A Project Report On Financial Analysis Of Eicher Motors Limited

1. 1. A Project Report On FinancialAnalysis Of Eicher Motors Limited Submittted to S.V.

Institute of Management Kadi Sarva Vishwavidyalaya On December 08, 2016 In Partial
Fulfilment of the requirements for the Accounting for Managers Coursein the Master of
Business Administration Programme By Bhavik Parmar, Anand Pillai (Roll No.- 22, 33) (DIV-
B)
2. 2. I PREFACE As a part of the course curriculum, the first semester M.B.A. students are
required to prepare a financial project report. The objective behind preparing this project
report is to relate the management subjects taught in the classroom to their practical
application. The preparation of this project report is based on financial analysis of annual
report of five consecutive years for a public limited company using ratio analysis, common
size statement and other financial tools. The scope of the project report is limited to the study
of the financial position of company on the basis of the published data available. This is our
initial experience for preparing project report. We cannot claim that our report is 100% free of
errors but at the same time it is our College’s assurance that we have tried our level best
effort to justify work allocated to us. It is indeed a golden opportunity for us to present the
report and indeed a matter of esteem honour itself. Our work in this project is, therefore a
humble attempt towards this end.
3. 3. II ACKNOWLEDGEMENT To make a project of this magnitude is impossible without a
dedicated effort and perfect guidance. We would like to express our deep feeling of gratitude
to the under mentioned officials for their assistant, guidance and inspiration before and
though out the project. Special thanks to Prof. Kalpesh Prajapati, our project faculty, for
showing us a proper way to walk on, for providing help and guidance throughout the project;
he has always been the source of encouragement. He has ceaselessly guided us in all the
aspects of the project, with his abundance amount off experience and finer ideas. We would
like to thank Dr. Bhavin Pandya, for his guidance whenever we called for. We have always
been welcomed with very pleasant smile and full co-operation by him. Working on the project
is hard, need hard work and concentration. What made it possible is the support we received
from those around us. We thank to all the faculties of our college for giving us guidance,
encouragement and right path to work on. We thank everybody who has directly or indirectly
helped us in this project to make it successful. Bhaviik Parmar Anand Pillai
4. 4. III EXECUTIVE SUMMARY This financial project we have prepared to know the practical
implication of accounting and how it is applied in real life situation. For this financial project
we have taken 5 years’ Balance Sheet and 5 years Profit and loss A/c of EICHER MOTORS
LIMITED for the analysis. In this project we have prepared following things: 1. Introduction
about company In this portion we have explain about company history, product profile and
basic details like registered office address, board of directors, bankers, auditors etc. 2.
Common size statement: Common size income statement is an income statement in which
each account is expressed as a percentage of the value of sales. This type of financial
statement can be used to allow for easy analysis between companies or between time
periods of a company. 3. Trend Analysis: A trend analysis is a method of analysis that allows
traders to predict what will happen with a stock in the future. Trend analysis is based on
historical data about the stock's performance given the overall trends of the market and
particular indicators within the market. 4. Ratio Analysis A ratio analysis is a quantitative
analysis of information contained in a company's financial statements. Ratio analysis is used
to evaluate various aspects of a company's operating and financial performance such as its
efficiency, liquidity, profitability and solvency.
5. 5. TABLE OF CONTENT INDEX SR NO. PARTICULAR PAGE NO. I Preface I II
Acknowledgement II III Executive summery III Chapter 1 : Introduction About The Company
1 1.1 Company Overview 2 1.2 History 3 1.3 Group Structure 4 1.4 Milestone 5 1.5 Company
Profile 7 1.6 Basic Details of the Company 8 Chapter 2 : Common Size Statements 11 2.1
Meaning of Common size statements 12 2.2 Common Size Statement Of Balance Sheet 13
 2.3 Common Size Statement Of Profit And Loss A/C 15 Chapter 3 : Trend Analysis 17 3.1
Meaning of Trend Analysis 18 3.2 Trend Analysis Of Balance Sheet 19 3.3 Trend Analysis
Of Profit And Loss A/C 29 Chapter 4 : Ratio Analysis 36 4.1 Meaning of Ratio Analysis 37
Chapter 4 : Recommendation and Suggestion 50 Chapter 5 : Conclusion 52 Bibliography 54
Annexure 55 List of Tables and Graphs 57
6. 6. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF MANAGEMENT,
KADI 1 Chapter-1 Introduction About The Company
7. 7. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF MANAGEMENT,
KADI 2 1. INTRODUCTIONTO THE COMPANY 1.1 COMPANY OVERVIEW Eicher Motors
Limited is an India-based company engaged in the business of automobile products and
related components. The Company’s product range includes commercial vehicles (Eicher
and Volvo trucks), motorcycles, and components, including gears and engineering solutions.
The Company operates in the leisure cruiser segment with engine capacity of 350 circuit
current and above. During the year ended December 31, 2009, the Company sold 51,955
motorcycles. In 2009, the Company introduced Classic bike in the two categories of 350cc
and 500cc. The Classic bikes are powered by a single cylinder 500 cc unit construction
engine (UCE) supported by electronic fuel injection (EFI). The UCE has an integrated
assembly for the engine, gear box and clutch to reduce friction. Eicher Motors' subsidiaries
include VE Commercial Vehicles Limited, Eicher Engineering Solutions, Inc., Hoff
Automotive Design Company and Hoff Technology Service Company. Eicher Motors
operates in three segments: Commercial Vehicles, Two Wheelers, and Components of
engineering products, as well as in the publication of city map and travel guides. Its
commercial vehicle plant is located at Dhar, MP. The company manufactures motorcycles at
a plant at Thiruvottiyur, TN, promoted under the brand Royal Enfield. The company’s
engineering component plants - located at Gurgaon, Haryana and Dewas, MP - manufacture
gears, gear boxes, and other components The company is also involved in management
consultancy services and customized. It has a joint venture agreement with Volvo AB. The
company has a strong network of 142 dealers distributed across India. Eicher Motors is
present in over 40 countries across the world. Most of the exports are to South Asia, West
Asia, and African countries. EICHER MOTORS LIMITED Eicher Motors Limited (EML) was
incorporated in 1982 and introduced its first product, the Canter, a 6 ton GVW truck
manufactured at its state of the art plant at Pithampur, Indore in collaboration with Mitsubishi
Motors Corporation, Japan, in 1986. The maiden offering soon created a strong customer
base for itself. From a single 6 Ton GVW truck in 1986, our range today extends from 5T to
16T GVW trucks and the Skyline and Voila range of Buses. All our products can be offered in
BS II compatible options. We also have arguably the best CNG technology in the world in our
CNG Buses.
8. 8. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF MANAGEMENT,
KADI 3 Pioneering the concept of Built Up vehicles in the country, we make products that
consistently deliver high value to our customers and are increasingly becoming the preferred
option for all CV users, not only in India but overseas too. Eicher CVs today have significant
presence in more than 20 countries across the world. In India, Eicher Motors has
consistently outperformed the industry in terms of growth and currently holds over 30%
market share in the 6T-11T GVW segments. In the 9T GVW segment, Eicher Motors
continues to be the leader with more than 50% market share. Our well- equipped workshops
result in faster turnaround of service. A network of more than 4500 Eicher trained private
mechanics, over 133 authorized sales and service centres, and easy availability of genuine
parts across more than 300 authorized spares outlets means less downtime and increased
opportunities for our customers to earn. Eicher Motors is now poised to further consolidate its
position in the CV industry by entering into the Medium & Heavy Commercial Vehicle
segments. Strategic plans are in place to ensure necessary investments in technology and
training to constantly sharpen our development and manufacturing edge. EML is totally
committed to fulfilling the vision of being one of the top 3 CV manufacturers in the country by
 giving customers what they want: vehicles that are safe, fuel efficient, easy to maintain,
enhance driver comfort and in turn productivity. Vehicles that deliver value by providing low
cost of ownership and increased profitability to our customers. Eicher has over 5000
employees located in 10 manufacturing facilities and 24 marketing offices all around the
country. The Group has around 950 vendors supplying components and sub- assemblies
which testify to the strength of the vendor base. The Group's products are brought to the
customer through its network of around 800 dealers distributed across the length and
breadth of the country. 1.2 HISTORY Eicher Motors is a commercial vehicle manufacturer in
India. The company's origins date back to 1948, when Goodearth Company was established
for the distribution and service of imported tractors. In 1959 the Eicher Tractor Corporation of
India Private Ltd was established, jointly with the Eicher tractor company, a German tractor
manufacturer. Since 1965 Eicher in India has been completely owned by Indian
shareholders. The German Eicher tractor was partly owned by Massey-Ferguson from 1970,
when they bought 30%. Massey-Ferguson bought out the German company in 1973. In 2005
Eicher Motors Ltd sold their tractors and engines business to TAFE Tractors (Tractors And
Farm Equipment Ltd) of Chennai, the Indian licensee of Massey Ferguson tractors.
9. 9. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF MANAGEMENT,
KADI 4 In October 1982 a collaboration agreement with Mitsubishi for the manufacture of
Light Commercial Vehicles was signed in Tokyo and in the same period the incorporation of
Eicher Motors Limited also took place. In February 1990, Eicher Goodearth bought 26%
stake in Enfield India Ltd and by 1993 Eicher acquired a majority stake (60% equity
shareholding) in Royal Enfield India. In July 2008, EML and Volvo Group's 50:50 joint
venture VE Commercial Vehicles (VECV) designs, manufactures and markets commercial
vehicles, engineering components and provides engineering design. The Eicher Group has
diversified business interests in manufacturing & marketing of Tractors, Commercial
Vehicles, Automotive Gears, Motorcycles, and exports of vehicles, aggregates and
components. Eicher has also invested in the potential growth areas of Management
Consultancy Services. The activities of the Group are divided into the following business
units covering all the business interests. 1.3 GROUP STRUCTURE The Eicher Group has
diversified business interests in design and development, manufacturing, and local and
international marketing of trucks, buses, motorcycles, automotive gears, and components.
Eicher has invested in the potential growth areas of management consultancy services,
customized engineering, and maps and travel guides. VE Commercial Vehicles (VECV)
Limited is a 50:50 joint venture between the Volvo Group (Volvo) and Eicher Motors Limited
(EML).VECV is divided into five business units.  Eicher Trucks and Buses - The E Series 
Volvo Trucks India - The VE Series  Eicher Engineering Components  VE Powertrain 
Eicher Goodearth  Eicher Publications Royal Enfield Motors, the motorcycle manufacturing
subsidiary, is a part of the Eicher Motors.
10. 10. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 5 1.4 MILESTONES A journey, spanning over five decades, Eicher
has come a long way. These rewarding times saw the company grow, diversify, acquire,
amalgamate, consolidate and expand; winning hearts and trust of clients, dealers/distributors
and shareholders alike. The path pursues has been illuminated with landmarks and
milestones, which stand as an edifice saluting our achievements. These milestones can be
divided into 2 phases.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> INITIAL PHASE
1948 > Goodearth Company set up to sell and service imported tractors 1952-57 >
Goodearth Company imported and sold about 1500 tractors in India 1958 > Eicher Tractor
Corporation of India Ltd. incorporated 1959 > First indigenous Eicher tractor built 1959 >
Eicher came out with India's first indigenously built tractor from its Faridabad factory 1960 >
Eicher changed name from Eicher Tractor Corporation of India Pvt. Ltd. to Eicher Tractors
India Ltd. 1965-75 > 100% indigenization achieved in Eicher Tractors
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> MID JOURNEY
 1980 > Eicher Goodearth Ltd. name given to Eicher 1982 > Collaboration agreement with
Mitsubishi for the manufacture of Light Commercial Vehicles signed in Tokyo 1982 >
Incorporation of Eicher Motors Ltd. 1985 > Silver Jubilee Year for Eicher 1986 > Eicher
Motors Ltd. springs into operation 1987 > Eicher Tractors went public
11. 11. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 6
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> MORE RECENT
1990 > Eicher Goodearth buys 26% equity stake in Enfield India Ltd. 1991 > ECS launched;
Eicher takes over Ramon & Demm 1992 > Eicher Tractors Ltd. selected as 'Company of the
Year' for 1990-91 in the four-wheeler category comprising commercial vehicles, passenger
cars, jeeps and tractors 1993 > Eicher adopts new identifier 1993 > Eicher acquires majority
stake in Enfield India (60% equity shareholding) 1994 > Enfield India Ltd. changed its name
to Royal Enfield Motors Ltd. 1995 > Eicher City Map - Delhi launched 1996 > Eicher Tractors
Ltd. amalgamated with Royal Enfield Motors to form Eicher Ltd. 2005 > Eicher Motors Ltd.
has disinvested the businesses of tractors and engines to TAFE Motors & Tractors Ltd.
(TMTL) 2008 > Volvo Group and Eicher Motors Ltd. established VE Commercial Vehicles
Limited (VECV) 2010 > The company launched the VE-series of Heavy Duty trucks 2012 >
Royal Enfield launches the Thunderbird 500 and 350 models. 2013 > Royal Enfield opens
second manufacturing facility in Oragadam, Tamil Nadu. In September 2013, Royal Enfield
globally launches the Continental GT 535cc café racer in London, UK. 2014 > Royal Enfield
opens its first concept store in Saket, New Delhi and launches its first exclusive store in
London, UK.
12. 12. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 7 1.5 COMPANY PRODUCT PROFILE Motors It manufactures
several kinds of commercial vehicles.Its 50–50 joint venture with the Volvo group, VE
Commercial Vehicles Limited, designs, manufactures and markets reliable, fuel– efficient
commercial vehicles of high quality and modern technology, engineering components and
provides engineering design solutions. It has technical and financial collaboration with
Mitsubishi Motors Corporation of Japan which led to manufacturing of CANTER range of
vehicles. It manufactures around 20000 vehicles per annum. Motorcycles It manufactures
bullet motorcycles Royal Enfield. It manufactures six different models ranging from 300cc to
600cc. The manufacturing plant has installed capacity of 39,000 motorcycles per annum.
Engineering Components The company manufactures complete range of automotive gears.
The range of gears includes Spiral bevels (Crown wheel and pinions), Straight bevels and
Transmission gears.
13. 13. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 8 1.6 BASIC DETAILS OF THE COMPANY
14. 14. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 9  Company Secretary & Compliance Officer Manhar Kapoor 
Auditors Deloitte Haskins & Sells, Chartered Accountants  Bankers HDFC Bank Limited
ICICI Bank Limited  RegisteredOffice 3rd Floor- Select Citywalk A-3 District Centre, Saket
New Delhi – 110 017 Tel No.: (011) 29563722 Website: www.eicher.in  Corporate Office
#96, Sector 32, Gurgaon – 122 001, Haryana Tel No.: (0124) 4415600 Website:
www.eicher.in  Plant Locations  Thiruvottiyur High Road, Thiruvottiyur, Chennai – 600 019
Tamil Nadu.  A-19/1, SIPCOT Industrial Growth Centre, Oragadam, Kanchipuram – 602
105 Tamil Nadu.
15. 15. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 10  Registrar & Share Transfer Agent MCS Limited F–65, 1st Floor,
Okhla Industrial Area, Phase I, New Delhi – 110 020 Tel No.: (011) 41406149-52 Fax No.:
(011) 41709881 e-mail: [email protected]
16. 16. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 11 Chapter-2 Common Size Statements
17. 17. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 12 2.1 COMMON SIZE STATEMENTS Common size financial
statement helps to compare the performance of a company with other companies in the
industry, regardless of asset size or sales volume. Evaluating common size statement of a
company over a period of years can be useful in trend analysis. Common size statement is
very useful ways to analyse financial statement. It consists of balance sheet and income
statement in which items are expressed in percentage rather than absolute value. To create
a common size statement, income statement total income taken has 100%. Each line item of
the income statement is compared as a percentage of total income. To prepare a common
size balance sheet total assets are taken equal to 100%. Each line item of balance sheet is
compared as a percentage of total assets.
18. 18. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 13 2.2 COMMON SIZE STATEMENT OF BALANCE SHEET Table
2.2.1: COMMON SIZE STATEMENT OF BALANCE SHEET COMMONSIZE STATEMENT
OF BALANCE SHEET Particular in Rs. Cr. Mar'16 Dec'14 Dec'13 Dec'12 Dec'11 15 months
12 months 12 months 12 months 12 months Sources OfFunds Total Share Capital 1% 2%
3% 4% 5% Reserves 98% 98% 96% 93% 93% Networth-A 99% 100% 100% 97% 97%
Secured Loans 0% 0% 0% 3% 1% Unsecured Loans 1% 0% 0% 0% 1% Total Debt-B 1%
0% 0% 3% 3% Total Liabilities(A+B) 100% 100% 100% 100% 100% ApplicationOf Funds
Gross Block 52% 51% 49% 34% 35% Less:Accum. Depreciation 11% 10% 13% 13% 15%
NetBlock (A) 40% 41% 36% 21% 20% Capital Work inProgress (B) 4% 5% 2% 9% 1%
Investments(C) 87% 96% 104% 100% 93% Inventories 14% 17% 17% 12% 8% Sundry
Debtors 2% 1% 1% 1% 1% Cash andBank Balance 2% 3% 2% 1% 1% Total CurrentAssets
18% 21% 21% 13% 9% Loans andAdvances 9% 18% 17% 14% 17% Total CA, Loans &
Advances 27% 39% 38% 27% 27% CurrentLiabilities 55% 66% 67% 47% 31% Provisions
3% 15% 13% 11% 10% Total CL & Provisions 57% 81% 80% 58% 41% NetCurrent
Assets(D) -31% -42% -42% -31% -14% Total Assets(A+B+C-D) 100% 100% 100% 100%
100%
19. 19. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 14 INTERPRETATION:  SOURCES OF FUNDS:  For the analysis
source of funds, we have taken the total liabilities as 100%.  The share capital of the
company is consisting of only 1.00% in current year.  As we can see in the table that the
shareholder’s funds and Reserves constitutes a large portion of the fund’s.  According to
common size statement the reserves of the company hold large portion that means If the
Company having a more reserve & surplus its means Company having lots of cash it’s
helpful for the contingencies times.  Secured and unsecured loan’s has minor fluctuation in
five year.  The companies secured loan’s decreasing every year and now company has no
secured loans but company has 1% unsecured loan’s against reserve is 98% that means
company already having more amount of reserve & surplus then also takes the loans for
taking the advantages of equity.  APPLICATION OF FUNDS:  For the analysis of
application of funds, we have taken total assets as 100%.  The net block of the company
only 1% decrease in current year as compared to last year.  The fluctuation in investment is
vary from year to year, current investment is lowest point as compared to last five years. 
The current assets and current liabilities both decreases from last year.
20. 20. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 15 2.3 COMMON SIZE STATEMENT OF PROFIT AND LOSS A/C
Table 2.3.1: COMMON SIZE STATEMENT OF PROFIT AND LOSS A/C COMMONSIZE
STATEMENT FOR PROFIT AD LOSS ACCOUNT in Rs. Cr. Particular Mar'16 Dec'14
Dec'13 Dec'12 Dec'11 15 months 12 months 12 months 12 months 12 months Income
SalesTurnover 113% 110% 113% 112% 111% Excise Duty 13% 10% 13% 12% 11%
NetSales 100% 100% 100% 100% 100% OtherIncome 3% 4% 5% 4% 11% Stock
Adjustments 1% 1% 2% 2% 2% Total Income 104% 105% 107% 106% 114% Expenditure
Raw Materials 58% 63% 66% 69% 71% Power& fuel cost 1% 1% 1% 1% 1% Employee cost
 5% 5% 7% 8% 8% Miscellaneous Expenses 9% 8% 9% 11% 11% Total Expenses 73% 77%
83% 88% 90% OperatingProfit 28% 24% 18% 14% 12% PBDIT 31% 28% 23% 18% 23%
Interest 0% 0% 0% 0% 0% PBDT 31% 28% 23% 18% 23% Depreciation 2% 2% 2% 2% 2%
Profit Before Tax 29% 26% 21% 17% 21% PBT 29% 26% 21% 17% 21% Tax 9% 8% 5%
3% 3% ReportedNet Profit 20% 18% 16% 14% 19%
21. 21. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 16 INTERPRETATION:  For the analysis of Profit and Loss A/c we
have taken the Net sales figures as 100%.  From the analysis of common size statement,
we can interpret that the miscellaneous expenditure is constant for first two years then after it
has minor changes.  The operating profit of the company is constantly increases from last
five years.  Interest are not occurred in last five years.  The net profit of the company
increased 2% as compared to last year and decreased in 2012 and 2013 as compared to
2011.
22. 22. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 17 Chapter-3 Trend Analysis
23. 23. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 18 3.1 TREND ANALYSIS Trend analysis involves calculation of
percentage changes in financial statement items for number of successive years. It is an
extension of horizontal analysis to several years. Trend analysis is carried out by first
assigning value of 100 to the financial statement items in past financial years used as the
base year. Then expressing financial statement items in the following years as a percentage
of the base year value. By the trend analysis we can quickly get idea about company’s
performance easily.
24. 24. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 19 3.2 TREND ANALYSIS OF BALANCE SHEET Table 3.2.0.1:
TREND ANALYSIS OF BALANCE SHEET TREND ANALYSISOF BALANCE SHEET
Particular in Rs. Cr. Mar'16 Dec'14 Dec'13 Dec'12 Dec'11 15 months 12 months 12 months
12 months 12 months Sources OfFunds Total Share Capital 101% 100% 100% 100% 100%
Reserves 414% 235% 155% 117% 100% Networth (A) 398% 228% 152% 116% 100%
Secured Loans 0% 0% 62% 308% 100% Unsecured Loans 291% 0% 0% 0% 100% Total
Debt (B) 158% 0% 28% 140% 100% Total Liabilities(A+B) 392% 223% 149% 117% 100%
ApplicationOf Funds Gross Block 572% 318% 207% 112% 100% Less:Accum. Depreciation
293% 147% 126% 98% 100% NetBlock (A) 779% 446% 266% 123% 100% Capital Work
inProgress (B) 2017% 1410% 331% 1433% 100% Investments(C) 363% 229% 165% 125%
100% Inventories 663% 453% 318% 167% 100% Sundry Debtors 1125% 261% 296% 151%
100% Cash andBank Balance 1494% 1445% 628% 117% 100% Total CurrentAssets 747%
495% 334% 163% 100% Loans andAdvances 194% 232% 146% 96% 100% Total CA,
Loans & Advances 390% 325% 212% 120% 100% CurrentLiabilities 690% 472% 319%
177% 100% Provisions 104% 328% 194% 127% 100% Total CL & Provisions 546% 436%
288% 164% 100% NetCurrent Assets(D) 833% 642% 429% 247% 100% Total
Assets(A+B+C-D) 392% 223% 149% 117% 100%
25. 25. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 20 INTERPRETATION: The interpretation of each item of the balance
sheet is depicted as follow……….  Share capital: Table 3.2.1: Total Share Capital Year
2016 2014 2013 2012 2011 Total share capital 101% 100% 100% 100% 100% Figure 3.2.1:
Total Share Capital Interpretation: The growth rate of the share capital of the company
constantly remains the stable for the four years but in 2016 only 1% incremental is we have
noticed. So we can say that company growth rate remains same for constantly five years.
100% 100% 100% 100% 101% 99% 100% 100% 100% 100% 100% 101% 101% 101%
101% 2011 2012 2013 2014 2016 Totalsharecapital Year Total Share Capital Total Share
Capital
26. 26. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 21  Secured loans Table 3.2.2: Secured Loans Year 2016 2014
 2013 2012 2011 Secured Loans 0% 0% 62% 308% 100% Figure 3.2.2. Secured Loans
Interpretation: The growth rate of the secured loans of the company in last two year has 0%.
Which means it’s favourably effect on current liabilities. It is good indicator for the company.
But in 2012 it is very high as comparing 2011 to 2016 data. 100 308 62 0 0 0 50 100 150 200
250 300 350 2011 2012 2013 2014 2016 Securedloanin% YEAR Secured Loans Secured
Loans
27. 27. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 22  Unsecured Loans Table 3.2.3: Unsecured Loans Year 2016
2014 2013 2012 2011 Unsecured Loans 291% 0% 0% 0% 100% Figure 3.2.3. Unsecured
loans Interpretation: The growth of the Unsecured loans is increased double as compared to
last five. Which is at 291%. But one thing is that also Company’s sales are increase with the
loans fund, it’s both good and bad effect for the company. 100% 0% 0% 0% 291% 0% 50%
100% 150% 200% 250% 300% 350% 2011 2012 2013 2014 2016 UNSECUREDLOANS
YEAR Unsecured Loans Unsecured Loans
28. 28. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 23  Total Current Liabilities Table 3.2.4: Total Current Liabilities
Year 2016 2014 2013 2012 2011 Current Liabilities 690% 472% 319% 177% 100% Figure
3.2.4: Total Current Liabilities Interpretation: The total current liabilities curve shows that the
current liabilities increases every year. If we compared 2016 liabilities to 2011 it is 6 times
increased from last five years. Due to decrease in the short provisions. It is financial position
is good as compared to last four year. 100% 177% 319% 472% 690% 0% 200% 400% 600%
800% 2011 2012 2013 2014 2016 CURRENTLIABILITES YEAR Current Liabilites Current
Liabilites
29. 29. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 24  Total Liabilities Table 3.2.5: Total Liabilities Year 2016 2014
2013 2012 2011 Total Liabilities 392% 223% 149% 117% 100% Figure 3.2.5: Total Liabilities
Interpretation: The total liabilities curves show that continuously increases from last five
years. 100% 117% 149% 223% 392% 0% 50% 100% 150% 200% 250% 300% 350% 400%
450% 2011 2012 2013 2014 2016 TOTALLIABILITIES YEAR Total Liabilites Total Liabilites
30. 30. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 25  Net Block Table 3.2.6: Net Block Year 2016 2014 2013 2012
2011 Net Block 779% 446% 266% 123% 100% Figure 3.2.6: Net Block Interpretation: The
total net block curve shows that the continuously increases from last five years. Due to
increases in the fixed assets of the company. It is increased around by 123% Dec-2012 to till
Mar-2016. It is indicating the positive impact on the company. 100% 123% 226% 446%
779% 0% 100% 200% 300% 400% 500% 600% 700% 800% 900% 2011 2012 2013 2014
2016 %CHANGEINNETBLOCK YEAR Net block Net block
31. 31. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 26  Capital Work in Progress Table 3.2.7: Capital Work in Progress
Year 2016 2014 2013 2012 2011 Capital Work in Progress 2017% 1410% 331% 1433%
100% Figure 3.2.7: Capital Work in Progress Interpretation: The capital work in progress
curve show that the fluctuation, In 2012 it is increases at 1433% then after in 2013 it is
decreases at 331% then after it is continuously increases to till 2016. It is favourable impact
on non-current assets. In 2016 it is increased up to 2017% which is shows positive effect on
the company profit. 100% 1433% 331% 1410% 2017% 0% 500% 1000% 1500% 2000%
2500% 2011 2012 2013 2014 2016 CAPITALWORKINPROGRESS YEAR Capital Work in
Progress Capital Work in Progress
32. 32. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 27  Total Current Assets Table 3.2.8: Total Current Assets Year
2016 2014 2013 2012 2011 Total current assets 747% 495% 334% 163% 100% Figure
3.2.8: Total Current Assets Interpretation: As in the figure 3.2.8 shows that the total current
assets curve is increases from last five years. In 2012 it is increases at 163% till now it is
increased at 747%. 100% 163% 334% 495% 747% 0% 100% 200% 300% 400% 500%
 600% 700% 800% 2011 2012 2013 2014 2016 TOTALCURRENTASSETS YEAR Total
currrent assets
33. 33. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 28  Net Current Assets Table 3.2.9: Net Current Assets Year 2016
2014 2013 2012 2011 Net Current Assets 833% 642% 429% 247% 100% Figure 3.2.9: Net
Current Assets Interpretation: As above chart shows that the Net current assets are
continuously increases from Dec- 2011 to Mar-2016. In 2012 it is 247% increases and in
2016 it increases up to 833%. 100% 247% 429% 642% 833% 0% 100% 200% 300% 400%
500% 600% 700% 800% 900% 2011 2012 2013 2014 2016 NETCURRENTASSETS YEAR
Net Current Assets
34. 34. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 29 3.3 TREND ANALYSIS OF PROFIT AND LOSS A/C Table
3.3.0.2: Trend Analysis of Profit and Loss A/c TREND ANALYSISOF PROFIT AD LOSS
ACCOUNT in Rs. Cr. Particular Mar'16 Dec'14 Dec'13 Dec'12 Dec'11 15 months 12 months
12 months 12 months 12 months Income SalesTurnover 940% 447% 258% 159% 100%
Excise Duty 1115% 405% 302% 182% 100% NetSales 922% 451% 254% 156% 100%
OtherIncome 232% 151% 104% 60% 100% Stock Adjustments 370% 300% 222% 148%
100% Total Income 842% 418% 238% 146% 100% Expenditure Raw Materials 758% 402%
237% 151% 100% Power& fuel cost 714% 359% 273% 170% 100% Employee cost 626%
315% 217% 155% 100% Miscellaneous Expenses 741% 338% 225% 159% 100% Total
Expenses 745% 386% 235% 153% 100% OperatingProfit 2161% 916% 392% 182% 100%
PBDIT 1217% 542% 251% 122% 100% Interest 70% 83% 13% 13% 100% PBDT 1232%
548% 254% 123% 100% Depreciation 1058% 385% 234% 132% 100% Profit Before Tax
1248% 563% 256% 123% 100% PBT (PostExtra-ordItems) 1248% 563% 256% 123% 100%
Tax 3123% 1384% 489% 168% 100% ReportedNet Profit 987% 449% 224% 116% 100%
35. 35. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 30  Net Sales Table 3.3.1: Net Sales Year 2016 2014 2013 2012
2011 Net sales 922% 451% 254% 156% 100% Figure 3.3.1: Net Sales Interpretation: The
growth rate of the Net sales of the company is increases around by 100% DEC- 2011 till the
Mar-2016. It’s continuously increases every year which means that the production of the
company increases every year. 100% 156% 254% 451% 922% 0% 100% 200% 300% 400%
500% 600% 700% 800% 900% 1000% 2011 2012 2013 2014 2016 NETSALES YEAR Net
sales
36. 36. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 31  Gross Sales/Sales Turnover Table 3.3.2: Sales Turnover/Gross
Sales Year 2016 2014 2013 2012 2011 Gross Sales 940% 447% 258% 159% 100% Figure
3.3.2: Sales Turnover/Gross Sales Interpretation: The growth rate of the company is
increases continuously from 2011 to 2016. In 2016 the gross sales increased 9 times as
compared to 2011. So, it is good for the company and it will generate more profit from sales.
100% 159% 258% 447% 940% 0% 100% 200% 300% 400% 500% 600% 700% 800% 900%
1000% 2011 2012 2013 2014 2016 GROSSSALES YEAR Gross Sales
37. 37. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 32  Total Expenditure Table 3.3.3: Total Expenditure Year 2016
2014 2013 2012 2011 Total Expenditure 745% 386% 235% 153% 100% Figure 3.3.3: Total
Expenditure Interpretation: Above graph shows that the total expenditure of the company
continuously increases from Dec-2011 to Mar-2016. The expenditure includes General and
administrative expenses, selling and distribution expenses, power and fuel cost and other
manufacturing expenses, Miscellaneous expenses. The basic reason behind increases of
expenses is more production of goods. 100% 153% 235% 386% 745% 0% 100% 200%
300% 400% 500% 600% 700% 800% 2011 2012 2013 2014 2016 TotalExpenditure Year
Total Expenditure
38. 38. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 33  Operating Profit Table 3.3.4: Operating Profit Year 2016 2014
 2013 2012 2011 Operating Profit 2161% 916% 392% 182% 100% Figure 3.3.4: Operating
Profit Interpretation: The curve of operating profit shows that every year company earn more
income after their expenditure. The rate is increases every year 82%, 210%, 524%, 1254%
respectively. Operating profit is included the other income of the company. 100% 182%
392% 916% 2161% 0% 500% 1000% 1500% 2000% 2500% 2011 2012 2013 2014 2016
OperatingProfit Year Operating Profit
39. 39. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 34  PBDT, PBDIT, PBT, PBT (Post Extra-ord items) Table 3.3.5:
PBDT, PBDIT, PBT, PBT (Post Extra-ord items) Year 2016 2014 2013 2012 2011 PBDT
1232% 548% 254% 123% 100% PBDIT 1217% 542% 251% 122% 100% PBT 1248% 563%
256% 123% 100% PBT(Post Extra-ord items) 1248% 563% 256% 123% 100% Figure 3.3.5:
PBDT, PBDIT, PBT, PBT (Post Extra-ord items) Interpretation: The graph of profit for the
year shows, that net profit of the company, it is representing the PBDT, PBDIT, PBT and
PBT (Post Extra-ord Items) of specific year. Company earned more profit in last five years as
we can see in the graph. In last year companies profit increased double because of less
interest and exception income of the company. 0% 200% 400% 600% 800% 1000% 1200%
1400% 2011 2012 2013 2014 2016 %CHANGEINNETPROFITELEMENTS YEAR PBDT
PBDIT PBT PBT(Post Extra-ord Items)
40. 40. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 35  PAT/REPORTED NET PROFIT Table 3.3.6: PAT Year 2016
2014 2013 2012 2011 PAT 987% 449% 224% 116% 100% Figure 3.3.6: PAT Interpretation:
The above graph shows the Profit after tax (Net Profit) of the company for five years. As we
can see that the PAT of the company continuously increases in last five years. As we can
see in the graph companies profit becomes double from 2013, 2014 and in 2016. 2011,
100% 2012, 116% 2013, 224% 2014, 449% 2016, 987% 0% 200% 400% 600% 800%
1000% 1200% 2011 2012 2013 2014 2016 PATIN% YEAR PAT PAT
41. 41. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 36 Chapter-4 Ratio Analysis
42. 42. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 37 4.1 RATIO ANALYSIS Ratio analysis is an important technique of
financial analysis. It is a means for judging the financial health of a business enterprise. It
determines and interprets the liquidity, solvency, profitability, etc. of a business enterprise. 
It becomes simple to understand various figures in the financial statements through the use
of different ratios. Financial ratios simplify, summarize, and systemize the accounting figures
presented in financial statements.  With the help of ratio analysis, comparison of profitability
and financial soundness can be made between one industry and another. Similarly,
comparison of current year figures can also be made with those of previous years with the
help of ratio analysis and if some weak points are located, remedial measures are taken to
correct them.  If accounting ratios are calculated for a number of years, they will reveal the
trend of costs, sales, profits and other important facts. Such trends are useful for planning. 
Financial ratios, based on a desired level of activities, can be set as standards for judging
actual performance of a business. For example, if owners of a business aim at earning profit
@ 25% on the capital which is the prevailing rate of return in the industry then this rate of
25% becomes the standard. The rate of profit of each year is compared with this standard
and the actual performance of the business can be judged easily.  Ratio analysis discloses
the position of business with different viewpoint. It discloses the position of business with
liquidity viewpoint, solvency view point, profitability viewpoint, etc. with the help of such a
study; we can draw conclusion regarding the financial health of business enterprise.
43. 43. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 38 1. PROFIT MARGIN RATIO The profit margin ratio, also called the
return on sales ratio or gross profit ratio, is a profitability ratio that measures the amount of
net income earned with each dollar of sales generated by comparing the net income and net
sales of a company. In other words, the profit margin ratio shows what percentage of sales
 are left over after all expenses are paid by the business. Creditors and investors use this
ratio to measure how effectively a company can convert sales into net income. Investors
want to make sure profits are high enough to distribute dividends while creditors want to
make sure the company has enough profits to pay back its loans. 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡
𝑃𝑟𝑜𝑓𝑖𝑡 𝑆𝑎𝑙𝑒𝑠 × 100 Table 4.1.1: Profit Margin Ratio Year 2016 2014 2013 2012 2011 Profit
Margin (%) 20% 18% 16% 14% 19% Figure 4.1.1: Profit Margin Ratio Interpretation: As per
the above chart we can conclude that the operating margin is increase in year 2012, 2013,
2014 and 2016 its show that a higher value of operating margin ratio is favourable which
indicates that more proportion of revenue is converted to operating income. An increase in
operating margin ratio overtime means that the profitability is improving. 0% 5% 10% 15%
20% 2011 2012 2013 2014 2016 19% 14% 16% 18% 20% %CHANGEINPROFITMARGIN
YEAR Profit Margin(%) Profit Margin(%)
44. 44. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 39 2. TOTAL ASSETS TURNOVER RATIO The asset turnover ratio
is an efficiency ratio that measures a company's ability to generate sales from its assets by
comparing net sales with average total assets. In other words, this ratio shows how efficiently
a company can use its assets to generate sales. 𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 = 𝑵𝒆𝒕 𝒔𝒂𝒍𝒆𝒔
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝒕𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕𝒔 Table 4.1.2: Total Assets turnover ratio Year 2016 2014 2013 2012
2011 Assets turnover ratio(Times) 2.89 2.48 2.09 1.63 1.22 Figure 4.1.2: Total Assets
turnover ratio Interpretation: From the above ratio, we can say that the ratio of 2011 is 1.22, if
the assets are very old then more depreciation has been deducted, then the turnover seems
to be more. From the above graph we can see that every year assets turnover ratio
increases gradually. In 2016 it is 2.89 times. We can say that the company sales increases
as compared to total assets. So, company using their assets more efficiently to generate
more profit from sales. 0 0.5 1 1.5 2 2.5 3 2011 2012 2013 2014 2016 1.22 1.63 2.09 2.48
2.89 ASSETSTURNOVERRATIO YEAR Assets turnover ratio Assets turnover ratio
45. 45. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 40 3. OPERATING PROFIT RATIO The operating margin ratio, also
known as the operating profit margin, is a profitability ratio that measures what percentage of
total revenues is made up by operating income. In other words, the operating margin ratio
demonstrates how much revenues are left over after all the variable or operating costs have
been paid. Conversely, this ratio shows what proportion of revenues is available to cover
non-operating costs like interest expense. 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑷𝒓𝒐𝒇𝒊𝒕 𝑹𝒂𝒕𝒊𝒐 = 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑷𝒓𝒐𝒇𝒊𝒕
𝑵𝒆𝒕 𝒔𝒂𝒍𝒆𝒔 × 𝟏𝟎𝟎 Table 4.1.3: Operating Profit Ratio Year 2016 2014 2013 2012 2011
Operating Profit Margin(%) 28% 24% 18% 14% 12% Figure 4.1.3: Operating Profit Ratio
Interpretation: This ratio measures the relation between net profit and sales of a firm
excluding the other income of the company. Operating profit ratio indicates the management
ability to operate the business efficiency. From the above graph the operating profit of year
2011 is 12% in the year 2013 increases 18% by 28% in 2016. So rapidly the ratio is
increases. 0% 5% 10% 15% 20% 25% 30% 2011 2012 2013 2014 2016 12% 14% 18% 24%
28% %CHANGEINOPERATINGPROFITMARGIN YEAR Operating Profit Ratio(%) Operating
Profit Ratio(%)
46. 46. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 41 4. CURRENT RATIO The current ratio is a liquidity and efficiency
ratio that measures a firm's ability to pay off its short-term liabilities with its current assets.
The current ratio is an important measure of liquidity because short-term liabilities are due
within the next year. This means that a company has a limited amount of time in order to
raise the funds to pay for these liabilities. Current assets like cash, cash equivalents, and
marketable securities can easily be converted into cash in the short term. This means that
companies with larger amounts of current assets will more easily be able to pay off current
liabilities when they become due without having to sell off long-term, revenue generating
assets. 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 = 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔 𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 Table 4.1.4: Current Ratio
Year 2016 2014 2013 2012 2011 Current Ratio 0.46 0.48 0.48 0.43 0.60 Figure 4.1.4:
 Current Ratio Interpretation: The standard for current ratio is 2:1, whereas the same for 2011
this company had 0.60:1 signifying that for every Rs.1 of current liabilities the company had
the Rs.0.60 current assets. For the year 2016 this company had the 0.46:1 signifying that for
every Rs.1 of current liabilities the company had the Rs.0.46 worth of current Assets. The
state affairs are quite comfortable and looking to the fact that current assets mostly comprise
liquid assets. It can be said that the company will be able to meet its current liabilities with
ease, as when they arise. 0 0.2 0.4 0.6 2011 2012 2013 2014 2016 0.6 0.43 0.48 0.48 0.46
CURRENTRATIO YEAR Current Ratio Current Ratio
47. 47. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 42 5. QUICK RATIO-ACID RATIO The quick ratio or acid test ratio is
a liquidity ratio that measures the ability of a company to pay its current liabilities when they
come due with only quick assets. Quick assets are current assets that can be converted to
cash within 90 days or in the short-term. Cash, cash equivalents, short-term investments or
marketable securities, and current accounts receivable are considered quick assets. 𝑸𝒖𝒊𝒄𝒌
𝑹𝒂𝒕𝒊𝒐 = 𝑸𝒖𝒊𝒄𝒌 𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒐𝒕𝒂𝒍 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 Quick Assets=Total Current Assets-Inventory-
Prepaid Expenses Table 4.1.5: Quick Assets Year 2016 2014 2013 2012 2011 Quick Assets
0.22 0.28 0.26 0.27 0.45 Figure 4.1.5: Quick Assets Interpretation: In 2011 the company’s
quick ratio was 0.45 and in 2012 it was further reduced at 0.27 and goes on 0.22 in 2016 the
ratio shows that the company has not sound working capital management to meet its current
liabilities. 0 0.1 0.2 0.3 0.4 0.5 2011 2012 2013 2014 2016 0.45 0.27 0.26 0.28 0.22
QUICKASSETS YEAR Quick Assets Quick Assets
48. 48. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 43 6. DEBT TO EQUITY RATIO The debt to equity ratio is a financial,
liquidity ratio that compares a company's total debt to total equity. The debt to equity ratio
shows the percentage of company financing that comes from creditors and investors. A
higher debt to equity ratio indicates that more creditor financing (bank loans) is used than
investor financing (shareholders). 𝑫𝒆𝒃𝒕 𝒕𝒐 𝑬𝒒𝒖𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 = 𝑺𝒆𝒄𝒖𝒓𝒆𝒅 𝑳𝒐𝒂𝒏 + 𝑼𝒏𝒔𝒆𝒄𝒖𝒓𝒆𝒅
𝑳𝒐𝒂𝒏 𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓′ 𝒔 𝑬𝒒𝒖𝒊𝒕𝒚 Table 4.1.6: Debt to Equity Ratio Year 2016 2014 2013 2012
2011 Debt to equity ratio 0.01 0.0 0.0 0.03 0.03 Figure 4.1.6: Debt to Equity Ratio
Interpretation: The acid-test ratio is far more forceful than the current ratio, primarily because
the current ratio includes inventory assets which might not be able to turn to cash
immediately. Company with ratios of less than 1 year 2012, 2013, 2014 and 2016 cannot pay
their current liabilities and should be looked at with extreme caution. Furthermore, if the acid-
test ratio is much lower than the current ratio, it means current assets are highly dependent
on inventory. 0 0.01 0.02 0.03 2011 2012 2013 2014 2016 0.03 0.03 0 0 0.01
DEBTTOEQUITYRATIO YEAR Debt to equity ratio Debt to equity ratio
49. 49. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 44 7. INVENTORY TURNOVER RATIO The inventory turnover ratio
is an efficiency ratio that shows how effectively inventory is managed by comparing cost of
goods sold with average inventory for a period. This measures how many times average
inventory is "turned" or sold during a period. This ratio is important because total turnover
depends on two main components of performance. The first component is stock purchasing.
If larger amounts of inventory are purchased during the year, the company will have to sell
greater amounts of inventory to improve its turnover. If the company can't sell these greater
amounts of inventory, it will incur storage costs and other holding costs. 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
𝒕𝒖𝒓𝒏𝒐𝒏𝒗𝒆𝒓 𝒓𝒂𝒕𝒊𝒐 = 𝑪𝒐𝒔𝒕 𝒐𝒇 𝑮𝒐𝒐𝒅𝒔 𝑺𝒐𝒍𝒅 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 Table 4.1.7: Inventory
Turnover Ratio Year 2016 2014 2013 2012 2011 Inventory turnover ratio 23.25 16.19 13.33
15.64 16.41 Figure 4.1.7: Inventory Turnover Ratio Interpretation: As per the above chart we
can see concluded that the Company’s inventory turnover ratio is increases, its shows a
lower inventory turnover ratio may be an indication of over-stocking which may pose risk of
obsolescence and increased inventory holding costs. However, a very high value of this ratio
may be accompanied by loss of sales due to inventory shortage. As we can see in this graph
the company’s inventory turnover ratio is 23.25 increased in 2016. 0 5 10 15 20 25 2011
 2012 2013 2014 2016 16.41 15.64 13.33 16.19 23.25 INVENTORYTURNOVERRATIO
YEAR Inventory turnover ratio Inventory turnover ratio
50. 50. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 45 8. DEBTOR’S TURNOVER RATIO Debtor turnover ratio is the
relationship between net sales and average debtors. It is also called account receivable
turnover ratio. Higher debtor’s turnover ratio means company rapidly collecting their money
or converting into cash and the quality of the company’s debtors is good. Lower debtor’s
turnover ratio indicates company not getting their money as fast as they required. 𝑫𝒆𝒃𝒕𝒐𝒓′ 𝒔
𝒕𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝒓𝒂𝒕𝒊𝒐 = 𝑵𝒆𝒕 𝑪𝒓𝒆𝒅𝒊𝒕 𝑺𝒂𝒍𝒆𝒔 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑫𝒆𝒃𝒕𝒐𝒓𝒔 Net Credit Sales = Total sales -
sales return - cash sales Table 4.1.8: Debtors Turnover Ratio Year 2016 2014 2013 2012
2011 Debtor’s turnover ratio 217.77 265.55 185.76 203.74 173.50 Figure 4.1.8: Debtors
Turnover Ratio Interpretation: The above debtor’s turnover ratio shows that in 2014 at 265.55
and then after it is decreases in 2016 at 217.77 but it is still near so, it is indicating better
management of receivables. 0 100 200 300 2011 2012 2013 2014 2016 173.5 203.74
185.76 265.55 217.77 DEBTORSTURNOVERRATIO YEAR Debtors turnover ratio Debtors
turnover ratio
51. 51. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 46 9. RETURN ON ASSETS RATIO The return on assets ratio, often
called the return on total assets, is a profitability ratio that measures the net income
produced by total assets during a period by comparing net income to the average total
assets. In other words, the return on assets ratio or ROA measures how efficiently a
company can manage its assets to produce profits during a period. 𝑹𝒆𝒕𝒖𝒓𝒏 𝒐𝒏 𝑨𝒔𝒔𝒆𝒕𝒔
𝑹𝒂𝒕𝒊𝒐 = 𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑻𝒐𝒕𝒓𝒍 𝑨𝒔𝒔𝒆𝒕𝒔 Table 4.1.9: Return on Assets Ratio Year 2016
2014 2013 2012 2011 Return on Assets Ratio 3.63 2.94 2.31 1.74 1.31 Figure 4.1.9: Return
on Assets Ratio Interpretation: The above ratio shows that the significant increases in return
on assets from 2011 to 2016 it is gradually increases. So, it is proving that the company’s
overall profitability increases. 0 0.5 1 1.5 2 2.5 3 3.5 4 2011 2012 2013 2014 2016 1.31 1.74
2.31 2.94 3.63 RETURNONASSETSRATIO YEAR Return on Assets Ratio Return on Assets
Ratio
52. 52. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 47 10. RETURN ON EQUITY RATIO The return on equity ratio or
ROE is a profitability ratio that measures the ability of a firm to generate profits from its
shareholder’s investments in the company. In other words, the return on equity ratio shows
how much profit each dollar of common stockholders' equity generates. ROE is also an
indicator of how effective management is at using equity financing to fund operations and
grow the company. 𝑹𝒆𝒕𝒖𝒓𝒏 𝒐𝒏 𝑬𝒒𝒖𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 = 𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓′ 𝒔
𝑬𝒒𝒖𝒊𝒕𝒚 Table 4.1.10: Return on Equity Ratio Year 2016 2014 2013 2012 2011 Return on
Equity Ratio 36.9 24.5 19.2 18.5 20.7 Figure 4.1.10: Return on Equity Ratio Interpretation:
As we can see in figure 4.1.10 that the Return on equity ratio is increases from 2012 to till
2016 which is indicates the company using shareholders fund efficiently to generate more
profit in the business and to grow the business. 0 10 20 30 40 2011 2012 2013 2014 2016
20.7 18.5 19.2 24.5 36.9 RETURNONEQUITYRATIO YEAR Return on Equity Ratio Return
on Equity Ratio
53. 53. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 48 11. INTEREST COVERAGE RATIO The interest coverage ratio is
a financial ratio that measures a company’s ability to make interest payments on its debt in a
timely manner. Unlike the debt service coverage ratio, this liquidity ratio really has nothing to
do with being able to make principle payments on the debt itself. Instead, it calculates the
firm’s ability to afford the interest on the debt. 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑪𝒐𝒗𝒆𝒓𝒂𝒈𝒆 𝑹𝒂𝒕𝒊𝒐 = 𝑷𝒓𝒐𝒇𝒊𝒕 𝑩𝒆𝒇𝒐𝒓𝒆
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒂𝒏𝒅 𝑻𝒂𝒙 𝑰𝒏𝒓𝒆𝒓𝒆𝒔𝒕 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔 Table 4.1.11: Interest Coverage Ratio Year 2016
2014 2013 2012 2011 Interest Coverage Ratio (Times) 233.1 102.5 86.1 159.2 87.1 Figure
4.1.11: Interest Coverage Ratio Interpretation: From the above chart and table through we
can say that in 2011 the interest coverage ratio is 87.1 then in 2012 increases to 159.2 and
 then after 2013 it is decreased at 86.1 and then after it is continuously increases till 2016
which is 233.1 noted. A continues increases ratio implies the not sound ability of the
company to services its interests to the lenders. So the company cannot rapidly raise the
funds from the lenders. 0 50 100 150 200 250 2011 2012 2013 2014 2016 87.1 159.2 86.1
102.5 233.1 INTERESTCOVERAGERATIO YEAR Interest Coverage Ratio Interest
Coverage Ratio
54. 54. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 49 12. EARNIGNS PER SHARE Earnings per share, also called net
income per share, is a market prospect ratio that measures the amount of net income earned
per share of stock outstanding. In other words, this is the amount of money each share of
stock would receive if all of the profits were distributed to the outstanding shares at the end
of the year. 𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 = 𝑷𝑨𝑻 − 𝑷𝒓𝒆𝒇𝒇𝒆𝒓𝒆𝒅 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝑵𝒐. 𝒐𝒇 𝑬𝒒𝒖𝒊𝒕𝒚
𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓′𝒔 Table 4.1.12: Earnings Per Share Year 2016 2014 2013 2012 2011
Earnings Per Share (Rs.) 470.5 227.1 145.7 120.1 114.4 Figure 4.1.12: Earnings Per Share
Interpretation: From the above table and graph shows that the ratio of 2011 is Rs.144.4. It is
gradually increase, in 2016 it goes to Rs.470.5 this shows the higher ratio compare to the
other companies. Due to high EPS, investors are highly interesting to invest in the company,
so company can easily raise the funds from the market. 0 50 100 150 200 250 300 350 400
450 500 2011 2012 2013 2014 2016 114.4 120.1 145.7 227.1 470.5
EARNINGSPERSHARE(RS.) YEAR Earnings Per Share (Rs.) Earnings Per Share (Rs.)
55. 55. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 50 Chapter-5 Recommendation & Suggestion
56. 56. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 51 RECOMMENDATION AND SUGGESTION  Growth of the
company is very good but we recommend that it can still manage its assets and liabilities
well so as to take advantage of leverage and earn more on them keeping idle.  EPS ratio is
gradually increases investors are highly interesting to invest in the company, so company
can easily raise the funds from the market.  Interest coverage ratio continuous increases
implies that the company has not sound ability to service its interest to the lenders.
57. 57. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 52 Chapter-6 Conclusion
58. 58. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 53 CONCLUSION Throughout financial project we came to know that
company is working more 50 years’. Eicher motors limited tried well to stay in market through
diversifying their product in the market. At starting they are manufacturing only tract but they
tried well to predicted future and “how they can survive in the market?” So they diversified
they product and as well as market segment to generate more profit. For financial analysis
we have found that the company’s earnings per share return is well in the market and the
profit of company also growing year by year which is well indicator for the company. In
debtor’s turnover ratio of the company is well managed by the organization to manage
receivables to generate rapid cash in the company. So, it will beneficial to do day to day
transaction. After analysing the quick assets ratio, we can conclude that the company has
not sound working capital management to meets its current liabilities. The main reason
behind that the ratio continuously decreases from last 5 years. The current ratio of the
company is totally worst because company had not tried to maintain 2:1 standard to meet its
current liabilities with easy, whenever it will arise in the company. From the analysis of profit
margin ratio, we can say that company’s overall profitability is increases year by year. Which
is best to those who want to invest in this company to take advantages.
59. 59. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 54 BIBLIOGRAPHY BOOKS: Narayanswamy“FinancialAccounting (A
Managerial Perspective)” Fourth Edition WEBSITES: Eicher.in
https://www.equitymaster.com/research-it/company-info/detailed-financial-
information.asp?symbol=echm&name=EICHER-MOTOR-Detailed-Financial-Data
 http://money.rediff.com/companies/Eicher-Motors-Ltd/10510004/ratio
http://www.moneycontrol.com/financials/eichermotors/ratios/EM
http://www.myaccountingcourse.com/financial-ratios
60. 60. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 55 ANNEXURE BALANCE SHEET OF EICHER MOTORS LIMITED
BALANCE SHEET'S OF EICHER MOTORS LIMITED Particular in Rs. Cr. Mar'16 Dec'14
Dec'13 Dec'12 Dec'11 15 months 12 months 12 months 12 months 12 months Sources
OfFunds Total Share Capital 27.16 27.10 27.04 27.00 26.99 Reserves 2123.62 1206.56
794.30 602.05 513.05 Networth(A) 2150.78 1233.66 821.34 629.05 540.04 Secured Loans
0.00 0.00 4.00 20.01 6.50 Unsecured Loans 22.57 0.00 0.00 0.00 7.75 Total Debt (B) 22.57
0.00 4.00 20.01 14.25 Total Liabilities(A+B) 2173.35 1233.66 825.34 649.06 554.29
ApplicationOf Funds Gross Block 1119.35 623.01 404.59 219.45 195.73 Less:Accum.
Depreciation 244.60 122.43 105.34 81.75 83.43 NetBlock (A) 874.75 500.58 299.25 137.70
112.30 Capital Work inProgress (B) 84.93 59.34 13.92 60.33 4.21 Investments(C) 1882.04
1188.58 856.35 649.39 518.01 Inventories 300.36 205.13 143.84 75.41 45.27 Sundry
Debtors 46.13 10.70 12.13 6.20 4.10 Cash andBank Balance 44.52 43.05 18.71 3.50 2.98
Total CurrentAssets 391.01 258.88 174.66 85.11 52.35 Loans andAdvances 185.27 221.51
138.98 91.71 95.51 Total CA, Loans & Advances 576.28 480.39 313.66 176.82 147.86
CurrentLiabilities 1186.30 811.39 549.32 303.80 172.03 Provisions 58.35 183.84 108.52
71.38 56.06 Total CL & Provisions 1244.65 995.23 657.84 375.16 228.09 NetCurrent
Assets(D) -668.37 -514.84 -344.18 -198.36 -80.23 Total Assets(A+B+C-D) 2173.35 1233.66
825.34 649.06 554.29
61. 61. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 56 PROFIT AND LOSS A/C OF EICHER MOTORS LIMITED
PROFIT AND LOSS ACCOUNT in Rs. Cr. Particular Mar'16 Dec'14 Dec'13 Dec'12 Dec'11
15 months 12 months 12 months 12 months 12 months Income SalesTurnover 6,983.98
3,320.23 1,917.76 1,179.30 742.83 Excise Duty 795.95 289.01 215.29 130.04 71.38
NetSales 6188.03 3031.22 1702.47 1049.26 671.45 OtherIncome 178.24 116.3 80.1 45.78
76.78 Stock Adjustments 53.22 43.17 31.96 21.27 14.4 Total Income 6419.49 3190.69
1814.53 1116.31 762.63 Expenditure Raw Materials 3614.75 1914.63 1131.04 721.74 476.7
Power& fuel cost 46.17 23.23 17.68 11.01 6.47 Employee cost 319.64 160.9 110.9 78.86
51.04 Miscellaneous Expenses 530.21 242.07 161.08 113.49 71.55 Total Expenses 4510.77
2340.83 1420.7 925.1 605.76 OperatingProfit 1730.48 733.56 313.73 145.43 80.09 PBDIT
1908.72 849.86 393.83 191.21 156.87 Interest 1.41 1.67 0.27 0.26 2.02 PBDT 1907.31
848.19 393.56 190.95 154.85 Depreciation 137.73 50.16 30.41 17.15 13.02 Profit Before
Tax 1769.58 798.03 363.15 173.8 141.83 PBT (PostExtra-ordItems) 1769.58 798.03 363.15
173.8 141.83 Tax 539.73 239.11 84.53 29.04 17.28 ReportedNet Profit 1229.85 558.92
278.62 144.76 124.55
62. 62. KADI SARVA VISHWAVIDAYALAYA UNIVERSITY S.V. INSTITUTE OF
MANAGEMENT, KADI 57 LIST OF TABLES AND GRAPHS Table List Graph List Table
Number Name Ofthe Table Graph Number Name ofThe Graph 2.2.1 Common Size
Statement Of Balance Sheet 3.2.1 Total Share Capital 2.3.1 Common Size Statement Of
Profit And Loss A/C 3.2.2 Secured Loans 3.2.0.1 Total Share Capital 3.2.3 Unsecured Loans
3.2.1 Secured Loans 3.2.4 Total Current Liabilities 3.2.2 Unsecured Loans 3.2.5 Total
Liabilities 3.2.3 Total Current Liabilities 3.2.6 Net Block 3.2.4 Total Liabilities 3.2.7 Capital
Work In Progress 3.2.5 Net Block 3.2.8 Total Current Assets 3.2.6 Capital Work In Progress
3.2.9 Net Current Assets 3.2.7 Total Current Assets 3.3.1 Net Sales 3.2.8 Net Current
Assets 3.3.2 Sales Turnover/Gross Sales 3.2.9 Trend Analysis Of BalanceSheet 3.3.3 Total
Expenditure 3.2.0.2 Trend Analysis Of Profit And Loss A/C 3.3.4 Operating Profit 3.3.1 Net
Sales 3.3.5 PBDT, PBDIT, PBT, PBT (Post Extra-Ord Items) 3.3.2 Sales Turnover/Gross
Sales 3.3.6 PAT 3.3.3 Total Expenditure 4.1.1 Profit Margin Ratio 3.3.4 Operating Profit
4.1.2 Total Assets TurnoverRatio 3.3.5 PBDT, PBDIT, PBT, PBT (Post Extra- Ord Items)
4.1.3 Operating Profit Ratio 3.3.6 PAT 4.1.4 Current Ratio 4.1.1 Profit Margin Ratio 4.1.5
Quick Assets 4.1.2 Total Assets TurnoverRatio 4.1.6 Debt To Equity Ratio 4.1.3 Operating
Profit Ratio 4.1.7 Inventory Turnover Ratio 4.1.4 Current Ratio 4.1.8 Debtors Turnover Ratio
4.1.5 Quick Assets 4.1.9 Return On Assets Ratio 4.1.6 Debt To Equity Ratio 4.1.10 Return
On Equity Ratio 4.1.7 Inventory Turnover Ratio 4.1.11 Interest Coverage Ratio 4.1.8 Debtors
Turnover Ratio 4.1.12 Earnings Per Share 4.1.9 Return On Assets Ratio 4.1.10 Return On
Equity Ratio 4.1.11 Interest Coverage Ratio 4.1.12 Earnings Per Share