Dromati Financial Statement Analysis Report

8/17/2019 Dromati Financial Statement Analysis Report

1/46

Ashok Leyland

FINANCIAL STATEMENTS ANALYSIS OF

ASHOK LEYLAND

A

PROJECT REPORT

Submitted to the faculty of Commerce !u"i#e"" Admi#i"trati$e

i# the %artial fulfillme#t of the re&uireme#t for the 'e(ree of

!achelor of Commerce

)P* *#i$er"ity

SUBMITTED BY: DROMATICLASS : B.Com 6th Sem

CLASS ROLL NO. : C3-1-31!NI". ROLL NO.: 3113MNO11#$$$6

*N'ER T)E S*PER+ISION OF ,

%RO&. RA'(S) 'A%OOR

'EPARTMENT OF COMMERCE

+-C MAN'I .)/P/0

A%ril 1234

1


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Ashok Leyland

PRFEACE

As the *o+ld ,s +o*,n +a,dly/ the 0s,nesses a+e also mo2,n to 0eome the he one. And

0y that +eslt/ mo+e and mo+e eole *ant to 0eome a maste+ ,n these 0s,nesses. The ma,n

+ose ,n the 4,nane 4,eld ,s to kno* ho* the 4,nan,al analys,s ,s done. 5e all kno* that

4,nane ,s the 0lood o4 any 0s,ness and *,thot ,t no 0s,ness an +n. &,nan,al analys,s o4

a omany ,s 2e+y d,44,lt and the most ,mo+tant task and 0y do,n th,s I am a0le to kno*

the *hole 4,nan,al os,t,on and 4,nan,al st+t+e o4 the omany.

S,mly 0y look,n at ho* mh ash a omany has does not +o2,de enoh ,n4o+mat,on.

The 4,nan,al statements need to 0e analyed to meas+e a omany7s e+4o+mane and to

oma+e ,t *,th othe+ 4,+m7s ,n the same ,ndst+y. The +eslt,n ,n4o+mat,on ,s ,ntended to 0e

se4l to o*ne+s/ otent,al ,n2esto+s/ +ed,to+s/ analysts/ and othe+s as the analys,s e2alates

the ast e+4o+mane/ 4t+e otent,al and 4,nan,al os,t,on o4 the 4,+m.

Th,s +eo+t ,s an analys,s o4 4,nan,al statements o4 Ashok Leyland. Th,s +eo+t has 0een

+ea+ed *,th an o08et,2e to de2elo analyt,al sk,lls +e9,+ed to ,nte++et the ,n4o+mat,on

e;l,,t as *ell as ,ml,,t< +o2,ded 0y the 4,nan,al statements and to meas+e the

omany7s e+4o+mane d+,n the ast 4e* yea+s. The 4,nan,al statements a+e analyeds,n t+ad,t,onal e2alat,on tehn,9es sh as ho+,ontal analys,s/ 2e+t,al analys,s and t+end

analys,s. S,ne+e attemts ha2e 0een made to make th,s +eo+t e++o+ 4+ee 0t ,4 any e++o+s and

om,ss,ons a+e 4ond then I aolo,e 4o+ that.

Dromati

=


3/46

Ashok Leyland

AC5NO6LE'-EMENT

Th,s ,s a +eat oo+tn,ty as *ell as +eat hono+ to s0m,t th,s %+o8et to yo/ I am 4,+stly

thanks to my ollee to ,2e me th,s k,nd o4 o+se otl,ne and makes me +ate4l 0y do,n

th,s +o8et.

I s,ne+ely thank all *ho ha2e ont+,0ted to sess th,s Reo+t. &,+stly I thanks to o+ %+o4.

Rakesh 'aoo+ 4o+ makes s a0le to do,n th,s k,nd o4 *o+k and ,2,n s ne* e;e+,ene.

And hel s a lot *hene2e+ *e needed. )e also +o2,des an ,mo+tant data and makes s to

nde+stand the te+ms and theo+y o4 &,nane as *ell as ,2es s ,dane.

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Ashok Leyland

CERTIFICATE

It ,s e+t,4,ed that +o8et +eo+t 7Fi#a#cial Stateme#t A#aly"i" of A"ho8

Leyla#d9/ S0m,tted 0y D+omat, ,n a+t,al 4l4,llment o4 the +e9,+ement 4o+

the De+ee o4 B.Com 4+om )% !n,2e+s,ty/ em0od,es o+,,nal *o+k and has

0een done nde+ my se+2,s,on.

Dated>>>>>>> S,nat+e o4 ?,de

@


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Ashok Leyland

C)APTERS

3/3 Fi#a#cial Stateme#t"

A fi#a#cial "tateme#t o+ fi#a#cial re%ort< ,s a 4o+mal +eo+d o4 the 4,nan,al at,2,t,es and

os,t,on o4 a 0s,ness/ e+son/ o+ othe+ ent,ty.

Rele2ant 4,nan,al ,n4o+mat,on ,s +esented ,n a st+t+ed manne+ and ,n a 4o+m easy to

nde+stand. They ty,ally ,nlde 0as, 4,nan,al statements/ aoman,ed 0y a manaement

d,sss,on and analys,s:1

1. A bala#ce "heet/ also +e4e++ed to as a "tateme#t of fi#a#cial %o"itio#/ +eo+ts on a

omanys assets/ l,a0,l,t,es/ ando*ne+s e9,ty at a ,2en o,nt ,n t,me.

=. An i#come "tateme#t/ also kno*n as a "tateme#t of com%rehe#"i$e

i#come/ "tateme#t of re$e#ue e:%e#"e/ PL o+ %rofit a#d lo"" re%ort/ +eo+ts on

a omanys ,nome/ e;enses/ and +o4,ts o2e+ a e+,od o4 t,me. A +o4,t and loss

statement +o2,des ,n4o+mat,on on the oe+at,on o4 the ente++,se. These ,nlde sales

and the 2a+,os e;enses ,n++ed d+,n the stated e+,od.

3. A "tateme#t of cha#(e" i# e&uity/ also kno*n as e&uity "tateme#t o+ "tateme#t of retai#ed ear#i#("/ +eo+ts on the hanes ,n e9,ty o4 the omany d+,n the stated

e+,od.

@. A ca"h flo; "tateme#t +eo+ts on a omanys ash 4lo* at,2,t,es/ a+t,la+ly ,ts

oe+at,n/ ,n2est,n and 4,nan,n at,2,t,es.

https://en.wikipedia.org/wiki/Management_discussion_and_analysishttps://en.wikipedia.org/wiki/Management_discussion_and_analysishttps://en.wikipedia.org/wiki/Financial_statement#cite_note-1https://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)https://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Income_statementhttps://en.wikipedia.org/wiki/Incomehttps://en.wikipedia.org/wiki/Incomehttps://en.wikipedia.org/wiki/Expensehttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Statement_of_retained_earningshttps://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Cash_flow_statementhttps://en.wikipedia.org/wiki/Investinghttps://en.wikipedia.org/wiki/Financinghttps://en.wikipedia.org/wiki/Financial_statement#cite_note-1https://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)https://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Income_statementhttps://en.wikipedia.org/wiki/Incomehttps://en.wikipedia.org/wiki/Expensehttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Statement_of_retained_earningshttps://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Cash_flow_statementhttps://en.wikipedia.org/wiki/Investinghttps://en.wikipedia.org/wiki/Financinghttps://en.wikipedia.org/wiki/Management_discussion_and_analysishttps://en.wikipedia.org/wiki/Management_discussion_and_analysis


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Ashok Leyland

3/1 Re%orti#( a#d I#ter%retatio# of Fi#a#cial Stateme#t

I#troductio#

&,nan,al statements on the,+ o*n a+e o4 l,m,ted se. &o+ e;amle: ,4 yo *e+e to ,dent,4y that

a 0s,ness has made +o4,ts o4 1 m,ll,on *hat does that tell yo a0ot the 0s,nessE Does ,t

sest the 0s,ness ,s a sessE It m,ht/ 0t not ,4 ,n the +e2,os yea+ they made +o4,ts o4

$ m,ll,on and the,+ losest +,2al ea+ned +o4,ts o4 6$ m,ll,on.

It ,s ,mo+tant that se+s o4 4,nan,al statements an ,nte++et the 4,nan,al statements to 0e

a0le to d+a* ot 2al,d onls,ons. Ty,ally th,s ,n2ol2es the se o4 oma+,sons to +,o+ yea+s/ 4o+easts and omet,to+s. !se+s an oma+e sales and e;ense 4,+es/ asset and

l,a0,l,ty 0alanes and ash 4lo*s to e+4o+m th,s analys,s.

Rat,o analys,s ,s *,dely sed to so+t th,s +oess o4 oma+,son. Dont 4o+et thoh that

+at,os a+e allated s,n the 4,+es al+eady +esent ,n the 4,nan,al statements. The +a*

data ,s e9ally se4l *hen e+4o+m,n analys,s. Rat,os a+e s,mly a tool to t+y and ass,st

nde+stand,n and oma+,son.

*"er" of fi#a#cial "tateme#t"

5hen ,nte++et,n 4,nan,al statements ,t ,s ,mo+tant to ase+ta,n *ho a+e the se+s o4

aonts and *hat ,n4o+mat,on they need:

• sha+eholde+s and otent,al ,n2esto+s F +,ma+,ly one+ned *,th +ee,2,n an ade9ate

+et+n on the,+ ,n2estment/ 0t also *,th the sta0,l,tyGl,9,d,ty o4 the 0s,ness

• sl,e+s and lende+s F one+ned *,th the se+,ty o4 the,+ de0t o+ loan

• manaement F one+ned *,th the t+end and le2el o4 +o4,ts/ s,ne th,s ,s the ma,n

meas+e o4 the,+ sess.

Othe+ otent,al se+s ,nlde:

• 4,nan,al ,nst,tt,ons

• emloyees

• +o4ess,onal ad2,so+s to ,n2esto+s

6

http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=none


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Ashok Leyland

• 4,nan,al 8o+nal,sts and ommentato+s.

Ratio a#aly"i"

Rat,os se s,mle allat,ons 0ased on the ,nte+at,ons ,n sets o4 data. &o+ e;amleH

hanes ,n osts o4 sale a+e d,+etly l,nked to hanes ,n sales at,2,ty. Chanes ,n sales

at,2,ty also ha2e an e44et on *aes and sala+,es/ +ee,2a0les/ ,n2ento+y le2els et. Rat,os

allo* s to see those ,nte+at,ons ,n a s,mle/ on,se 4o+mat.

Rat,os a+e o4 l,m,ted se on the,+ o*n/ ths/ the 4ollo*,n o,nts shold se+2e as a se4l

hekl,st ,4 yo need to analyse data and omment on ,t:

• 5hat does the +at,o l,te+ally meanE

• 5hat does a hane ,n the +at,o meanE

• 5hat ,s the no+mE

• 5hat a+e the l,m,tat,ons o4 the +at,oE

#


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Ashok Leyland

3/< Fi#a#cial A#aly"i" Mea#i#( a#d Co#ce%t

Fi#a#cial a#aly"i" also +e4e++ed to as fi#a#cial "tateme#t a#aly"i" o+ accou#ti#(

a#aly"i" o+ A#aly"i" of fi#a#ce< +e4e+s to an assessment o4 the 2,a0,l,ty/ sta0,l,ty and +o4,ta0,l,ty

o4 a 0s,ness/ s0-0s,ness o+ +o8et.

It ,s e+4o+med 0y +o4ess,onals *ho +ea+e +eo+ts s,n +at,os that make se o4 ,n4o+mat,on

taken 4+om 4,nan,al statements and othe+ +eo+ts. These +eo+ts a+e sally +esented to to

manaement as one o4 the,+ 0ases ,n mak,n 0s,ness de,s,ons. &,nan,al analys,s may

dete+m,ne ,4 a 0s,ness *,ll:

• Cont,ne o+ d,sont,ne ,ts ma,n oe+at,on o+ a+t o4 ,ts 0s,nessH

• Make o+ +hase e+ta,n mate+,als ,n the man4at+e o4 ,ts +odtH

• A9,+e o+ +entGlease e+ta,n mah,ne+,es and e9,ment ,n the +odt,on o4 ,ts oodsH

• Isse stoks o+ neot,ate 4o+ a 0ank loan to ,n+ease ,ts *o+k,n a,talH

• Make de,s,ons +ea+d,n ,n2est,n o+ lend,n a,talH

• Make othe+ de,s,ons that allo* manaement to make an ,n4o+med selet,on on 2a+,os

alte+nat,2es ,n the ondt o4 ,ts 0s,ness.

3/= Tool" a#d Tech#i&ue" of Fi#a#cial Stateme#t A#aly"i",

&ollo*,n a+e the most ,mo+tant tools and tehn,9es o4 4,nan,al statement analys,s:

1. )o+,ontal and "e+t,al Analys,s

=. Rat,os Analys,s

3/ )ori>o#tal a#d +ertical A#aly"i",

)ori>o#tal A#aly"i" or Tre#d A#aly"i",

Coma+,son o4 t*o o+ mo+e yea+s 4,nan,al data ,s kno*n as hori>o#tal a#aly"i"/ o+ t+end

analys,s. Horizontal analysis ,s 4a,l,tated 0y sho*,n hanes 0et*een yea+s ,n 0oth dolla+

and e+entae 4o+m.

)o+,ontal analys,s ,s 4a,l,tated 0y sho*,n hanes 0et*een yea+s ,n 0oth dolla+ and

e+entae 4o+m as has 0een done ,n the e;amle 0elo*. Sho*,n hanes ,n dolla+ 4o+m

hels the analyst 4os on key 4ato+s t hat ha2e a44eted +o4,ta0,l,ty o+ 4,nan,al os,t,on.

https://en.wikipedia.org/wiki/Businesshttps://en.wikipedia.org/wiki/Businesshttps://en.wikipedia.org/wiki/Projecthttps://en.wikipedia.org/wiki/Projecthttps://en.wikipedia.org/wiki/Projecthttps://en.wikipedia.org/wiki/Financial_statementshttps://en.wikipedia.org/wiki/Stockshttps://en.wikipedia.org/wiki/Stockshttps://en.wikipedia.org/wiki/Stockshttps://en.wikipedia.org/wiki/Loanhttps://en.wikipedia.org/wiki/Working_capitalhttp://www.accountingformanagement.com/accounting_ratios.htm#Horizontal%20and%20Vertical%20Analysishttp://www.accountingformanagement.com/accounting_ratios.htm#Ratios%20Analysishttp://www.blogger.com/blogger.g?blogID=1567601386008028031http://www.accountingformanagement.com/horizontal_analysis_or_trend_analysis.htmhttps://en.wikipedia.org/wiki/Businesshttps://en.wikipedia.org/wiki/Projecthttps://en.wikipedia.org/wiki/Financial_statementshttps://en.wikipedia.org/wiki/Stockshttps://en.wikipedia.org/wiki/Loanhttps://en.wikipedia.org/wiki/Working_capitalhttp://www.accountingformanagement.com/accounting_ratios.htm#Horizontal%20and%20Vertical%20Analysishttp://www.accountingformanagement.com/accounting_ratios.htm#Ratios%20Analysishttp://www.blogger.com/blogger.g?blogID=1567601386008028031http://www.accountingformanagement.com/horizontal_analysis_or_trend_analysis.htm


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Ashok Leyland

O0se+2e ,n the e;amle that sales 4o+ =$$= *e+e @ m,ll,on o2e+ =$$1/ 0t that th,s

,n+ease ,n sales *as mo+e than neated 0y a @.m,ll,on ,n+ease ,n ost o4 oods sold.

Sho*,n hanes 0et*een yea+s ,n e+entae 4o+m hels the analyst to a,n e+set,2e and

to a,n a 4eel 4o+ the s,n,4,ane o4 the hanes that a+e tak,n lae. &o+ e;amle a 1

m,ll,on ,n+ease ,n sales ,s mh mo+e s,n,4,ant ,4 the +,o+ yea+s sales *e+e = m,ll,on

than ,4 the +,o+ yea+s sales *e+e =$ m,ll,on. In the 4,+st s,tat,on/ the ,n+ease *old 0e

$J that ,s ndo0tedly a s,n,4,ant ,n+ease 4o+ any 4,+m. In the seond s,tat,on/ the

,n+ease *old 0e J that ,s 8st a +e4let,on o4 no+mal +o+ess.

Tre#d Perce#ta(e,

)o+,ontal analys,s o4 4,nan,al statements an also 0e a++,ed ot 0y omt,n tre#d

%erce#ta(e". Trend percentage states se2e+al yea+s 4,nan,al data ,n te+ms o4 a 0ase yea+. The

0ase yea+ e9als 1$$J/ *,th all othe+ yea+s stated ,n some e+entae o4 th,s 0ase.

+ertical A#aly"i",

+ertical a#aly"i" ,s the +oed+e o4 +ea+,n and +esent,n common size

statements. Commo# "i>e "tateme#t ,s one that sho*s the ,tems aea+,n on ,t ,n

e+entae 4o+m as *ell as ,n dolla+ 4o+m.

(ah ,tem ,s stated as a e+entae o4 some total o4 *h,h that ,tem ,s a a+t. 'ey 4,nan,al

hanes and t+ends an 0e h,hl,hted 0y the se o4 ommon s,e statements.

Common size statements a+e a+t,la+ly se4l *hen oma+,n data 4+om d,44e+ent

oman,es. For example/ ,n one yea+/ 5endys net ,nome *as a0ot 11$ m,ll,on/ *he+eas

MDonalds *as 1/@=# m,ll,on. Th,s oma+,son ,s some*hat m,slead,n 0ease o4 the

d+amat,ally d,44e+ent s,e o4 the t*o oman,es. To t th,s ,n 0ette+ e+set,2e/ the net

,nome 4,+es an 0e e;+essed as a e+entae o4 the sales +e2enes o4 eah omany/

S,ne 5endys sales +e2ene *e+e 1/#@6 m,ll,on and MDonalds *e+e K/#K@ m,ll,on/

5endys net ,nome as a e+entae o4 sales *as a0ot 6.3J and MDonalds *as a0ot

[email protected].

1/ Ratio" A#aly"i",

Accou#ti#( Ratio" 'efi#itio#? Ad$a#ta(e"? Cla""ificatio# a#d Limitatio#",

The +at,os analys,s ,s the most o*e+4l tool o4 4,nan,al statement analys,s.Rat,os s,mly

means one nm0e+ e;+essed ,n te+ms o4 anothe+. A +at,o ,s a stat,st,al ya+dst,k 0y means o4

K

http://www.accountingformanagement.com/trend_percentages.htmhttp://www.accountingformanagement.com/vertical_analysis_full.htmhttp://www.blogger.com/blogger.g?blogID=1567601386008028031http://www.accountingformanagement.com/financial_statement_analysis_accounting_ratios.htmhttp://www.accountingformanagement.com/trend_percentages.htmhttp://www.accountingformanagement.com/vertical_analysis_full.htmhttp://www.blogger.com/blogger.g?blogID=1567601386008028031http://www.accountingformanagement.com/financial_statement_analysis_accounting_ratios.htm


10/46

Ashok Leyland

*h,h +elat,onsh, 0et*een t*o o+ 2a+,os 4,+es an 0e oma+ed o+ meas+ed. Rat,os an

0e 4ond ot 0y d,2,d,n one nm0e+ 0y anothe+ nm0e+. Rat,os sho* ho* one nm0e+ ,s

+elated to anothe+.

'efi#itio# of Accou#ti#( Ratio",

The te+m accou#ti#( ratio" ,s sed to des+,0e s,n,4,ant +elat,onsh, 0et*een 4,+es

sho*n on a 0alane sheet/ ,n a +o4,t and loss aont/ ,n a 0deta+y ont+ol system o+ ,n any

othe+ a+t o4 aont,n o+an,at,on. Accounting ratios ths sho*s the +elat,onsh, 0et*een

aont,n data.

Rat,os an 0e 4ond ot 0y d,2,d,n one nm0e+ 0y anothe+ nm0e+. Rat,os sho* ho* one

nm0e+ ,s +elated to anothe+. It may 0e e;+essed ,n the 4o+m o4 o-e44,,ent/ e+entae/

+oo+t,on/ o+ +ate. &o+ e;amle the ++ent assets and ++ent l,a0,l,t,es o4 a 0s,ness on a

a+t,la+ date a+e =$$/$$$ and 1$$/$$$ +eset,2ely. The +at,o o4 ++ent assets and ++ent

l,a0,l,t,es old 0e e;+essed as = ,.e. =$$/$$$ G 1$$/$$$< o+ =$$ e+ent o+ ,t an 0e

e;+essed as =:1 ,.e./ the ++ent assets a+e t*o t,mes the ++ent l,a0,l,t,es. Rat,o somet,mes

,s e;+essed ,n the 4o+m o4 +ate. &o+ ,nstane/ the +at,o 0et*een t*o nme+,al 4ats/ sally

o2e+ a e+,od o4 t,me/ e.. stok t+no2e+ ,s th+ee t,mes a yea+.

Ad$a#ta(e" of Ratio" A#aly"i",

Rat,o analys,s ,s an ,mo+tant and ae-old tehn,9e o4 4,nan,al analys,s. The 4ollo*,n a+e

some o4 the ad2antaes G Bene4,ts o4 +at,o analys,s:

1. Sim%lifie" fi#a#cial "tateme#t", It s,ml,4,es the om+ehens,on o4 4,nan,al

statements. Rat,os tell the *hole sto+y o4 hanes ,n the 4,nan,al ond,t,on o4 the 0s,ness=. Facilitate" i#ter@firm com%ari"o#, It +o2,des data 4o+ ,nte+-4,+m oma+,son. Rat,os

h,hl,ht the 4ato+s asso,ated *,th *,th sess4l and nsess4l 4,+m. They also +e2eal

st+on 4,+ms and *eak 4,+ms/ o2e+2aled and nde+2aled 4,+ms.

3. )el%" i# %la##i#(, It hels ,n lann,n and 4o+east,n. Rat,os an ass,st

manaement/ ,n ,ts 0as, 4nt,ons o4 4o+east,n. %lann,n/ o-o+d,nat,on/ ont+ol and

ommn,at,ons.

1$

http://www.blogger.com/blogger.g?blogID=1567601386008028031http://www.blogger.com/blogger.g?blogID=1567601386008028031http://www.blogger.com/blogger.g?blogID=1567601386008028031http://www.blogger.com/blogger.g?blogID=1567601386008028031


11/46

Ashok Leyland

@. Ma8e" i#ter@firm com%ari"o# %o""ible, Rat,os analys,s also makes oss,0le

oma+,son o4 the e+4o+mane o4 d,44e+ent d,2,s,ons o4 the 4,+m. The +at,os a+e hel4l ,n

de,d,n a0ot the,+ e44,,eny o+ othe+*,se ,n the ast and l,kely e+4o+mane ,n the 4t+e.

. )el% i# i#$e"tme#t deci"io#", It hels ,n ,n2estment de,s,ons ,n the ase o4

,n2esto+s and lend,n de,s,ons ,n the ase o4 0anke+s et.

Limitatio#" of Ratio" A#aly"i",

The +at,os analys,s ,s one o4 the most o*e+4l tools o4 4,nan,al manaement. Thoh +at,os

a+e s,mle to allate and easy to nde+stand/ they s44e+ 4+om se+,os l,m,tat,ons.

1. Limitatio#" of fi#a#cial "tateme#t", Rat,os a+e 0ased only on the ,n4o+mat,on *h,h

has 0een +eo+ded ,n the 4,nan,al statements. &,nan,al statements themsel2es a+e s08et to

se2e+al l,m,tat,ons. Ths +at,os de+,2ed/ the+e 4+om/ a+e also s08et to those l,m,tat,ons. &o+

e;amle/ non-4,nan,al hanes thoh ,mo+tant 4o+ the 0s,ness a+e not +ele2ant 0y the

4,nan,al statements. &,nan,al statements a+e a44eted to a 2e+y +eat e;tent 0y aont,n

on2ent,ons and onets. %e+sonal 8dment lays a +eat a+t ,n dete+m,n,n the 4,+es 4o+

4,nan,al statements.

=. Com%arati$e "tudy re&uired, Rat,os a+e se4l ,n 8d,n the e44,,eny o4 the

0s,ness only *hen they a+e oma+ed *,th ast +eslts o4 the 0s,ness. )o*e2e+/ sh a

oma+,son only +o2,de l,mse o4 the ast e+4o+mane and 4o+easts 4o+ 4t+e may not

+o2e o++et s,ne se2e+al othe+ 4ato+s l,ke ma+ket ond,t,ons/ manaement ol,,es/ et.

may a44et the 4t+e oe+at,ons.

3. Rat,os alone a+e not ade9ate: Rat,os a+e only ,nd,ato+s/ they annot 0e taken as 4,nal

+ea+d,n ood o+ 0ad 4,nan,al os,t,on o4 the 0s,ness. Othe+ th,ns ha2e also to 0e seen.

@. Problem" of %rice le$el cha#(e", A hane ,n +,e le2el an a44et the 2al,d,ty o4

+at,os allated 4o+ d,44e+ent t,me e+,ods. In sh a ase the +at,o analys,s may not lea+ly

,nd,ate the t+end ,n sol2eny and +o4,ta0,l,ty o4 the omany. The 4,nan,al statements/

the+e4o+e/ 0e ad8sted kee,n ,n 2,e* the +,e le2el hanes ,4 a mean,n4l oma+,son ,s

to 0e made th+oh aont,n +at,os.

. Lak o4 ade9ate standa+d: No 4,;ed standa+d an 0e la,d do*n 4o+ ,deal +at,os. The+e

a+e no *ell aeted standa+ds o+ +le o4 thm0 4o+ all +at,os *h,h an 0e aeted as no+m.

It +ende+s ,nte++etat,on o4 the +at,os d,44,lt.

11

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12/46

Ashok Leyland

6. Limited u"e of "i#(le ratio", A s,nle +at,o/ sally/ does not on2ey mh o4 a

sense. To make a 0ette+ ,nte++etat,on/ a nm0e+ o4 +at,os ha2e to 0e allated *h,h ,s l,kely

to on4se the analyst than hel h,m ,n mak,n any ood de,s,on.

#. Per"o#al bia", Rat,os a+e only means o4 4,nan,al analys,s and not an end ,n ,tsel4.

Rat,os ha2e to ,nte++eted and d,44e+ent eole may ,nte++et the same +at,o ,n d,44e+ent *ay.

. I#com%arable, Not only ,ndst+,es d,44e+ ,n the,+ nat+e/ 0t also the 4,+ms o4 the

s,m,la+ 0s,ness *,dely d,44e+ ,n the,+ s,e and aont,n +oed+es et. It makes

oma+,son o4 +at,os d,44,lt and m,slead,n.

1=


13/46

Ashok Leyland

3/ A%%licatio# of a$ailable Tool" Tech#i&ue" for Fi#a#cial

A#aly"i" of a Com%a#y

Fi#a#cial A#aly"i" ,s de4,ned as 0e,n the +oess o4 ,dent,4y,n 4,nan,al st+enth and

*eakness o4 a 0s,ness 0y esta0l,sh,n +elat,onsh, 0et*een the elements o4 0alane sheet

and ,nome statement. The ,n4o+mat,on e+ta,n,n to the 4,nan,al statements ,s o4 +eat

,mo+tane th+oh *h,h ,nte++etat,on and analys,s ,s made. It ,s th+oh the +oess o4

4,nan,al analys,s that the key e+4o+mane ,nd,ato+s/ sh as/ liquidity solvency,

profitaility as *ell as the efficiency o4 oe+at,ons o4 a 0s,ness ent,ty may 0e ase+ta,ned/

*h,le sho+t te+m and lon te+m +osets o4 a 0s,ness may 0e e2alated. Ths/ ,dent,4y,n

the *eakness/ the ,ntent ,s to a++,2e at +eommendat,ons as *ell as 4o+easts 4o+ the 4t+e o4

a 0s,ness ent,ty.

&,nan,al analys,s 4oses on the 4,nan,al statements/ as they a+e a d,slos+e o4 a 4,nan,al

e+4o+mane o4 a 0s,ness ent,ty. !A "inancial State#ent is an organi$ed collection of data

according to logical and consistentaccounting procedures% Its purpose is to convey an

understanding of so#e financial aspects of a usiness fir#% It #ay s&o' assets position at

a #o#ent of ti#e as in t&e case of alance s&eet, or #ay reveal a series of activities over a

given period of ti#es, as in t&e case of an inco#e state#ent%(

S,ne the+e ,s +e++,n need to e2alate the ast e+4o+mane/ +esent 4,nan,al os,t,on/ the

os,t,on o4 l,9,d,ty and to ass,st ,n 4o+east,n the 4t+e +osets o4 the o+an,at,on/

2a+,os 4,nan,al statements a+e to 0e e;am,ned ,n o+de+ that the 4o+east on the ea+n,ns may

0e made and the +o+ess o4 the omany 0e ase+ta,ned.

The 4,nan,al statements a+e: Income statement, balance sheet, statement of earnings,

statement of changes in financial position and the cash flow statement. T&e inco#e

state#ent / ha2,n 0een te+med as +o4,t and loss aont ,s the most se4l 4,nan,al

statement to enl,hten *hat has haened to the 0s,ness 0et*een the se,4,ed t,me ,nte+2als

*h,le sho*,n/ +e2enes/ e;enses a,ns and losses. Balance s&eet ,s a statement *h,h

sho*s the 4,nan,al os,t,on o4 a 0s,ness at e+ta,n o,nt o4 t,me. The d,st,nt,on 0et*een

,nome statement and the 0alane sheet ,s that the 4o+me+ ,s 4o+ a e+,od and the latte+

,nd,ates the 4,nan,al os,t,on on a a+t,la+ date. )o*e2e+/ on the 0as,s o4 4,nan,al

statements/ the o08et,2e o4 4,nan,al analys,s ,s to d+a* ,n4o+mat,onto 4a,l,tate de,s,on

mak,n/ to e2alate the st+enth and the *eakness o4 a 0s,ness/ to dete+m,ne the ea+n,n

13


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Ashok Leyland

aa,ty/ to +o2,de ,ns,hts on l,9,d,ty/ sol2eny and +o4,ta0,l,ty and to de,de the 4t+e

+osets o4 a 0s,ness ent,ty.

The+e a+e 2a+,os tyes o4 &,nan,al analys,s. They a+e 0+,e4ly ment,oned he+e,n:

E)ternal analysis: The e;te+nal analys,s ,s done on the 0as,s o4 0l,shed 4,nan,al

statements 0y those *ho do not ha2e aess to the aont,n,n4o+mat,on/ sh

as/ stok holde+s/ 0anks/ +ed,to+s/ and the ene+al 0l,.

I#ter#al A#aly"i", Th,s tye o4 analys,s ,s done 0y 4,nane and aont,ndea+tment. The

o08et,2e o4 sh analys,s ,s to +o2,de the ,n4o+mat,on to the to manaement/ *h,le

ass,st,n ,n the de,s,on mak,n +oess.

S&ort ter# Analysis: It ,s one+ned *,th the *o+k,n a,tal analys,s. It ,n2ol2es the

analys,s o4 0oth ++ent assets and ++ent l,a0,l,t,es/ so that the ash os,t,on l,9,d,ty< may

0e dete+m,ned.

*ori$ontal Analysis: The oma+at,2e 4,nan,al statements a+e an e;amle o4 ho+,ontal

analys,s/ as ,t ,n2ol2es analys,s o4 4,nan,al statements 4o+ a nm0e+ o4 yea+s. )o+,ontal

analys,s ,s also +ea+ded as 'y#amic A#aly"i".

+ertical A#aly"i", ,t ,s e+4o+med *hen 4,nan,al +at,os a+e to 0e allated 4o+ one yea+ only.

It ,s also alled as "tatic a#aly"i".

An asso+tment o4 tehn,9es ,s emloyed ,n analy,n 4,nan,al statements. They

a+e: Comparative Financial Statements, statement of changes in woring capital, common

size balance sheets and income statements, trend analysis and ratio analysis.

Com%arati$e Fi#a#cial Stateme#t", It ,s an ,mo+tant method o4 analys,s *h,h ,s sed to

make oma+,son 0et*een t*o 4,nan,al statements. Be,n a tehn,9e o4 ho+,ontal analys,s

and al,a0le to 0oth 4,nan,al statements/ ,nome statement and 0alane sheet/ ,t +o2,des

mean,n4l ,n4o+mat,on *hen oma+ed to the s,m,la+ data o4 +,o+ e+,ods. The oma+at,2e

statement o4 ,nome statements ena0les to +e2,e* the oe+at,onal e+4o+mane and to d+a*

onls,ons/ *he+eas the 0alane sheets/ +esent,n a hane ,n the 4,nan,al os,t,on d+,n

the e+,od/ sho* the e44ets o4 oe+at,ons on the assets and l,a0,l,t,es. Ths/ the a0solte

hane 4+om one e+,od to anothe+ may 0e dete+m,ned.

Stateme#t of Cha#(e" i# 6or8i#( Ca%ital, The o08et,2e o4 th,s analys,s ,s to e;t+at

the ,n4o+mat,on +elat,n to *o+k,n a,tal. The amont o4 net *o+k,n a,tal ,s dete+m,ned

0y dedt,n the total o4 ++ent l,a0,l,t,es 4+om the total o4 ++ent assets. The statement o4

hanes ,n *o+k,n a,tal +o2,des the,n4o+mat,on ,n +elat,on to *o+k,n a,tal 0et*een

t*o 4,nan,al e+,ods.

1@


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Ashok Leyland

Commo# Si>e Stateme#t", The 4,+es o4 4,nan,al statements a+e on2e+ted to e+entaes.

It ,s e+4o+med 0y tak,n the total 0alane sheet as 1$$. The 0alane sheet ,tems a+e e;+essed

as the +at,o o4 eah asset to total assets and the +at,o o4 eah l,a0,l,ty to total l,a0,l,t,es. Ths/

,t sho*s the +elat,on o4 eah omonent to the *hole - )ene/ the name ommon s,e.

Tre#d A#aly"i", It ,s an ,mo+tant tool o4 ho+,ontal analys,s. !nde+ th,s analys,s/ +at,os o4

d,44e+ent ,tems o4 the 4,nan,al statements 4o+ 2a+,os e+,ods a+e allated and the

oma+,son ,s made ao+d,nly. The analys,s o2e+ the +,o+ yea+s ,nd,ates the t+end o+

d,+et,on. T+end analys,s ,s a se4l tool to kno* *hethe+ the 4,nan,al health o4 a 0s,ness

ent,ty ,s ,m+o2,n ,n the o+se o4 t,me o+ ,t ,s dete+,o+at,n.

Ratio A#aly"i", The most ola+ *ay to analye the 4,nan,al statements ,s omt,n

+at,os. It ,s an ,mo+tant and *,dely sed tool o4 analys,s o4 4,nan,al statements. 5h,le

de2elo,n a mean,n4l +elat,onsh, 0et*een the ,nd,2,dal ,tems o+ +o o4 ,tems o4

0alane sheets and ,nome statements/ ,t h,hl,hts the key e+4o+mane ,nd,ato+s/ sh

as/ li!"idity, solvency and profitability o4 a 0s,ness ent,ty. The tool o4 +at,o analys,s e+4o+ms

,n a *ay that ,t makes the +oess o4 om+ehens,on o4 4,nan,al statements s,mle+/ at the

same t,me/ ,t +e2eals a lot a0ot the hanes ,n the 4,nan,al ond,t,on o4 a 0s,ness ent,ty.

It mst 0e noted that &,nan,al analys,s ,s a ont,nos +oess 0e,n al,a0le to e2e+y

0s,ness to e2alate ,ts ast e+4o+mane and ++ent 4,nan,al os,t,on. It ,s se4l ,n 2a+,os

s,tat,ons to +o2,de manae+s the ,n4o+mat,on that ,s needed 4o+ +,t,al de,s,ons. The

+oess o4 4,nan,al analys,s +o2,des the,n4o+mat,on a0ot the a0,l,ty o4 a 0s,ness ent,ty to

ea+n ,nome *h,le ssta,n,n 0oth sho+t te+m and lon te+m +o*th.

1


16/46

Ashok Leyland

CHAPTER-1

INTRO'*CTION

A"ho8 Leyla#d ,s an Ind,an atomo0,le man4at+,n omany 0ased ,n Chenna,/ Ind,a.

&onded ,n 1K@/ ,t ,s the =nd la+est omme+,al 2eh,le man4at+e+ ,n Ind,a/ @th la+est

man4at+e+ o4 0ses ,n the *o+ld and 16th la+est man4at+e+ o4 t+ks lo0ally.

Oe+at,n s,; lants/ Ashok Leyland also makes sa+e a+ts and en,nes 4o+ ,ndst+,al and

ma+,ne al,at,ons. It sells a0ot 6$/$$$ 2eh,les and a0ot #/$$$ en,nes annally. It ,s the

seond la+est omme+,al 2eh,le omany ,n Ind,a ,n the med,m and hea2y omme+,al

2eh,le M)C"< sement *,th a ma+ket sha+e o4 =J =$$#F$


17/46

Ashok Leyland

B+anh o44,e:

No. 1 Sa+da+ %atel Road/

?,ndy/

Chenna, F 6$$ $3=/

Ind,a.

Tel: $$K1 @@-===$ 6$$$

&a;: $$K1 @@-===$ 6$$$

Manaement Team

Ashok Leyland ,s ++ently headed 0y M+ R. Seshasayee *ho ,s the Mana,n D,+eto+ s,ne1KK. !nde+ h,s leade+sh,/ the omany has e;anded 4+om a +ely Ind,a-ent+, omanyto a omany *,th lo0al 4os. M+. Seshasayee *as also the %+es,dent o4 CII Con4ede+at,on

o4 Ind,an Indst+y


18/46

Ashok Leyland

S)ARE)OL'IN- PATTERN OF AS)O5 LEYLAN'

Shareholdi#( Patter# @ A"ho8 Leyla#d Ltd/

)olderB" Name No of Share" Share )oldi#(

&o+e,nInst,tt,ons 1$#1$6$ #.=J

&o+e,n%+omote+ 11$@6@6KK @@.3J

Othe+s 61#6#K@ =6.1@J

?ene+al%0l, =#=###$ 1$.K@J

&,nan,alInst,tt,ons 16#$1$#63 6.#J

NBanksMtal&nds 11@=##$ @.KJ

Cent+al?o2t ==$K#=$ $.$KJ

SALES DATA

1


19/46

Ashok Leyland

CHAPTER-2

COMPANY PROFILE

About Ashok Leyland

Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India. It is thesecond largest commercial vehicle company in India in the medium and heavy commercial vehicle(M&C!" segment #ith a market share of $% ($'')'%".Ashok Leyland is a market leader in the bus

segment.

*he company #as established in +-% as Ashok Motors, #ith an aim to assemble Austin cars.Manufacturing of commercial vehicles #as started in + #ith e/uity contribution from the 0ritishcompany, Leyland Motors. *oday the Company is the flagship of the indu1a 2roup, a 0ritish)basedand Indian originated transnational conglomerate.

Ashok Leyland is a technology leader in the commercial vehicles sector of India. Its annual turnover e3ceeded 456 $ billion in $'')'%. 5elling close to around %7,''' medium and heavy vehicles in$'')'%, Ashok Leyland is India8s largest e3porter of medium and heavy duty trucks out of India. It isalso one of the largest 9rivate 5ector :mployers in India ) #ith about +$,''' employees #orking in ;factories and offices spread over the length and breadth of India

on)=esident Indian transnationalgroup and I!:C< ?iat 5pA, part of the ?iat 2roup and :urope8s leading truck manufacturer. *hisresulted in Ashok Leyland launching the @Cargo@ range of trucks. *hese vehicles used Iveco engines

and for the first time AL vehicles had factory)fitted cabs. *he Cargo trucks are no longer in productionand the use of Iveco engine #as discontinued, but the Cargo cab continues to be used on the eCometrange of trucks.

Ashok Leyland also had a collaboration #ith ino Motors, apan from #hom the technology for the )series engines #as bought. Many indigenous versions of )series engine #as developed #ith - and ;cylinder and also conforming to 05$ and 057 emission norms in India. *hese engines proved to bee3tremely popular #ith the customers primarily for their e3cellent fuel efficiency. Most current modelsof Ashok Leyland come #ith )series engines.

In the 1ourney to#ards global standards of /uality, Ashok Leyland reached a ma1or milestone in +7#hen it became the first in India8s automobile history to #in the I5< ''$ certification. *he morecomprehensive I5< ''+ certification came in +-, B5 ''' in +% and I5< +-''+ certification for

all vehicle manufacturing units in $''$. In $'';, Ashok Leyland became the first automobile companyin India to receive the *5+;- Corporate Certification.

1K


20/46

Ashok Leyland

Achievements

• :ight out of ten metro state transport buses in India are from Ashok Leyland. At;' million

passengers a day, Ashok Leyland buses carry more people than the entire Indian rail net#ork.

• Ashok Leyland has a near %. market share in the Marine 6iesel :ngines Markets in India.

• In $''$, all the vehicle)manufacturing units of Ashok Leyland #ere I5< +-''+ certified #ith

:nvironmental Management 5ystem.

• In the $'';)' financial year, the company sold a record %7,+'+ vehicles #hich is an all time

high for Ashok Leyland.

• It is one of the leading suppliers of defense vehicles in the #orld and also the leading supplier

of logistics vehicles to the Indian Army.

=$


21/46

Ashok Leyland

CHAPTER-3

A!O*T MY PROJECT ,@

ObDecti$e" of the "tudy

To allate the ,mo+tant 4,nan,al +at,o o4 the o+an,sat,on as

a a+t o4 the +at,o analys,s the+e0y to nde+stand the hanes

the needs and t+ends ,n the 4,+m7s 4,nan,al os,t,on.

To assess the e+4o+mane o4 AS)O' L(PLAND. on the

0as,s o4 ea+n,ns and also to e2alate the sol2eny os,t,on o4

the omany.

To ,dent,4y the 4,nan,al st+enths and *eaknesses o4 the

o+an,at,on.

To ,2e the a+o+,ate sest,ons to the ,n2esto+s. To hel

them to make mo+e ,n4o+med de,s,ons.

Limitatio#" of "tudy

1. The stdy ,s on4,ned to a e+,od o4 last yea+s.

=. As most o4 the data ,s 4+om the seonda+y so+es/ hene the a+ay ,s

l,m,ted.

=1


22/46

Ashok Leyland

CHAPTER-4

FINANCIAL STATEMENTS OF ASHOK

LEYLAND

7.+ oriontal Analysis

7.+.+ oriontal Analysis of 0alance 5heetfor the year $''%)'

Table 1 Horizontal Analysis of Balance SheetFor the year 2008-07

(=s in millions"

Particulars Mar 08 Mar 07 !han"e !han"e

(=s" (=s" ("

Sources of fun#s

A" 5hare Capital +77'.7- +7$7.% ;.- '.-

0" =eserves and 5urplus $'+.-% +;$+.%+ $7.; +-.-'

*otal $+-%.%$ +%-.;% $--.+- +7.-7

Loan ?undsD

A" 5ecured Loans +'$.- 7;'$.+; )+;.; )-.+

0" 4nsecured Loans ;$.;+ $%'+.%$ -+'. +-%.%;

*otal %%.'+ ;-'7.% $-+.'7 7%.

6eferred *a3 Liability $7%.$ +;.$ ;%.+ $%.%

T$TA% &2'0&(0& 27&18(') %-.'% $'.--

A**lication of Fun#s

?i3ed AssetsD

A" 2ross 0lock $-$-.7% $;$'+. 7$$$.-+ +$.7'

0" LessD 6epreciation +-+;%.%% +7+7+.;- +'7.$- .'

C" >et 0lock +$. +7''.77 $+%.+ +;.$

:" Capital #ork)in progress $$.- $7-.+ $+.- +$$.%

Investments ;' $$+'.- 7%%%.'; +.%;!urrent assets loans an#

==


23/46

Ashok Leyland

a#+ances

A" Inventories +$$7.+- +''7.$+ +7.7 +-.7

0" 5undry debtors 7%.7 $$%. )+-'.- )$%.+$

C" Cash & bank balances -+7. -7-.7 +;-.7+ 7.%

6" Loans & advances %$-+.7 ;;. +-.% $7.'%

*otal $%$.; $;.+- +,.-

$ ;.%

%ess, !urrent liabilities an#*ro+isions )

A" Liabilities +$;.' +;+;.$ $,'.%

- +;.;;

0" 9rovisions 7-$.7+ +'-$.7 $,-+'.'

+ $7+.$$

*otal $$+.- +%.

,+;'.%

$.7

>et current assets ;'77.+; -+%. (7,7%.-

7" )7.-

)

Misc. :3penses $$$.$ $--.+% ($+.$

;" )%.+

)

T$TA% &2'0&(0& 27&18(') ,%-.'

% $'.--

!hart 1, Horizontal Analysis of Balance SheetFor 2008-07

=3


24/46

Ashok Leyland

.

&(1(2( Horizontal Analysis of Balance SheetFor the year 2007-0

=@


25/46

Ashok Leyland

Table 2 Horizontal Analysis of Balance SheetFor the year 2007-0

(=s in millions"


(=s" (=s" ("

Sources of fun#s

A" 5hare Capital +7$7.% +$$+. +'$.$% %.7

0" =eserves and 5urplus +;$+.%+ +$'$.- -+%.% 7;.

*otal +%-.;% +-+$-.7 -%$+.+ 7-.+7

Loan ?undsD

A" 5ecured Loans 7;'$.+; +%-;.+ +.$ .'-

0" 4nsecured Loans $%'+.%$ '$.7 )$$'. )--.;

*otal ;-'7.% ;+.$% )+.7 ).-

6eferred *a3 Liability +;.$ +;.% +$.- .

T$TA% 27&18(') 228.0(7 --%.$ +.;+


?i3ed AssetsD

A" 2ross 0lock $;$'+. $+7%-. -%+;.% $$.7

0" LessD 6epreciation +7+7+.;- ++$.$% ++.7; .%

C" >et 0lock +7''.77 -7$.+ 7;7.;$ 7%.;

:" Capital #ork)in progress $7-.+ +-+-.+ ;'.- ;.-

Investments $$+'.- 7;%+.% )+-'.%- )7.

Current assets, loans andadvances

A" Inventories +''7.$+ '$.;+ +;.; +%.

0" 5undry debtors $$%. -$-7.7 %.7% $7.$$

C" Cash & bank balances -7-.7 ;'$%.; )+;.7 )$.%;

6" Loans & advances ;;. 7'$;.7 7;;.- +$+.$*otal $;.+- $$7$-.+7 -,;7.'+ $'.%-

=


26/46

Ashok Leyland

LessD Current liabilities andprovisions )

A" Liabilities +;+;.$ ++-;%. ,'-.7' --.'+

0" 9rovisions +'-$.7 $;+;.$+ (+,7.+

" );'.+;

*otal +%. +-'%.+; 7,-7.7 $-.;;

>et current assets -+%. %$7%. +,+.;$ +-.7$

)

Misc. :3penses $--.+% 7.' ++.++ $7-.+

)

T$TA% 27&18(') 228.0(7 -,-%.$ +.;+

!hart 2 Horizontal Analysis of Balance SheetFor the year 2007-0

&(1(. Horizontal Analysis of /ncoe Stateent

For the year 2008-07

=6


27/46

Ashok Leyland

Table . Horizontal Analysis of /ncoe StateentFor the year 2008-07

(=s in millions"


(=s" (=s" (=s" (in "

/ncoe

5ales less returns ,$+.$7 +,;%+.; ,;'.- .%7


28/46

Ashok Leyland

&(1() Horizontal Analysis of /ncoe Stateent

For the 3ear 2007-0

=


29/46

Ashok Leyland

Table ) Horizontal Analysis of /ncoe StateentFor the 3ear 2007-0

(=s in millions"


(=s" (=s" (=s" (in "

/ncoe

5ales less returns +,;%+.; $,-;. +,$'.+ 7;.;'


30/46

Ashok Leyland

&(2 4ertical Analysis

7.$.+ !ertical Analysis of 0alance 5heet

3$


31/46

Ashok Leyland

Table 7 4ertical Analysis of Balance Sheet

(=s in millions"

Particulars Mar 08 Mar 07 Mar0 Mar0)

Sources of fun#s

5hareholdersE funds $+-%.%$ +%-.;% +-+$-.7 ++;%.;

(" ;.7+ ;.7 ;+.%- $.;7

Loan ?undsD %%.'+ ;-'7.% ;+.$% %%'-.';

(" $;. $7.-- 7'.$ 7.;

T$TA% 7$'7.'7 $7+%. $$%-'. $$++.+

(" +'' +'' +'' +''


?i3ed AssetsD +$. +7''.77 -7$.+ %7%.-;

(" -;.7 -.%- -+.7' -'.$%

Current assets, loans and advances $%$.; $;.+- $$7$-.+7 $+$.;7

(" %.7 %. .- .$+

LessD Current liabilities and provisions $$+.- +%. +-'%.+; ++;;.;

(" ;.' ;-.$ ;+.; $.7

T$TA% 7$'7.'7 $7+%. $$%-'. $$++.+

(" +'' +'' +'' +''

!hart 7 4ertical Analysis of Balance SheetFor the 3ear 2008

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!hart 8 4ertical Analysis of Balance SheetFor the 3ear 2007

!hart ' 4ertical Analysis of Balance SheetFor the 3ear 200

3=


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!hart 10 4ertical Analysis of Balance SheetFor the 3ear 200)

&(& Tren# Analysis

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Table ' Tren# Analysis of Balance Sheet

(=s in millions"

Particulars Mar0) Mar0 Mar 07 Mar 08

Sources of fun#s

5hareholdersE funds ++;%.; +-+$-.7 +%-.;% $+-%.%$

(" $.;7 ;+.%- ;.7 ;.7+

Loan ?undsD %%'-.'; ;+.$% ;-'7.% %%.'+

(" 7.; 7'.$ $7.-- $;.

T$TA% $$++.+ $$%-'. $7+%. 7$'7.'7

(" +'' +'' +'' +''


?i3ed AssetsD %7%.-; -7$.+ +7''.77 +$.

(" -'.$% -+.7' -.%- -;.7

Current assets, loans and advances $+$.;7 $$7$-.+7 $;.+- $%$.;

(" .$+ .- %. %.7

LessD Current liabilities and provisions ++;;.; +-'%.+; +%. $$+.-

(" $.7 ;+.; ;-.$ ;.'

T$TA% $$++.+ $$%-'. $7+%. 7$'7.'7

(" +'' +'' +'' +''

!hart 11 Tren# Analysis of Balance SheetSources of Fun#s

3@


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!hart 12 Tren# Analysis of Balance SheetA**lication of fun#s

ANALYSIS OF PROFITABILITY

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Profitability 5atios

*o analye the profitability of a company profitability ratios are used. *hese ratios measure theoperating or income performance of a company. *he goal of a business is to make a profit, so thistype of ratio e3amines ho# #ell a company is meeting that goal. *he commonly used ratios to

evaluate profitability areD

• 2ross 9rofit ratio

• >et 9rofit ratio

• =eturn on Assets

• Asset *urnover

• =eturn on :/uity

PARTICULARS 200.-0) 200)-0 200-07 2007-08

GROSS PROFIT12090.

514785.

7 17,049.8519,644.

89

NET SALES41818.

9752476.

57 71681.7677291.

23PAT 2714.1 3273.2 4412.86 4693.1

AVG. TOTAL ASSETS19776.

6135253.

66 40743.0550016.

41AVG. EQUITY SHARE HOLER!SFUN

11098.31

22515.94 25079.82

20217.75

!hart 1& Profitability 5atio Analysis

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.(1( 6ross Profit 5atio 6ross Profit 100 9et Sales

200.-0) 200)-0 200-07 2007-08

2=


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A55:* *4=>

200.-0) 200)-0 200-07 2007-08

9A* 2714.1 3273.2 4412.86 4693.1

A!2. *


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ANALYSIS OF SOLVENCY

!hart 1. Sol+ency 5atio Analysis

)(1(


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Analysis*his ratio suggests that #hether company manages to earn sufficient income to cover its e3penses.*he ratio of the company indicates that company depends much on borro#ed funds. *he high interestratio means that company depends more on debt funds.

200.-0) 200)-0 200-07 2007-08

I>*:=:5* C

@$


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Ashok Leyland

CASH FLOW STATEMENT ANALYSIS

!ash Flo> Stateent for the year en#e# March &1 2008-2007

(Rs.Millions)

2008 2007

!ash lo> fro o*eratin" acti+ities

Profit before ta ;,7%+. ;,'-.';

Ad1ustments forD

6epreciation, amortisation and impairment +,7.;+ +,'.-

or?in" ca*ital chan"es 82&(& &1.(11

Ad1ustments for changes in D

Inventories (+,7.7

" (+,;.;'"

6ebtors +,-$;.% (+,''.;"

Advances $;+.$ (+,'-.-+"

Current liabilities and provisions 7,;.%$ -,+'$.-

!ash "enerate# fro o*erations 11'8)('1 8)(88

Income ta3 including ?ringe benefit ta3 paid (+,$%'.;

" (+,7;.''"

9et cash lo> fro o*eratin" acti+ities before etraor#inary e*en#iture 1070)(2 )&2'(88

Compensation under !oluntary retirement scheme (-%.-+" (77'.7"

9et cash lo> fro o*eratin" acti+ities after etraor#inary e*en#iture 10)(8) .'''()1

!ash lo> fro in+estin" acti+ities

9ayments for assets ac/uisition (;,$'.'-

" (;,%+$.%"

9roceeds on sale of fi3ed assets ++7.; +'%.-

9urchase of Investments (77.%$" ('.;-"

5aleFredemption of investments --. %+.7

Income from investments H Interest +';.;+ .-7

H 6ividend $$.% +$.7

Changes in advances($,$7+.%

" (+,-7.'"

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Ashok Leyland

9et cash lo> use# in in+estin" acti+ities @80'(78

@7221('7

!ash lo> fro financin" acti+ities

Long term borro#ings H =aised 7,;$.+ $,+;$.7

H =epaid (-'-.+" (%$."

Changes in short term borro#ings 7.7$

6ebentureFLoan raising e3penses paid (;%.-" ($.-"

Interest paid H net (-;." (+%+.;"

6ividend paid and ta3 thereon (+,$.7-"

Interim dividend and ta3 thereon ($,$;-.7$"

9et cash lo> fro financin" acti+ities &.)(18 @2'08(.0

9et cash inflo>@outflo> 20)(2) @)1&0(8

$*enin" cash an# cash e:ui+alents 1')2(02 7082(88

!losin" cash an# cash e:ui+alents 81)7(27 1')2(02

9et increase@#ecrease in cash an# cash e:ui+alents 20)(2) @)1&0(8

Analysis,?igures in the brackets represent outflo#. Interest paid is e3clusive of purchases of investments is%7+.-7 millions. Cash and cash e/uivalents after the ad1ustment of cash credits balances related tounclaimed dividend is =s --+. millions.

*he statement of cash flo# reveals a net cash outflo# from operations of =s. +''.$; millions#hereas the company sho#s a net profit of =s ;7%+.' million. *here is a sharp decrease in theinventories of the company. I.e. =s +7.7 million and debtors have increased =s +-$;.% million.

?urther compensation under voluntary retirement scheme is =s -%.-+ million. And a net profit on the

sale of investment is =s --. million. 9rofit on disposal of fi3ed assets #ould be =s 7.%; millionfor the year $''%.

*he conversion of ?oreign Currency Convertible >otes into e/uity shares has not been considered inthe above statement.Cash flo#s from Investing activities includes ac/uisition of +'' shares in Albonair 2mb (cost =s.+. million" and 6efiance *esting & :ngineering 5ervices (cost =s. +-+.' million" and disposal of ;' (=s. '. million" and + (=s. +.- million" shares respectively therein.

*he company has used more cash in operations than all of the cash it received from its investing andfinancing activities resulting into a net increase in cash.

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Ashok Leyland

!ash Flo> Stateent for the year en#e# March &1 2007-200

(Rs. Millions)

2007 200

!ash flo> fro o*eratin" acti+ities

Profit before ta ;,'-.'; -,$7.

Ad1ustments forD

6epreciation, amortisation and impairment +,'.- +,$;'.';

fro in+estin" acti+ities 9ayments for assets ac/uisition );,%+$.% )$,;-;.%;

9roceeds on sale of fi3ed assets +'%.- -.7-

9roceeds on sale of undertaking H ;$'.

9urchase of long term and other Investments )'.;- )+7%.;;

5ale F redemption of long term investments .;- -.;%

Income from investments H Interest --.% -%.

H 6ividend +$.7 ;.7

Changes in advances )+,-7. +%.

9et cash flo> use# in in+estin" acti+ities -7.'('1 -1&&)(8)

!ash flo> fro financin" acti+ities

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Ashok Leyland

Long term borro#ings H =aised $,+;$.7 +%;.;

H =epaid )%$. )+,+;$.%%

Changes in short term borro#ings H );.

6ebenture F Loan raising e3penses paid )$.- H

Interest paid H net )+;.'$ )+;;.;

6ividend paid and ta3 thereon )+,$.7- )+,7;.+

Interim dividend and ta3 thereon )$,$;-.7$ H

9et cash flo> fro financin" acti+ities -28'&(7) -2)7(0.

9et cash inflo> @outflo> -)&'1(1) -'1(72

$*enin" cash an# cash e:ui+alents 8)0&(22 '1'.('.

!losin" cash an# cash e:ui+alents &112(07 8)0&(22

9et increase @#ecrease in cash an# cash e:ui+alents -)&'1(1) -'1(72

Analysis,?igures in the brackets represent outflo#. Interest paid is e3clusive of purchases of investments is7-'.+ millions. Cash and cash e/uivalents after the ad1ustment of cash credits balances related tounclaimed dividend is =s +7.7+ million.

*he statement of cash flo# reveals a net cash outflo# from operations of =s. -.+ millions#hereas the company sho#s a net profit of =s ;'-.'; million. *here is a sharp decrease in theinventories of the company. I.e. =s +;.;' million and debtors have decreased =s +''.; million.

?urther compensation under voluntary retirement scheme is =s 77'.7 million. Loss on disposal of fi3ed assets #ould be =s 7$7.+ million for the year $''%.

T%& '()*&+-() ( F(+&-/) C++&)' C()*&+-& N(& -)( &- %+& % )( &&) '()-&+&

-) %& (*& &&).C% (: +( I)*&-)/ '-*--& -)'& '---() ( 100; (:)&+%-< -)&+& -) A*- A%(=L&) $((+ .+.(. >--+? ( R. 0.38 --() ) -


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Ashok Leyland

C)APTER

O!SER+ATION AN' CONCL*SION,

I *old l,ke to onlde that AS)O' L(PLAND. has t+a2elled a lon d,stane ,n +s,t o4

e;ellene ,n all the a+eas o4 ,ts e+4o+mane/ 4o+ *h,h ,t has 0eome a *o+ld lass omany.

• O+an,at,on ,s 0ased on the t+ad,t,onal a+oah on 4,nan,n total 4nds ,.e.

Sha+eholde+s 4nd.

• O+an,at,on ,s 0ase on 4,nan,n ,ts *o+k,n a,tal on onse+2at,2e a+oah.

• The o+an,at,on ,s onstantly ,m+o2,n ,ts +ese+2e and s+ls *h,h a ood s,n

st+enthen,n 4t+e 4,nan,al sta0,l,t,es.

• Oe+at,n e;enses o4 o+an,at,on a+e to 0e ,m+o2ed the +o4,ta0,l,ty o4 the/

o+an,at,on.

• Li&uidity Ratio,

It sho*s that AS)O' L(PLAND has the a0,l,ty to meet ,ts ++ent o0l,at,ons. It doesnt

s44e+ 4+om e;ess l,a0,l,t,es. It ths has a +oe+ 0alane 0et*een h,h l,9,d,ty lak o4

l,a0,l,ty. Its a ood s,n 4o+ AS)O' L(PLAND as the +ed,to+s *old de4,n,tely e;tend

+ed,t 0ease o4 the sat,s4ato+y l,9,d,ty os,t,on o4 AS)O' L(PLAND.

• Sol$e#cy Ratio",

The sol2eny +at,os o4 AS)O' L(PLAND sho* that at +esent AS)O' L(PLAND ,s

de0t 4+ee omany o+ a e+o de0t omany hene the+e ,s no de0t holde+ o4 AS)O'

L(PLAND the+e4o+e ,t doesnt ay the 4,;ed ,nte+est. Ths the sol2eny +at,o o4

AS)O' L(PLAND sho*s that ,t has a ood lon-te+m sol2eny os,t,on.

• Acti$ity Ratio",

The at,2,ty +at,os sho* the seed *,th *h,h the assets a+e on2e+ted to sales. The

e44,,en,es ,n t+n,n ,ts ,n2ento+,es +at,o has ons,de+a0le *h,h des,te/ that AS)O'

L(PLAND ,s ,n the os,t,on to sell ,ts stok 9,kly. The omany de0to+ t+no2e+ +at,o

has ,n+eased 4o+ some as *ell as de+eases 4o+ some yea+ 0t ,n the +esent yea+ ,.e.=$

1=-13 ,t has de+eased *h,h des,te that the omany oe+ates on ash 0as,s and

ollet,on o4 aont +ee,2a0les ,s e44,,ent enoh.

• Profitability Ratio",

The +,ma+y o08et,2e o4 a 0s,ness one+n ,s to ea+n +o4,ts *h,h ,s +e9,+ed not only

4o+ e;,stene 0t also 4o+ e;ans,on d,2e+s,4,at,on. The +o4,ta0,l,ty +at,o o4 AS)O'

L(PLAND has ood one.

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Ashok Leyland

!I!LIO-RAP)Y

Authori>ed !oo8

• MANA?(M(NT ACCO!NTIN?

Shash, k. ?ta R.'. Sha+ma<

• Annal +eo+t o4 AS)O' L(PLAND =$1$-=$11

• Annal +eo+t o4 AS)O' L(PLAND =$11-=$1=

• Annal +eo+t o4 AS)O' L(PLAND =$1=-=$13

SEARC) EN-INES,

• ***.oole.om

• htt:GG***.ashokleyland.omG• ***.In2estoed,a.om
http://www.google.com/http://www.ashokleyland.com/http://www.investopedia.com/http://www.google.com/http://www.ashokleyland.com/http://www.investopedia.com/

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Dromati Financial Statement Analysis Report