Maruti Suzuki

Solvency & Leverage Ratio

2016 2017 2018 2019 2020 2021

Debt Equity 1.45 0.406 0.421 0.363 0.291 0.364
Ratio

Equity 0.7 0.710 0.703 0.733 0.774 0.731

Ratio

Debt Equity Ratio - MARUTI SUZUKI

LTD

1.45

0.406 0.421 0.363 0.364

0.291
2016 2017 2018 2019 2020 2021
YEARS

Equity Ratio - MARUTI SUZUKI LTD

77%

73%
Axis Title

73%

71%
70% 70%

2016 2017 2018 2019 2020 2021

YEARS
Hyundai Motors India Limited

2016 2017 2018 2019 2020

Debt Equity 1.930 1.814 0.784 0.678 0.681

Ratio
Equity Ratio 0.518 0.551 0.560 0.595 0.594

Debt Equity Ratio - HYUNDAI

MOTORS INDIA LTD

1.93
1.814
Axis Title

0.784
0.678 0.681

2016 2017 2018 2019 2020

YEARS

Equity Ratio - HYUNDAI MOTORS

INDIA LTD

60% 59%

56%
Axis Title

55%

52%

2016 2017 2018 2019 2020

YEARS
DEBT – EQUITY RATIO

Debt -to-equity ratio measure the value of total debt and financial liabilities against the total share
holders equity.

MARUTI - SUZUKI

 The liabilities of the Maruti Suzuki was increased from the year 2015-2016 to 16 % which led
to increase in the liability of the firm. Which resulted in higher debt equity ratio i.e. 1.45
 In the year 2017, the debt equity ratio was 0.406. from that it could be interpreted that the
liabilities of the firm decreased. In the same year we can see the increase in equity, so it
could be interpreted that the raised equity are used to pay off its liabilities.
 In the consecutive 3 years, their debt- equity ratio decreased to 0.421, 0.363, 0.291
respectively. From this it could be interpreted that the company paid off its liabilities and
fully financed in equity.
 In the year 2021, there was a slight increase in the ratio to 0.364, their liabilities was
increased. Might be because of outbreak of covid pandemic.

Here the trend line is a downward trend line. They maintained ideal range of debt equity ratio
i.e.1:2. It could be interpreted that the company is financing its operations to 50% through wholly
owned funds.

HYUNDAI MOTORS

 The debt – equity ratio of Hyundai motors in the year 2016 was 1.93, which was because of
increase in 7% of liabilities in bank loan.
 We could notice sudden decline of debt equity ratio in the year 2018 to 0.784. In this year
the company mobilized more equity and paid of its liabilities.
 In the consecutive 3 years their debt equity ratio was declined. And they maintained a ideal
range of debt equity ratio.

Here the trend line is a down ward trend line. The company has great interest among investors
and has always higher cash leverage. The company decreased their liabilities year on year.

Comparing Maruti Suzuki Limited & Hyundai Motors India limited, both the companies are
maintaining safe debt equity ratio below 1. Being in the same industry Maruti Suzuki’s debt
equity ratio is comparatively low than that of Hyundai, which could attract more investors to
Maruti Suzuki.
SHARE HOLDERS EQUITY RATIO

MARUTI SUZUKI LIMITED

The shareholder equity ratio shows how much a company’s assets are funded by issuing stock rather
than borrowing money.

 Maruti Suzuki’s equity ratio was above 70% in all the 5 consecutive years, this shows that
their 70% of company’s assets have been generated by issuing equity shares rather than
taking on debt.
 This shows that the company is financially stronger in the long run.

HYUNDAI MOTORS INDIA LTD

 Hyundai motors equity ratio was increasing year on year from 2016 – 2020.

Comparing Maruti Suzuki and Hyundai motors , when a company sold off its assets for cash and paid
of its liabilities, Maruti Suzuki’s shareholders will retain 70% with them, whereas in case of Hyundai
motors only 55% will remain with the shareholders as cash and remaining will get paid off as
liabilities.

Thus Maruti Suzuki has a good standard of shareholders equity to assets.

DU-POINT ANALYSIS

ROE - MARUTI SUZUKI LTD

25%
21%
20% 19% 19%
RETURN ON EQUITY

18%

15%
11%
10% 8%

5%

0%
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021
YEARS
 ROE - HYUNDAI MOTORS INDIA LTD
30%
25%
25%
RETURN ON EQUITY

22% 21%
20% 19%
16%
15%
10%
5%
0%
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
YEARS

The purpose of du-point analysis is use to evaluate components parts of company return on
equity. From this we comes to know what financial changes happened when we contribute to ROE.

Comparing to Maruti and Hyundai the operations of both companies are different, here Maruti has
above 5% of net profit and Hyundai has only 5% and less than that so, Maruti generate higher profit
than Hyundai, so the Maruti has good cost control and it sales are high. Here for the Hyundai
company the asset turnover are increases so Return on equity increases, so the company can
generate more cash and the reinvestment will be effective.