latst amndmnts in projct

8/10/2019 Latst Amndmnts in Projct

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A FINANCIAL

ANALYSIS MARUTI

UDOYOG

1


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Chapter 1

1.1 Introduction about the topic

1.2 Objective of the study

Chapter 2

2.1 Profile of the company

2.2 Nature of the organization

2. Company!s vision " mission

2.# $ize of the organization

2.% Product range of the company

2.& Capital size of the organisation

2.' Organisation structure of the company

2.( )ar*et share of the company

2.+ Position of the company

Chapter

,esearch )ethodology

Chapter #

-ata nalysis " Interpretation

Chapter %

%.1 /indings " conclusion

%.2 0imitations

%. $uggestions

Chapter1

2


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1.1Introduction

/inancial analysis is the starting point for ma*ing plans before using any sophisticated

forecasting and planning procedures. 3nderstanding the past is a prere4uisite for

anticipating the future. /inancial analysis is the process of identifying the financial

strength and 5ea*ness of the firm by properly establishing relationship bet5een the items

of the balance sheet and the profit and loss account. /inancial analysis can be underta*en

by management of the firm or by parties outside the firm viz. o5ners creditors

investors and others. 6he nature of analysis 5ill differ depending on the purpose of the

analyst.

Investors: 7ho invested their money in the firm!s shares are most concerned about the

firm!s earnings. 6hey more confidence in those firm!s that sho5 steady gro5th in

earnings. s such they concentrate on the analysis of the firm!s present and future

profitability. 6hey are also interested in the firm!s financial structure to that e8tent

influence the firm!s earning ability and ris*.

Trade creditors and financia instit!tion: 6hey are interested in firm!s ability to meet

their claims over a very short period of time. 6heir analysis 5ill therefore confine to the

evolution of the firms li4uidity position. nd the financial institutions are interested in

the financial statements of the borro5ing concern to ascertain its shortterm as 5ell as

longterm solvency and also it profitability.

S!""iers: On the other hand are concerned 5ith the firm!s longterm solvency and

survival. 6hey analysis the firm!s profitability over time its ability to generate cash to be

able to pay interest and repay principal and the relationship bet5een various sources of

funds 9capital structure relationships:. 0ongterm creditors do analysis the historical

/inancial statements but they place more emphasis on the firm!s projected or pro forma

financial statements to ma*e analysis about its future solvency and profitability.

Mana#e$ent and e$"o%ees: 6he firm 5ould be interested in every aspect of the

financial analysis. It is their overall responsibility to see that the resources of the firms are

used to most effectively and efficiently and that the firm!s financial condition is sound.


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6he foresaid features of financial statement analysis that really facilitates the organization

to determine their financial strengths and 5ea*ness. In connection 5ith this the

researcher has opted a maruti ltd to analyze their financial abilities and suggests them for

a longterm gro5th prospective. nd the employees of a concern are interested in the

financial statement of the firms to ascertain its profitability and ability to offer higher

5ages bonus better 5or*ing conditions etc.

Govern$ent: 6he ;overnment is interested in the financial statements of a concern for

purposes of ta8ation and also for the purpose of regulating the activities of the concern.

1.& O'(ectives of t)e financia ana%sis

6o determine the profitability or earning capacity and progress of the concern

#


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6o judge the financial position of the concern and also analyze the strength and

5ea*ness of the firm

6o find out the solution to the unfavorable financial conditions and financial

performance

6o involve comparison for a useful interpretation of the financial statement

.*ario!s o'(ectives of t)e ana%sis are:

6o study the service offered by the )aruti to the customers and financial

activities and also study the ne5 planes and schemes of the company.

$tudy is mainly focused on the financial and commercial activities of the

company.

6o indicate the trend progress of do5nfall of the company.

6o evaluate the profitability of the company.

6o sho5 the relative strength and 5ea*ness of the company.

6o determine the financial condition and financial performance of the company.

6o involve comparison for a useful interpretation of the financial statement

6o find out the solution to the unfavorable financial conditions and financial

performance

6o analyze ho5 the company as utilized its each financial resources and its

sources 6o find out the mar*et share of the company

%


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Chapter 2

PROFILE OF

COMPANY

2.1 P,O/I0industan mbassadorand Premier Padmini5ere both around 2% years out of date atthat point. 6hrough 2==# )aruti $uzu*i has produced over % )illion vehicles. )aruti$uzu*is are sold in India and various several other countries depending upon e8portorders. )odels similar to )aruti $uzu*is 9but not manufactured by )aruti 3dyog: aresold by $uzu*i )otor Corporationand manufactured in Pa*istanand other $outh sian

countries.6he company e8ports more than %==== cars annually and has an e8tremelylarge domestic mar*et in India selling over '==== cars annually.)aruti (==till 2==#5as the India?s largest selling compact car ever since it 5as launched in 1+(. )ore thana million units of this car have been sold 5orld5ide so far. Currently )aruti $uzu*i ltotops the sales charts.-ue to the large number of )aruti (==s sold in the Indian mar*etthe term @)aruti@ is commonly used to refer to this compact car model. Its manufacturingfacilities are located at t5o facilities;urgaonand )anesarsouth of -elhi. )aruti$uzu*i!s ;urgaon facility has an installed capacity of %==== units per annum. 6he)anesar facilities launched in /ebruary 2==' comprise a vehicle assembly plant 5ith acapacity of 1===== units per year and a -iesel


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Name " type of organization

6ype Public 9B$< ),36IN$ead4uarters -elhiIndiaFey people )r. $hinzo Na*anishi )anaging-irector " C


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A!t)ori-ed Service Stations

)aruti is one of the companies in India 5hich has unparalleled service net5or*.

6o ensure the vehicles sold by them are serviced properly )aruti had 1%#% listeduthorized service stations and =


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schools are modeled on international standards 5here learners go through classroom andpractical sessions. )any international practices li*e road behavior and attitudes are alsotaught in these schools. Before driving actual vehicles participants are trained onsimulators.

2. Company!s vision " mission

Co$"an% vision

1=


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6he leading Indian automobile industry creating customer delight and shareholder!s5ealth J a pride of india.K 7e must be an internationally competitive company in terms ofour products and services. 7e must retain our leadership in india and should also aspireto be among the global players.

Co$"an% $ission

6o provide a 5ide range of modern and high 4uality fuel efficient vehicles in order tomeet needs of different customers both in domestic and e8port mar*ets. 6o providema8imum value for money to their customers through continuous improvement ofproduct and services.)aruti has a net5or* of +1 sales outlets across 2= cities all overindia.6he service net5or* covers 111 to5ns and cities bolstered by21#2 authorisedservices outlets. 6he company!s change in strategy and emphasis on developing effectivemar*eting communications 5as their highlights

&. Product of the organization

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2.% Product ,ange

Under Rs. / La0)s Mar!ti 223 Ato3 O$ni

,eva

Rs. /45 La0)s mbassador

/iat Palio

12


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>yundai $antro ;etz

Chevrolet Opel Corsa

Mar!ti 6en3 7a#on R3 *ersa3 8stee$3 G%"s%

/ord Icon " /iesta

6ata Indica Indigo

)ahindra Bolero

Rs. 5412 La0)s

Chevrolet $5ing Optra 6avera

>yundai ccent onda City

Rs. 12415 La0)s

/ord )ondeo " yundai $onata


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Fro$

Year

To

Year

Cass Of

S)are

A!t)ori-ed

Ca"ita

Iss!ed

Ca"ita

;aid U" S)ares

+Nos,

;aid U" Face

*a!e

;aid U"

Ca"ita

2=1= 2=11 I,)N

)N;IN;

AOIN6 )N;IN;-I,


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6he company has a multitier management structure comprising the board of directors atthe top follo5ed by five business vertical heads reporting to the )anaging -irector.6hese business verticals are )ar*eting " $ales


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2.( )ar*et share of the organisation

ccounting to '+M Cars rule the passenger automobile in India. 6he chief players in thissegment are )aruti $uzu*i. 7hile )aruti $uzu*i enjoys fullfledged monopoly in multipurpose automobiles sector 5ith %2M of mar*et share6he automobile industry had a gro5th of 1%.# M during prilAanuary 2==' 5ith the

average annual gro5th of 1=1%M over the last decade or so. 7ith the incrementalinvestment of %#= billion the gro5th is e8pected to double in the ne8t 1= years.

Consistent gro5th and dedication have made the Indian automobile industry the secondlargest tractor and t5o5heeler manufacturer in the 5orld. It is also the fifthlargestcommercial vehicle manufacturer in the 5orld. 6he Indian automobile mar*et is amongthe largest in sia.

1&


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6he *ey players li*e >industan )otors )aruti 3dyog /iat India Private 0td 6ata)otors Bajaj )otors >ero )otors sho* 0eyland )ahindra " )ahindra have beendominating the vehicle industry. fe5 of the foreign players li*e 6oyota Firlos*ar )otor0td. $*oda India Private 0td. >onda $iel Cars India 0td. have also entered the mar*etand have catered to the customers! needs to a large e8tent.Not only the Indian companies but also the international car manufacturing companiesare focusing on compact cars to be delivered in the Indian mar*et at a much smallerprice. )oreover the automobile companies are coming up 5ith financial schemes such as

easy aving firmly established its presence in the domestic mar*ets the Indianautomobile sector is no5 penetrating the international arena. Eehicle e8ports from Indiaare at their highest levels. 6he leaders of the Indian automobile sector such as 6ata)otors )aruti and )ahindra and )ahindra are leading the e8ports to


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Foreign 54.21 % 54.21 % 54.21 % 54.21 % 54.21 %

Public 45.9 % 45.9 % 45.9 % 45.9 % 45.9 %

In!"i"#"ion! $.00 % $.11 % $.11 % $.9 % $9.14 %

FII 21.00 % 20.09 % 20.09 % 21.12 % 22.2 %

DII 1.00 % 1.02 % 1.02 % 1&.& % 1&.$2 %

Non In!"i"#"ion! .9 % .& % .& % .00 % &.&5 %

'odie! Cor(ora"e 5.2& % &.00 % &.00 % 5.&4 % 4.59 %

C#!"odian! -- -- -- -- --

Total 2)9)10)0&0 2)9)10)0&0 2)9)10)0&0 2)9)10)0&0 2)9)10)0&0

Chapter

1(


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R8S8ARCo5ever most of study is conducted 5as based on secondar% so!rces.

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Chapter #

FIANCIAL ANALYSIS

OF

MARUTI LTD.

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Financia Ana%sis

/inancial statement namely the statement of the profit " loss account and the balance

sheet are indication of t5o signifycant factors profitability and financial soundness

analysis of statements means such a treatment of the information contained to afford a

diagnosis of the profitability and financial statements analysis as the process of

methodical classification comparison 5ith other corising 4uestion and then see*ingans5er for them.

/inance is the very typical aspect in course of management. 6he main objective behind

the study is to get precisely. It also helps us to study the present finance scenario. 6he

objective is such that company!s profitability li4uidity and capacity by such analysis 5e

can interpret the position of the company. $o it is very important to study.

Profit 6rend for ' years

P,O/I6 CO)P,I$ION 9IN 81=) ,s:

Particulars 2==+ 2==( 2==' 2==& 2==% 2==# 2==Operating Profit

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Only cash from operating activities is included in this report.

IM;ORTANC8 OF CAS< ;ROFIT:

6he cash profit is an important measure of profitability as 5ell as li4uidity. 7hen the

cash profit differs from the profit is sho5n in the profit and loss account or profit and lossstatement. djusting depreciation arrives at the cash profitJ amortize action of capital

e8penses etc. 6he cash profit is much less or negative compared to the profit declared in

the profit and loss account. It indicates li4uidity and signals for appropriate cash

management. 6he net cash from operations can be calculated through adjustment of non

cash items li*e depreciation changes in inventory and receivable and payables and or

other items for 5hich cash offers the investing and financing activities.

)


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3seful information about the trend of profitability is from profitability ratio. 6he gross

profit ratio net profit ratio and ratio of return on investment give a good idea of the

profitability of the business. On the basic of this ratio investors get an idea about overall

efficiency of managers and ban* as 5ell as other creditors dra5 useful conclusion about

repaying capacity of the borro5ers.

0I3I-I6L

In fact the use of ratio 5as made initially to ascertain the 0i4uidity of business. 6he

current ratio acid test ratio 5ill tell 5hether the firm 5ill be able to meet its current

liabilities and 5hen they nature. Ban*s and other leaders 5ill be able to conclude from

these ratios 5hether the firm 5ill be able to pay regularly the interest and loan

installments.


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3$


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Classifcation o ratio

Proftability ratio

;ross Profit ,atio

)eaning

It is e8presses relationship bet5een ;ross Profit earned to net sales. It is a

significant indicator of the profitability of business. It e8presses in percent. /or e8ample a ratio sho5s that for a sale of every ,s.

1=== a margin of 2%= rupees is available from 5hich operating e8penses of

business are recovered. 6he ratio sho5s 5hether the mar* up obtained on cost of production is sufficient

or not. 6here is no calibration against reasonability of gross profit ratio. >o5everit must be enough to cover its operating e8penses. In many industries there are

more or less recognized gross profit ratios and the business should strive to

maintain this standard. If this ratio is lo5 it indicates that the cost of sales is high or that the purchasing

is inefficient. lternatively it may also mean that due to depression the selling price is reduced

but there are may be no corresponding reduction the selling price is reduced but

there may be no corresponding reduction in cost of sales. In such a case the

management must investigate the causes and try to bring up this ratio.

Implementation

;ross profit is result of the relation bet5een price sales volume and costs.

change in the gross margin can be brought about by changes in any of these

factors. 6he gross profit ratio can also be used in determining the e8tent of loss caused by

theft spoilage damage and so on in the case of those firms 5hich follo5 the

policy of fi8ed gross profit margin in pricing their product.

6he gross margin represents the limit beyond 5hich fall in sales price are outsidethe tolerance limit.

2'


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/ormula

/O, ;,O$$ P,O/I6 ,6IO

Particulars 2==+ 2==( 2==' 2==& 2==% 2==# 2==

;ross Profit 9


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Net profit ratio is valuable for the purpose of ascertaining the overall profitability of

business and sho5s the efficiency of operating the business.

Implementation

6he net profit ratio is indicative of management!s ability to operate the business

5ith sufficient success not only to recover from revenue of the period the cost ofmerchandise or services the e8penses of operating the business and the cost of the

borro5ed funds but also to leave a margin of reasonable compensation to the

o5ners for providing their capital at ris*. 6he ratio of net profit ratio to sales essentially e8presses the cost price

effectiveness of the operation. high net profit margin 5ould ensure ade4uate return to the o5ners as 5ell as

enable a firm to 5ithstand adverse economic conditions 5hen selling price is

declaiming cost of production raising and a lo5 net profit margin has the

opposite implication.

It indicates the portion of sales revenue is left to the proprietors after all operating

e8penses are paid. 6he higher the ratio the better 5ill be the profitability. In order to have a better

idea of profitability the gross profit ratio and net profit ratio may be

simultaneously considered. If the gross profitability increases over the five years

but net profit is declining it indicates that administrative e8penses are slo5ly

rising.

/ormula

2+

Net Profit D 1== $ales


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/O, N


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bove table sho5s that for the year 2==# Q =% it 5as ((. M the increase in 2==%

Q =& up to (+.2M that indicates there is increase in operating e8penses for the

year 2==& Q =' it is +2.=M and it is higher than previous year 5hich sho5s

increase in operating e8penses. 6his operating e8pense may be due to gro5th in the organization or it may reflect

inefficacy of administrative control on e8penses. >ere negative sign sho5s decrease in operating e8penses.

Operating ,atio

)eaning

Operating ,atio is computed by dividing e8penses by sales.

6he term Roperating ratio! includes 91: CO;$ 92: administrative e8penses 9:

selling e8penses and 9#: financial e8penses but e8cludes ta8es dividends and

e8traordinary losses due to theft of goods good destroyed by fire and so on.

Implementation

$ome accountants calculate e8penses ratio in respected of ra5 Q material

consumed direct 5ages and factory e8penses. It is closely related to the profit margin gross as 5ell as net.

/ormula

OPERATION RATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Operatin

E!pense 2""4#8 "5"0#4 "244#2" 900#"5 80"#54 786#54 840#88

$O%& 3498#6 3744#5 3"97#0" 2506#35 2"60#0

4

"673#6

4 ""68#58

Net &ales 20530#" "789"#6 "4696#3 "20"5#9 "0923#

8 9"04#4 7"80#"

Operatin Ratio 27#3423 29#3708 30#22 28#3499 27#"""3 27#02"

9 27#9865

2

C O ; $ S Operating e8penses D 1==

Net sales


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IN6


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%ross Pro/it E1IT In

!"0* Rs 2382#3 307"#2 255"#2 2035#4 "76"#7 "264#7 604#2

$apital Eploed &are

capital Reseres and

surplus In !"0* Rs

9344#9 84"5#4 6853#9 5452#6 4378#8 359"#2 3098

Return on Inestent 25#4930497 36#49499

73

37#222

6032

37#3289

807

40#232

4838

35#2"6

6407

"9#502

905"

Interpretation

6his ratio sho5s relationship bet5een < B I 6 to CPI60


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/O, ,,O0-


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Net Profit 9In 81=)

,s:1='2.& 1&&+.'1 1%%.2+ 11+'.=' (&=.1 &21.(2 12+.'2

Preference -ividend

9In ,s:= = = = = = =

$hare Capital 9In

81=) ,s:1##.% 1##.% 1##.% 1##.% 1##.% 1##.% 1##.%

,eturn on ere year 2==(=+ sho5s mar*ed improvement that is

5hy it is ta*en into consideration.

,eturn on


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/O, ,O0-


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/O, ,


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/O, -IEI-


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/O, P,IC<


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/O, -IEI-


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/ormula

/O, IN6


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)eaning

6he amount invested in business is invested in all capital employed and sales are

affected through them to earn profits so in order to find relation bet5een net sales

to capital employed.

Implementation

6he usefulness of the -u Pont analysis lies in the fact that it presents the overall

picture of the performance of a firm as also enables the management to identify

the factors 5hich have a bearing on profitability.

/ormula

'OR O)ERA,, T(RNO)ER RATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Net &ales In !"0* Rs 20530#" "789"#6 "4696#3 "20"5#9 "0923#8 9"04#4 7"80#"

$apital Eploed

&are capital

Reseres and surplus

In !"0* Rs

9344#9 84"5#4 6853#9 5452#6 4378#8 359"#2 3098

O)ERA,, T(RNO)ER

RATIO

2#"9693

0946

2#"26054

6"4

2#"44224

456

2#203700

987

2#49470

"74

2#535"

97"49

2#3"765

6553

Interpretation

6his ratio indicates net sales to capital employed. In the year 2==# Q =% ratio is

2.#+ and 2==% Q =& it is 2.2= and its decrease on 2.1# in the year 2==& Q ='.

6herefore it is bad for company.

In the year 2==(=+ the ratio is 2.1+ 5hile in the year 2=='=( the ratio is

decreased to 2.12 5hich sho5s slo5 do5n in the company.

/i8ed assets turnover ratio

#

Net salesCapital employed


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)eaning

It is based on the relationship bet5een the sales and assets of the firm.

reference to this 5as made 5hile 5or*ing out the overall profitability of a form

as reflected in its earning po5er.

Implementation

6o ascertain efficiency and profitability of the business. 6he higher the turnover

ratio the more efficiency is the management and utilization of the assets 5hile

lo5 turnover ratios are indicative of underutilization of available resources.

/ormula

FOR FI=8D ASS8TS TURNO*8R RATIO

;artic!ars &22 &22 &22> &22? &225 &22 &22/

Net Saes +In @12M

Rs,&25/2.1 1>1.? 1??./ 1&215. 12&/. 12. >12.1

Tota Fi@ed Asset +In

@12M Rs,

>2>./

&

5>1?.1??

1/

>2.>1

/5

2>/.1?

1

//.?1

211

/>?.?

???>

/55.52

5

Fi@ed Asset T!rnover

Ratio

&. /.1/ /.1 &.5 &.>>&.&

&.2&

Interpretation

/i8ed turn over ratio indicates the turnover of the company in one year.

In the year 2==# Q =% ratio is 2.'' and 2==% Q =& it is 2.+% and it increase on .1

in the year 2==& ='. 6herefore it is good for company.

In the year 2==(=+ there is decrease of 'M in the fi8ed turnover ratio compare to

last year 5hile during year 2=='=( there is very minor change in the ratio. Lear2=='=( and 2==&=' sho5s almost similar financial position of the company

5hile year 2==(=+ sho5s slight slo5 do5n in the financial position of the

company

##

$ales/i8ed assets


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-ebtor turn over ratio

)eaning

It is allied and closely related to this is the average collection period. It is the test

of the li4uidity of the debtors of a firm.

Implementation

6his figure should be measured as in the case of average inventory on the basis

of the monthly average. It suggests that number of times the amount of credit sale

is collected during the year.

/ormula

/O, -


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0o5er the collection period and higher debtor turnover ratio is advisable.

Creditor ratio

)eaning

It is the no. of days 5ithin 5hich 5e ma*e payment to our creditors for creditpurchases it obtained from creditor ratio.

Implementation

6he generally the longer credit period achieved means the operation of the

payment being financial interest feels by supper funds.

/ormula

FOR CREDITOR RATIO

Particulars 2008 2007 2006 2005

Creditr !I" #$0M

Rs%85&'( (0('6 555'$ &6)'7

*ills Pa+a,le !I"

#$0M Rs% 0 0 0 0Credit Purc-ase

!I" #$0M Rs%$)()8'8 $08)6'& ()(2'8 862$')

Creditr Rati22')86)2

&5

)0'6)7850

2$

2$'570()7

)$

$('6)$668

$

Interpretation

Creditor ratio indicates creditor to credit purchase.

In the year 2==# Q =% ratio is 1+.& and 2==% Q =& it is 21.%' and its increase on =.& in

the year 2==& Q ='.

In the year 2=='=( there is decrease on 22.( times i.e. decrease of &.&M in the

creditor ratio compare to previous year.

6hus it indicates slight slo5 do5n in the financial condition of the company.

#&

Creditor S B P D &%Credit Purchases


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Creditor turns over ratio

)eaning

It is the no. of days 5ithin 5hich 5e ma*e payment to our creditors for creditpurchases it obtained from creditor ratio.

Implementation

6he generally the longer credit period achieved means the operation of the

payment being financial interest feels by supper funds.

/ormula

FOR CREDITOR TURN OER RATIO

Particulars !""# !""$ !""% !""&

NO' O

Days in

(ear

)%& )%& )%& )%&

Cre*itor+s

Ratio !!')#%)!,&

)"'%)$#&"!

- !-'&$".)$)- -.'%)-%%#-

Cre*itors

Turnover

Ratio

-%')",&.$")--'.-))%#&

--%'.!".-&-& -#'&.!,"#.

Interpretation

Creditor ratio indicates creditor to credit purchase. In the year 2==# Q =% ratio is

1(.%+ and 2==% Q =& it is 1&.+2 and its increase on 11.+1 in the year 2==& Q ='.6herefore it is good position for company.

-uring the year 2=='=( ratio is 1&.=. It increases in compare to previous

financial year thus it indicates good position of the company.

#'

No. of days in a year Creditor!s ratio


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$toc* 6urnover ,atio

)eaning

It is the no. of times the average stoc* is turned over during the year is *no5n as

stoc* turnover ratio. It measures the relationship bet5een CO;$ and inventory

level.

>igher the turnover ratio the more profitable business 5ould be. $uch firms 5ill

be able to trade on a smaller margin of a gross profit.

0o5er stoc* turn over ratio indicates accumulation of slo5 moving obsolete and

lo5 4uality goods 5hich is a danger signal for management.

Implementation

6his approach has the advantage of being free from bias as it smoothens out the

fluctuations in the inventory level at different period.

It is measures ho5 4uic*ly inventory is sold. It is a test of efficient inventory

management.

6o judge 5hether the ratio of a firm is satisfactory or not.

/ormula

/O, $6OCF 63,N OE


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/or the year 2==(=+ and 2=='=( the ratio are 2.=% times and 1'. times

respectively. It is more in 2==(=+ compare to 2=='=(. It indicates better position

of the company.

6herefore it is good for company. >o5 efficiently stoc* rate in the year >igher

the ratio better position of the company as 5ell as efficiency.

i0ui*ity Ratio:

Current ,atio

)eaning

6he current ratio is the ratio of total current assets to total current liability. It is

calculated by dividing current assets by current liability. It is also *no5n as a 5or*ing capital ratio as it is measure of 5or*ing capital

available at a particular time. It is a measure of short term financial strength of the

business and sho5s 5hether the business 5ill be able to meet its current

liabilities as and 5hen they mature.

Implementation

6he current ratio of a firm measures its short term solvency. 6hat is a measure of

margin of safety to the creditors. 6he fact that a firm can rarely count on such an

even flo5 re4uires that the size of the C.. should be sufficiently larger than C.0.so that the firm 5ould be assured of being able to pay its current maturing debts

as and 5hen it becomes due.

/ormula

/O, C3,,


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81=) ,s:

Current ,atio 1.&1&2 1.=+&= 1.#'2 1.(+211# 1.(#(2%( 1.1'++ 1.((2=%=

Interpretation

Current ratio indicates current assets to current liability. In the year 2==# Q =%

ratio is 1.(# 1 and 2==% Q =& it is 1.(+ 1 and its decrease on 1.# 1 in the year

2==& Q ='.

6herefore it is good for company.

/or the year 2==(=+ the ratio is 1.&11 and for the year 2=='=( it is 1.&11. $o

for the year 2==(=+ it is good as ideal is 21 and 1.&11 closer to ideal one.

)ainly 2 1 is good. It indicates repaying condition of the company to the current

liabilities. 6he standard current ratio must be 21.

0i4uid ,atio

)eaning

It is obtained by dividing the li4uid assets by li4uid liabilities.

It li4uid ratio is designed to sho5 the amount of cash available to meet immediate

payments. If the li4uid assets are e4ual to or more than li4uid liabilities the condition may

be considered as satisfactory.

Implementation

6he importance of ade4uate li4uidity in the sense of the ability of a firm to meet

short term obligations 5hen they become due for payment can hardly be

overstressed.

In fact li4uidity is a prere4uisite for the very survival of a firm. It measures ability

of a firm to meet its short term obligations and reflect the short term finance

strength of a firm.

/ormula

%=

0i4uid assets0i4uid liability


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/O, 0I3I-I6L ,6IO

Particulars 2==+ 2==( 2==' 2==& 2==% 2==# 2==

6otal

Current

ssets 9In

81=) ,s:

%#+1.1 =+'.+ ##=% '#=.+ 2+'2 2=1(.+ 2'(2.(

Inventories

9In 81=)

,s:

+=2. 1=( '=1.# ((1.2 &&&.& #+.( #('

Prepaid


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uic* assets here do not include both stoc* and debtors because payment from

debtors 5ould not generally be received immediately 5hen li4uid liabilities are to

be paid.

Implementation

6his ratio is the most rigorous and conservative test of a firm!s li4uidity position.

/urther it is suggested that it 5ould be useful for the management.

/ormula

/O, 3ICF CI- 6


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Proprietary ratio helps to *no5n ho5 many proprietary funds to total assets.

6he higher the ratio the stronger the financial position of the enterprise as it

signifies that the proprietors have provided larger funds to purchase assets. 6his

ratio can not e8ceed 1==MJ it means that the business does not use any outside

funds. 6here are no outside liabilities. Purchases are made for cash only and firm

carries business entirely from o5n funs only. very high ratio therefore is not

desired as it sho5s insufficient use of out side fund is made.

;enerally it is said that proprietor!s fund should be enough to cover fi8ed assets.

nd also reasonable proportion must be maintained bet5een o5ned funds and

borro5ed funds so the benefit of trading on e4uity is obtained. 7hich inture

increase the rate of e4uity dividend.

/ormula

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6he relationship bet5een borro5ed funds and o5ner!s capital is a popular

measure of the long term financial solvency of a firm. 6his relationship is sho5n

by the debt Q e4uity ratio.

Implementation

6his ratio reflects the relative claims of creditors and shareholders against the

assets of the firm. lternatively this ratio indicates the relative proportions of

debts and e4uity in financing the assets of a firm.

6he -< ratio is an important tool of financial analysis to appraise the financial

structure of a firm. It has important implication from vie5 point of the creditors

o5ners and the firm itself.

higher ratio means that outside creditors have a larger claim than the o5ners of

business. 6he pressure from creditors 5ould increase and their interference 5ill

also increase. 6he company 5ith high debt position 5ill have to accept strict

conditions from the lenders 5hile borro5ing money.

lo5er ratio is not profitable from the vie5 point of e4uity share holders asbenefit of trading on e4uity is not availed of and the rate of e4uity dividend 5ill

be comparatively lo5er.

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Chapter %

FINDINGS

%%


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AND

CONCLUSION

%&


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%.1 FINDINGS CONCLUSION

6he study is entitle T $tudy of /inancial $tatement nalysis of the )aruti 0imitedK has

been underta*en 5ith the objective to analyze and interpret the company!s financial

performance.

)aruti 5as listed in 2== and has been a consistent and strong performer on the stoc*

e8change giving handsome returns to investors.

6hey are practically debt free and have a healthy cash balance. 6hey have financed all

gro5th from internal resources.

6heir continuous efforts at cost cutting and improving productivity even in good times

have helped them in ma*ing reasonable profits despite the impact of higher commodity

prices and 5ea*er rupee.

)aruti $uzu*i India 06-. company has a trend of gro5th from 2== to 2=='.-uring the

financial year 2==(=+ the there is do5nfall in the gro5th of the company. 6he main

reason behind this do5nfall is because of the global recession and the price of

commodities of )aruti 5as 4uite high in the commodity mar*et. 6he do5nfall of net

profit during the financial year 2==(=+ is 2+.&M over the financial year 2=='2==(.6he

total sales numbers in 2==+1= mar* a gro5th of 2+M over last financial year. 6he e8port

sales of 1#'%'% units in the year2==+1= are the highest ever annual e8port by the

company.

)aruti has crossed sale of 1million cars and by achieving this no5 it has become

landmar* for )aruti 5here other companies 5ill ta*e time to reach and of course they

have raise their bar for themselves also.

5.&LIMITATION OF T


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6he financial statements are e8pressed in monetary values so they appear to give

final and accurate position but sometimes it does not give e8act position.

6he precision of financial statement data is not possible because the statements

deal 5ith natters 5hich cannot be precisely stated.

6he company 5anted not to disclose some of the analysis carried on. >ence some

of them are not included in this report.6he study had to be fully dependent upon past financial statements as such it may

fail to reflect the financial stand and capacity of the company a near future.

)ore emphasis has been laid on the accounting ratios as they reveal the trend over

a period.

conclusion from this analysis is not real indications of the efficiency of the

management and hence re4uires further investigation.

6he balance sheet ratio cannot be fully relied upon as the balance sheet sho5 the

financial position as particular data.

/or the industrial average comparisons analysis the data 5ere not available.

-ifference in definitions of basic concepts renders the comparison

inaccurate. >ence ratio value might vary significantly.

In spite of all these limitation study 5as grand success as it helped to improve the

*no5ledge and give better e8perience and e8poses to factory practice and surrounding all

the attempts have been made to ma*e right type of interpretation and suggestion.

5./ SUGG8STIONS

%(


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9I9LIOGRA;


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