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CITY PREMIER COLLEGE

INTRODUCTION TO THE TOPIC

FINANCIAL MANAGEMENT

The significance of this function is not only seen in the 'Line' but also in
the capacity of 'Staff' in overall Financial management which refers to the
efficient and effective management of money (funds) in such a manner as
to accomplish the objectives of the organization. It is the specialized
function directly associated with the top administration of a company. It
has been defined differently by different experts in the field.

It includes how to raise the capital, how to allocate it i.e. capital


budgeting. Not only about long term budgeting but also how to allocate
the short term resources like current assets. It also deals with the dividend
policies of the shareholders.

DEFINITION FINANCIAL MANAGEMENT

Financial Management is the Operational Activity of a business that is


responsible for obtaining and effectively utilizing the funds necessary for
efficient operation. by Joseph Massie.

"Financial management is concerned with raising financial resources and


their effective utilization towards achieving the organizational goals."

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IMPORTANCE AND SIGNIFICANCE OF THE TOPIC

The Project report covers analytical study of the financials. Financials of


the organization helps in assessing the financial position of the
organization. It also help in the process of budgeting i.e. in estimating the
income which in turn helps in planning future expenses of the
organization such as investment, expansion plan and other day to day
expenses. It also helps management in decision making process at various
levels, strategies tactical and operational level decision making. The
study would help in understanding the financial position of the company
by covering various ratios of the Company.

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COMPANY PROFILE

Tata Motors Limited is India's largest automobile company, with


consolidated revenues of INR 2, 62,796 cores (USD 42.04 billion) in
2016-15. It is the leader in commercial vehicles in each segment, and
among the top in passenger vehicles with winning products in the
compact, midsize car and utility vehicle segments.

The Tata Motors Group's over 60,000 employees are guided by the
mission "to be passionate in anticipating and providing the best vehicles
and experiences that excite our customers globally."

Established in 1945, Tata Motors' presence cuts across the length and
breadth of India. Over 8 million Tata vehicles ply on Indian roads, since
the first rolled out in 1954. The company's manufacturing base in India is
spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow
(Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad
(Karnataka). Following a strategic alliance with Fiat in 2005, it has set up
an industrial joint venture with Fiat Group Automobiles at Ranjangaon
(Maharashtra) to produce both Fiat and Tata cars and Fiat power trains.
The company's dealership, sales, services and spare parts network
comprises over 6,600 touch points, across the world.

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Tata Motors, also listed in the New York Stock Exchange (September
2004), has emerged as an international automobile company. Through
subsidiaries and associate companies, Tata Motors has operations in the
UK, South Korea, Thailand, South Africa and Indonesia. Among them is
Jaguar Land Rover, acquired in 2008. In 2004, it acquired the Daewoo
Commercial Vehicles Company, South Korea's second largest truck
maker. The rechristened Tata Daewoo Commercial Vehicles Company
has launched several new products in the Korean market, while also
exporting these products to several international markets. Today two-
thirds of heavy commercial vehicle exports out of South Korea are from
Tata Daewoo. In 2006, Tata Motors formed a 51:49 joint venture with the
Brazil-based, Marco polo, a global leader in body-building for buses and
coaches to manufacture fully-built buses and coaches for India - the plant
is located in Dharwad. In 2006, Tata Motors entered into joint venture
with Thonburi Automotive Assembly Plant Company of Thailand to
manufacture and market the company's pickup vehicles in Thailand, and
entered the market in 2008. Tata Motors (SA) (Proprietary) Ltd., Tata
Motors' joint venture with Tata Africa Holding (Pty) Ltd. set up in 2013,
has an assembly plant in Rosslyn, north of Pretoria. The plant can
assemble; semi knocked down (SKD) kits, light, medium and heavy
commercial vehicles ranging from 4 tons to 50 tones.

Tata Motors is also expanding its international footprint, established


through exports since 1961. The company's commercial and passenger
vehicles are already being marketed in several countries in Europe,
Africa, the Middle East, South East Asia, South Asia, South America,
Australia, CIS and Russia. It has franchisee/joint venture assembly
operations in Bangladesh, Ukraine, and Senegal.

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The foundation of the company's growth over the last 70 years is a deep
understanding of economic stimuli and customer needs, and the ability to
translate them into customer-desired offerings through leading edge
R&D. With over 4,500 engineers, scientists and technicians the
company's Engineering Research Centre, established in 1966, has enabled
pioneering technologies and products. The company today has R&D
centers in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South
Korea, Italy, Spain, and the UK.

It was Tata Motors, which launched the first indigenously developed


Light Commercial Vehicle in 1986. In 2005, Tata Motors created a new
segment by launching the Tata Ace, India's first indigenously developed
mini-truck. In 2009, the company launched its globally benchmarked
Prima range of trucks and in 2014 the Ultra range of international
standard light commercial vehicles. In their power, speed, carrying
capacity, operating economy and trims, they will introduce new
benchmarks in India and match the best in the world in performance at a
lower life-cycle cost.

Making strides in the Commercial Vehicle Business, in March 2016, Tata


Motors also took the lead to bring a world renowned motorsport to India,
with the T1 Prima Truck Racing Championship. This unique initiative
witnessed over 45,000 spectators in 2017 at the Buddh International
Circuit. This will be an annual property, edged on motorsport calendars
globally and Tata Motors continues to promote its flagship brand, Prima,
through this initiative.

Tata Motors also introduced India's first Sports Utility Vehicle in 1991
and, in 1998, the Tata Indica, India's first fully indigenous passenger car.

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In January 2008, Tata Motors unveiled the world famous, the Tata Nano
and subsequently launched, as planned, in India in March 2009, since its
inception, it was developed to meet the needs of an attractive and
affordable entry level car. The Nano has evolved over time, with the
needs of its customers, to become a feature-rich compact hatchback. The
Company has introduced the new generation range called the GenX Nano
in May 2017.

In July 2016, Tata Motors expanded its footprint in the petrol market,
with the launch of its indigenously developed and globally benchmarked
Revotron 1.2T engine, India's First 1.2 Litre MPFi Turbocharged Petrol
Engine and the first from the new generation Revotron engine series.

This was followed by the launch of Tata Zest in August 2016, a stylish
compact sedan which comes with new design language, best-in-class
performance with unparalleled driving pleasure. Bringing its Horizonext
strategy at play, the Company introduced its sporty, premium hatchback,
Tata Bolt in January 2017. The Zest and Bolt have largely led the
recovery for the passenger vehicle business and continue to receive good
response from customers.

Tata Motors is equally focused on environment-friendly technologies in


emissions and alternative fuels. It has developed electric and hybrid
vehicles both for personal and public transportation. It has also been
implementing several environment-friendly technologies in
manufacturing processes, significantly enhancing resource conservation.

Through its subsidiaries, the company is engaged in engineering and


automotive solutions, automotive vehicle components manufacturing and
supply chain activities, vehicle financing, and machine tools and factory
automation solutions.

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Tata Motors is committed to improving the quality of life of communities


by working on four thrust areas - employability, education, health and
environment. The activities touch the lives of more than a million
citizens. The company's support on education and employability is
focused on youth and women. They range from schools to technical
education institutes to actual facilitation of income generation. In health,
the company's intervention is in both preventive and curative health care.
The goal of environment protection is achieved through tree plantation,
conserving water and creating new water bodies and, last but not the
least, by introducing appropriate technologies in vehicles and operations
for constantly enhancing environment care.

With the foundation of its rich heritage, Tata Motors today is etching a
refulgent future.

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RESEARCH STUDY

PROBLEM DEFINITION

The main purpose of the study is to analyze the financial statements of


"TATA MOTORS LIMITED" for the year 2013 to 2017

Financial management is one the most important and integral part of any
company. Understanding the financial of the company is necessary for
the stack holders. Financial position deals with knowing the liquidity,
profitability, solvency, and leverage that is risk involved in the company.
The terms and financial jargons are least understood by layman. The
project would try to solve the problem of understanding the financial
problem in easy and presentable form in better way to help the
shareholders for their decision making process.

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OBJECTIVES

The present study has been undertaken to achieve the following


objectives with regards to management of ratio analysis of Tata Motors:

To analyze and evaluate ratio analysis.


To evaluate the inventory, receivables and cash management
performance.
To assess the relative significance of various sources of financing
of ratio analysis.
To suggest on the basis of conclusions, innovation in the
management of ratio analysis in Tata Motors.
To find out the fluctuations arising in ratio analysis in the company
due to its nature of demand and supply, production, government
policies thereto.
To analyze the growth in the sector of production and installation
policies and capacities during five year plans.
To apply the theoretical knowledge to learn various aspects of
management. To know the profitability of real estate business and
its impact on ratio analysis.

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HYPOTHESIS OF THE STUDY

The study has been pursued to test the following hypothesis with
references to Tata Motors:
That proper management of working capital improves both
Liquidity and Profitability position of the firm.
During the period of observation 2013 2017, TATA MOTORS
LTD has shown a positive trend in the net profit, liquidity of the
company.

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SCOPE OF THE STUDY

Research study is for the period of 5 year i.e. 2013 to 2017.


The study is confined to the analysis of the main head office of the
company at Nagpur.
Study is only to the subject topic i.e. Ratio Analysis.
The study is about TATA MOTORS LTD.
The basic aim of the study is to acquire the insights in to the tools of
the theoretical data analysis and its application to practical data.
The study also intends to use modern tools and techniques of ratio
analysis.

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THEORETICAL PERSPECTIVE

MEANING OF RATIO

"Ratio in general is a way of concisely showing the relationship between


two quantities of something."

RATIO ANALYSIS

Ratio Analysis is a form of Financial Statement Analysis that is used to


obtain a quick indication of a firm's financial performance in several key
areas. The ratios are categorized as Short-term Solvency Ratios, Debt
Management Ratios, Asset Management Ratios, Profitability Ratios, and
Market Value Ratios.

Ratio Analysis as a tool possesses several important features. The data,


which are provided by financial statements, are readily available. The
computation of ratios facilitates the comparison of firms which differ in
size. Ratios can be used to compare a firm's financial performance with
industry averages. In addition, ratios can be used in a form of trend
analysis to identify areas where performance has improved or
deteriorated over time.

Because Ratio Analysis is based upon accounting information, its


effectiveness is limited by the distortions which arise in financial
statements due to such things as Historical Cost Accounting and inflation.
Therefore, Ratio Analysis should only be used as a first step in financial
analysis, to obtain a quick indication of a firm's performance and to
identify areas which need to be investigated further.

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DEFINITION OF RATIO ANALYSIS

"Ratio is simply a means of highlighting in arithmetical term, of


relationship figures drawn from financial statements."

"Ratio is an expression of quantitative relationship between two


numbers."

STEPS INVOLVED IN RATIO ANALYSIS

1. Selection of the relevant data from the financial statements.

2. Calculation of appropriate ratios from the above data.

3. Comparison of the calculated ratios with ratios of the past period of the
firm.

4. Interpretations of the ratios.

ADVANTAGES OF RATIO ANALYSIS

1. Helpful in analysis of Financial Statements.

2. Helpful in comparative Study.

3. Helpful in locating the weak spots of the business.

4. Helpful in Forecasting.

5. Estimate about the trend of the business.

6. Fixation of ideal Standards.

7. Effective Control.

8. Study of Financial Soundness.

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CLASSIFICATION OF RATIOS

The ratios may be grouped in accordance with the purposes they serve of
different users of accounting information. On this basis, ratios are
classified as follows:

LIQUIDITY RATIO

These ratios analyze short term and immediate financial position of a


business organization and indicate the ability of the firm to meet its short
term commitments(current liabilities)out of its short term
resources(current assets).They are also known as Solvency Ratios.

LEVERAGE RATIO

These ratios measure the relationship between proprietors funds and


borrowed funds. They indicate the degree of debt financing in a firm.

ACTIVITY RATIO

These ratios are designed to indicate the effectiveness of the firm in


utilizing its funds, its degree of efficiency, and its standards of
performance. Hence they are also known as Efficiency and Performance
ratios.

PROFITABILITY RATIO

These ratios are intended to reflect the overall efficiency of the


organization, its ability to earn a reasonable return on capital employed or
on shares issued and the effectiveness of its investment policies.

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LIQUIDITY RATIO

It refers to the ability of the firm to meet its current liabilities. The
liquidity ratio, therefore, are also called Short-term Solvency Ratio.
These ratios are used to assess the short-term financial position of the
concern. They indicate the firms ability to meet its current obligation out
of current resources.

In the words of Saloman J. Flink, Liquidity is the ability of the firms to


meet its current obligations as they fall due.

Liquidity ratio includes two ratios:-

Current Ratio

Quick Ratio or Acid Test Ratio

Current Ratio

This ratio explains the relationship between current assets and current
liabilities of a business.

Current Assets: -Current assets includes those assets which can be


converted into cash with in a years time.

Current Assets = Cash in Hand + Cash at Bank + B/R + Short Term


Investment + Debtors (Debtors Provision) + Stock (Stock of Finished
Goods + Stock of Raw Material + Work in Progress) + Prepaid Expenses.

Current Liabilities: - Current liabilities include those liabilities which


are repayable in a years time.

Current Liabilities = Bank Overdraft + B/P + Creditors + Provision for


Taxation + Proposed Dividend + Unclaimed Dividends + Outstanding
Expenses + Loans Payable within a Year.

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According to accounting principles, a current ratio of 2:1 is supposed to


be an ideal ratio.It means that current assets of a business should, at least,
be twice of its current liabilities. The higher ratio indicates the better
liquidity position; the firm will be able to pay its current liabilities more
easily. If the ratio is less than 2:1, it indicates lack of liquidity and
shortage of working capital. The biggest drawback of the current ratio is
that it is susceptible to window dressing. This ratio can be improved by
an equal decrease in both current assets and current liabilities.

Quick Ratio

Quick ratio indicates whether the firm is in a position to pay its current
liabilities within a month or immediately.

Liquid Assets means those assets, which will yield cash very shortly.

Liquid Assets = Current Assets Stock Prepaid Expenses

An ideal quick ratio is said to be 1:1. If it is more, it is considered to be


better. This ratio is a better test of short-term financial position of the
company.

LEVERAGE RATIO

This ratio discloses the firms ability to meet the interest costs regularly
and Long term indebtedness at maturity.

These ratios include the following ratios:

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Debt Equity Ratio

This ratio can be expressed in two ways:

First Approach: According to this approach, this ratio expresses the


relationship between long term debts and shareholders fund.

Debt Equity Ratio=Long term Loans/Shareholders Funds or Net Worth

Second Approach: According to this approach the ratio is calculated as


follows:-

Debt Equity Ratio=External Equities/internal Equities

Debt equity ratio is calculated for using second approach. This Ratio is
calculated to assess the ability of the firm to meet its long term liabilities.
Generally, debt equity ratio of is considered safe. If the debt equity ratio
is more than that, it shows a rather risky financial position from the long-
term point of view, as it indicates that more and more funds invested in
the business are provided by long-term lenders. The lower this ratio, the
better it is for long-term lenders because they are more secure in that
case. Lower than 2:1 debt equity ratio provides sufficient protection to
long-term lenders.

ACTIVITY RATIO

These ratios are calculated on the bases of cost of sales or sales,


therefore, these ratios are also called as Turnover Ratio. Turnover
indicates the speed or number of times the capital employed has been
rotated in the process of doing business. Higher turnover ratio indicates
the better use of capital or resources and in turn leads to higher
profitability.

It includes the following:

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Stock Turnover Ratio

This ratio indicates the relationship between the cost of goods during the
year and average stock kept during that year.

Stock Turnover Ratio = Cost of Goods Sold / Average Stock

Here, Cost of goods sold = Net Sales Gross Profit

Average Stock = Opening Stock + Closing Stock/2

This ratio indicates whether stock has been used or not. It shows the
speed with which the stock is rotated into sales or the number of times the
stock is turned into sales during the year. Higher the ratio, the better it is,
since it indicates that stock is selling quickly. In a business where stock
turnover ratio is high, goods can be sold at a low margin of profit and
even than the profitability may be quite high.

Debtors Turnover Ratio

This ratio indicates the relationship between credit sales and average
debtors during the year:

Debtor Turnover Ratio = Net Credit Sales / Average Debtors + Average


B/R

While calculating this ratio, provision for bad and doubtful debts is not
deducted from the debtors, so that it may not give a false impression that
debtors are collected quickly. This ratio indicates the speed with which
the amount is collected from debtors. The higher the ratio, the better it is,
since it indicates that amount from debtors is being collected more
quickly. The more quickly the debtors pay, the less the risk from bad-
debts, and so the lower the expenses of collection and increase in the
liquidity of the firm. By comparing the debtors turnover ratio of the

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current year with the previous year, it may be assessed whether the sales
policy of the management is efficient or not.

Creditors Turnover Ratio

This ratio indicates the relationship between credit purchases and average
creditors during the year.

Creditors Turnover Ratio = Net credit Purchases / Average Creditors +


Average B/P

Note: - If the amount of credit purchase is not given in the question, the
ratio may be calculated on the bases of total purchase.

This ratio indicates the speed with which the amount is being paid to
creditors. The higher the ratio, the better it is, since it will indicate that
the creditors are being paid more quickly which increases the credit
worthiness of the firm.

Fixed Assets Turnover Ratio

This ratio reveals how efficiently the fixed assets are being utilized.

Fixed Assets Turnover Ratio = Cost of Goods Sold/ Net Fixed Assets

Here, Net Fixed Assets = Fixed Assets Depreciation

This ratio is particular importance in manufacturing concerns where the


investment in fixed asset is quite high. Compared with the previous year,
if there is increase in this ratio, it will indicate that there is better
utilization of fixed assets. If there is a fall in this ratio, it will show that
fixed assets have not been used as efficiently, as they had been used in
the previous year.

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Working Capital Turnover Ratio

This ratio reveals how efficiently working capital has been utilized in
making sales.

Working Capital Turnover Ratio = Cost of Goods Sold / Working Capital

Here, Cost of Goods Sold = Opening Stock + Purchases + Carriage +


Wages + Other Direct Expenses - Closing Stock

Working Capital = Current Assets Current Liabilities

This ratio is of particular importance in non-manufacturing concerns


where current assets play a major role in generating sales. It shows the
number of times working capital has been rotated in producing sales. A
high working capital turnover ratio shows efficient use of working capital
and quick turnover of current assets like stock and debtors. A low
working capital turnover ratio indicates under-utilization of working
capital.

PROFITABILITY RATIO

The main object of every business concern is to earn profits. A business


must be able to earn adequate profits in relation to the risk and capital
invested in it. The efficiency and the success of a business can be
measured with the help of profitability ratio.

Gross Profit Ratio

This ratio shows the relationship between gross profit and sales.

Gross Profit Ratio = Gross Profit / Net Sales *100

Here, Net Sales = Sales Sales Return

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This ratio measures the margin of profit available on sales. The higher the
gross profit ratio, the better it is. No ideal standard is fixed for this ratio,
but the gross profit ratio should be adequate enough not only to cover the
operating expenses but also to provide for depreciation, interest on loans,
dividends and creation of reserves.

Net Profit Ratio

This ratio shows the relationship between net profit and sales. It may be
calculated by two methods:

Net Profit Ratio = Net Profit / Net sales *100

Operating Net Profit = Operating Net Profit / Net Sales *100

Here, Operating Net Profit = Gross Profit Operating Expenses such as


Office and Administrative Expenses, Selling and Distribution Expenses,
Discount, Bad Debts, Interest on short-term debts etc.

This ratio measures the rate of net profit earned on sales. It helps in
determining the overall efficiency of the business operations. An increase
in the ratio over the previous year shows improvement in the overall
efficiency and profitability of the business.

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RESEARCH METHODOLOGY

RESEARCH

Research is the process of systematic and in depth study or search of any


particular topic, subject by the collection, presentation and interpretation
of relevant details or data. It is a careful search of any subject matter,
which is an endeavour to discover or to find out valuable facts which
would be useful for further application or utilization.

Primary data

Primary research consists of a collection of original primary data


collected by the researcher. It is often undertaken after the researcher has
gained some insight into the issue by reviewing secondary research or by
analyzing previously collected primary data. It can be accomplished
through various methods, including questionnaires and telephone
interviews in market research, or experiments and direct observations in
the physical sciences, amongst others.

The source of primary data content

There is no primary data in this study.

Secondary data

Secondary data is data collected by someone other than the user.


Common sources of secondary data for social science include censuses,
organizational records and data collected through qualitative
methodologies or qualitative research. Primary data, by contrast, are
collected by the investigator conducting the research. Secondary data
analysis saves time that would otherwise be spent collecting data and,
particularly in the case of quantitative data, provides larger and higher-

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quality databases that would be unfeasible for any individual researcher


to collect on their own. In addition, analysts of social and economic
change consider secondary data essential, since it is impossible to
conduct a new survey that can adequately capture past change and/or
developments.

The source of secondary data content

Information collected through Internet.


Information collected from the annual reports of the company.

This study of the topic is totally based on financial statements of the


company therefore secondary data is used to analyze topic.

DATA COLLECTION

Primary data collection

Primary data can be collected by using experiments, surveys,


questionnaires, interviews, and observations. If youve already gathered
this information, we can then analyze it and then come up with accurate
results based on your needs. But if you havent already gotten this
information together, no problem! We can also help with that step of data
collection as well.

Secondary Data Collection

Secondary data comes from resources that have already been published.
You may have a running list of certain sources but there are so many
published items in the world, it can be hard to find the one thing that will
make a difference to your project. Collection of data from secondary
sources is a treasure hunt and we are skilled researchers with an eye for
diamonds. We have developed extensive lists of secondary sources of

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data collection and will utilize them for your project. Just because
something is listed as a secondary source for data collection doesnt mean
that its less important though.

The source of secondary data content

Information collected through Internet.


Information collected from the annual reports of the company.

Tools used in the data collection

The data collection process can be relatively simple depending on the


type of data collection tools required and during the research. Data
collection tools are the instruments used to collect information for
performance assessment, self-evaluation. The data collection tools needs
to be strong enough to support what the evaluation find during research.

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DATA ANALYSIS AND DATA INTERPRETATION

LIQUIDITY RATIO

Current Ratio

Years 2013 2014 2015 2016 2017

Current 1.10 1.50 1.02 0.96 1.35


Ratio

Current Ratio
2013 2014 2015 2016 2017

1.1
1.35

0.96 1.5

1.02

Interpretation

The Current Ratio for the financial year 2013 is 1.10, for the financial
year 2014 is 1.50, for the financial year 2015 is 1.02, for the financial
year 2016 is 0.96, for the financial year 2017 is 1.35.

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Quick Ratio

Year 2013 2014 2015 2016 2017

Quick 1.01 1.01 0.87 0.91 1.33


Ratio

Quick Ratio

2013
2017 19%
26%

2014
20%
2016
18%
2015
17%

Interpretation

The Quick Ratio for the financial year 2013 is 1.01, for the financial year
2014 is 1.01, for the financial year 2015 is 0.87, for the financial year
2016 is 0.91, for the financial year 2017 is 1.33.

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LEVERAGE RATIO

Debt Equity Ratio

Year 2013 2014 2015 2016 2017


Debt
Equity 0.97 1.11 1.03 0.75 0.69
Ratio

Debt Equity Ratio

15%
21%
2013
2014
17%
2015
2016
24% 2017

23%

Interpretation

The Debt Equity Ratio for the financial year 2013 is 0.97, for the
financial year 2014 is 1.11, for the financial year 2015 is 1.03, for the
financial year 2016 is 0.75, for the financial year 2017 is 0.69.

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PROFITABILITY RATIO

Gross Profit Ratio

Year 2013 2014 2015 2016 2017

Gross 10.47 11.05 7.59 9.96 14.14


Profit
Ratio

Gross Profit Ratio

2013
2017 19%
27%

2014
21%
2016
19%
2015
14%

Interpretation

The Gross Profit Ratio for the financial year 2013 is 10.47, for the
financial year 2014 is 11.05, for the financial year 2015 is 7.59, for the
financial year 2016 is 9.96, for the financial year 2017 is 14.14.

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Net Profit Ratio

Year 2013 2014 2015 2016 2017


Net Profit
Ratio 5.64 6.48 3.78 7.28 9.82

Net Profit Ratio

17%
30% 2013
2014
2015
20%
2016
2017

22%
11%

Interpretation

The Net Profit Ratio for the financial year 2013 is 5.64, for the financial
year 2014 is 6.48, for the financial year 2015 is 3.78, for the financial
year 2016 is 7.28, for the financial year 2017 is 9.82.

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Return on Assets Ratio

Year 2013 2014 2015 2016 2017


Return on
Assets 82.12 93.81 96.93 115.26 147.95
Ratio

Return On Assets Ratio

2013
2017 15%
28%

2014
17%

2016
22% 2015
18%

Interpretation

The Return on Assets Ratio for the financial year 2013 is 82.12, for the
financial year 2014 is 93.81, for the financial year 2015 is 96.93, for the
financial year 2016 is 115.26, for the financial year 2017 is 147.95.

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CONCLUSION

I have done research on analytical study of ratio analysis with special


reference to TATA MOTORS LTD from the financial years 2013 to
2017; through the project work certain findings were collected. Various
objectives were set which were fulfilled in research:

1. Liquidity Ratio of the firm is flexible as it is increasing as well as


decreasing with time. It shows short term financial position of the
company is good.

2. Current Ratio of the firm increased in the year 2014. The highest figure
was 1.50 recorded in the year 2014.

3. There is a decrease in Quick Ratio of the company. Highest figure


which was 1.33 recorded in the year 2017.

4. Leverage Ratio - Debt equity ratio is decreasing which shows a sound


long term solvency, low risk, and conservative capital structure. Highest
debt equity ratio was 1.11 recorded in the year 2014

5. There is flexibility in the gross profit ratio of the company. The highest
gross profit was 14.14 recorded in the year 2017.

6. There is a positive trend in net profit of the company. The highest Net
Profit Ratio was 9.82 recorded in the year 2017.

7. Return on asset ratio was highest 147.95 recorded in the year 2017.

The Hypothesis of the study is that:

The statement of the Hypothesis is proved to be true.

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RECOMMENDATION AND SUGGESTION

After analysis and interpretation of ratios of TATA MOTORS LTD for


the year 2013 to 2017 the following suggestion are made for the
betterment of the company.

1. It is emphasized that one has to keep in mind; there will be scope or


future development in any concern and in any department.

2. The company should increase fixed assets which raise the profitability
of the company.

3. The company should reduce the current liability for the smooth
working of the company.

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CITY PREMIER COLLEGE

BIBLIOGRAPHY

The Financial Statements of TATA MOTORS LTD

Websites

www.tatamotors.com

www.moneycontrol.com

www.economictimes.indiatimes.com

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CITY PREMIER COLLEGE

ANNEXURE

Balance Sheet of Tata Motors ------------------- in Rs. Cr. -------------------


Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 643.78 643.78 638.07 634.75 637.71
Equity Share Capital 643.78 643.78 638.07 634.75 637.71
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 14,195.94 18,510.00 18,473.46 18,967.5119,351.40
Net worth 14,839.72 19,153.78 19,111.53 19,602.2619,989.11
Secured Loans 4,803.26 4,450.01 5,877.72 6,915.77 7,708.52
Unsecured Loans 15,277.71 10,065.52 8,390.97 4,095.86 6,929.67
Total Debt 20,080.97 14,515.53 14,268.69 11,011.6314,638.19
Total Liabilities 34,920.69 33,669.31 33,380.22 30,613.8934,627.30
Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 27,973.79 26,130.82 25,190.73 23,676.4621,002.78
Less: Revaluation Reserves 22.87 22.87 23.31 23.75 24.19
Less: Accum. Depreciation 12,190.56 10,890.25 9,734.99 8,656.94 7,585.71
Net Block 15,760.36 15,217.70 15,432.43 14,995.7713,392.88
Capital Work in Progress 6,040.79 6,355.07 4,752.80 4,036.67 3,799.03
Investments 16,987.17 18,458.42 19,934.39 20,493.5522,624.21
Inventories 4,802.08 3,862.53 4,455.03 4,588.23 3,891.39
Sundry Debtors 1,114.48 1,216.70 1,818.04 2,708.32 2,602.88
Cash and Bank Balance 944.75 226.15 462.86 1,840.96 2,428.92
Total Current Assets 6,861.31 5,305.38 6,735.93 9,137.51 8,923.19
Loans and Advances 4,270.67 4,374.98 5,305.91 5,832.03 5,426.95
Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Total CA, Loans &
11,131.98 9,680.36 12,041.84 14,969.5414,350.14
Advances
Deferred Credit 0.00 0.00 0.00 0.00 0.00

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CITY PREMIER COLLEGE

Current Liabilities 12,282.33 13,334.13 16,580.47 20,280.8216,271.85


Provisions 2,717.28 2,708.11 2,200.77 3,600.82 3,267.11
Total CL & Provisions 14,999.61 16,042.24 18,781.24 23,881.6419,538.96
Net Current Assets -3,867.63 -6,361.88 -6,739.40 -8,912.10-5,188.82
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 34,920.69 33,669.31 33,380.22 30,613.8934,627.30

Contingent Liabilities 9,882.65 13,036.73 15,090.21 15,413.6219,084.08

35