DAYANANDA SAGAR UNIVERSITY

CENTER FOR EXECUTIVE EDUCATION

EXECUTIVE – MBA- 2021

ACCOUNTING FOR MANAGERS

ASSIGNMENT II
Answer all (FIVE) Questions (30 Marks)

1. Select any two manufacturing companies of your choice belonging to same industry
and of more or less same age listed in any of one of the Indian Stock exchanges (either
in BSE or in NSE or in both) and redraw their financial statements for latest two years
in columnar form (preferably for the year 2018-19 and 2019-20).
(05 Marks)

2. Perform financial analysis with regard to their financial performance and the financial
position (for both the companies selected as above) using appropriate ratios in order to
study their solvency, liquidity, profitability and turnover/activity.
(10 Marks)

3. Also apply market ratios to study the overall performance of the selected two
companies. (05 Marks)

4. Compare the results of both companies and interpret them accordingly. (05 Marks)

5. Prepare a report on the performance of both the companies which can be used by a potential
equity investor in that particular industry.
(05 Marks)

Component of the report to be submitted

Title of the assignment:
Analysis of Financial Performance of “….. and ….. Companies”
1. Introduction
2. Meaning and definition of financial statement Analysis
3. Overview of Industry selected
4. Overview of Companies selected
5. Financial statements of two companies for two years
6. Analysis of financial statements of two companies
a. Solvency ratios
b. Liquidity ratios
c. Profitability ratios
d. Turnover/activity ratios
7. Market ratios and overall performance
8. Comparison of performance of two companies
9. Interpretation
10. Report to potential Equity investors
11. References
....THE END....
 Solution -

Meaning and definition of financial statement Analysis -

The process of critical evaluation of the financial information contained in the financial statements in
order to understand and make decision regarding the operation of the firm is called financial statement
Analysis.

Meaning - In general terms it is the study of relationship among various financial facts and figures as
given in a set of financial statements and interpretation to gain insight into profit and operational
efficiency of the firm to assess its financial health and future.

Overview of the industry and company selected

 Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is a subsidiary of the Japanese
automotive manufacturer Suzuki. It was founded and owned by the Government of India between 1981 until
2003. It was sold to Suzuki Motor Corporation by Government of India in 2003. As of July 2018, it had a market
share of 53 percent in the Indian passenger car market.
 The Honda Motor Company is a Japanese public multinational conglomerate manufacturer of automobiles,
motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan. Honda has been the world's
largest motorcycle manufacturer since 1959.

Analysis of Financial Performance of “Maruti Suzuki India Ltd.” and

“Honda Motors”
Introduction:
 Financial analysis is used to find financial stability, evaluate economic trends, financial
policymaking for the long term, and evaluation of businesses in order to determine its
profitability, sustainability, and strength of earning potential.
 As the analysis of financial reports also means an understanding of the functioning of
business decision-making which includes observation, assessment, forecasting, and
formulation of diagnosis all the processes that took place in any organization, summarized
within the financial statements. Financial analysis is an essential part of all commercial
operations as it facilitates litigable insights into the health and capacity of the organization
in the future.
 Alongside providing imperative data to the lenders and investors that could sway the price
of stocks or rate of interest, this information also enables company managers to measure
their performance in terms of the expectations or growth of the industry.
 From the perspective of the management, financial analysis is essential for the
advancement of the company as it sheds light on the strengths as well as the weaknesses
which in turn directly impact competitiveness.
 There are many common ways to analyze financial data like calculating ratios from financial
statements and comparing these financial ratios to historical data of organizations or other
competitor companies.

Overview of Automobile Industry:

 The Indian automobile industry is the fourth largest in the world with an annual turnover of
$100 billion and employs 32 million people. The two-wheeler industry in India is the largest
in the world. India is also the largest tractor manufacturer and the eight largest commercial
vehicles manufacturer in the world.
 The automobile sector currently contributes about 50 per cent of the manufacturing gross
domestic product (GDP) in India, 26 per cent of the industry GDP and 7.1 per cent of overall
GDP, up from 2.7 per cent in 1992-93. The sector contributes approximately 13 per cent of
excise revenue to the government.
 The total investment in this sector is around $40 billion in the last decade. The decade of
2001-2010 saw a compounded annual sales growth of 15.67 per cent, which included 10 per
cent exports. The yearly growth of exports was 23 per cent from 2000 to 2015 due to
constant government support.
 The automobile industry includes two-wheeler, four-wheeler, passenger vehicle and
commercial vehicles. In 2018-19, 4.06 million cars were manufactured and at present
around 32 million cars run on Indian streets. The two-wheeler segment dominates the
industry with a share of 80 per cent.

Profit and Loss Statement for Maruti Suzuki India Ltd for Financial year 2018-19
and 2019-20

March -20 March

-19
INCOME

REVENUE FROM OPERATIONS [GROSS] 71,690.40 83,026.50

Less: Excise/Service Tax/Other Levies 0.00 0.00

REVENUE FROM OPERATIONS [NET] 71,690.40 83,026.50

TOTAL OPERATING REVENUES 75,610.60 86,020.30

Other Income 3,420.80 2,561.00

TOTAL REVENUE 79,031.40 88,581.30

EXPENSES

Cost Of Materials Consumed 34,636.60 45,023.90

Operating And Direct Expenses 0.00 0.00

Changes In Inventories Of FG,WIP And Stock-In -238.10 210.80

Trade

Employee Benefit Expenses 3,383.90 3,254.90

Finance Costs 132.90 75.80

Depreciation And Amortisation Expenses 3,525.70 3,018.90

Other Expenses 11,889.20 11,634.00

TOTAL EXPENSES 71,966.60 78,115.70

PROFIT/LOSS BEFORE EXCEPTIONAL, 7,064.80 10,465.60

EXTRAORDINARY ITEMS AND TAX
Exceptional Items 0.00 0.00

PROFIT/LOSS BEFORE TAX 7,064.80 10,465.60

TAX EXPENSES-CONTINUED OPERATIONS

CURRENT TAX 1,374.80 2,932.30

LESS: MAT CREDIT ENTITLEMENT 0.00 0.00

DEFERRED TAX 39.40 32.70

TAX FOR EARLIER YEARS 0.00 0.00

TOTAL TAX EXPENSES 1,414.20 2,965.00

PROFIT/LOSS AFTER TAX AND BEFORE 5,650.60 7,500.60

EXTRAORDINARY ITEMS

PROFIT/LOSS FROM CONTINUING 5,650.60 7,500.60

OPERATIONS

PROFIT/LOSS FOR THE PERIOD 5,650.60 7,500.60

Profit and Loss Statement for Honda Motors for Financial year 2018-19 and
2019-20

March-20 March -19

INCOME

REVENUE FROM OPERATIONS [GROSS] 43,485.7 68,764.8

6 8

Less: Excise/Service Tax/Other Levies 0.00 0.00

REVENUE FROM OPERATIONS [NET] 43,485.7 68,764.8

6 8

TOTAL OPERATING REVENUES 43,928.1 69,202.7

7 6

Other Income 1,383.05 2,554.66

TOTAL REVENUE 45,311.2 71,757.4

2 2

EXPENSES

Cost Of Materials Consumed 26,171.8 43,748.7

 5 7

Operating And Direct Expenses 830.24 571.76

Changes In Inventories Of FG,WIP And Stock-In Trade 722.68 144.69

Employee Benefit Expenses 4,384.31 4,273.10

Finance Costs 1,973.00 1,793.57

Depreciation And Amortisation Expenses 3,375.29 3,098.64

Other Expenses 7,959.75 9,895.68

TOTAL EXPENSES 49,927.6 69,155.4

4 2

PROFIT/LOSS BEFORE EXCEPTIONAL, -4,616.42 2,602.00

EXTRAORDINARY ITEMS AND TAX

Exceptional Items -2,510.92 -203.07

PROFIT/LOSS BEFORE TAX -7,127.34 2,398.93

TAX EXPENSES-CONTINUED OPERATIONS

CURRENT TAX 33.05 294.66

LESS: MAT CREDIT ENTITLEMENT 0.00 0.00

DEFERRED TAX 129.24 83.67

TAX FOR EARLIER YEARS 0.00 0.00

TOTAL TAX EXPENSES 162.29 378.33

PROFIT/LOSS AFTER TAX AND BEFORE -7,289.63 2,020.60

EXTRAORDINARY ITEMS

PROFIT/LOSS FROM CONTINUING OPERATIONS -7,289.63 2,020.60

PROFIT/LOSS FOR THE PERIOD -7,289.63 2,020.60

Balance Sheet of Maruti Suzuki India Ltd. for the financial year 2018-2019
and 2019-2020:
Amounts are in Crores.
MARCH - 20 MARCH - 19

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 151.00 151.00

TOTAL SHARE CAPITAL 151.00 151.00

Reserves and Surplus 48,286.00 45,990.50

TOTAL RESERVES AND SURPLUS 48,286.00 45,990.50

TOTAL SHAREHOLDERS FUNDS 48,437.00 46,141.50

NON-CURRENT LIABILITIES

Long Term Borrowings 0.00 0.00

Deferred Tax Liabilities [Net] 598.40 564.00

Other Long Term Liabilities 2,170.30 2,036.50

Long Term Provisions 51.60 39.50

TOTAL NON-CURRENT LIABILITIES 2,820.30 2,640.00

CURRENT LIABILITIES

Short Term Borrowings 106.30 149.60

Trade Payables 7,494.10 9,633.00

Other Current Liabilities 3,014.80 3,743.30

Short Term Provisions 679.60 624.40

TOTAL CURRENT LIABILITIES 11,294.80 14,150.30

TOTAL CAPITAL AND LIABILITIES 62,552.10 62,931.80

ASSETS

NON-CURRENT ASSETS

Tangible Assets 15,374.50 14,956.70

Intangible Assets 406.70 451.10

Capital Work-In-Progress 1,337.40 1,600.10

Other Assets 0.00 0.00

FIXED ASSETS 17,118.60 17,007.90

Non-Current Investments 35,248.80 31,469.50

Deferred Tax Assets [Net] 0.00 0.00

Long Term Loans And Advances 0.20 0.20

Other Non-Current Assets 1,757.10 2,092.60

TOTAL NON-CURRENT ASSETS 54,124.70 50,570.20

CURRENT ASSETS

Current Investments 1,218.80 5,045.50

Inventories 3,214.90 3,325.70

Trade Receivables 2,127.00 2,310.40

Cash And Cash Equivalents 21.10 178.90

Short Term Loans And Advances 16.90 16.00

Other Current Assets 1,828.70 1,485.10

TOTAL CURRENT ASSETS 8,427.40 12,361.60

TOTAL ASSETS 62,552.10 62,931.80

Balance Sheet of Honda Motors for the financial year 2018-2019 and
2019-2020:
Amounts are in Crores.
March - 20
March - 19
EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 719.54 679.22

TOTAL SHARE CAPITAL 719.54 679.22

Reserves and Surplus 16,800.61 21,483.30

TOTAL RESERVES AND SURPLUS 16,800.61 21,483.30

TOTAL SHAREHOLDERS FUNDS 18,387.65 22,162.52

NON-CURRENT LIABILITIES

Long Term Borrowings 14,776.51 13,914.74

Deferred Tax Liabilities [Net] 198.59 205.86

Other Long Term Liabilities 1,646.56 404.11

Long Term Provisions 1,769.74 1,281.59

TOTAL NON-CURRENT LIABILITIES 18,391.40 15,806.30

CURRENT LIABILITIES

Short Term Borrowings 6,121.36 3,617.72

Trade Payables 8,102.25 10,408.83

Other Current Liabilities 10,180.46 7,765.57

Short Term Provisions 1,406.75 1,148.69

TOTAL CURRENT LIABILITIES 25,810.82 22,940.81

TOTAL CAPITAL AND LIABILITIES 62,589.87 60,909.63

ASSETS

NON-CURRENT ASSETS

Tangible Assets 19,540.25 18,316.61

Intangible Assets 5,667.73 3,970.22

Capital Work-In-Progress 1,755.51 2,146.96

Other Assets 0.00 0.00

FIXED ASSETS 29,702.78 28,573.42

Non-Current Investments 15,730.86 15,434.19

Deferred Tax Assets [Net] 0.00 0.00

Long Term Loans And Advances 138.46 143.13

Other Non-Current Assets 3,449.01 3,529.59

TOTAL NON-CURRENT ASSETS 49,021.11 47,680.33

CURRENT ASSETS

Current Investments 885.31 1,433.18

Inventories 3,831.92 4,662.00

Trade Receivables 1,978.06 3,250.64

Cash And Cash Equivalents 3,532.19 1,306.61

Short Term Loans And Advances 232.14 200.08

Other Current Assets 3,109.14 2,376.79

TOTAL CURRENT ASSETS 13,568.76 13,229.30

TOTAL ASSETS 62,589.87 60,909.63

Financial Ratios:
Maruti Suzuki India Ltd. for the financial year 2018 - 2019
Liquidity Ratios:

1) Current Ratio: Current Assets/Current Liabilities

12,361.60/14,150.30 = 0.8735

2) Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current

Liabilities

5,094.108/14,150.30= 0.36

Solvency Ratios:
1) Fixed Asset Ratio: Net Fixed Assets/Long term Funds

17,007.90/46,141.50 = 0.3686

2) Debt – Equity Ratio: Total Debt/Shareholder’s funds

(14,150.30+2640)/46,141.50= 0.3638

3) Proprietary Ratio: Shareholders Funds/Total Tangible Assets

46,141.50/14,956.70 = 3.0850

4) Current Ratio: Current Assets/Current Liabilities

12,361.60/14,150.30 = 0.8735

5) Liquidity Ratio: Liquid Assets/Current Liabilities

 (2310.40+178.90)/14,150.30= 0.1759

6) Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current

Liabilities

178.90/14,150.30= 0.01

7) Defensive Interval Ratio: Liquid Assets (quick Assets)/Daily Cash Requirement

2489.3/ (3,018.90/365)= 2489.3/8.2709= 300.97

8) Debt Service Coverage Ratio = (Profit after tax + depreciation +Interest on

Loans)/ (Interest on Loan +Loan repayment in a year)
(7500.60+3018.90)/ 14,150.30= 0.7434

Profitability Ratios:

1) Overall Profitability Ratio: ROI = Operating profit/Capital Employed

7,500.60/46,141.50= 0.1625

2) Price Earnings Ratio (P/E Ratio) = Market Price per Equity share/Earnings per
share
6715/248.30= 27.04

3) Gross Profit Ratio: (Gross Profit/Net Sales) X 100

10465.60/83026.50= 12.605%

4) Net Profit Ratio: (Net Profit/Net Sales) X 100

7500.60/83026.50 = 9.033%

5) Operating Ratio: (Operating Cost/Net Sales) X 100

(3,254.90+45023.90)/83026.50=0.58148 = 58.14%

6) Fixed Charge Cover Ratios: Income before Interest and Tax/Interest

10465.60/3040.8 = 3.44

7) Pay-out Ratio: Dividend per Equity Share/Earning per equity Share

2,416.60/248.30 = 9.732

8) Dividend Yield Ratio: (Dividend per Share/Market Price per share) X 100
 45/5,113.636= 0.88

9) Net Worth: (Net Profit After Interest & Tax/Net Worth) X 100
(7,500.60/46,141.50) X 100 = 16.255

Turnover Ratios:

1) Overall Turnover Ratio: Net Sales/Capital Employed

83,026.50/46,141.50= 1.7993

2) Fixed Assets Turnover Ratio: Net Sales/Net Fixed Assets

83,026.50/12,361.60= 6.716

3) Debtors Turnover Ratio: Credit Sales/Avg. of Account Receivable

(83,026.50/ (1461.80+2310.3)/2)= 44.02

4) Creditors Turnover Ratio: Credit Purchases/Avg. Accounts Payable

(83,206.50/8563.55)= 9.6953

5) Stock Turnover Ratio: Cost of Goods Sold/Avg. of Inventory

1.86

Financial Ratios:
Honda Motors for the financial year 2018 – 2019
Liquidity Ratios:

1) Current Ratio: Current Assets/Current Liabilities

13,229.30/22,940.81= 0.5766

2) Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current

Liabilities

1,306.61/22,940.81= 0.056

Solvency Ratios:

3) Fixed Asset Ratio: Net Fixed Assets/Long term Funds

28,573.42/22,162.52= 1.289
4) Debt – Equity Ratio: Total Debt/Shareholder’s funds

(38,747.11)/ 22,162.52= 1.74

5) Proprietary Ratio: Shareholders Funds/Total Tangible Assets

22,162.52/18,316.61= 1.20

6) Current Ratio: Current Assets/Current Liabilities

13,229.30/22,940.81= 0.5766

7) Liquidity Ratio: Liquid Assets/Current Liabilities

(1,306.61+3,250.64)/ 22,940.81= 0.1986

8) Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current

Liabilities

1,306.61/22,940.81= 0.056

9) Defensive Interval Ratio: Liquid Assets (quick Assets)/Daily Cash Requirement

(1,306.61+3,250.64)/ (3,098.64/365)= 536.84

10) Debt Service Coverage Ratio = (Profit after tax + depreciation +Interest on
Loans)/ (Interest on Loan +Loan repayment in a year)
(2,020.60+3098.64)/ 22,940.81= 0.223

Profitability Ratios:

1) Overall Profitability Ratio: ROI = Operating profit/Capital Employed

2,020.60/22,162.52= 0.0911

2) Price Earnings Ratio (P/E Ratio) = Market Price per Equity share/Earnings per
share

331.10/5.94= 55.74
3) Gross Profit Ratio: (Gross Profit/Net Sales) X 100

2,602.00/68,764.88= 3.783%
4) Net Profit Ratio: (Net Profit/Net Sales) X 100
2,020.60/68,764.88= 2.938

5) Operating Ratio: (Operating Cost/Net Sales) X 100

(4,273.10+43,748.77)/ 68,764.88=0.58148 = 69.83

6) Fixed Charge Cover Ratios: Income before Interest and Tax/Interest

2,602.00/2171.9 = 1.19

7) Pay-out Ratio: Honda did not give any dividends for FY 19

8) Dividend Yield Ratio: Honda did not give any dividends for FY 19.

9) Net Worth: (Net Profit After Interest & Tax/Net Worth) X 100
(2,020.60/22,162.52) X 100 = 9.117

Turnover Ratios:

10) Overall Turnover Ratio: Net Sales/Capital Employed

68,764.88/22,162.52= 3.102

11) Fixed Assets Turnover Ratio: Net Sales/Net Fixed Assets

68,764.88/28,573.42= 2.406

12) Debtors Turnover Ratio: Credit Sales/Avg. of Account Receivable

38777.188/ (1461.80+2310.3)/2)= 20.56

13) Creditors Turnover Ratio: Credit Purchases/Avg. Accounts Payable

38777.188/12,317.23= 3.14

14) Stock Turnover Ratio: Cost of Goods Sold/Avg. of Inventory

13.40

Financial ratio of Maruti Suzuki Ltd for Financial year 2019-2020

Liquidity Ratios:

1) Current Ratio: Current Assets/Current Liabilities

0.63

2) Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current

Liabilities
0.41

Solvency Ratios:
3) Fixed Asset Ratio: Net Fixed Assets/Long term Funds
 0.35

4) Debt – Equity Ratio: Total Debt/Shareholder’s funds

0.29

5) Proprietary Ratio: Shareholders Funds/Total Tangible Assets

3.15

6) Current Ratio: Current Assets/Current Liabilities

0.63

7) Liquidity Ratio: Liquid Assets/Current Liabilities

0.41

8) Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current

Liabilities
0.41

9) Defensive Interval Ratio: Liquid Assets (quick Assets)/Daily Cash Requirement

2.39
10) Debt Service Coverage Ratio = (Profit after tax + depreciation +Interest on
Loans)/ (Interest on Loan +Loan repayment in a year)
0.93

Profitability Ratios:

11) Overall Profitability Ratio: ROI = Operating profit/Capital Employed

0.22

12) Price Earnings Ratio (P/E Ratio) = Market Price per Equity share/Earnings
per share
22.82
13) Gross Profit Ratio: (Gross Profit/Net Sales) X 100
4.99

14) Net Profit Ratio: (Net Profit/Net Sales) X 100

7.47

15) Operating Ratio: (Operating Cost/Net Sales) X 100

9.65

16) Fixed Charge Cover Ratios: Income before Interest and Tax/Interest
2.97

17) Pay-out Ratio: Dividend per Equity Share/Earning per equity Share
 26.33

18) Dividend Yield Ratio: (Dividend per Share/Market Price per share) X 100
0.84

19) Net Worth: (Net Profit After Interest & Tax/Net Worth) X 100
11.66

Turnover Ratios:
6) Overall Turnover Ratio: Net Sales/Capital Employed
1.48

7) Fixed Assets Turnover Ratio: Net Sales/Net Fixed Assets

1.59

8) Debtors Turnover Ratio: Credit Sales/Avg. of Account Receivable

34.08

9) Creditors Turnover Ratio: Credit Purchases/Avg. Accounts Payable

8.12

10) Stock Turnover Ratio: Cost of Goods Sold/Avg. of Inventory = 23.12

Financial Ratio of Honda Motors for Financial year 2019-2020

Liquidity Ratios:

Current Ratio: Current Assets/Current Liabilities

0.58

Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current Liabilities
0.38

Solvency Ratios:
Fixed Asset Ratio: Net Fixed Assets/Long term Funds
1.61

Debt – Equity Ratio: Total Debt/Shareholder’s funds

1.10

Proprietary Ratio: Shareholders Funds/Total Tangible Assets

0.94

Current Ratio: Current Assets/Current Liabilities

 0.58

Liquidity Ratio: Liquid Assets/Current Liabilities

0.12

Super Quick Ratio or Cash Ratio = Cash & Marketable securities/Current Liabilities
0.38

Defensive Interval Ratio: Liquid Assets (quick Assets)/Daily Cash Requirement

1.367
Debt Service Coverage Ratio = (Profit after tax + depreciation +Interest on Loans)/
(Interest on Loan +Loan repayment in a year)
-0.15

Profitability Ratios:

Overall Profitability Ratio: ROI = Operating profit/Capital Employed

0.22

Price Earnings Ratio (P/E Ratio) = Market Price per Equity share/Earnings per share
-2.21

Gross Profit Ratio: (Gross Profit/Net Sales) X 100

-16.37

Net Profit Ratio: (Net Profit/Net Sales) X 100

-4.3925

Operating Ratio: (Operating Cost/Net Sales) X 100

9.65

Fixed Charge Cover Ratios: Income before Interest and Tax/Interest

1.32

Pay-out Ratio: Dividend per Equity Share/Earning per equity Share

0.0

Dividend Yield Ratio: (Dividend per Share/Market Price per share) X 100
0.0

Net Worth: (Net Profit after Interest & Tax/Net Worth) X 100
-39.64

Turnover Ratios:
1) Overall Turnover Ratio: Net Sales/Capital Employed
2.36
2) Fixed Assets Turnover Ratio: Net Sales/Net Fixed Assets
0.90

3) Debtors Turnover Ratio: Credit Sales/Avg. of Account Receivable

10.2063

4) Creditors Turnover Ratio: Credit Purchases/Avg. Accounts Payable

4.67

5) Stock Turnover Ratio: Cost of Goods Sold/Avg. of Inventory

10.34

Comparison of Performance of Maruti Suzuki India Ltd and

Honda Motors
Market Ratios of Maruti and Honda Motors for Financial year 2018-2019 and
2019-2020
Market Ratio Uses: It gives an insight to the investor about the price of the
shares, financial and managerial efficiency of the company.
It also helps in the analysis of the future prospect of the company.
This is required to analyze the different trends in the stock market.
It can be used to find out the undervalued shares which have high potential to
earn money in the future.

1) Price/Earnings or PE Ratio= Price per share / Earnings per share (EPS)

2) Dividend Yield Ratio= Total dividend paid in a year / Number of shares
outstanding.
3) Market to Book Ratio = Price of one share / Book value of one share.

All ratios needed for Market ratio comparison are calculated above .
Market Ratios Maruti -19 Honda Maruti -20 Honda
Motors-19 Motors -20

Price/Earnings 27.04 55.74 22.82 -2.21

or PE Ratio

Dividend Yield 0.88 0.0 0.84 0.0

Ratio

Market to Book 4.85 2.83 4.75 3.61

Ratio
Interpretation and Report:
 P/E Ratio- Since Maruti has shown higher P/E ratio in the financial year 2018-
2019 and 2019-2020, compared to Honda Motors whose P/E ratio significantly
declined in FY 2020, investors will be keen on paying a higher share price today
because of growth expectations in the future.
 Net Sales of Maruti is significant compared to Honda for FY 19 and FY 20 and
has kept on growing profit at a steady rate compared to Honda who had a
hefty loss in FY 20.
 The Debt to Equity Ratio of Maruti is below 1, i.e. it has a significant lower
debt holding compared to Honda.
 The Net profit Ratio of Maruti is also a lot better than Honda Motors who has
shown a negative profit compared to Maruti for FY 20.
 Maruti also has a higher Dividend Yield ratio of 0.86 (avg. of FY 19 and FY 20)
compared to Honda who did not pay any dividend to their investor for FY 19
and 20.
 Book Value per share of Honda Motors is not steady as it showed a dip from
FY-19 to FY -20 whereas the Book Value per share of Maruti has shown a
healthy growth sign moving up every year including FY-19 and 20.
 Shareholders Equity - Maruti also has a higher Shareholders Equity compared
to Honda Motors, thus increasing the revenue of Maruti and decreasing the
operating cost.

Conclusion:
 Since Maruti Suzuki has performed well better compared to the Honda Motors
over the past 2 financial years namely FY-19 and FY-20.
 Maruti has increased the share price and Book value per share consistently.
Whereas, the stock of Honda Motors is trading at a loss compared to Maruti.
So by analyzing the financial statement and ratios of Honda Motors and Maruti
Suzuki India Ltd., investing in Maruti is a better option foreseeing the future
growth.

References:
https://www.moneycontrol.com/
https://www.business-standard.com/
https://www.equitymaster.com/