14405118 ratio analysis of tata motors

8/3/2019 14405118 Ratio Analysis of TATA MOTORS

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ASSIGNMENT

ON RATIO COMPARISON OFTATA MOTORS FOR 2007 AND 2008.

Submitted to:K.L. ChawlaHead, Department of Finance

INMANTEC

Submitted ByKamal Kant Soni @ PG-08-36Esha Raj @ PG-08-29

Chitrangda Jaiswal @ PG-08-27


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INCOME STATEMENT OF TATA MOTORS

RevenuesOther RevenuesTOTAL REVENUESCost of Goods SoldGROSS PROFITSelling General & Admin Expenses, TotalR&D ExpensesDepreciation & Amortization, Total

Other Operating ExpensesOTHER OPERATING EXPENSES, TOTALOPERATING INCOMEInterest ExpenseInterest and Investment IncomeNET INTEREST EXPENSEIncome (Loss) on Equity InvestmentsCurrency Exchange Gains (Loss)Other Non-Operating Income (Expenses)EBT, EXCLUDING UNUSUAL ITEMS

(2007)323,612.0

19.6325,143.8234,753.690,390.230,811.0

850.26,880.9

17,508.556,050.634,339.6-4,650.6

592.5-4,058.1

394.2652.1-1.4

31,326.4

(currency in million Rs.)(2008)

356,514.865.0

358,086.0254,571.5103,514.535,136.3659.57,820.7

24,046.667,663.135,851.4-9,127.21,696.6-7,430.6652.01,376.1-0.630,448.3

Gain (Loss) on Sale of AssetsOther Unusual Items, TotalEBT, INCLUDING UNUSUAL ITEMSIncome Tax ExpenseMinority Interest in EarningsEarnings from Continuing OperationsNET INCOME

---52.2

31,274.28,832.1-742.2

21,699.921,699.9

1,103.6-37.031,514.98,515.4-1,322.521,677.021,677.0


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BALANCE SHEET OF TATA MOTORS

AssetsCash and EquivalentsTOTAL CASH AND SHORT TERM INVESTMENTSAccounts ReceivableNotes ReceivableOther ReceivablesTOTAL RECEIVABLESInventoryPrepaid ExpensesOther Current AssetsTOTAL CURRENT ASSETSGross Property Plant and EquipmentAccumulated Depreciation-NET PROPERTY PLANT AND EQUIPMENTGoodwillLong-Term InvestmentsDeferred Charges, Long TermOther IntangiblesOther Long-Term AssetsTOTAL ASSETS

LIABILITIES & EQUITYAccounts PayableAccrued ExpensesShort-Term BorrowingsCurrent Income Taxes PayableOther Current Liabilities, TotalUnearned Revenue, CurrentTOTAL CURRENT LIABILITIESLong-Term DebtCapital LeasesMinority Interest

Deferred Tax Liability Non-CurrentTOTAL LIABILITIESCommon StockAdditional Paid in CapitalRetained EarningsComprehensive Income and Other

TOTAL COMMON EQUITYTOTAL LIABILITIES AND EQUITY

(2007)(2008)(currency in millions Rs.)

11,542.738,331.711,542.738,331.717,022.220,605.184,553.76,938.9

62.711.9101,638.597,555.931,669.032,946.41,247.33,334.8

16,681.720,504.7

162,779.2192,673.5129,408.3182,484.4-54,266.5-57,652.475,141.8124,832.04,430.15,661.611,745.926,658.3

119.32,442.1--1,429.6

---254,216.3353,697.1

48,723.34,704.934,325.1,084.2

38,789.26.7

127,633.7

38,693.6--2,499.68,172.7176,999.63,853.619,364.044,087.89,911.377,216.7254,216.3

67,832.85,389.352,503.2901.462,104.1218.0188,948.8

63,345.5--4,683.19,744.5

266,721.93,854.9

15,372.258,523.79,224.486,975.2353,697.1


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Liquidity ratioCurrent ratio = Current assets / Current liability

2008

Current Assets

Current Liability

Current Ratio (2008)

Current Ratio (2007)

Quick Ratio (2008)

Quick Ratio (2007)

Interval measure -

192,673.5

188,948.8

192,673.5/ 188,948.8 = 1.01

162,779.2/ 127,633.7 = 1.27

C.A. - Invent. / C.L.192,673.5 - 32,946.4 / 188,948.8 = .85

162,779.2- 31,669.0/127,633.7 = 1.02

Current assets-inven. / avg. daily cash oper. Exp

Total cash exp./ 36567,663.1/ 365 = 185.3

192,673.5 - 32,946.4 / 185.3 = 862 days

56,050.6/ 365 = 153.5162,779.2- 31,669.0 / 153.5 = 854 days

2007

162,779.2

127,633.7

For 2008-Avg. daily cash oper. Exp -

Interval measure -

For 2007Avg. daily cash oper. Exp -Interval measure -

In liquidity ratio, we observe that current ratio in 2008 is less in comparison of2007. it means companies efficiency decreases in paying current liability. And inquick ratio, it also decreases. In 2008, regular cash meet was 862 days incomparison of 854 of 2007. It means firms ability to pay its daily exp. Increases.


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Leverage RatioTotal debt ratio

For 2008

Total debt-Capital employed -

Or

For 2007Total debt-Capital employed -

63,345.5Net worth + borrowingShare capital + debt.86,975.2+ 63,345.5= 150320.763,345.5 / 150320.7 = .42

38,693.6

77,216.7 + 38,693.6= 115910.3(shr. cap) (debt)38,693.6 / 115910.3 = .33

- Net worth / total debt Net worth = share cap.86,975.2/63,345.5 = 1.3777,216.7 /38,693.6 = 1.99

Capital employed / net worth

150320.7 / 86,975.2= 1.73115910.3 / 77,216.7 = 1.50

Total debt / capital employed

Debt equity ratio

For 2008For 2007

Capital equity ratio -

For 2008For 2007

Interest coverage ratio EBIT + depreciation / Interest

Earning before taxAdd- Interest

200830,448.39,127.2

39575.5

For 2008

For 2007

200731,326.44,650.6

35977

- 39575.5 + 7,820.7/9,127.2 = 5.19

- 35977 + 6,880.9 / 4,650.6= 9.21

In 2008, the long term financial position getting strong than 2008. Capability ofpaying long term debt. is increases. As we seen, debt ratio increases. And thecontribution of debt is increases in 2008 than 2007. and the part of share capital is

also increases in total capital employed than 2007. it means, company is increasingits capital through shares.


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Activity Ratio

Inventory Turnover Ratio:- Cost of goods sold / Inventory

(2008)254,571.532,946.4

(2007)234,753.631,669.0

=

=

7.72

7.41

Cost of goods soldInventory

For 2008:-

For 2007 :-

254,571.5 / 32,946.4

234,753.6 / 31,669.0

Debtor Turnover Ratio :- Sales / debtor

For 2008 :-

For 2007 :-

358,086.0 (sales) / 97,555.9 (debtor) =

325,143.8 (sales) / 101,638.5 (debtor) =

98 days

112 days

3.67

3.20

Average collection period (2008) = 360 / 3.67 =

Average collection period (2007) = 360 / 3.20 =

Assets Turnover Ratio :- Sales / Net assets or capital employed

For 2008 :-

For 2007 :-

358,086.0 (sales) / 150320.7 (c.e.) =

325,143.8 (sales) / 115910.3 (c.e.) =

2.38

2.80

Working Capital Turnover Ratio:- Sales / Net working capitalNet Working Capital =Current assets Current liability

For 2008For 2007

For 2008 :-

For 2007 :-

= 192,673.5 - 188,948.8 = 3724.7= 162,779.2 - 127,633.7 = 35145.5

358,086.0 (sales) / 3724.7 (N.W.C.) = 96.13

325,143.8 (sales) / 35145.5 (N.W.C) = 9.25

As we seen, companys efficiency of using its assets is increasing in 2008 than2007. The inventory turnover ratio which shows its efficiency of selling product isincreasing. Average collection period is decreasing means company is selling its

product more on cash basis in 2008 than 2007. but companys assets turnoverratio is decreasing means sales is not growing according to its capital employedand working capital.


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Profitability Ratio

Gross Margin = Gross profit / Sales

103,514.5 / 358,086.0 = .29

90,390.2 / 325,143.8 = .28

PAT / EBIT

21,677.0 / 37878.921,699.9 / 35384.5

= .57= .61

Gross Margin (2008) =

Gross Margin (2007) =

EBIT Ratio

For 2008For 2007

Return on investment

For 2008For 2007

Return on equity

For 2008For 2007

=

==

=

==

=

==

EBIT / Capital employed

39575.5 / 150320.7 = .2635977 / 115910.3 = .31

PAT / Net worth

21,677.0 / 86,975.2 = .2521,699.9 / 77,216.7 = .28

In profitability ratio, the gross profit ratio is increasing in 2008 than 2007. itmeans its profit is growing in sales. But companys EBIT ratio is decreasing meansinterest on capital and tax rate is increased in 2008 than 2007 which is responsiblein decreasing its PAT. And companys return on investment is decreased thatindicates that its earning on capital employed is decreased in 2008 than 2007. andits ROE is also decreases means its PAT on its share capital is decreased.


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14405118 ratio analysis of tata motors

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