Company Analysis Report




Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads.  'Fill it . Hero Honda Motors succinctly points out.Forget it¶. the Chairman.  ´Heroµ .  During the 80s. they are related to Jagdish Lal Munjal.  The joint venture between India's Hero Group and Honda Motor Company.COMPANY PROFILE & INTRODUCTION: is the brand name used by the Munjal brothers in the year 1956 with the flagship company Hero Cycles.Shut it .  As Brijmohan Lall Munjal.

Every 30 seconds. Uttrakhand in April this year. . someone in India buys Hero Honda's top -selling motorcycle ² Splendor. every second motorcycle sold in the country is a Hero Honda. These are almost as many as the number of people in Finland. and today.20 million Hero Honda two wheelers tread Indian roads today.  Over Hero Honda has consistently grown at double digits since inception. Hero Honda bikes currently roll out from its three globally benchmarked manufacturing facilities. Two of these are based at Dharuhera and Gurgaon in Haryana and the third state of the art manufacturing facility was inaugurated at Haridwar. Ireland and Sweden put together!.

9 million bikes per year. Hero Honda is worlds third largest two wheeler maker. By 2002 Hero Group had sold 86 million bicycles producing 16000 bicycles a day. It holds the record for most popular bike in the world by sales for Its Splendor model. .These plants together are capable of churning out 3. Today Hero Honda has an assembly line of nine different models of motorcycles available.





1)CURRENT RATIO: CURRENT ASSETS CURRENT LIABILITIES 2005 0.Liquidity Ratio s.57 2008 Interpretation: The ideal ratio 2:1 . The company should increase the current assets and decrease the current liabilities. The liquidity position of the company is not satisfactory because it is not reached the ideal ratio 2:1 .31 2006 0.62 2007 0.51 0. .

Current liabilities 2005 0.Quick Ratio: Current assets inventories.11 2006 0.33 Interpretation: the liquidity position of the company is not satisfactory because the ratio is decrease and not reached the ideal ratio 1:1 the company should increase quick assets such as cash and bank balance and decrease the current liabilities. .36 2008 0.30 2007 0.

LEVERAGE RATIO S: 1)Debt equity Ratio 2)Proprietary Ratio 3)Fixed Asset Ratio 4)Interest Coverage RatiO .

The solvency position of the company is satisfactory but it should decrease the loans such as secured and unsecured.09 2007 0.07 2008 0. It should increase the reserves and share capital also.14 2006 0. . 2005 0.04 Interpretation: Interpretation The Ideal Ratio is 2:1.Debt Equity Ratio: Long term debts/Equity share holder funds.

The higher the ratio . the better it is.92 Interpretation: These ratio is the indicative of strong financial position of business .87 2007 0.89 2008 0.Proprietary Ratio: Net Worth /Total Assets 2005 0. . but the company Should increase the shareholders funds.83 2006 0.

45 2007 0. .67 and it will never be more than 1 .Fixed Assets Ratio: Fixed Assets Net worth 2005 0.50 Interpretation: This ratio is satisfactory and the ideal ratio is 0. the long term funds are used to buy or acquire the fixed assets.51 2008 0.42 2006 0.

to pay the interest charges for the long term debts.38 2007 55.74 2006 231. . This Ratio indicates whether a business is earning sufficient profits to pay the interest charges.Interest coverage Ratio: PBIT/Fixed Interest Charges 2005 117. This ratio is not satisfactory and company should increase the sales and profits .20 2008 40.38 Interpretation: The ideal ratio is 6.

Turn Over Ratios 1)inventory holding periods 2)working capital turnover 3)inventory turnover ratio 4)fixed assets turnover ratio .

Inventory Holding Period: Period: No .T.93 Interpretation: The Inventory turnover ratio also be expressed in terms of no.42 2008 11.38days 2006 10. of days (or) months it takes for the stock to get converted into sales.58 2007 10. Here the company is satisfactory and company has to work hard to have more sales . Of Days In Years/S.R 2005 11.

e.85 2006 -11.49 2008 -11. increase the current assets and decrease current liabilities .. .64 Interpretation: The Company should increase the sales and also increase the working capital i.Working Capital TurnOver Ratio Net Sales/Working Capital 2005 -7.75 2007 -17.

.56 2008 30. Inventory 2005 31.80 2006 34.17 Interpretation: The ideal ratio is 8.Inventory TurnOver Ratio: CGS/Avg.02 2007 34. the company should control the cost of goods sold expenses and increase the sales in order to increase the ratio.

Fixed Assets Turn Over Ratio: TurnOver/ TurnOver/ Fixed Assets 2005 10. .30 2008 6. the ratio is decreasing from year to year and we should increase the sales up to the maximum level and we should use the fixed assets up to full 100% capacity.38 2006 8.67 Interpretation: The ideal ratio is 5.77 2007 7.

Profitability Ratio s: 1)Gross Profit Ratio 2)Operating Ratio 3)Earning per share .

48.96 2008 RS. The shareholders returns on their investment is increasing year to year .48. of Equity shares 2005 RS.47 Interpretation : The profits of the company are increasing slightly and we should increase the sales and we should decrease the cost of goods sold . operating expenses.64 2007 RS.59 2006 RS.EARNING PER SHARE: PAT-Preference dividends No.42.40.

91% 2007 12.Gross profit ratio: gross profit X 100 Sales 2005 15.34% 2008 13. .91% 2006 15.46% Interpretation: The profitability position of the company is satisfactory because of the Gross profit ratio is increasing from year to year but it is not enough the company should control the cost of goods sold expenses and increase the sales.

30% 2006 85.Operating Ratio: CGS + Operating Exp X 100 Net Sales 2005 85.07% 2008 88.09% Interpretation: The company had controlled the operating expenses that s why the ratio is decreased . .40% 2007 89. It is satisfactory . the company should continue this performance in the future also.the lower the ratio the better it is.

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