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A STUDY ON FINANCIAL PERFORMANCE OF

SELECTED AUTOMOBILE COMPANIES


BY
S.JANCY RANI.
II
nd
Year M.B.A.

INTRODUCTION
Financial Performance is a subjective measure of how well a
firm can use assets from its primary mode of business and generate revenues.
Financial decisions which increase risks will decrease the value of the firm
and on the other hand, financial decisions which increase the profitability will
increase value of the firm. Risk and profitability are two essential ingredients
of a business concern. There has been a considerable debate about the
ultimate objective of firm performance, whether it is profit maximization or
wealth maximization.
MEANING
1.Finance is the allocation of assets and liabilities over time under conditions of
certainty and uncertainty. A key point in finance is the time value of money, which
states that a unit of currency today is worth more than the same unit of currency
tomorrow.
2. Finance aims to price assets based on their risk level, and expected rate of return.
Finance can be broken into three different sub categories: public finance, corporate
finance and personal finance.

IMPORTANCE OF FINANCE
1. It helps in obtaining sufficient funds at a minimum cost.
2. It tries to generate sufficient profits to finance expansion and
modernization of the enterprise and secure stable growth.
3. It also ensures safety of funds through creation of reserves
investment of profit, etc.

Uses of Financial Management
1. Anticipating financial needs.
2. Acquiring financial resources.
3. Allocating funds in Business.
4. Administrating the allocation of funds.
5. Analyzing the performance of finance.
6. Accounting and Reporting to management.

Need of the Study
1. Financial analysis is the powerful mechanism which helps in ascertaining the
strengths and weakness in the operation and financial position of an enterprise.
2. Financial statement analysis is largely a study of the relationship among the
various financial factors in a business as disclosed by a single set statement and
a study of the trend of these factors as shows in a series of statement.
3. Financial analysis is the process of identifying the financial strengths and
weakness of the firm by properly establishing relationship between the items of
the balance sheet and the profit and loss accounts.

Limitation of the study
Time was one of the limitations of this study. Because of the lack
of time the analysis is based on the secondary data collected from the
balance sheet, profit and loss accounts and other records from the
organization.


Review of Literature

1. The study was intended to probe into the financial condition-financial strength
and weakness-of the Indian Auto-mobile industry.
2. An attempt has been made in this study to analyze the important variables of
Automobile industry and projected future trends regarding sales and profit for the
next 10 year periods, with a view to help the policy makers to take appropriate
decisions.
3. It is conceptualized that sustained growth, adequate liquidity and requsine
profitability in the SME sector is significantly related to their investment and
financing decisions.
RESEARCH METHODOLOGY

1.RESEARCH
Research is a process in which the researcher wishes to find out the
end result for a given problem and thus the solution helps in future
course of action
2.RESEARCH DESIGN
The research design used in this project is Analytical in nature the
procedure using, which researcher has to use facts or information
already available, and analyze these to make a critical evaluation of the
performance.




1.








3.OBJECTIVES OF THE STUDY
To analyse the liquidity position of selected companies.
To analyse the profitability position of the leverage selected
companies.
To analyse the leverage position of the selected companies.
To analyse the turnover position of the selected companies















4.Scope of the study
The scope of the study is to analyse the financial performance of the
company. Automobile industry and also ascertain the development of
financial position of the company.
5. Limitations of the study
The time duration of the study is limited.
The financial statement and annual reports are taken into
consideration


RATIO ANALYSIS

Ratio analysis is an accounting tool, which can be used to measure
the solvency, the profitability, and the overall financial strength of a
business, by analyzing its financial accounts Accounting ratios are very
easy to calculate and they enable a business to highlight which areas of
its finances are weak and therefore require immediate attention







1.LIQUIDITY RATIO

1. Current Ratio
Current ratio=Current Assets/Current Liabilities.

2. Quick Ratio
Quick Ratio = Current Assets - Inventories/Current Liabilities.

3. Cash Ratio
Cash Ratio=Cash and Cash Equivalents/ Current Liabilities.

4.Net Working Capital
Networking Capital = Current Assets Current Liabilities
4.Net Working Capital
Net Working Capital=Current Assets Current Liabilities



Suggestions
The companies may use debt so that may attract the shareholders. Because of good
liquidity position, so it can meet out its immediate obligations.

CURRENT RATIO

COMPANY NAME

YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO


ASHOK LEYLAND
2008-2009 2374.91 2207.29 1.075
2009-2010 2849.22 3002.68 0.948
2010-2011 3573.64 3505.26 1.019
2011-2012 3493.56 4837.41 0.722
2012-2013 3329.37 4749.58 0.701


BAJAJ AUTO
2008-2009 833.17 1378.20 0.604
2009-2010 819.25 2218.06 0.369
2010-2011 1065.49 2624.35 0.406
2011-2012 1548.22 2925.53 0.529
2012-2013 1195.14 668.22 1.788

HERO MOTORCORP
2008-2009 694.26 1678.93 0.413
2009-2010 2408.27 3965.69 0.607
2010-2011 703.27 5316.40 0.132
2011-2012 1003.98 3520.66 0.285
2012-2013 1482.80 2893.39 0.512


TATA MOTORS
2008-2009 4423.18 10968.95 0.403
2009-2010 5939.67 16909.30 0.351
2010-2011 8923.19 16271.85 0.548
2011-2012 9137.51 20280.82 0.450
2012-2013 6753.93 16580.47 0.407


TVS MOTORS
2008-2009 544.11 776.08 0.701
2009-2010 549.78 838.62 0.655
2010-2011 804.48 1047.94 0.767
2011-2012 831.66 1149.47 0.723
2012-2013 827.63 1242.15 0.666
CHART
LEVERAGE RATIO

1.Debt Equity Ratio
Debt Equity Ratio = Total Debt/ Net Worth.
2.Debt Ratio
Debt Ratio = Total Debt/ Total Assets.


Suggestions

Debt Ratio

COMPANY NAME

YEAR TOTAL DEBT TOTAL ASSETS DEBT RATIO


ASHOK LEYLAND
2008-2009 1961.98 5435.87 0.360
2009-2010 2280.45 5936.76 0.384
2010-2011 2658.19 6621.14 0.401
2011-2012 2395.53 6607.32 0.362
2012-2013 3504.82 7959.92 0.440


BAJAJ AUTO
2008-2009 1570.00 3439.69 0.456
2009-2010 1338.58 4266.92 0.313
2010-2011 325.15 5235.37 0.062
2011-2012 97.48 6138.55 0.015
2012-2013 71.27 9300.35 0.007

HERO MOTORCORP
2008-2009 78.49 3879.24 0.020
2009-2010 66.03 3531.05 0.018
2010-2011 1491.16 4447.22 0.335
2011-2012 994.85 5284.68 0.188
2012-2013 302.16 5308.40 0.056


TATA MOTORS
2008-2009 13165.56 25559.83 0.515
2009-2010 16625.91 31429.69 0.528
2010-2011 14638.19 34651.49 0.422
2011-2012 11011.63 30637.64 0.359
2012-2013 14268.69 33403.53 0.427


TVS MOTORS
2008-2009 905.98 1719.11 0.527
2009-2010 1003.29 1868.67 0.536
2010-2011 785.42 1784.83 0.440
2011-2012 715.46 1884.76 0.379
2012-2013 545.86 1770.53 0.308
CHART





TURN OVER RATIO

1. Fixed Assets Turnover Ratio
Fixed Assets Turnover Ratio= Sales/Fixed Assets.

2. Current Assets Turnover Ratio
Current Assets Turnover Ratio = Net Sales / Current Asset.




Suggestions
The turnover ratio is decreasing .
FIXED ASSETS TURNOVER RATIO



COMPANY NAME

YEAR NET SALES FIXED ASSETS FIXED ASSETS
TURNOVER RATIO


ASHOK LEYLAND
2008-2009 6168.99 3060.96 2.015
2009-2010 7436.18 3087.54 2.408
2010-2011 11407.15 3047.5 3.743
2011-2012 13309.59 3113.76 4.274
2012-2013 12481.20 4630.55 2.695


BAJAJ AUTO
2008-2009 8709.06 2606.52 3.341
2009-2010 11847.91 3447.67 3.436
2010-2011 16482.38 4169.88 3.952
2011-2012 19582.32 4590.33 4.265
2012-2013 20041.99 8105.21 2.472

HERO
MOTORCORP
2008-2009 12325.38 3184.98 3.869
2009-2010 15839.58 1122.78 14.107
2010-2011 19366.97 3743.95 5.172
2011-2012 23586.80 4280.7 5.510
2012-2013 23768.11 3825.6 6.212


TATA MOTORS
2008-2009 25660.67 21136.65 1.214
2009-2010 35373.29 25490.02 1.387
2010-2011 47088.44 25728.3 1.830
2011-2012 54306.56 21500.13 2.525
2012-2013 44765.72 26667.6 1.678


TVS MOTORS
2008-2009 3670.92 1175 3.124
2009-2010 4363.11 1318.89 3.308
2010-2011 6179.48 980.35 6.303
2011-2012 7126.20 1053.1 6.776
2012-2013 7065.00 942.9 7.492
FIXED ASSETS TURNOVER RATIO
CHART
FINDINGS
Analysis of financial statements leads to some findings which indicate the performance
of the company in certain aspects.
Long term solvency :
This shows that company is using long term fund for other than acquiring fixed assets.
Short term solvency :
Short term solvency ratios are in more than the comfort level. Most of them are
above the recommendable levels.
Activity Ratios :
Activity ratios of the company are giving different pictures about the utilization
of the resources.


Conclusion



The financial performance of the companies should be
developed from one year to next year. The financial analysis helps an
organization 1.0 improve its financial strength. A continuous effort at
cost cutting and improving productivity will help the companies in
making reasonable profits despite the impact of higher commodity
prices and weaker rupee. The analysis gives an optimistic view about
the industry and its growth which recommends the investors to keep a
good watch on the major players to benefit in terms of returns on their
investments.