Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Institute Of Business
Administration
GLS Campus, Maida plaza Lane,Off. C.G.
Road
Ellisbridge, Ahmedabad – 380 006.
Certificate
ACKNOWLEDGEMENT
I am highly thankful to MARUTI SUZUKI
for helping me in my Practical Studies at
second year B.B.A. programme. It has
provided me many details and enlightens
me in preparation of this financial report.
PROFITABILITY RATIO
Gross profit ratio
LIQUIDITY RATIO :
Current ratio
Liquid ratio
Quick / acid ratio
LEVERAGE RATIO:
Proprietary ratio
Debt equity ratio
Capital gearing ratio
OTHERS:
Long term fixed fund to fixed asset
4. Accounting policies and notes
Notes of accounts
Main policies pertaining the unit
Implication
5. Director’s Report
6. Auditors Reports
Name of the auditors
To state weather reports is qualified or
unqualified
Implication
Special Achievement :
MARUTI SUZUKI HAS WON OVER 50 AWARDS SINCE YEAR 2000
MEANING
Cash flow means inflows that is, sources of cash which are at the
disposable at the firm and outflows of the fire that is the use of the
firm.
Interpretation
Above cash flow of Maruti Suzuki Ltd. Is shown that year 2006 – 07
net profit is higher than 2005 – 06 and this is good condition for the
company. Also investing as well as financing activities cash flow
describes strong condition from the previous years cash flow activities.
PROFITABLITY :
LIQUIDITY :
EFFCIENCY :
The absolute ratios of a firm are not of much use, unless they are
compared with similar ratios of other firms belonging to the same
industry. This is a inter firm compared to other firms comparison,
which shows the strength and weakness of the firm as compared to
other firms and will indicate corrective measures.
INDICATE TREND :
The ratio of the last 3 to 5 years will indicate the trend in the
respective fields. A particular ratio of a company , for one year may
compare favorably with industry average, but its trend shows a
deteriorating position, it is not desirable only ratio analysis will
provide this information.
1) Profitability ratio :
2) Liquidity Ratios :
3) Leverage Ratios :
Meaning :
It is a ratio expressing relationship between Gross Profit earned
to sales. It is a useful indication of the profitability of business.
Implementation :
Gross profit is result of the relation between price, sales volume
and costs. A change in the gross margin can be brought about
by changes in any of these factors.
The gross profit ratio can also be used in determining the extent
of loss caused by theft, spoilage, damage and so on in the case
of those firms which follow the policy of fixed gross profit margin
in pricing their product.
The gross margin represents the limit beyond which fall in sales
price are outside the tolerance limit.
Formula :
INTERPRETATION :
This ratio indicates relation between G/P and Sales. For the year 2004-
05 it was 19.93 and 2005-06 was 20.51 and increase to 24.59 in
2006-07.
Meaning :
Net profit ratio is valuable for the purpose of ascertaining the over-all
profitability of business and shows the efficiency of operating the
business.
Implementation :
The net profit ratio is indicative of management’s ability to
operate the business with sufficient success not only to recover
from revenue of the period the cost of merchandise or services,
the expenses of operating the business and the cost of the
borrowed funds, but also to leave a margin of reasonable
compensation to the owners for providing their capital at risk.
A high net profit margin would ensure adequate return to the owners
as well as enable a firm to withstand adverse economic conditions
when selling price is declaiming, cost of production raising and a low
net profit margin has the opposite implication.
Formula :
Interpretation :
Meaning :
Implementation :
Formula :
= Expenses X 100
Sales
INTERPRETATION :
This ratio shows relationship between expanses to sales. Above table
shows that for the year 2004 – 05 it was 88.64 % the increase in 2005
– 06 up to 89.23% that indicates there is increase in operating
expenses for the year 2006 – 07 it is 92.03% and it is higher than
previous tear which shows increase in operating expenses.
Meaning :
Implementation :
Formula:
INTERPRETATION:
This ratio shows relationship between COGS + operating expanses to
sales. Above table shows that for the year 2004 – 05 it was 87.33 %
the increase in 2005 – 06 up to 86.90 % that indicates there is
increase in operating expenses for the year 2006 – 07 it is 83.89 %
and it is lower than previous year which shows increase in operating
expenses.
Meaning :
The profitability ratio can be computed by relating the profits of a firm
to its investment.
Implementation :
Return on investment indicates the profitability of business and
is very much in use among financial analysis.
Formula :
= EBIT X 100
Capital employed
INTERPRETATION:
Meaning :
It is carries the relationship of return to the sources of funds yet
another step further.
Implication :
It expresses the profitability of a firm in relation to the funds
supplied by the creditors and owners taken to gather, the return
on shareholders’ equity measures exclusively the return on the
owners’ funds.
Formula :
= Net profit X 100
Share holders fund
INTERPRETATION:
The ratio indicates relationship between Net profits to share holders fund therefore
higher the returns to shareholders. For the year 2004 05 it is 21.90 % that
Meaning :
It is obtained by dividing net profit after tax deduction of performance
dividing by his amount of ordinary share capital plus free reserve.
Implementation :
This is probably the single most important ratio to judge whether
the firm has earned a satisfactory return for its equity – holders
or not.
Formula :
= Net profit after tax -- Preference dividend X 100
Equity capital
Meaning :
It is obtained by dividing net profit after tax deduction of performance
dividing by his amount of ordinary share capital plus free reserve.
Implementation :
This is probably the single most important ratio to judge whether
the firm has earned a satisfactory return for its equity – holders
or not.
Formula :
= Net profit after tax -- Preference dividend X 100
Equity share holders’ funds
INTERPRETATION:
For the year 2004 – 05 it is 19.49 % that increase in the year 2005 – 06 up to
21.81%. These ratios shows downward trend in the ratio in return on shareholders
fund for this company.
Meaning :
Implementation :
Formula :
INTERPRETATION :
Meaning :
Implementation :
Like the EPS, the DPS is also should not be taken at its face
value as the increase DPS may not be a reliable measure of
profitability as the equality base may have increase due to
increase relation without any change in the number of
outstanding shares.
Formula :
INTERPRETATION :
This ratio indicates the total dividend declared to no. of shares. For the
year 2004 – 05 it is 2.00 % and 2005 – 06 is3.50 % and increase on
4.50 % in the year 2006 – 07.
Meaning :
Implementation :
The price earning ratio reflects the price currently being paid by
the market for each Rupee of currently reported EPS. In other
words, the PIE ratio measures investors’ expectations and the
market appraisal of the earnings. Therefore, only normally
sustainable earning associated with the assets are taken into
account.
Formula :
INTERPRETATION :
This ratio indicates the earning per share for shareholders of company.
In the year 2004 – 05 ratio is 17.58% and 2005 – 06 it is 21.95% and
it’s increase on 29.55%. Therefore it is good for company as well as
shareholders.
Meaning :
Dividend yield ratio is closely related to the EPS and DPS. While the
EPS and DPS are based on the book value per share, the yield is
expressed in terms of the market value per share. The earnings yield
may be defined as the ratio of earnings per share to the market value
per ordinary share.
Implementation :
The dividend yield ratio is calculated by dividing the cash
dividends per share by the market value per share.
Formula :
INTERPRETATION :
This ratio indicates the earning per share for shareholders of company.
In the year 2004 – 05 ratio is 29.55 % and 2005 – 06 it is 41.16 %
and its increase on 54.06 %.therefore it is good for company as well
as shareholders.
Meaning :
It is also known as ‘time interest – earned ratio’. This ratio measures
the debt servicing capacity of a firm insofar as fixed interest on long
term loan is concerned. It is determined by dividing the operating
profit or earning before interest and taxes ( EBIT ) by the fixed
interest changes on loans.
Implementation :
This ratio uses the concept of net profits before taxes because
tax is calculated after paying interest on long term loan.
This ratio as the name suggests, show how many times the
interest changes are covered by EBIT out of which they will be
paid.
Formula :
= EBITD
Interest
INTERPRETATION :
This ratio indicates the EBDIT to interest. In the year 2004 – 05 ratio
is 50.39 and 2005 – 06 it is 100.70 and it’s decrease on
68.85.therefore it is good for company as well as shareholders.
Meaning :
The 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 between net sales to capital employed.
Implementation :
The usefulness of the Du 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 which have a
bearing on profitability.
Formula :
= Net sales
Capital employed
INTERPRETATION :
Meaning :
It is based on the relationship between the sales and assets of the
firm. A reference to this was made while working out the overall
profitability of a form as reflected in its earning power.
Implementation :
To ascertain efficiency and profitability of the business. The
higher the turnover ratio, the more efficiency is the
management and utilization of the assets while low turnover
ratios are indicative of underutilization of available resources.
Formula :
= sales
Fixed assets
INTERPRETATION :
Fixed turn over ratio indicates the turnover of the company in one
year. In the year 2004 – 05 ratio is 5.69 and 2005 – 06 it is 6.72 and
its decrease on 5.08 in the year 2006 - 07. Therefore, it is bad for
company.
Meaning :
It is allied and closely related to this is the average collection period. It
is the test of the liquidity of the debtors of a firm.
Implementation :
This 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.
Formula :
= credit sales
Avg. Debtors
INTERPRETATION :
Debtor turnover ratio indicates credit sales to avg. debtors. In the year
2004 – 05 ratio is 16.90 and 2005 – 06 it is 19.19 and it’s increase on
20.94 in the year 2006 – 07. Therefore, it is good position for
company. How efficiently the amount is collected from the customers
from the credit sales. As compare to previous year the no. of days
collection period increase which indicate inefficiency of collection
department. Lower the collection period and higher debtor turnover
ratio is advisable.
Meaning :
It is the no. of days within which we make payment to our creditors for
credit purchases it obtained from creditor ratio.
Implementation :
The generally the longer credit period achieved means the
operation of the payment being financial interest feels by supper
funds.
Formula :
= creditor + B / P X 365
Credit Purchases
INTERPRETATION :
Creditor ratio indicates creditor to credit purchase. In the year 2004 –
05 ratio is 18.82 and 2005 – 06 it is 20.77 and its decrease on 18.88
in the year 2006 – 07. Therefore, it is good position for company.
Meaning :
It is the no. of days within which we make payment to our creditors for
credit purchases it obtained from creditor ratio.
Implementation :
The generally the longer credit period achieved means the
operation of the payment being financial interest feels by supper
funds.
Formula :
= No. of days in a year
Creditor’s ratio
INTERPRETATION :
Creditor ratio indicates creditor to credit purchase. In the year 2004 –
05 ratio is 19.33 and 2005 – 06 it is 17.57 and its increase on 11.91 in
the year 2006 – 07. Therefore, it is good position for company.
Meaning :
It is the no. of times the average stock is turned over during the year
is known as stock turnover ratio. It measures the relationship between
COGS and inventory level.
Implementation :
This approach has the advantage of being free from bias as it
smoothens out the fluctuations in the inventory level at different
period.
Formula :
= cost of good sold
Average stock
INTERPRETATION :
Stock turnover ratio indicates cost of goods sold to average stock. In
the year 2004 – 05 ratio is 15.80 times and 2005 – 06 it is 12.33
times and it’s increase on 13.80 times in the year 2006 – 07.
Therefore, it is good for company. How efficiently stock rate in the
year Higher the ratio, better position of the company as well as
efficiency.
Meaning :
The current ratio is the ratio of total current assets to total current
liability. It is calculated by dividing current assets by current liability.
Implementation :
The current ratio of a firm measures its short term solvency.
That is a measure of margin of safety to the creditors. The fact
that a firm can rarely count on such an even flow requires that
the size of the C.A. should be sufficiently larger than C.L. so that
the firm would be assured of being able to pay its current
maturing debts as and when it becomes due.
Formula :
= current Assets
Current liability
INTERPRETATION :
Current ratio indicates current assets to current liability. In the year
2004 – 05 ratio is 1.84 : 1 and 2005 – 06 it is 1.89 : 1 and it’s
decrease on 1.54 : 1 in the year 2006 – 07. Therefore, it is good for
company. Mainly 2 : 1 is good. It indicates, repaying condition of the
company to the current liabilities. The standard current ratio must be
2:1.
Meaning :
It is obtained by dividing the liquid assets by liquid liabilities. It liquid
ratio is designed to show the amount of cash available to meet
immediate payments.
Implementation :
The importance of adequate liquidity in the sense of the ability of
a firm to meet short term obligations when they become due for
payment can hardly be overstressed.
formula :
= liquid assets
Liquid liability
INTERPRETATION :
Liquid ratio indicates liquid assets to liquid liability. In the year 2004 –
05 ratio is 1.53 : 1 and 2005 – 06 it is 1.52 : 1 and it’s decrease on
Meaning :
The measure of absolute liquidity may be obtain by comparing only
cash and bank balance as well as readily marketable securities with
liquid liabilities.
Implementation :
This ratio is the most rigorous and conservative test of a firm’s
liquidity position. Further, it is suggested that it would be useful
for the management.
formula :
= Quick assets
Liquid liability
INTERPRETATION :
Quick / acid test ratio is indicates quick assets and liquid liability. In
the year 2004 – 05 ratio is 1.13 : 1 and 2005 – 06 it is 1.17 : 1 and
it’s decrease on 0.97 : 1 in the year 2006 – 07. Therefore, it is good
for company.
Meaning :
The ratio shows the proportion of proprietors’ funds to the total assets
employed in known in the proprietary ratio.
Implementation :
Proprietary ratio helps to known how many proprietary funds to
total assets.
Formula :
= Proprietary fund
Net asset
INTERPRETATION :
This ratio indicates the proprietary funds to total assets. For the year
2004 – 05 it is 60.65 %and 2005– 06 is 66.12 % and decrease in
2006 – 07 it is 60.65 %. This is a bad for company.
Meaning :
The relationship between borrowed funds and owner’s capital is a
popular measure of the long term financial solvency of a firm. This
relationship is shown by the debt – equity ratio.
Implementation :
This ratio reflects the relative claims of creditors and
shareholders against the assets of the firm. Alternatively this
ratio indicates the relative proportions of debts and equity in
financing the assets of a firm.
Formula :
= long term liabilities
Shareholders fund
INTERPRETATION :
Meaning :
This ratio expresses the proportion of preference capital and ordinary
capital the higher ratio, the greater propos ion of preference capital
and debenture to ordinary capital.
Implementation :
Capital gearing ratio is helps to preference share and dividend to
equity share and helps to know about company’ s capital and
overall growth.
Formula :
= fixed investment barring capital
Ordinary capital
INTERPRETATION :
This ratio indicates the debenture and preference capital to ordinary
share. For the year 2004 – 05 in4.13% and 2005 – 06 is 0.50%and
increased in 2006 – 07 is 2.13. This is bad for the company.
2) FIXED ASSETS
Fixed Assets (except freehold lamed which is carried at cost) are
carried at cost of acquisition or construction or at manufacturing cost.
[in case of own manufactured assets ] in the year of capitalization less
accumulated depreciation.
Assets required under finance lease are capitalized at the lower of their
fair value and present value of minimum lease payments.
3) DEPRECIATION
Fixed assets excepts for lease hold land are depreciated on the straight
line method on a prorate basis from the month in which each asset
is put, to use, at the following rates :
4) INVESTMENTS
5) INVENTORIES
b) Tools are written off over a period of three years except for
tools valued at Rs.5000/- or less individually which are
charged off to revenue in the year of purchase.
6) INVESTMENTS
Current investments are valued at the lower of cost and fair value.
Long term investments are valued at cost except. In the case of a
permanent diminution in their value, in which case the necessary
provisions made.
9) DIFERRED TAXES
Tax expense of the period, comprising current tax, fringe benefits tax
and deferred tax, is included in determining the net profit / (loss) for
the year. Current tax is recognized based on assessable profit
Compute in accordance with the income tax act and at the prevailing
tax rate. Deferred tax is recognized for all timing differences. Deferred
FINANCIAL RESULTS :
Maruti’s performance during the year as compared with that during the
previous year is summarized below :
DIVIDEND :
The Board recommends a dividend of 90% (i.e. Rs.4.50 Per equity
share of Rs. 5 each ) for the year ended 31 st March 2007 amounting
to Rs. 1,300 million as against a dividend of 70% amounting to
Rs.1,011 million , paid for the year ended 31st March 2006.
DIRECTORS :
As per Articles of Association of the company and relevant
provisions of the companies act, 1956,Mr. R.C.Bhargava ,Mrs. Pallavi
Shroff and Mr. Shuji Oishi are liable to retire by rotation at the ensuing
Annual General Meeting and, being eligible, offer themselves for
reappointment, During the year, Mr. Tsuneo Kobayashi was elevated
as Senior Joint Managing Director with effect from 13th November
2006. Pursuant to the promotion and transfer to Suzuki Motor
Corporation, japan, Mr. Shinichi Takeuchi has resigned with effect
from close of hours of 26th May 2007, from the post of Director and
joint Managing Director. The Board records its appreciation for the
invaluable contribution made by him during his tenure. Mr. Masayuki
Osada was appointed as Director and whole-time Director designated
as Director (Research & Development) w.e.f26th July 2007 to fill the
casual vacancy caused by the resignation of Mr. Takeuchi.
c) Taken proper and sufficient care for the maintenance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
your company and for preventing and detecting fraud and other
irregularities ; and
12) The company has no granted any loans and advances on the basic
of security by way of pledge of shares, departures and other securities.
18) The company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under
section 301 of the act during the year.
20) The company has not raised any money by public issue during the
year.
21) During the course of our examination of the books and records
of the company , carried out in accordance with the generally
accepted auditing practices in India, and according to the
information and explanations given to us, we have neither come
across any instance of fraud on or by the company, noticed or
reported during the year, nor have we been informed of such case by
the management.
Audit committee:
EXPENDITURE
Raw materials 101,374 69.47 88,766 73.96 (4.49)
Purchase of trade 6,159 4.22 4,644 3.69 0.53
Goods.
Stores 1,097 0.75 824 0.69 0.06
Employee’s 2,884 1.98 2,287 1.90 0.08
Remuneration
and Benefits
Manufacturing ; 8,258 5.66 6,226 5.19 0.47
Administrative &
Other Expenses.
Selling and 4,999 3.42 3560 2.97 0.45
Distribution
Expenses.
B. S. SHAH