P

Total Assets

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:12

P'('*'$ F!+ 51:.,5 5=,.6 63:.65 63:.=5 638.,=

T(&a A$$#&$ 25%559.83 31%:29.69 35%912.,5 3,%3=9.29 33%:,3.53

CURRENT ASSETS

TURNOVER RATIO

2.,1J 1.82J 1.==J 2.,9J 1.91J

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2009 2010 2011 2012 2013

1.60*

1.70*

1.80*

1.90*

2.00*

2.10*

2.20*

2.01*

1.82*

1.77*

2.09*

1.91*

Proprietary ratio

Pro+retar) rato

A!a$*$/

As per data% Broprietor ratio sho!s o"erall positi"e relationship #et!een propriters fund and

total assets. Khen the proprietor fund is increasin( at that tie in"estent in assets "alue or

return also increased. n year 2,12 there is #oo of 2.,9J%#ut in last year 2,13 a(ain

decrease #y 1.91J. .

BRO$TA&4T? RATO

As the nae itself su((ests% this ratio is calculated to deterine profita#ility of the fir. The

#asic o#0ecti"e of alost e"ery #usiness is to earn profit !hich is essential for sur"i"al of the

#usiness. A #usiness needs profits not only for its e)istence #ut also for its e)pansion and

di"ersification. The in"estors !ant an adeuate return on their in"estents% !or+ers !anthi(her !a(es% creditors !ant hi(her security for interest and loan and the list could continue.

t is a class of financial etrics that are used to assess a #usinesss a#ility to (enerate earnin(s

as copared to its e)penses and other rele"ant costs incurred durin( a specific period of tie.

$or ost of these ratios% ha"in( a hi(her "alue relati"e to a copetitors ratio or the sae

ratio fro a pre"ious period is indicati"e that the copany is doin( !ell.

7ROSS BRO$T RATOH

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The (ross profit ar(in ratio tells us the profit a #usiness a+es on its cost of sales. t is a

"ery siple idea and it tells us ho! uch (ross profit our #usiness is earnin(. 7ross profit is

the profit !e earn #efore !e ta+e off any adinistration costs% sellin( costs and so on. So !e

should ha"e a uch hi(her (ross profit ar(in than net profit ar(in.

Gi(h ratios are fa"ora#le in this% since it indicates the #usiness is earnin( a (ood return on thesale of its erchandise.

7ross Brofit

7ross profit ratio P 1,,

>et Sales

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

G'($$ P'()*& 13%9,5.1= 18%:16.81 21%883.32 2=%111.=6 3,%312.1:

N#& Sa#$ 25%66,.6= 35%3=3.29 :=%95=.2: 5:%21=.22 ::%=65.=2

G'($$ P'()*& Ra&*( 5:.19 J 52.,6J :5.63J 5,.,1J 6=.=1J

2009 2010 2011 2012 2013

0.00*

10.00*

20.00*

30.00*

40.00*

50.00*

60.00*

70.00*

54.19* 52.06*45.63*

50.01*

67.71*

Gross proft ratio

,ro%% +ro-t rato

A!a$*$/

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$ro the a#o"e (raph the 7ross profit ratio sho!s the decrease trend in the 7B !hich is #ad

si(n for the copany% copany should ha"e to increase or aintain its hi(h le"el of 7B #ut is

(oin( in ne(ati"e !ay. As copare to year 2,11,to 2,1,% there is #i( increase in (ross profit

in all fi"e years% it is 6=.=1J.

>T BRO$T RATOH

This sho!s the portion of sales a"aila#le to o!ners after all e)penses. A hi(h profit ratio is

hi(her profita#ility of the fir. This ratio sho!s the earnin( left for shareholder as percenta(e

of >et sales.

>et Mar(in Ratio easures the o"erall efficiency of production% Adinistration sellin(%

financin(% pricin( and Taste Mana(eent.

>et Brofit After ta)

>et profit ratio P 1,, >et Sales

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

NPAT 1%,,1.26 2%2:,.,8 1%811.82 1%2:2.23 3,1.81

N#& Sa#$ 25%66,.6= 35%3=3.29 :=%95=.2: 5:%21=.22 ::%=65.=2

N#& P'()*& Ra&*( 3.9,J 6.33J 3.=8J 2.29J ,.6=J

2009 2010

0.00*

1.00*

2.00*

3.00*

4.00*

5.00*

6.00*

7.00*

3.90*

6.33*

N

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A!a$*$/

The (raph sho!s the increase

and decrease trend% in first t!o

year it !as increasin( than it

!ent do!n% it indicate decreasein profita#ility of the

shareholders. As copae frist

t!o year in last year it has #een

#oo indecreasin(.

OBRAT>7 >T BRO$T RATOH

The (raph sho!s the increase and decrease trend% in first t!o year it !as increasin( than it

!ent do!n% it indicate decrease in profita#ility of the shareholders. As copare to first t!o

year last year it has #een #oo indecreasin(.

This ratio esta#lishes the relation #et!een the net sales and the operatin( net profit. Theconcept of operatin( net profit is different fro the concept of net profit operatin( net profit

is the profit arisin( out of #usiness operations only. This is calculated as follo!sH

Operatin( net profit P >et Brofit >on operatin( e)penses non operatin( incoe.

Alternati"ely% this profit can also #e calculated #y deductin( only operatin( e)penses fro

the (ross profit.

This ratio is calculated !ith help of the follo!in( forula.

Operatin( net Brofit

Operatin( net profit ratio P 1,, >et Sales

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

O#'a&*!8 N#&

P'()*&

1%=23.1, :%,32.83 :%=,5.=2 :%1==.55 1%=1=.98

N#& Sa#$ 25%66,.6= 35%3=3.29 :=%95=.2: 5:%21=.22 ::%=65.=2

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O#'a&*!8 N#& P'()*&

Ra&*(

6.=1J 11.:,J 9.81J =.=,J 3.8:J

2009 2010 2011 2012 2013

0.00*

2.00*

4.00*

6.00*

8.00*

10.00*

12.00*

6.71*

11.40*

9.81*

7.70*

3.84*

perating Net Proft Ratio

/+eratng et Pro-t Rato

A!a$*$/

As sho!n in (raph% in year 2,,9 the operatin( net profit ratio increases% it continuous tillsecond year an than it is (oin( up to its hi(hest le"el of 11.:,. it sho!s the ne(ati"e direction

!hich is decrease in operatin( net profit ratio. n the last year as copare to first year it (oes

to #elo! the first year le"el.

O O> ASSTS RATOH

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This ratio actually easures the profita#ility of the in"estents in the fir. And the related

forula isH

>et Brofit After ta)

Returns on assets P 1,,

Assets

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

NPAT 1%,,1.26 2%2:,.,8 1%811.82 1%2:2.23 3,1.81

A$$#&$ 5:35.8= 5936.=6 6621.1: 66,=.32 =959.92

R#&'!$ (! A$$#&$ 3.5,J =.1:J 9.53J 8.5=J 5.:5J

2009 2010 2011 2012 2013

0.00*

2.00*

4.00*

6.00*

8.00*

10.00*

12.00*

3.50*

7.14*

9.53*

8.57*

5.45*

Returns on Assets

Return% on $%%et%

A!a$*$/

The (raph sho!s the trend increasin( in first three years and after that it (oes do!n. n

startin( years the return on asset ratio is increase. This eans that the copany is increasin(

their re"enue per unit of asset #ut then it #ecoes ne(ati"e. This is #ad si(ns for the

copany. &ut o"erall copany is a"era(e returns of 6.8.

RTCR>S O> ABTA4 MB4O?;H

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This Ratio is considered to #e "ery iportant. t indicates the percenta(e of net profits #efore

interest and ta) to total capital eployed. t reflects the o"erall efficiency !ith !hich capital

is used. The ratio of a particular #usiness should #e copared !ith other #usiness firs in the

sae industry to find out the e)act position of the #usiness.

t is calculated asH

>et Brofit #efore interest and ta)

Returns on capital eployed P 1,,

apital ployed

N(/ apital ployed P uity apital Breference apital Reser"es and Surplus

4on( Ter ;e#t $ictitious Assets

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

NPBIT 1=69.85 :219.82 3686.:8 2559.65 1562.69

Ca*&a E(#+ 25%559.83 31%:29.69 35%912.,5 3,%3=9.29 33%:,3.53

R#&'!$ (! "a*&a

#(#+

6.92J 13.:3J 1,.2=J 8.:3J :.68J

2009 2010 2011 2012 2013

0.00*

2.00*

4.00*

6.00*

8.00*

10.00*

12.00*

14.00*

16.00*

6.92*

13.43*

10.27*8.43*

4.68*

Return n Capital Ratio

Return /n Ca+ta Rato

ANALYSIS/

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n (raph% return on capital eployed is ;ecreasin( year 2,13% % in year 2,1, shareholders (et

#enefit a)iu 13.:3J.the o"erall #usiness efficiency is increasin(.in last year it is "ery

less.

RTCR>S O> QCT?H

This ratio also +no!n as return on shareholders- funds or return on proprietors- funds or

return on net !orth% indicates the percenta(e of net profit a"aila#le for euity shareholders to

euity shareholders- funds and not on total capital eployed.

t is calculated asH

>BAT Breference ;i"idend

Return on euity ratio P 1,, uity shareholders fund

R##$ *! C('#$

YEAR 2::; 2:1: 2:11 2:12 2:13

NPAT 1%,,1.26 2%2:,.,8 1%811.82 1%2:2.23 3,1.81

E>*& S%a'#%(+#'

)!+

51:.,5 5=,.6 63:.65 63:.=5 638.,=

R#&'!$ (! #>*& 'a&*( 19:.=8J 392.58J 285.:8J 195.=,J :=.3,J

2009 2010 2011 2012 2013

0.00*

50.00*

100.00*

150.00*

200.00*

250.00*

300.00*

350.00*

400.00*

450.00*

194.78*

392.58*

285.48*

195.70*

47.30*

Return n Capital Ratio

ere% 1

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A!a$*$/

The fi(ure sho!s that the returns on euity is increasin( in the #e(innin( and touches hi(hest

le"el in the year 2,1, !hich is 329.58J then it is declinin( in last t!o year the reason is

decrease in copany profit

>>7S BR SGARH

BS easures the profit earned per share. The hi(her BS !ill attract ore in"estors to

acuire shares in the copany as it indicates that the #usiness is ore profita#le enou(h to

pay the di"idends in tie. So it is of utost iportance to in"estors in order to decide the

prospects.

t is calculated asH

BS P >.B.A.T. Breference ;i"idend

>u#er of euity shares Outstandin(

YEAR 2::; 2:1: 2:11 2:12 2:13

EPS :=;5 3=;1 2


36/38

2009 2010 2011 2012 2013

0

5

10

15

20

25

30

35

40

45

EARN!NG PER "#ARE

$R, PR $R

oentsH

As entioned a#o"e% BS is one of the iportant criteria for easurin( the perforance of a

copany. f BS increases% the possi#ility of a hi(her di"idend per share also increases.

Go!e"er% the di"idend payent depends on the policy of the copany. Mar+et price of

shares of a copany ay also sho! an up!ard trend if the BS is sho!in( a risin( trend.

Go!e"er% it should #e ree#ered that BS of different copanies ay "ary fro copany

to copany due to the follo!in( different practices #y different copanies re(ardin( stoc+ in

trade% depreciation% source of raisin( finance% ta)plannin( easures etc.

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CONCULSION

$ro last t!o years the autoo#iles sectors has #een stru((le. After analysin( all the ratio%

current ratio has ostly reained #elo! the 1 !hich eans the copany has #een under

pressure of not ha"in( enou(h assets to repay their short ter o#li(ations. Quic+ ratio

su((ests that the copany has ore liuid lia#ilities than liuid assets% it is #ad si(n for the

copany% copany should not #e a#le to eet the liuid lia#ilities !hich are hi(her as

copare to liuid assets. urrent assets turno"er ratio sho!s that copany current assets

"alue is ore than 6 ties in that year% copany capa#ility to earn profit throu(h current

assets is "ery (ood. As per the data% the !or+in( capital not that uch capa#le to (enerate the

sales re"enue% !hen copany needs the !or+in( capital that !ere not a"aila#le at that tie

so it should defiantly ha"e ipact on sales. The capital eployed sho!s that !hen

shareholder@s in"ested their oney in to the #usiness% it helps to increase the sales. The net

sales in increasin( reasoned ay #e reuireent of !or+in( capital or achinery etc.. The

de#t euity ratio descri#es that copany creditors ha"e hi(her contri#ution than shareholders.

opany is only dependin( on de#t not utiliin( the shareholders capital. The (ross profit is

continuously (oin( do!n and net profit ratio also (oin( ne(ati"e after the three years. The

copany o"erall perforance is !ea+ it ay #e for hi(h de#t and increase in interest upon it.

$ro the ratio analysis the copany TATA MOTORS profile is declin( due to the decline of

!hole autoo#ile industries should #e ad"isa#le not to in"est in the copany.

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BIBLOGRAPHY

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tt+%www.googe."o.n:

gw%rd;"r1#4wCw?(;tata@otor%."o@

tt+www.@one)"ontro."o@%to"#%"o@+an)n>o%to"#new%.++:

%"d;TL

Documents

A Ratio Analysis Report on FINAL of Tata