UNIVERSITY OF MUMBAI

A PROJECT REPORT ON

“A Study on Debt Mutual Fund.”

SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OD THE DEGREE

OF BACHELOR OF MANAGEMENT STUDY

T.Y.BAF (ACCOUNTING & FINANCING)

UNDER THE FACULTY OF COMMERCE

BY MR. SHUBHAM RAJESH SINGH

ROLL NO: FF21023

YEAR : 2023-2024

UNDER THE GUIDANCE OF

Asst. Prof. MUKUL KULKARNI

S.I.A. COLLEGE OF

HIGHER

EDUCATION

Sagarli, Dombivili (E)

ACADEMIC YEAR

2023-2024
 CERTIFICATE

THE SOUTH INDIAN ASSOCIATION (REGD)

THE S.I.A. COLLEGE OF HIGHER

EDUCATION AFFILIATED BY MUMBAI
UNIVERSITY DOMBIVILI (E)
This is to Certify MR. SHUBHAM RAJESH SINGH has T.Y.BAF Semester – VI, Roll
No. FF21049 Completed his Project Work for the Degree for Bachelor In Commerce
(Accounting & Finance) Under The Faculty Of Commerce And His Project Is Entitled
“A Study on Debt Mutual Fund” Under my Supervision.

I Further Certify that the Entire Work Has Been Done by The Learner Under My
Guidance And That No Part Of It Has Been Submitted Previously For Any Degree Of
Any University.

It Is His Own Work And Fact Reported His Personal Finding And Investigations.

PROJECT GUIDE EXAMINER

CO-ORDINATIOR PRINCIPAL

2
 DECLARATION

I the undersigned MR. SHUBHAM RAJESH SINGH. here by, declare that the work
embodied in this project work titled “A Study on Debt Mutual Fund”
form my own contribution to the research work carried out under the guidance of
Asst. Prof MUKUL KULKARNI is a result of my own research work and has not
been previously submitted to any other Degree to this or any other university.
Wherever reference has been made to previous works of others, it has been
clearly indicated as such and included in the bibliography.
I, here by further declare that all information of this document has obtained and
presented in accordance with academic rules and ethical conduct.

Date:-

Signature of the learner

3
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to
do this project.

I would like to thank Principal, Dr. Padmaja Arvind for providing the necessary
facilities required for completions of this project.

I take this opportunity to thank our Cordinator Asst. Prof. Rasika Shinde, for
her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Asst.
Prof MUKUL KULKARNI . Whose guidance and care made the project
successful.

I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers who
supported me throughout my project.

4
 INDEX

Chp. Financial Statement Analysis of Tata Motors Page No.

No.
1. Introduction
1.1 Introduction to the Financial Statements Analysis 7–8
1.2 How Financial Statement is Used 9
1.3 Significance of Financial Statement Analysis 10
1.4 Features of Financial Statement Analysis 11
1.5 Limitations of Financial Statement Analysis 12
1.6 Historical View 13 – 15
1.7
Method of Financial Statement Analysis 16 – 23
1.8
Introduction of TATA Motors Company 24 – 29

2. Research Methodology
2.1 Objective of Study 30 – 31
2.2 Hypothesis 32 – 33
2.3 Scope of Study 33
2.4 33 – 34
Limitations of Study
34
2.5 Research Design 35
2.6 Methods of Data Collections

3. Literature Review
3.1 What is Literature Review 36 – 39
3.2 Review (4 Reviews) 40 – 50

4. Data Analysis
4.1 Introduction 51 – 52
4.2 Financial Ratio Analysis 53
4.3 Ratio Analysis 53 – 54
4.4 Objective of Ratio Analysis 55
4.5 56
Limitations of Ratio Analysis
4.6 Data Representation & Interpretation 57 – 75

5 Finding and Conclusion

5.1 Conclusion 76 – 77
5.2 Findings 78
5.3 Suggestion 79
5.4 Bibliography 80
5.5 Webliography 80
5.6 Appendix 81 – 87

5
CHAPTER 1: INTRODUCTION

6
 1.1 INTRODUCTION TO MUTUAL FUND

A mutual fund is an investment vehicle made up of a pool of funds collected from many
investors for the purpose of investing in assets and securities such as stocks, bonds or money
market instruments. Mutual funds are operated by fund managers, who invest the fund capital
and attempt to produce capital gains and income for the fund investors. An asset management
company (AMC) is a company that manages a mutual fund. For all practical purposes, it is an
organized form of a money portfolio manager which has several mutual fund schemes with
similar or varied investment objectives. The AMC hires a professional money manager, who
buys and sells securities in line with the fund's stated objective. A mutual fund portfolio is
structured and maintained to match the investment objectives stated in its prospectus. Each
investor owns shares, which represent a portion of the holdings of the fund. Thus, a mutual fund
is one of the most viable investment options for the small investor as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively low cost.
Mutual funds invest in a wide amount of securities, and performance is usually tracked as the
change in the total market cap of the fund, derived by aggregating performance of the
underlying investments. Mutual fund units, or shares, can typically be purchased or redeemed as
needed at the fund's current net asset value (NAV) per share. A fund's NAV is derived by
dividing the total value of the securities in the portfolio by the total amount of shares
outstanding.

When an investor purchases shares in a mutual fund, he is usually assessed a fee known as an
expense ratio. A fund's expense ratio is the summation of its advisory fee or management fee
and its administrative costs. Additionally, these fees can be assessed on the front-end or back-
end, known as the load of a mutual fund. When a mutual fund has a front-end load, fees are
assessed at the time of the initial purchase. For a back-end load, mutual fund fees are assessed
when an investor sells his shares. Sometimes, however, an investment company offers a no-load
mutual fund, which is a fund sold without a commission or sales charge. These funds are
distributed directly by an investment company rather than through a secondary party.

Investing in a mutual fund offers the investor a gamut of benefits. With mutual fund
investments, the money can be spread in small bits across varied companies. This way, the
investor reaps the benefits of a diversified portfolio with small investments. The pool of money
collected by a mutual fund is managed by professionals who possess considerable expertise,
resources and experience. Through analysis of markets and economy, they help pick favourable
investment opportunities for their investors. A mutual fund usually spreads the money in
companies across a wide spectrum of industries. This not only diversifies the risk, but also helps
take advantage of the position it holds. Mutual funds clearly present their investment strategy to
their investors and regularly provide them with information on the value of their investments.
Also, a complete portfolio disclosure of the investments made by various schemes along with
the proportion invested in each asset type is provided. A wide variety of schemes allow
investors to pick up those which suit their risk/ return profile. All the mutual funds are registered
with SEBI. They function within the provisions of strict regulations created to protect the
interests of the investors.

7
 Definition Of Mutual Fund
Mutual fund is a pool of money collected from public to be invested to realize
specific investment objective of the investor.

According to Praveen N. Sharoff defination of mutual fund

A portfolio of stock market shares and other financial instruments built with
funds collected from small investors, whose primary concern is security of
investment".

How do mutual fund work?

Now, the NAV of the mutual fund changes every day on the basis of the performance of the
assets in the mutual fund is invested in. If a mutual fund invests in a particular stock whose price
goes up tomorrow, the same will reflect in the NAV of the mutual fund and vice versa. So, in
the above example, if the NAV of the mutual fund goes up to Rs 20, then your 50 units that
amounted to Rs 500 earlier will now amount to Rs 1000 (500 units x Rs 20). Hence, the mutual
fund’s performance is driven by its underlying assets, which generate its returns to investors.

So, if you redeem your mutual fund units, you shall receive Rs 1000 against the Rs 500 you
originally paid. This gain of Rs 500 is known as a capital gain. The market value of the mutual
8
fund portfolio is not fixed but varies every day; consequently, NAV also tends to change daily,
based on the valuation of the fund portfolio. Hence, this gain of Rs 500 can be a loss also,
depending on how the NAV moves and the underlying assets perform. Since mutual fund
investments are market-linked, the returns are not guaranteed and are also, dynamic in nature.

9
 1.2 HOW MUTUAL FUND IS USED?

1. Fund Creation: A mutual fund is created when

an asset management company (AMC) designs a fund with a specific investment objective.
strategy, and risk profile.

2. Pooling Funds: Investors who want to invest in the fund purchase units at the current Net
Asset Value (NAV). The NAV is the per-unit value of the fund's net assets (Assets minus
liabilities).

3. Portfolio Management: Skilled fund managers oversee the investment process. They
research and select securities to build a diversified portfolio aligned with the fund's
objectives. A fee is charged by the fund houses for management of the funds called
management fees.

4. Regular Reporting: Fund managers takes care that regular updates are provided to
investors about the fund's performance, holdings, and any changes in strategy by the AMC.

5. Redemption and Exit: Investors can sell their units back to the fund at the prevailing
NAV. The redemption process provides liquidity to investors. Certain mutual funds may
charge and Exit Load, serving as a charge or fee if investors withdraw prematurely (prior to
a defined duration) from the fund..

1.3 SIGNIFICANCE OF MUTUAL FUND

1. Diversification

10
One of the best advantages of investing in MFs is diversification. They allow investors to spread their
money across a spectrum of securities such as stocks, bonds and other asset classes. This
diversification reduces the overall risk of an investor’s portfolio and ensures their investments are not
overly dependent on just one security or asset class.

At ICICI Bank, we have a range of Mutual Funds that can diversify investments across different
sectors and asset classes. For example, the ICICI Prudential Equity & Debt Fund invests in a
combination of equity and debt securities, providing investors with a diversified portfolio that balances
risk and optimises returns.

2. Professional Fund Management

MFs offer Professional Fund Management. These funds are managed by experienced and successful
Fund Managers with the knowledge and expertise to identify the best investment opportunities and
minimise risk. Fund Managers use various tools and techniques to analyse market trends and opt for
securities that offer the best potential returns.

At ICICI Bank, our MFs are managed by experienced Fund Managers who abide by disciplined
investment protocols to identify ideal opportunities in different market conditions. Our Fund Managers
have a proven track record of delivering consistent returns to investors over the long term.

3. Easy Access

Investing in MFs is seamless and convenient, even for first time investors. People can buy the funds
online or through a financial advisor and begin with a small amount of money. The option to invest
small has made Mutual Funds an accessible investment option. ICICI Bank’s wide range of MFs caters
to different investment goals and risk profiles. Our online platform lets investors purchase and redeem
Mutual Funds with ease and manage their investments from anywhere, anytime.

4. Tax Benefits

Investing in MFs can also earn Tax benefits to investors. Certain types of funds such as Equity Linked

11
Saving Schemes (ELSS), provide Tax benefits under Section 80C of the Income Tax Act of 1961.
Investors can claim a deduction of up to Rs <1.5> lakh per year on investments made in ELSS,
reducing their Tax liability.

Our ICICI Prudential Long-term Equity Fund (Tax Saving) is an ELSS scheme that offers investors
tax benefits while providing exposure to quality equity investments.

5. Professional Risk Management

In a way, MFs also offer Professional Risk Management services to investors, without actually
charging them for it. Fund Managers use many risk management techniques to mitigate potential risks
associated with investing in securities. These techniques includes diversification, asset allocation and
hedging strategies to name a few.

At ICICI Bank, our approach to risk management ensures that our funds can deliver consistent long-
term returns to investors, with minimal risk.

6. Low Cost

MFs are also a cost-effective investment option for investors. They have a lower entry cost than other
investment options such as stocks or real estate. In addition, MFs also have lower transaction costs and
management fees compared to other investment options in the market.

At ICICI Bank, we offer a range of MFs with low management fees and expense ratios, which makes
them an affordable investment option for investors.

7. Long-term Returns

The most important reason to invest in MFs is the potential for long-term returns. While there is no
guarantee of returns on any investment, MFs have historically and statistically delivered higher returns
than other investment options such as Fixed Deposits (FDs) or Savings Accounts. Over the long-term,
investors can and do grow their wealth aplenty through compounding, which multiplies the valueof

12
MFs.

13
 1.4 FEATURES OF MUTUAL FUND

New fund offer (NFO) release: An AMC can start a mutual fund scheme by launching its NFO. It
creates and shares the strategy of the scheme before its launch. Investors can then decide whether and
how much they should invest. NFO units are often priced at a low ticket, such as Rs 10

Pooling money: After the NFO, fund houses receive funds from interested investors to purchase shares
in stocks, bonds, and other assets. Investors who didn’t participate in the NFO can still buy the units of
the fund after it gets operational.

Investments in securities: The scheme’s strategy determines how the fund manager will invest the
funds. The fund manager does extensive research on the economy, industries, and companies before
making an investment decision. He then buys the most appropriate securities that will generate
optimum returns for unitholders.

Return of funds: As mutual funds generate returns, the gains can be distributed among investors or
retained in the scheme for further growth. Investors receive payouts if they choose the IDCW option
(income distribution cum capital withdrawal). If they choose the growth option, the gains are retained
in the scheme and allowed to grow further.

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 1.5 LIMITATIONS OF MUTUAL FUND

1.High Expense Ratios and Sales Charges

If you're not paying attention to mutual fund expense ratios and sales charges, they can get out of
hand. Be very cautious when investing in funds with expense ratios higher than 1.50%, as they are
considered to be on the higher cost end. Be wary of 12b-1 advertising fees and sales charges in
general. There are several good fund companies out there that have no sales charges. Fees reduce
overall investment returns.

2.Management Abuses
Churning, turnover, and window dressing may happen if your manager is abusing their authority. This
includes unnecessary trading, excessive replacement, and selling the losers prior to quarter-end to fix
the books.

3.Tax Inefficiency
Like it or not, investors do not have a choice when it comes to capital gains payouts in mutual funds.
Due to the turnover, redemptions, gains, and losses in security holdings throughout the year, investors
typically receive distributions from the fund that are an uncontrollable tax event.

4.Poor Trade Execution

If you place your mutual fund trade anytime before the cut-off time for same-day NAV, you'll receive
the same closing price NAV for your buy or sell on the mutual fund. For investors looking for faster
execution times, maybe because of short investment horizons, day trading, or timing the market,
mutual funds provide a weak execution strategy.

15
1.6 TYPES OF MUTUAL FUNDS

1.Debt funds

Debt funds (also known as fixed income funds) invest in assets like government securities
and corporate bonds. These funds aim to offer reasonable returns to the investor and are
considered relatively less risky. These funds are ideal if you aim for a steady income and are
averse to risk.

2.Equity funds

In contrast to debt funds, equity funds invest your money in stocks. Capital appreciation is
an important objective for these funds. But since the returns on equity funds are linked to
market movements of stocks, these funds have a higher degree of risk. They are a good
choice if you want to invest for long term goals such as retirement planning or buying a
house as the level of risk comes down over time.

3.Hybrid funds

What if you want equity as well as debt in your investment? Well, hybrid funds are the
answer. Hybrid funds invest in a mix of both equity and fixed income securities. Based on
the allocation between equity and debt (asset allocation), hybrid funds are further classified
into various sub-categories.

1.7 INTRODUCTION OF DEBT MUTUAL FUND

Debt funds invest in securities that generate fixed income, like treasury bills, corporate bonds,
commercial papers, government securities, and many other money market instruments.

16
All these instruments have a pre-decided maturity date and interest rate that the buyer can earn
on maturity - hence the name fixed-income securities. The returns are usually not affected by
fluctuations in the market. Therefore, debt securities are considered to be low-risk investment
options.

Debt is the major market in which people invest their hard-earned money to make profits. The
debt market consists of various instruments which facilitate the buying and selling of loans in
exchange for interest. Considered to be less risky than equity investments, many investors with a
lower risk tolerance prefer buying in debt securities. However, debt investments offer lower
returns as compared to equity investments.

1.7 METHOD OF FINANCIAL STATEMENT ANALYSIS

There are various methods or techniques that are used in Analysing Financial
statements, such as:

1. Comparative Statements

2. Common Size Percentages

3. Trend Analysis

4. Ratios Analysis.

Period of financial statement analysis:

The Balance Sheet and Income statement of companies across the Globe are usually
prepared for a period of 1 year. However, the date from which this period starts varies
from country to country. In India, this 1-year period starts from 1st April and ends on
31st March.

1.7.1 TOOLS OF FINANCIAL STATEMENT ANALYSIS:

A Financial Analyst can adopt the following tools for analysis of financial statement.
These are also termed as methods of financial analysis.

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18
 1. Comparative Statement Analysis:

A comparative statement is a document that compares a particular financial statement

with prior period statements or with the same financial report generated by another
company. Analysts and business managers use the income statement, balance sheet
and cash flow statement for comparative purposes. The process reveals trends in the
financials and compares one company's performance with another business. Analysts
like comparative statements because the reports show the effect of business decisions
on a company's bottom line. Analysts can identify trends and evaluate the
performance of managers, new lines of business and new products on one report,
instead of having to flip through individual financial statements. When comparing
different companies, a comparative statement shows how a business reacts to market
conditions affecting an entire industry.

I. Horizontal analysis:

Horizontal analysis spotlights trends and establishes relationships between items that
appear on the same row of a comparative statement. Horizontal analysis discloses
changes on items in financial statements over time. Each item (such as sales) on a row
for one fiscal period is compared with the same item in a different period. Horizontal
analysis can be carried out in terms of changes in dollar amounts, in percentages of
change, or in a ratio format. Horizontal analysis may be conducted for balance sheet,
income statement, schedules of current and fixed assets and statement of retained
earnings. Dollar and Percentage Changes are computed by using the following
formulas:

1. Dollar Change =

Amount of the item in comparison year – Amount of the item in base year

2. Percentage Change =
Amount Comparison Year - Amount in Base Year / Amount In Base Year *
100

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 II. Vertical analysis:

Vertical analysis involves the conversion of items appearing in financial statement

columns into terms of percentages of a base figure to show the relative significance of
the items and to facilitate comparison. On the balance sheet, individual assets can be
expressed in terms of their relationship to total assets. Liabilities and shareholders’
equity accounts can be expressed in terms of their relationship to the total of liabilities
and shareholders’ equity. On the income statement, each item is stated as a percentage
of sales. In a vertical analysis the percentage is computed by using the following
formula:

Percentage of base = Amount of Individual / Amount of Base *100

2. Common-Size Statement Analysis:

A common-size financial statement is displays line items as a percentage of one

selected or common figure. Creating common-size financial Statements makes it
easier to analyse a company over time and compare it with its peers. Using common-
size financial statements helps investor’s Spot trends that a raw financial statement
may not uncover.

3. Trend Analysis:

Trend analysis is a technique used in technical analysis that attempts to predict the
future stock price movements based on recently observed trend data. Trend analysis is
based on the idea that what has happened in the past gives traders an idea of what will
happen in the future. There are three main types of trends: short-, intermediate- and
long-term.

4. Ratio Analysis:

Ratio analysis is referred to as the study or analysis of the line items present in the
financial statements of the company. It can be used to check various factors of a

20
business such as profitability, liquidity, solvency and efficiency of the company or the
business.

Ratio analysis is mainly performed by external analysts as financial statements are the
primary source of information for external analysts.

The analysts very much rely on the current and past financial statements in order to
obtain important data for analyzing financial performance of the company. The data
or information thus obtained during the analysis is helpful in determining whether the
financial position of a company is improving or deteriorating.

1. Ratio Profitability:

 Operating Profit Ratio :

Operating profit ratio is a type of profitability ratio that is used for determining the
operating profit and net revenue generated from the operations. It is expressed as a
percentage.

The formula for calculating operating profit ratio is:

Operating Profit Ratio = Operating Profit/ Revenue from Operations × 100

Or Operating Profit Ratio = 100 – Operating ratio

 Return on Capital Employed (ROCE) or Return on Investment (ROI) :

Return on capital employed (ROCE) or Return on Investment is a profitability ratio

that measures how well a company is able to generate profits from its capital. It is an
important ratio that is mostly used by investors while screening for companies to
invest.

The formula for calculating Return on Capital Employed

is : ROCE or ROI = EBIT ÷ Capital Employed × 100

Where EBIT = Earnings before interest and taxes or Profit before interest and taxes

Capital Employed = Total Assets – Current Liabilities

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 Return on Net Worth :

22
This is also known as Return on Shareholders’ funds and is used for determining
whether the investment done by the shareholders are able to generate profitable
returns or not.

It should always be higher than the return on investment which otherwise would
indicate that the company funds are not utilized properly.

The formula for Return on Net Worth is calculated as :

Return on Shareholders’ Fund = Profit after Tax / Shareholders’ Funds × 100

Or Return on Net Worth = Profit after Tax / Shareholders’ Funds × 100

2. Solvency Ratio

 Debt to equity ratio :

Debt to equity is one of the most used debt solvency ratios. It is also represented as
D/E ratio. Debt to equity ratio is calculated by dividing a company’s total liabilities
with the shareholder’s equity. These values are obtained from the balance sheet of the
company’s financial statements.

It is an important metric which is used to evaluate a company’s financial leverage.

This ratio helps understand if the shareholder’s equity has the ability to cover all the
debts in case business is experiencing a rough time. It is represented as

Debt to equity ratio = Long term debt / shareholder’s

funds Or Debt to equity ratio = total liabilities / shareholders’

equity

A high debt-to-equity ratio is associated with a higher risk for the business as it
indicates that the company is using debt for fuelling its growth. It also indicates lower
solvency of the business.

 Debt Ratio :

Debt ratio is a financial ratio that is used in measuring a company’s financial

leverage. It is calculated by taking the total liabilities and dividing it by total capital.
23
If the debt ratio is higher, it represents the company is riskier.

24
The long-term debts include bank loans, bonds payable, notes payable etc.

Debt ratio is represented as

Debt Ratio = Long Term Debt / Capital or Debt Ratio = Long Term Debt / Net Assets

Low debt to capital ratio is indicative of a business that is stable while a higher ratio
casts doubt about a firm’s long-term stability. Trading on equity is possible with a
higher ratio of debt to capital which helps generate more income for the shareholders
of the company.

 Proprietary Ratio:

Proprietary ratios is also known as equity ratio. It establishes a relationship between

the proprietors funds and the net assets or capital.

It is expressed as

Equity Ratio = Shareholder’s funds / Capital or Shareholder’s funds / Total Asset

3. Activity Ratio:

 Stock Turnover Ratio :

This is one of the most important turnover ratios which highlights the relationship between
the inventory or stock in the business and cost of the goods sold. It shows how fast the
inventory gets cleared in an accounting period or in other words, the number of times the
inventory or the stock gets sold or consumed. For this reason, it is also known as the
inventory turnover ratio.

It Is calculated by the following formula

Stock Turnover Ratio = Cost of Goods Sold / Average Inventory

A high stock turnover ratio is indicative of fast moving goods in a company while a low stock
turnover ratio indicates that goods are not getting sold and are being stored at warehouses for
an extended period of time.

25
  Debtor Turnover Ratio :

This ratio is an important indicator of a company which shows how well a company is able to
provide credit facilities to its customers and at the same time is also able to recover the due
amount within the payment period.

It is also known as accounts receivable turnover ratio as the payments for credit sales that will
be received in the future are known as accounts receivables.

The formula for calculating Debtor Turnover ratio is

Debtor Turnover Ratio = Credit Sales / Average Debtors

A higher ratio indicates that the credit policy of the company is sound, while a lower ratio
shows a weak credit policy.

 Working Capital Turnover Ratio :

This ratio is helpful in determining the effectiveness with which a company is able to utilise
its working capital for generating sales of its goods.

The formula for calculating working capital turnover ratio is

Working capital turnover ratio = Sale or Costs of Goods Sold / Working Capital

If a company has a higher level of working capital it shows that the working capital of the
business is utilized properly and on the other hand, a low working capital suggests that
business has too many debtors and the inventory is unused.

 Investment Turnover Ratio or Net Asset Turnover Ratio :

Investment Turnover Ratio is related to the sales taking place in the business and the net
assets or the capital employed. It determines the ability of the business to generate sales
revenue by the use of net assets of the business. The ratio is calculated using the following
formula

Investment Turnover Ratio = Net Sales/ Capital Employed

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 4. Liquidity ratio

 Current Ratio or Working Capital Ratio

The current ratio is a measure of a company’s ability to pay off the obligations within the next
twelve months. This ratio is used by creditors to evaluate whether a company can be offered
short term debts. It also provides information about the company’s operating cycle. It is also
popularly known as Working capital ratio. It is obtained by dividing the current assets with
current liabilities.

Current ratio is calculated as follows:

Current ratio = Current Assets / Current Liabilities

 Quick Ratio or Acid Test Ratio

Quick ratio is also known as Acid test ratio is used to determine whether a company or a
business has enough liquid assets which are able to be instantly converted into cash to meet
short term dues. It is calculated by dividing the liquid current assets by the current liabilities

It is represented as

Quick Ratio = (Cash + Marketable securities + Accounts receivable) / Current

liabilities The ideal quick ratio should be one (1) for a financially stable company.

 Cash Ratio or Absolute Liquidity Ratio

Cash ratio is a measure of a company’s liquidity in which it is measured whether the company
has the ability to clear off debts only using the liquid assets (cash and cash equivalents such as
marketable securities). It is used by creditors for determining the relative ease with which a
company can clear short term liabilities.

It is calculated by dividing the cash and cash equivalents by current liabilities.

Cash ratio = Cash and equivalent / Current liabilities

 Net Working Capital Ratio

The net working capital ratio is used to determine whether a company has sufficient cash or
funds to continue its operations. It is calculated by subtracting the current liabilities from the
current assets.

Net Working Capital Ratio = Current Assets – Current Liabilities

27
1.8 INTRODUCTION OF TATA MOTORS LIMITED COMPANY:

1.8.1 PROFILE OF TATA MOTORS LIMITED :

Tata Motors Limited is an Indian multinational automotive manufacturing company,

headquartered in Mumbai, India, which is part of the Tata Group. The company produces
passenger cars, trucks, vans, coaches, buses.

Tata Motors Limited

Formerly Tata Engineering and Locomotive Company Ltd. (TELCO)

Company type Public

Traded as BSE: 500570

NSE: TATAMOTORS
NSE NIFTY 50 Constituent

ISIN IN9155A01020

Industry Automotive

Founded 1945; 79 years ago

Founder Jehangir Ratanji Dadabhoy Tata

Headquarters Mumbai, Maharashtra, India[1]

Area served Worldwide

Key people Natarajan Chandrasekaran (Chairman)

Martin Uhlarik (CDO)

Products Automobiles

28
 Luxury vehicles
Commercial vehicles
Automotive parts
Pickup trucks
SUVs

Production output 1.1 Million (approx) (2021)

Services Automotive finance

Vehicle leasing
Vehicle service

Revenue ₹350,600.15 crore (US$44 billion) (2023)[2]

Operating income ₹7,059.30 crore (US$880 million) (2023)[2]

Net income ₹2,414.30 crore (US$300 million) (2023)[2]

Total assets ₹336,081.38 crore (US$42 billion) (2023)[3]

Total equity ₹45,321.80 crore (US$5.7 billion) (2023)[3]

Number of ~81,811+(2023)[4]
employees

Parent Tata Group

Subsidiaries Tata Motors Cars

Jaguar Land Rover
Tata Daewoo
Tata Marcopolo
Tata Technologies
Tata Hispano
Tata Hitachi Construction Machinery

Rating S&P BB/Stable[5]

Website www.tatamotors.com

29
Formerly known as Tata Engineering and Locomotive Company (TELCO), the company was
founded in 1945 as a manufacturer of locomotives. The company manufactured its first
commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969.
Tata Motors entered the passenger vehicle market in 1988 with the launch of the Tata Mobile
followed by the Tata Sierra in 1991, becoming the first Indian manufacturer to achieve the
capability of developing a competitive indigenous automobile. In 1998, Tata launched the
first fully indigenous Indian passenger car, the Indica, and in 2008 launched the Tata Nano,
the world’s most affordable car. Tata Motors acquired the South Korean truck manufacturer
Daewoo Commercial Vehicles Company in 2004. Tata Motors has been the parent company
of Jaguar Land Rover since the company established it for the acquisition of Jaguar Cars and
Land Rover from Ford in 2008.

Tata Motors’ principal subsidiaries include British premium car maker Jaguar Land Rover
(the maker of Jaguar and Land Rover cars) and the South Korean commercial vehicle
manufacturer Tata Daewoo. Tata Motors has a construction-equipment manufacturing joint
venture with Hitachi (Tata Hitachi Construction Machinery), and a joint venture with
Stellantis which manufactures automotive components and Fiat Chrysler and Tata branded
vehicles. On 12 October 2021, private equity firm TPG invested $1 billion in Tata Motors’
electric vehicle subsidiary.

Tata Motors has auto manufacturing and vehicle plants in Jamshedpur, Pantnagar, Lucknow,
Sanand, Dharwad, and Pune in India, as well as in Argentina, South Africa, the United
Kingdom, and Thailand. It has research and development centers in Pune, Jamshedpur,
Lucknow, Dharwad, India and South Korea, the United Kingdom, and Spain. Tata Motors is
listed on the BSE (Bombay Stock Exchange), where it is a constituent of the BSE SENSEX
index, the National Stock Exchange of India, and the New York Stock Exchange. The
company is ranked 265th on the Fortune Global 500 list of the world’s biggest corporations as
of 2019.

On 17 January 2017, Natarajan Chandrasekaran was appointed chairman of the company Tata
Group. Tata Motors increased its UV market share to over 8% in FY2019.

30
1.8.2. HISTORY OF TATA MOTORS LIMITED:

Tata Motors was founded in 1945, as a locomotive manufacturer. Tata Group entered the
commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz of
Germany. After years of dominating the commercial vehicle market in India, Tata Motors
entered the passenger vehicle market in 1991 by launching the Tata Sierra, a sport utility
vehicle based on the Tata Mobile platform. Tata subsequently launched the Tata Estate (1992;
a station wagon design based on the earlier Tata Mobile), the Tata Sumo (1994, a 5-door
SUV) and the Tata Safari (1998).

Tata launched the Indica in 1998, a fully indigenous Indian passenger car tailor-made to suit
Indian consumer needs though styled by I.D.E.A, Italy. Although initially criticized by auto
analysts, its excellent fuel economy, powerful engine, and aggressive marketing strategy
made it one of the best-selling cars in the history of the Indian automobile industry. A newer
version of the car, named Indica V2, was a major improvement over the previous version and
quickly became a mass favorite. Tata Motors also successfully exported large numbers of car
to South Africa. The success of the Indica played a key role in the growth of Tata Motors.

In 2004, Tata Motors acquired Daewoo’s South Korea-based truck manufacturing unit,
Daewoo Commercial Vehicles Company, later renamed Tata Daewoo.

On 27 September 2004, Ratan Tata, the Chairman of Tata Motors, rang the opening bell at the
New York Stock Exchange to mark the listing of Tata Motors.

In 2005, Tata Motors acquired a 21% controlling stake in the Spanish bus and coach
manufacturer Hispano Carrocera. Tata Motors continued its market area expansion through
the introduction onew products such as buses (Star bus and Globus, jointly developed with
subsidiary Hispano Carrocera) and trucks (Novus, jointly developed with subsidiary Tata
Daewoo).

In 2006, Tata formed a joint venture with the Brazil-based Marco polo, Tata Marco polo Bus,
to manufacture fully built buses and coaches.

In 2008, Tata Motors acquired the English car maker Jaguar Land Rover, manufacturer of the
Jaguar and Land Rover from Ford Motor Company.

In April 2022, Tata AVINYA Concept: A NEW PARADIGM OF INNOVATION;

Tata acquired full ownership of Hispano Carrocera in 2009.

31
In 2009, its Lucknow plant was awarded the “Best of All” Rajiv Gandhi National Quality
Award.

In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company
Trilix for €1.85 million. The acquisition formed part of the company’s plan to enhance its
styling and design capabilities.

In 2012, Tata Motors announced it would invest around ₹6 billion in the development of
Futuristic Infantry Combat Vehicles in collaboration with DRDO.

In 2013, Tata Motors announced it will sell in India, the first vehicle in the world to run on
compressed air (engines designed by the French company MDI) and dubbed “Mini CAT”.

In 2014, Tata Motors introduced the first Truck Racing championship in India “T1 Prima
Truck Racing Championship”.

On 26 January 2014, the Managing Director Karl Slym was found dead. He fell from the 22 nd
floor to the fourth floor of the Shangri-La Hotel in Bangkok, where he was to attend a
meeting of Tata Motors Thailand.

On 2 November 2015, Tata Motors announced Lionel Messi as global brand ambassador at
New Delhi, to promote and endorse passenger vehicles globally.

On 27 December 2016, Tata Motors announced the Bollywood actor Akshay Kumar as brand
ambassador for its commercial vehicles range.

On 8 March 2017, Tata Motors announced that it has signed a memorandum of understanding
with Volkswagen to develop vehicles for India’s domestic market.

On 3 May 2018, Tata Motors announced that it sold its aerospace and defence business to
another Tata Group Entity, Tata Advanced Systems, to unlock their full potential.

On 29 April 2019, Tata Motors announced a partnership with Nirma University in

Ahmedabad to provide a Beach. Degree programme for employees of its Sanand plant.

On 24 March 2020, Tata Motors Ltd announced that it would spin off its passenger vehicles
arm as a separate unit within the company.

On 5 March 2021, Tata Motors’ shareholders approved hiving off its passenger vehicles
business into a separate entity.

32
In August 2021, as a complimentary reward for Indian Olympians who finished close fourth
in Tokyo Olympics 2021 and missed the place for Bronze, the company planned to recognize
the efforts by gifting an Altroz hatchback.

On 23 August 2021 Tata Motors announced it will launch its mini SUV Punch in the ongoing
festive season.

On 30 May 2022 Tata Motors announced that it has signed an agreement to acquire a Ford
India Manufacturing plant in Sanand, Gujarat. Tata Motors agreed to pay 7.26bn rupees
($91.5m) for the manufacturing plant.

33
CHAPTER No 2: RESEARCH METHODOLOGY

34
2.1 OBJECTIVES OF STUDY:

• To study about the financial performance of company.

• To understand, analyze and interpret the information contained in financial

statements of Company.

• To analyze the Liquidity and profitability position of the company.

• To analyze the asset turnover ratio.

• To analyze operational efficiency of the company.

• To determine the solvency position of the company.

• To determine the cause of increasing and decreasing the profits.

• To know the financial strength and weakness of company.

35
2.2 WHAT IS HYPOTHESIS:

A hypothesis is an assumption that is made based on some evidence. This is the initial
point of any investigation that translates the research questions into predictions. It
includes components like variables, population and the relation between the variables.
A research hypothesis is a hypothesis that is used to test the relationship between two
or more variables

Types of Hypothesis :

 Simple Hypothesis

It shows a relationship between one dependent variable and a single independent

variable. For example – If you eat more vegetables, you will lose weight faster. Here,
eating more vegetables is an independent variable, while losing weight is the
dependent variable.

 Complex Hypothesis

It shows the relationship between two or more dependent variables and two or more
independent variables. Eating more vegetables and fruits leads to weight loss, glowing
skin, and reduces the risk of many diseases such as heart disease.

 Directional Hypothesis

It shows how a researcher is intellectual and committed to a particular outcome. The

relationship between the variables can also predict its nature. For example- children
aged four years eating proper food over a five-year period are having higher IQ levels
than children not having a proper meal. This shows the effect and direction of the
effect.

 Non-directional Hypothesis

It is used when there is no theory involved. It is a statement that a relationship exists

between two variables, without predicting the exact nature (direction) of the
relationship

36
  Null Hypothesis

It provides a statement which is contrary to the hypothesis. It’s a negative statement,

and there is no relationship between independent and dependent variables. The
symbol is denoted by “HO”.

 Associative and Causal Hypothesis

Associative hypothesis occurs when there is a change in one variable resulting in a change in
the other variable. Whereas, the causal hypothesis proposes a cause and effect interaction
between two or more variables.

 Sources of Hypothesis

Following are the sources of hypothesis:

 The resemblance between the phenomenon.

 Observations from past studies, present-day experiences and from the
competitors.
 Scientific theories.
 General patterns that influence the thinking process of people.

2.3 SCOPE OF THE STUDY:

The scope of the study is to find out the financial performance of “Tata Motors
Limited Company’’. For the past five years 2018 to 2022. A sincere attempt has been
made to include All the aspect relating to the study. For this purpose, analysis of
financial performance of the Company has done from the last five year published
financial statement and all aspects the Researcher should be included in the report.

2.4 LIMITATIONS OF THE STUDY

 The ratio is calculated from past financial statements and these are not
Indicators of future.
• This project has limited time period to study.
37
 • Difficulty in data collection
• The ratios are computed on the basis of past results. It doesn’t help properly to
predict the future to Predict budget and estimates since the business policy is
constantly changing.

2.5 RESEARCH DESIGN:

The research design for this study is descriptive in nature. The descriptive research
Design tries to descriptive of data and information which are already available
without changing Its nature and dimension of the data. The reason for selecting the
descriptive research design to Evaluate the data especially the data is of secondary in
nature. The Primary data is collected by Conservation by the research of the
functioning of the unit. To analyze the amount tied-up in Various components of
working capital by equites micro finance private limited company.

To examine the liquidity position during the period under the study on the basis of
some Important parameter of liquidity management such as Current Ratio, absolute
ratio, to analysis The Trend analysis of the company. To measure the extent of
relationship between income and Expenditure and using correlation Co-efficient.

The data which is being used for this research is fully in secondary Natures. The data
Collected from all sources are scrutinized, financial analysis techniques like Ratio
analysis and Executed to analyze

The financial data and also correlation Co-efficient etc. Case study method has been
followed For this study. In the present study an effort has been made to study the
practice, procedures and Techniques adopted by the Equites micro finance. For the
management and control of current Asset and current liabilities.

The secondary data for the present study were collected from annual reports and
Accounts. The sources of data are purely secondary. Secondary data is collected
through Information gathered from books, journals, magazines and annual report of
equites micro Finance private

38
2.6 METHODS OF DATA COLLECTION:

Primary dada Collection :

Primary data is a type of data that is collected by researchers directly from main
sources through interviews, surveys, experiments, etc. Primary data are usually
collected from the source—where the data originally originates from and are regarded
as the best kind of data in research.

The sources of primary data are usually chosen and tailored specifically to meet the
demands or requirements of particular research. Also, before choosing a data
collection source, things like the aim of the research and target population need to be
identified.

 Company Financial Statement and Ratio

 Company website.

Secondary Data collection :

 What is Secondary Data?

Secondary data refer to the data that are gathered by a secondary party other than the
user himself. The common sources of the secondary data for social science include
statements, the data collected by government agencies, organizational documents, and
the data that are basically collected for other research objectives. However, primary
data, by difference, are gathered by the investigator conducting the research.

Through the internet and published data.

In view of the objects of the study listed above an exploratory research design has
been Adopted. Exploratory research is one which is largely interprets and already
available Information and it lays particular emphasis on analysis and interpretation of
the existing and Available information.

• To know the financial status of the company.

• To know the credit worthiness of the company.

39
CHAPTER NO 3 : LITERATURE REVIEW:

40
3.1 WHAT IS A LITERATURE REVIEW:

The literature review is a written overview of major writings and other sources on a
selected topic. Sources covered in the review may include scholarly journal articles,
books, government reports, Web sites, etc. The literature review provides a
description, summary and evaluation of each source.

 Purpose of the literature review :

The purpose of the literature review is to provide a critical written account of the current
state of research on a selected topic:

 Identifies areas of prior scholarship.

 Places each source in the context of its contribution to the understanding of
the specific issue, area of research, or theory under review.
 Describes the relationship of each source to the others but you have selected.
 Identifies new ways to interpret, and shed light on any gaps in, previous research
 Points the way forward for further research.

 Components of the literature review :

The literature review should include the following:

 Objective of the literature review.

 Overview of the subject under consideration.
 Clear categorization of sources selected into those in support of your.
 Particular position, those opposed, and those offering completely different
arguments.
 Discussion of both the distinctiveness of each source and its similarities with
the others

41
 Types of Literature Review :

 Narrative literature review:

Narrative literature review, also referred to as traditional literature review, critiques

literature and summarizes the body of a literature. Narrative review also draws
conclusions about the topic and identifies gaps or inconsistencies in a body of
knowledge. You need to have a sufficiently focused research question to conduct a
narrative literature review

 Systematic literature review :

Systematic literature review requires more rigorous and well-defined approach

compared to most other types of literature review. Systematic literature review is
comprehensive and details the timeframe within which the literature was selected.
Systematic literature review can be divided into two categories: meta-analysis and
meta-synthesis.

When you conduct meta-analysis you take findings from several studies on the same
subject and analyze these using standardized statistical procedures. In meta-analysis
patterns and relationships are detected and conclusions are drawn. Meta-analysis is
associated with deductive research approach.

Meta-synthesis, on the other hand, is based on non-statistical techniques. This

technique integrates, evaluates and interprets findings of multiple qualitative research
studies. Meta-synthesis literature review is conducted usually when following
inductive research approach.

 Scoping literature review:

Scoping literature review, as implied by its name is used to identify the scope or
coverage of a body of literature on a given topic. It has been noted that “scoping
reviews are useful for examining emerging evidence when it is still unclear what
other, more specific questions can be posed and valuably addressed by a more precise
systematic review.”[1] The main difference between systematic and scoping types of
literature review is that, systematic literature review is conducted to find answer to
42
more specific

43
research questions, whereas scoping literature review is conducted to explore more
general research question.

 Argumentative literature review:

Argumentative literature review, as the name implies, examines literature selectively

in order to support or refute an argument, deeply imbedded assumption, or
philosophical problem already established in the literature. It should be noted that a
potential for bias is a major shortcoming associated with argumentative literature
review.

 Integrative Literature review

Integrative literature review reviews, critiques, and synthesizes secondary data about
research topic in an integrated way such that new frameworks and perspectives on the
topic are generated. If your research does not involve primary data collection and data
analysis, then using integrative literature review will be your only option.

 Theoretical literature review:

Theoretical literature review focuses on a pool of theory that has accumulated in

regard to an issue, concept, theory, phenomena. Theoretical literature reviews play an
instrumental role in establishing what theories already exist, the relationships between
them, to what degree existing theories have been investigated, and to develop new
hypotheses to be tested.

At the earlier parts of the literature review chapter, you need to specify the type of
your literature review your chose and justify your choice. Your choice of a specific
type of literature review should be based upon your research area, research problem
and research methods. Also, you can briefly discuss other most popular types of
literature review mentioned above, to illustrate your awareness of them.

44
3.2 REVIEW:

Name – R. Bhuvneshwari, S. Lakshmi

Topic – A study of Financial statements Analysis Sriram Perfumes Trichy

Year – 2015

Objective of the study

• To analyze the production, sales and profit trend of SRIRAM

PERFUMES.
• To analyze the activity of SRIRAM PERFUMES
• To analyze the profitability of SRIRAM PERFUMES
• To analyze the financial structure of SRIRAM PERFUMES
• To make suggestion for improvement of financial soundness.

Scope of the study

 The information relevant to the decision under consideration from total

information Contained in the financial statements
 The information in a way to highlight significant
 Interpretation and drawing if interfaces and conclusion

Limitations of the study

 The study is based on secondary data, obtained from the published report and
as its Findings depends entirely on the accuracy of such data.
 Financial statement does not keep pace with the changing price level.

Data collection:

The main source of data used for the study was secondary, drawn from the Annual
profit and loss account and balance sheet. Figures found in annual reports of the
Selected units. The other data sources and opinions expressed in commercial journals,
Magazines, accounting literature etc. have been also used in this study.

45
Findings

 In the beginning of the study periods the current ratios have been very low
however Due course of time it has been increased.
 All the years the Acid Test ratios are less than the normal ratio. Hence the Sri
Ram Perfumes is not in a required liquidity position to meet its short term
Obligations.
 The sales have been increasing, but the net profit decreasing hence the
management Should take care of the quality and market situations, to bring
good profits to the Organization.
 During all the study periods the relationship between sales to total assets are
normal. Hence the company’s sales were almost directly proportionate in the
study periods
 Return on capital employed ratios for the study periods are high hence the firm
is Efficiently using its capital.
 In the years of study it is shown that the cost of goods sold is almost one time
of the Average stock.
 The debtor’s turnover ratios are very low hence it indicates that the
management of The company not managing the debtors efficiently and
collection of money from the Debtors are not fast.
 The Net worth Turnover ratios indicate that the firm is not efficiently utilizing
its Capital hence it does not the capability to achieve maximum sales with
minimum Capital.
 During all the study period years the relationship between sales to total assets
is very Low.
 The company is able to generate enough cash to satisfy its debt obligations.
However, A low debt-to-equity ratio may also indicate that a company is not
taking advantage Of the increased profits that financial leverage may bring.
 During the study periods the working capital was very low and fluctuating.

46
Suggestions

The company’s profit over the years has been increasing when compared to previous
Years. Non-operating expense of the company is high all the years. So the
management

Should take necessary steps to reduce the non-operating expenses. The management
Should take steps to reduce the borrowed capital.

Management should take initiative steps for the proper utilization of the resources.
The company should increase the current assets to enjoy credit worthiness. The
liquidity position of the company is not satisfactory and this can be improved Further
for the purpose of proper utilization of the liquid assets of the company. The sales
have been increasing, but the net profit decreasing hence the management

Should take care of the quality and market situations, to bring good profits to the
Organization The company should effectively utilize its working capital The company
should take steps to clear idle stocks which are kept in the company for Long time.

To collect the funds quickly

Conclusion

On studying the financial performance of SRI RAM PERFUMES, TRICHY for a

period of five Years from 2010 to 2014, the study reveals that the financial
performance is better. SRIRAM PERFUMES, TRICHY has been maintaining good
financial position and further it can improve If the company concentrates on its
Administrative and selling expenses and by reducing Expenses. The company should
increase sales volume as well as gross profit. Despite price Drops in various products,
the company has been able to maintain and grow its market share To make strong
margins in market, contributing to the strong financial position of the Company. The
company was able to meet its entire requirements for capital expenditures And higher
level of working capital commitment with higher volume of operations and from Its
operating cash flows.

47
Name - Pavithra Dilip Gurukrishnan

Topic – A study on Financial statements Analysis of BSNL

Year – 2018

Introduction

Research in common parlance reference to a search for knowledge once can also
define research as the scientific and systematic search for pertinent information on a
specific topic. In fact research is an art of scientific investigation. The research
involved extensive and intensive studies of BSNL In this project report sincere efforts
has been made to study the financial statement of the company. During the study, I
study the financial position and performance Of the company at last I have given
interpretation and conclusion of the study.

The main objective of this study Is to carry on brief study on “Comparative Analysis
of the

Objective of the study

 To identify the various assets of BSNL with respect to Annual Reports of the
BSNL.
 To study the functioning of the finance department.
 Comparative study of Two year Annual reports.

Scope of the project

 There are one circle office and one training center in the Trivandrum sector
 The circle office is situated in P.M.G in Trivandrum
 Training center is situated in kaymakam in Trivandrum H.Q
 The accounts related matters are carry on in the circle office
 The project duration is three months from January to march

Limitations of Study

 Time and cost constraints were also there.

 Chances of some biasness could not be eliminated.

48
  A majority of respondents show lack of cooperation and are biased towards
their own Opinions.
 It is only a study of interim reports.
 Financial analysis is based upon only monetary information and non-monetary
factors are Ignored.
 It does not consider changes in price level.
 Changes in accounting procedure by a firm may often make financial analysis.
 Analysis is only a means and not an end in itself. We has to make
interpretation and

Methodology

Every project work is based on certain methodology, which is a way to systematically

solve the Problem or attain its objectives. It is a very important guideline and lead to
completion of any Project work through observation, data collection and data analysis
System of broad principles or rules from which specific methods or procedures may
be derived To understand different situations (or solve different problems) within the
scope of a particular Discipline.

Data Collection:

Research will be based on two sources:

Primary Data:

Survey: Primary data was collected by departmental survey for BSNL.

 Personal Observation, Data from the POCs of BSNL

Secondary Data:

Secondary data will consist of different literatures like books which are published,
articles, Internet, the company manuals and websites of company-
www.bsnl.com.Books related to financial analysis.

49
Findings:

 Mostly year BSNL suffers in losses.

 BSNL build fixed assets; these assets will give effect in profit of
BSNL.Highly dues of intra/inter circle transfer of funds which is leave our
effect in liabilities
 Coordination’s of departments are not satisfactory.
 Qualification of employees is not match his posts.
 Revenues policies of BSNL are not properly implied.
 Departmental process so long.
 Proper computerizing of department are not satisfactory.

Suggestion:

 There should be increase in investment of BSNL. So that could be earned

more profit. Because, if investment will be high than profit will be earned
high.
 There should be improved the working process of BSNL. Because working
Process of BSNL is take more time.
 Departments of BSNL do not have good coordination. So there should be
Good Coordination in departments of BSNL. If coordination will have good
in Departments, Than there will not has to face any problem in proper work.
 Time to time, there should be provided training of employee. So that they
could take Information about the new technology of them proper working
Process.
 There should be good communication between each departments of BSNL.
 There should be computerized work in BSNL. But also at this time, paper
Work are Continue to see in many department.
 Use better & high tech methods of advertising, so that more & more
subscriber attract Towards BSNL.
 Should try to decrease expenditure especially in the employee’s remuneration
& benefit Area.

50
Conclusion

From 1986 of its establishment to 2010, in these 24 years the company has shown
many faces, Throughout its journey. At one time BSNL had a monopoly in the
market. But now the company Is facing a very tough competition from the giants like
Bharti-Airtel, Reliance Idea, Vodafone, Tata etc.

Here are the conclusions which I derived after analyzing the financial statements of
BSNL:-

Out the past four years, in 3 years BSNL recorded a decrease in profit and in 2
years a Decrease in income, but the expenditure has continuously increased. These are
the years where telecom sector emerge as a fastest growing sector of economy. And in
the same years BSNL fail to gain more income.

Although the income figure is continuously falling but there is no impact shown on
Expenditure side, it is continuously increasing over the years. This is the main cause
of Reduction in profits.

In the year 2009-10 BSNL current assets fell with a huge margin due to this year
poor Performance. After this year company has shown a growth in current assets but
not Sufficient to fulfill the short-term requirements.

In the year 2009-10 fixed assets found significant growth with 12.56% which is a
good Sign for long term prospect. But increase in fixed assets during last two years is
not Sufficient. I would like to provide the following suggestions for improving the
services And thereby revenue of BSNL:

51
Name – Ms. Samridhi Kapoor Bhel Haridwar

Topic – An Analysis of Financial statements of BHEL

Year- 2019

Objectives of Study:

 To analyze the financial statement of the company for seven Years by

applying financial ratios.
 To identifying the financial strength and weakness
 To measure the performance in terms of assets utilization and profitability.
 To Understand the functioning of the finance department.

Scope of the study:

The scope of this study extends to a number of areas, By taking the help of ratio
analysis, the financial strength and weakness of the firm was Identified. Ratio analysis
is an excellent tool to find out what went wrong or what the company Is doing right;
therefore, the company can take actions. Its main aim is to measure the firm’s
liquidity, profitability and other indications that Business is conducted in a rational
and orderly way. The study aims at analyzing the Profitability and overall
performance of the company by using ratio analysis. Here the study Is for a period of
seven years, from 2007 to 2013. The future plans of HEEP should be laid Down in
view of the firm’s financial strength and weakness by properly establishing
Relationship between the items of the Balance Sheet and Profit and Loss account
(income Statement).

Limitation of the study:

The study suffers from certain limitations: 1-It’s exclusively Depending on the
published financial data, so it is subject to all limitations that are inherent in The
condensed published financial statements.

As the financial statements are prepared on The basis of a going concern, it does not
give exact position. Thus accounting concepts and Conventions cause a serious
limitation to financials analysis

.It took a lot of time in collection Of data as the data available in BHEL Hardware is
52
so wide and covers great deal of extensive Information.

53
Data Collection

The evaluation of profitability and financial performance was for period of Seven
years from 2007 to 2013. Necessary secondary data was obtained from the audited
Annual reports, namely financial statements, and other records of the company given
for the Purpose of effective periodical analysis

Findings and Conclusion:

On seeing the liquidity position of BHEL. I conclude that it is Not very good as the
current assets are in the form of inventories and debtors. The debt Collection period is
high and inventories are least liquid current assets. So maintaining the Inventories are
relatively costly affair for the company and the management must have to Investigate
properly. It is very necessary so that fund should not be blocked unreasonably.
Efficient inventory management is required in BHEL. On seeing the leverage position
of the BHEL, I conclude that it is very good as the stake Of owners in company is
continuously increasing and its long term debt continuously Decreasing it means that
company is paying its debt promptly and creditors will not face Any risk in investing
in BHEL as also BHEL is giving assured ROI. On seeing turnover, fixed assets and
current assets turnover of company is increasing Which is a good indicator as it brings
commensurate gain and also the average Collection goes on decreasing but
management should take more efficient steps to Reduce it. On seeing the profitability
of the BHEL its overall performance is very good. A Continuous increase in the
values of Earning per share and Dividend Per Share results, Investors feel safe to
invest money in BHEL.

54
Name – Nikita Arora

Topic - Financial statements Analysis of Tata motors Ltd.

Year – 2021

Objective of the study

To analyze the financial position of the company.

To make comparative study of financial statements of different years.

To compare the Impact of ratios on the performance of company.

Scope of the study

This study aims at analyzing the overall financial position of the Tata Motors by using

Accounting ratios. The analysis covers the years 2016-2017, 2017-2018, 2018-2019
and 2019-2020 for examining financial statements such as income statements and
balance sheets. The Study’s scope includes the numerous variables that influence the
company’s financial position. The research takes into account data from the previous
four years.

Limitations of the study

We only analysed last four years’ financial statements which does not represent the
Whole profitability of the company.

The data used in the analysis is based on the company’s own published past results.
As a Result, ratio analysis metrics are not always indicative of future company
performance.

Financial statements used for financial analysis are prepared based on a going
Concern concept, so they do not always reflect the current situation.

Findings

At this stage, the financial analysis has been done in order to draw some broad
conclusions about Tata Motors Limited results. One of the most important things to
understand about financial Analysis is that the financial statements provide all of the
details needed to make a definitive Decision about what is going on in the business.

55
From the brief explanation and illustrations of Four years, financial statements of Tata
Motors have been used to analyze the financial Performance for the years under study
(2016-2019).

Suggestions

Decreasing its profitability, but it has promising potential prospects. To avoid meeting
tough Financial conditions in the future, it must closely monitor prices, reduce
expenditures, and Manage its finances.

Conclusion

To conclude, the Tata Motors Company has maintained its influence on the industry.
We can see Tata Motors’ downfall, but it is expected to rebound because it is such a
big company. We can See from this study that Tata Motors’ willingness to make
contractual payments has been Severely harmed. Looking at all four years, 2016-2017
is regarded as the strongest financial year Of the four. Company had the highest
current and quick ratio in 2016-2017, and the rate has since Fallen, indicating that
liquidity has declined over time. It is expected that the company will

Integrative literature review reviews, critiques, and synthesizes secondary data about
research topic in an integrated way such that new frameworks and perspectives on the
topic are generated. If your research does not involve primary data collection and data
analysis, then using integrative literature review will be your only option.

56
 CHAPTER NO 04:
DATA ANALYSIS AND INTERPRETATION

57
4.1 INTRODUCTION TO DATA ANALYSIS AND
INTERPRETION:

Financial statements are records that provide an indication of the organization’s

financial status. Its quantitatively describes the financial health of the company. It
helps in the evaluation of company’s prospects and risks for the purpose of making
business decision. The objective of financial statement is to provide information about
the financial position, performance and change in financial position of an enterprise
that is useful to wide range of user in making economic decision. Financial statement
analysis is the process of analysing a company’s financial statements for decision-
making purposes. External stakeholders use it to understand the overall health of an
organization as well as to evaluate financial performance and business value. Internal
constituents use it as a monitoring tool for managing the finances.

Financial statements should be understandable, relevant, reliable and comparable.

They give an accurate picture of company’s condition and operating results in a
condensed form. Reported assets, liabilities and equity are directly related to an
organization’s financial position whereas reported income and expenses are directly
related to an organization’s financial performance. Analysis and interpretation of
financial statements helps in determining the liquidity position, long term solvency,
financial viability, profitability and soundness of a firm. There are four basic types of
financial statements: Balance sheet, Income statement, Cash flow, Statement of
retained earnings.

The analysis of financial statement Is a process of evaluating the relation between

components of financial statement to obtain a better understanding of firm financial
position. Analysis is a process of critically examining the accounting information
given in financial statements. For the purpose of analysis, individual items are
studied; their interrelationship with other related figures is established.

58
4.2 FINANCIAL RATIO ANALYSIS:

 What Is Financial Ratio Analysis?

Financial ratios are useful tools that help business managers, owners, and potential investors
analyze and compare financial health. They are one tool that makes financial analysis possible
across a firm’s history, an industry, or a business sector.

Financial ratio analysis uses the data gathered from these ratios to make decisions about
improving a firm’s profitability, solvency, and liquidity.

4.3 RATIO ANALYSIS:

Ratio analysis is referred to as the study or analysis of the line items present in the financial
statements of the company. It can be used to check various factors of a business such as
profitability, liquidity, solvency and efficiency of the company or the business.

Ratio analysis is mainly performed by external analysts as financial statements are the
primary source of information for external analysts.

The analysts very much rely on the current and past financial statements in order to obtain
important data for analyzing financial performance of the company. The data or information
thus obtained during the analysis is helpful in determining whether the financial position of a
company is improving or deteriorating.

 Types of Ratio Analysis

1. Profitability ratios:

The purpose of profitability ratios is to determine the ability of a company to earn profits
when compared to their expenses. A better profitability ratio shown by a business as
compared to its previous accounting period shows that business is performing well.

The profitability ratio can also be used to compare the financial performance of a similar firm,
i.e it can be used for analyzing competitor performance.

Some of the most used profitability ratios are return on capital employed, gross profit ratio,
net profit ratio, etc.

59
 2. Solvency Ratios:

Solvency ratios are used for determining the viability of a company in the long term or in
other words, it is used to determine the long term viability of an organisation.

Solvency ratios calculate the debt levels of a company in relation to its assets, annual earnings
and equity. Some of the important solvency ratios that are used in accounting are debt ratio,
debt to capital ratio, interest coverage ratio, etc.

Solvency ratios are used by government agencies, institutional investors, banks, etc. to
determine the solvency of a company.

3. Activity Ratio:

Activity ratios are used to measure the efficiency of the business activities. It determines how
the business is using its available resources to generate maximum possible revenue.

These ratios are also known as efficiency ratios. These ratios hold special significance for
business in a way that whenever there is an improvement in these ratios, the company is able
to generate revenue and profits much efficiently.

Some of the examples of activity or efficiency ratios are asset turnover ratio, inventory
turnover ratio, etc.

4. Liquidity Ratios:

Liquidity ratios are helpful in determining the ability of the company to meet its debt
obligations by using the current assets. At times of financial crisis, the company can utilise
the assets and sell them for obtaining cash, which can be used for paying off the debts.

Some of the most commonly used liquidity ratios are quick ratio, current ratio, cash ratio, etc.
The liquidity ratios are used mostly by creditors, suppliers and any kind of financial
institutions such as banks, money lending firms, etc. for determining the capacity of the
company to pay off its obligations as and when they become due in the current accounting
period.

60
4.4 OBJECTIVES OF RATIO ANALYSIS

Once an organization’s financial statements are compiled, they need to be evaluated

Analysed. The objectives of ratio analysis are as follows:

1. Helps in Measuring the Profitability of the Company

Profit is the key requirement of every business. It is based on profit a business survives And
plans for further expansion. Thus if we say a business has earned a certain amount of profit,
We are not sure how good or bad the figure is. Thus, here a profitability ratio that includes
gross Profit, net profit, Expense ratios comes in handy as it provides the profitability of the
firm. The Management can track down the grey areas and work upon them for improvement.

2. Helps in Evaluating Operational Efficiency

Few of the ratios are targeted to evaluate the firm’s degree of efficiency at how it is Handling
its assets and other resources. It is a must for a firm that assets and financial resources Are
well utilized, and unnecessary expense levels are kept to a bare minimum. To get an overall
Picture of the efficiency of assets, turnover ratios and efficiency ratios can play a major role.

3. Maintaining Liquidity

The liquidity problem is the major issue that many firms face these days, and thus every Firm
should maintain a certain amount of liquidity to meet its urgent cash requirement. Specifically
to main short term solvency issues, quick ratio and current ratio can play a major Role.

4. Determining Financial Health

Some ratios are handy to determine the overall financial health and performance of a
Company. This can be indicated by determining the overall long term solvency of the firm.
This Helps in judging whether there is too much pressure on the assets or if the firm is over-
leveraged. Thus, to avoid future liquidation problem, the business has to quickly recognize
this.

5. Helps in Comparing

Here, certain ratios are used to compare the benchmarks prevalent in the industry to get A
better outlook of the company’s financial performance and position. Businesses can take
Rectifying actions if the company does not maintain the standard. Here generally, the ratios
are Compared to the previous year’s ratio to understand the company’s track record.

61
4.5 LIMITATIONS OF RATIO ANALYSIS

Ratio analysis is an important aspect; however, a range of drawbacks of ratio analysis are
listed Below.

1. The Concept of Inflation

When we compare period-wise numbers for trend analysis, and if the inflationary rate Has
changed in between the periods, the comparison makes no sense. Ratio analysis does not
Account for the inflation factor at all.

2. The Problem of Aggregation

The data from the financial statement for a particular line item that we are using for our Study
or comparison may have been aggregated in a different proportion in the past, and thus Doing
a trend analysis based on this data doesn’t give a true picture.

3. Changes in Operation

A business can go drastic changes in its operations due to certain unexpected needs, and Thus
using the data of the past and making a judgment based on that does not give a fruitful
Conclusion because pre-change and post-change of Ratios that prove handy in such scenarios
Are leverage ratios and debt-equity ratios. Operation numbers under no circumstances can be
Compared together.

4. The Policies of Accounting

When we are doing peer to peer comparison, different companies may use different
Accounting policies and thus, it makes it hard to conclude on such cases.

5. No Standard Definition of Ratios

There is no set standard definition of ratios and numbers to be included in it. Some firms May
include some items when calculating a ratio, and few may include others. Thus when it
Comes to a comparison of both companies, it becomes difficult

62
4.6 DATA REPRESENTATION AND INTERPRETATION

(Rs. In Crores)

ITEM
AND
2022-23 2021-22 2020-21 2019-20 2018-19
YEARS
CURRENT
ASSETS 11,499.95 15,619.61 15,854.59 13,568.76 13,229.30

CURRENT
LIABILITIES 25,803.53 26,992.81 26,251.55 25,810.82 22,940.81

CASH 1414.65 2,605.43 4,318.94 3,532.19 1,306.61

TOTAL 61,770.77 63,899.87 65,059.66 62,589.87 60,909.63

ASSETS

TOTAL
LIABILITIES 61,770.77 63,899.87 65,059.66 62,589.87 60,909.63

TOTAL 766.02 765.88 765.81 719.54 679.22

EQUITY

NET SALES 65,298.84 46,880.97 46,559.39 43,485.76 68,764.88

COST OF
GOOD SOLD 42,226.81 31,693.11 19,050.74 26,171.85 43,748.77

INTEREST 2,047.51 2,121.73 2,358.54 1,973.00 1,793.57

63
 NET INCOME
AND LOSS 2,728.13 -1,390.86 -2,395.44 -7,289.63 2,020.60

GROSS 65,298.84 46,880.97 29,769.07 43.485.76 68,764.88

PROFIT
LONG
TERM 10,445.70 14,102.74 16,326.77 14,776.51 13,914.74
DEBT
SHORT TERM 8,426.74 9,129.91 5,421.95 6,121.36 3,617.12
DEBT

INVENTORIES 3,027.90 3,718.49 4,551.71 3,831.92 4662.00

OPERATING 899.06 593.90 348.71 830.24 571.76

EXPENSES
OPERATING 66,578.27 47,923.59 30,595.02 45,311.22 71,757.42
PROFIT
DEBTORS 2,307.72 2,111.78 2,087.51 1,978.06 3,250.64

1. REVENUE / INCOME STATEMENT RATIO

Income statement/profit and loss account ratios are those ratios that are calculated by using
the items of income statement/profit and loss account of a particular period only. Examples of
income statement/profit and loss account ratios are net profit ratio, gross profit ratio,
operating ratio, and times interest earned ratio etc.

 Operating Profit Ratio:

Operating Profit Ratio is referred to as the ratio that is used to define a relationship between
the operating profit and the net sales. Operating profit is also known as Earnings before
interest and taxes (EBIT) and net sales can also be defined as the revenue that is earned from
the operations. Operating profit ratio is one type of profitability ratio and is therefore
expressed in the form of a percentage.Net sales consist of cash and credit sales. Therefore,
the operating
64
65
profit ratio helps in comparing the operating profit earned by a business in relation to the
revenue that will be generated by the business.

Operating profit ratio = Operating profit / Net Sales

Table.4.1 Showing Operating Profit Ratio From 2019 to 2023 (Rs. In Crores)

Operating Net Gross Profit

Financial Year Profit Sales Ratio %

2023 66,578.27 65,298.84 101.96

2022 47,923.59 46,880.97 102.22
2021 30,595.02 46,559.39 65.712
2020 45,311.22 43,485.76 104.19
2019 71,757.42 68,764.88 104.35

Figure 4.1 Showing Operating Profit Ratio From 2019 to 2023

Operating Profit Ratio

120
104.35 104.19 102.22 101.96
100

80
Percentage (%)

65.712
60

40

20

0
2019 2020 2021 2022 2021
Year

66
Interpretation :

The above graph represents the Operating profit ratio of TATA MOTORS LIMITED
COMPANY of five Consecutive financial years starting from 2018 up till 2022. The
x- axis represents the financial Years and the y- axis represents the ratios.

The Operating profit ratio 104.35 is the highest in the financial year 2019. The
financial year 2019 has the best operational performance as compared to the other
financial years. But as we can see the Operating profit ratio is a lot of drop in year
2021. Operating profit ratio 65.712 is very lowest in year 2021.

 Return On Net Worth:

Return on Net Worth is a profitability ratio developed from the perspective of the
investor and not the company. By looking at this, the investor sees whether the entire
net profit is coming to him or how much return he would get. It explains the
efficiency of the shareholders’ capital to generate profit.

Return On Net Worth = Profit after Tax ÷ Shareholders Funds ×100

Table 4.2 Showing Return On Net Worth From 2019 to 2023 (Rs. In Crores)

Financial
Year 2019 2020 2021 2022 2023
Return on
net Worth 9.11 -41.60 -12.57 -6.97 12.14
(%)

67
 Figure 4.2 Showing Return On Net Worth From 2019 2023

Return on Net
20
Worth
12.14
9.11
10

0
2019 2020 2021 2022 2023
Percentage (%)

-10 -6.97
-12.57
-20

-30

-40
-41.6
-50
Year

Interpretation:

The above graph represents the Return on net Worth of TATA MOTORS LIMITED
COMPANY of five Consecutive financial years starting from 2018 up till 2022. The
x- axis represents the financial Years and the y- axis represents the ratios

Except the return on net worth of Financial Year 2021 , the rest of the Financial years
return on net worth are negative.

 Return On capital Employed:

The term return on capital employed (ROCE) refers to a financial ratio that can be
used to assess a company’s profitability and capital efficiency. In other words, this
ratio can help to understand how well a company is generating profits from
its capital as it is put to use. ROCE is one of several profitability ratios financial
managers, stakeholders, and potential investors may use when analyzing a
company for investment.

Return On capital Employed = EBIT ÷ capital Employed

68
Table 4.3 Showing Return On Capital Employed From 2019 to 2023 (Rs. In Crores)

Financial
Year 2019 2020 2021 2022 2023
Return On
capital 11.07 -6.72 0.35 0.92 8.67
Employed
(%)

Figure 4.3 Showing Return On Capital Employed From 2019 to 2023

Return on Capital Employed

12
10
8
6
Percentage (%)

4
2
0
2019 2020 2021 2022 2023
-2

-4
-6
-8
Year

Interpretation:

The above graph represents the Return on capital Employed Ratio of TATA
MOTORS LIMITED COMPANY of five Consecutive financial years starting from
2018 up till 2022. The x- axis represents the financial Years and the y- axis represents
the ratios.

69
The return On capital Employed Ratio 11.57 is the highest in the financial year 2019.
But as we can see the return on capital Employeds a lot of drop in year 2020. Return
On capital Employed financial Year 2020 Ratio is negetive -7.18.

2. BALANCE SHEET RATIO:

Balance sheet ratios are those ratios that are calculated by using figures from the
balance sheet only. These ratios study the relationship between the assets and
liabilities, of concern. These ratios help to judge liquidity, solvency and capital
structure of concern. The figures must be used from the balance sheet of the same
period. We are going to analysis the following six balance sheet ratios. Current ratio,
Quick ratio, Proprietary ratio, capital gearing ratio etc..

 Proprietary Ratio = Shareholders Funds ÷ Total Assets ×100

Proprietary ratio is a type of solvency ratio that is useful for determining the amount
or contribution of shareholders or proprietors towards the total assets of the business.

It is also known as equity ratio or shareholder equity ratio or net worth ratio. The
main purpose of this ratio is to determine the proportion of the total assets of a
business that is funded by the proprietors.

Proprietary ratio can be used to evaluate the stability of the capital structure of a
business or company and also show how the assets of a business are formed by
issuing a number of equity shares rather than taking loans or debt from outside.

Table 4.4 Showing Proprietary Ratio From 2019 to 2023 (Rs. In Crores)

Financial Year Shareholders Total Assets Proprietary

Funds Ratio %
2023 22,467.39 61,770.77 35.13
2022 19,937.76 63,899.89 31.2
2021 19,055.97 65,059.66 29.3
2020 18,387.65 62,589.87 29.4
2019 22,162.52 60,909.63 36.4

70
Figure4.4 Showing Proprietary Ratio From 2019 to 2023

Proprietory Ratio
40
36.4
35.12
35
31.2
29.4 29.3
30
Percentage (%)

25

20

15

10

0
2019 2020 2021 2022 2023
Year

Interpretation:

The above graph represents the praprietary ratio of TATA MOTORS LIMITED
COMPANY of five Consecutive financial years starting from 2018 up till 2022. The
x- axis represents the financial Years and the y- axis represents the ratios.

The proprietary Ratio is the highest in the financial year 2018. But as we can see the
praprietary ratio is a lot of drop in year 2020 and 2021.

 Current Ratio :

The current ratio is a liquidity ratio that measures a company’s ability to pay short-
term obligations or those due within one year. It tells investors and analysts how a
company can maximize the current assets on its balance sheet to satisfy its current
debt and other payables.

Current Ratio = Current Assets ÷ Current Liabilities

71
 Table 4.5 Showing Current Ratio From 2019 to 2023 (Rs. In Crores)

Financial Year Current Assets Current Current

Liabilities Ratio
2023 11,499.95 25,803.53 0.45
2022 15,619.61 26,992.81 0.58
2021 15,854.59 26,251.55 0.60
2020 13,568.76 25,810.82 0.53
2019 13,229.30 22,940.81 0.58

Figure 4.5 Showing Current Ratio From 2019 to 2023

Current Ratio
0.7
0.6
0.58 0.58
0.6
0.53
0.5 0.45
Percentage (%)

0.4

0.3

0.2

0.1

0
2019 2020 2021 2022 2023
Year

72
Interpretation:

The above graph represents the Current ratio of TATA MOTORS LIMITED
COMPANY of five Consecutive financial years starting from 2018 up till 2022. The
x- axis represents the financial Years and the y- axis represents the ratios.

The Current ratio 0.62 is the highest in the financial year 2018. But as we can see the
Current ratio is a lot of drop in year 2020. Current ratio 0.53 is very lowest in year
2020

 Cash Ratio:

The cash ratio is a measurement of a company’s liquidity. It specifically calculates

the ratio of a company’s total cash and cash equivalents to its current liabilities.
The metric evaluates company’s ability to repay its short-term debt with cash or
near- cash resources, such as easily marketable securities. This information is
useful to creditors when they decide how much money, if any, they would be
willing to loan a company.

Cash Ratio = cash and Cash Equivalent ÷ Current Liabilities

Table 4.6 Showing Cash Ratio From 2019 to 2023 (Rs. In Crores)

Financial Cash And Cash Current Liabilities Cash

Year Equivalent Ratio

2023 1,414.65 25,803.53 0.055

2022 2,605.43 26,992.81 0.097

2021 4,318.94 26,251.55 0.1645
2020 3,532.19 25,810.82 0.1368
2019 1,306.61 22,940.81 0.0569

73
 Figure 4.6 Showing Cash Ratio From 2019 to 2023

Cash Ratio
0.18 0.1645
0.16
0.1368
0.14

0.12
Percentage (%)

0.097
0.1

0.08
0.0569 0.055
0.06

0.04
0.02
0
2019 2020 2021 2022 2023
Year

Interpretation:

The above graph represents the Cash ratio of TATA MOTORS LIMITED
COMPANY of five Consecutive financial years starting from 2018 up till 2022. The
x- axis represents the financial Years and the y- axis represents the ratios.

The Cash ratio 0.1645 is the highest in the financial year 2021. But as we can see the
Cash ratio is a lot of drop in year 2022. Cash ratio 0.0096 is very lowest in year
2022

 Net Working Capital Ratio

The net working capital ratio is the net amount of all elements of working capital. It
is intended to reveal whether a business has a sufficient amount of net funds available
in the short term to stay in operation. Use the following formula to calculate the net
working capital ratio:

Net Working Capital Ratio = Current Assets – Current Liabilities

74
Table 4.7 Showing Net Working Capital Ratio From 2019 to 2023 (Rs. In Crores)

Working
Financial Year Current Current Capital
Assets Liabilities Ratio

2023 11,499.95 25,803.53 -14,303.58

2022 15,619.61 26,992.81 -11,373.2
2021 15,854.59 26,251.55 -10,396.96
2020 13,568.76 25,810.82 -12,242.06
2019 13,229.30 22,940.81 -9,711.51

Figure 4.7 Showing Net Working Capital Ratio From 2019 to 2023

Net Working Capital

0
Ratio
2019 2020 2021 2022 2023
-2000

-4000

-6000
Percentage (%)

-8000

-10000
-9711.51
-10396.96
-12000 -11373.2
-12242.06
-14000
-14303.58
-16000
Year

75
Interpretation:

The above graph represents the net working capital ratio of TATA MOTORS
LIMITED COMPANY of Five consecutive financial years starting from 2018 up till
2022. The x- axis represents the Financial years and the y- axis represents the ratios.

All the financial years from 2018 to 2022 Show a negative working capital ratio. In
not even a single financial year there is a positive net Working capital ratio. From
starting to end of the every financial year it shows that net working Capital ratio is
increasing year by year .

 Quick Ratio

The quick ratio measures a company’s ability to pay off short term obligations with
liquid assets. In other words, the quick ratio is an accounting ratio that measures a
company’s liquidity. It is also known as the acid test ratio as it tests the ability of a
company to convert its quick assets into instant cash. The ratio measures the rupee
amount of liquid assets available against the rupee amount of current liabilities.
Liquid assets or quick assets are those assets that can be instantly converted into cash
with a low impact on the price received in the open market. Whereas current liabilities
are those expenses that become payable in one year’s time.

Quick Ratio = (Current Assets – Inventories) ÷ Current Liabilities

Table 4.8 Showing Quick Ratio From 2019 to 2023 (Rs. In Crores)

Financial Current Assets Current

Year – Inventories Liabilities Quick Ratio

2023 8,472.05 25,803.53 0.33

2022 11,901.12 26,992.81 0.44
2021 11,303.23 26,251.55 0.43
2020 9,736.84 25,810.82 0.38
2019 8,567.3 22,940.81 0.37

76
Figure 4.8 Showing Quick Ratio From 2019 to 2023

Quick Ratio
0.5
0.43 0.44
0.45
0.4 0.37 0.38

0.35 0.33
Percentage (%)

0.3
0.25
0.2
0.15
0.1
0.05
0
2019 2020 2021 2022 2023
Year

Interpretation:

The above graph represents the Quick ratio of India coal Ltd Company of five
Consecutive financial years starting from 2018up till 2022. The x- axis represents the
financial Years and the y- axis represents the ratios.

The financial year 2019 experiences the lowest quick Ratio. Then there is quiet a good
increase in the ratio in the following year. The next year, 2020 Experiences a highest
the quick ratio and then in the next year again one can observe an increase In the
quick ratio which is the highest of all the ratios of the five financial years.

 Debt To Equity Ratio:

Debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage and is

calculated by dividing a company’s total liabilities by its shareholder equity. D/E ratio
is an important metric in corporate finance. It is a measure of the degree to which a
company is financing its operations with debt rather than its own resources. Debt-to-
equity ratio is a particular type of gearing ratio.

Debt To Equity Ratio = debt Funds ÷ Shareholders Funds

77
 Table 4.9 Showing Debt To Equity Ratio From 2019 to 2023 (Rs. In Crores)

Financial Year Long Term Shareholders Debt To Equity

Funds Ratio
Debt

2023 18,872.44 22,467.39 0.84

2022 23,232.65 19,937.76 1.17
2021 21,748.72 19,055.97 1.14
2020 20,987.87 18,387.65 1.14
2019 17,532.46 22,162.52 0.79

Figure 4.9 Showing Debt To Equity Ratio From 2019 to 2023

Debt Equity Ratio

1.4

1.14 1.14 1.17

1.2

1
0.84
Percentage (%)

0.79
0.8

0.6

0.4

0.2

0
2019 2020 2021 2022 2023
Year

78
Interpretation:

The above graph represents the debt-to-equity ratio of TATA MOTORS LIMITED
COMPANY of five Consecutive financial years starting from 2018 up till 2022. The
x- axis represents the financial Years and the y- axis represents the ratios.

The financial year 2022 has the highest debt to equity Ratio. The financial year 2020
experience a rise in the debt To Equity Ratio which is continuous for the further
financial year

 Debt Ratio :

A debt ratio is a tool that helps determine the number of assets a company bought
using debt. The ratio helps investors know the risk they will be taking if they invest in
an entity having higher debt used for capital building. The ratio also lets them assess
how fruitfully a company uses its debt to build and expand its business.

Debt Ratio : Total Debt ÷ Total Assets

Table 4.10 Showing Debt Ratio From 2019 to 2023 (Rs. In Crores)

Financial Year Total Total Debt Ratio

Debt Assets
2023 18,872.44 61,770.77 0.31
2022 23,232.65 63,899.87 0.36
2021 21,748.72 65,059.66 0.33
2020 20,897.87 62,589.87 0.33
2019 17,531.86 60,909.63 0.29

79
 Figure 4.10 Showing Debt Ratio From 2019 to 2023

Debt Ratio
0.4
0.36
0.35 0.33 0.33
0.31
0.29
0.3

0.25
Percentage (%)

0.2

0.15

0.1

0.05

0
2019 2020 2021 2022 2023
Year

Interpretation

The above graph represents the debt ratio of TATA MOTORS LIMITED COMPANY
of five Consecutive financial years starting from 2018 up till 2022. The x- axis
represents the financial Years and the y- axis represents the ratios.

The debt ratio 0.363 is at its highest in 2022 and lowest in 2018.It shows that debt
Financial is more now

80
 3. COMPOSITE RATIO:

These ratios are calculated by using the items of both income statement and balance
sheet for the same period. Composite ratios are, therefore, also known as mixed ratios
and inter-statement ratios. Numerous composite ratios are computed depending on the
need of analyst. Some examples are inventory turnover ratio, receivables turnover
ratio, accounts payable turnover ratio, and working capital turnover ratio etc.

 Assets Turnover Ratio

The asset turnover ratio, also known as the total asset turnover ratio, measures the
efficiency with which a company uses its assets to produce sales. The asset turnover
ratio formula is equal to net sales divided by the total or average assets of a company.
A company with a high asset turnover ratio operates more efficiently as compared to
competitors with a lower ratio.

Assets Turnover Ratio= Net Sales ÷ Total Assets

Table 4.12 Showing Assets Turnover Ratio From 2019 to 2023 (Rs. In Crores)

Financial Year Net Sales Total Assets Assets Turnover

Ratio (times)
2023 96,362.40 61,770.77 1.56
2022 72,195.55 63,889.87 1.13
2021 48,794.75 65,059.66 0.75
2020 69,474.76 62,589.87 1.11
2019 1,10,855.53 60,909.63 1.82

81
 Figure 4.12 Showing Assets Turnover Ratio From 2019 to 2023

Asset Turnover Ratio

2
1.82
1.8
1.56
1.6
1.4
Percentage (%)

1.2 1.11 1.13

1
0.8 0.74

0.6
0.4
0.2
0
2019 2020 2021 2022 2023
Year

Interpretation:

The above graph represents the asset turnover ratio of TATA MOTORS LIMITED
COMPANY of five Consecutive financial years starting from 2018. The x- axis
represents the financial years and The y- axis represents the ratios.

The asset turnover ratio of the company in the year 2019 is Higher as compared to the
asset turnover ratio in the year 2018. The next financial year 2020 reflects a Decrease
in the

Ratio. The financial year 2020 reflects the lowest asset turnover ratio of all the Last
five financial years.

82
Chapter No 05

Conclusion and Suggestions

83
5.2 CONCLUSION:

 To conclude, the Tata Motors Company has maintained its influence on the
industry. We can see Tata Motors’ downfall, but it is expected to rebound
because it is such a big company. We can see from this study that Tata
Motors’ willingness to make contractual payments has been severely harmed
 Looking at all 2018 to 2022 is regarded as the strongest financial year of the
Company had the highest current and quick ratio in 208 to 2022, and the rate
has since Fallen, indicating that liquidity has declined over time. It is expected
that the company will Rebound from the loss if its assets are well managed
and its debts are adequately financed.
 The sales turnover of the company is also fluctuating year by year. The sales
was increase in Year 2018 to 2020 but before 2018 there was very poor
condition in the value of sales turnover.
 Companies need to keep a track on the asset turnover ratio. This ratio helps the
company to Measure how productive the business is and how much revenue is
generated from its investment n the assets. A high asset turnover ratio is a sign
of better and efficient management of assets On hand. Soothe companies need
to analyze and their asset turnover ratio at regular Intervals.
 The asset turnover ratio measures the efficiency of how well a company uses
assets to produce Sale
 It can be seen that the inventory turnover was the highest in the year 2019-
2020 which most the goods stored in the inventory were sold and bought quiet
often which led to greater Turnover.
 Debt-to-Equity ratio is increasing continuously instead of decreasing. This
ratio shows that Owed fund is less than the borrowed fund.

84
5.2 FINDINGS:

1. The current ratio of the company isn’t satisfactory, because that Doesn’t attain the
ideal ratio. It indicates that the liquidity position of The firm is not good and the firm
shall not be able to pay its current Liabilities in time without facing difficulties.
2. Quick ratio is above the standard in the year 2015-2016. And in the Following year it
is less than the standard. It means the company’s Ability to cover short term debt is
getting worse.
3. The company had not reached the standard Debt equity ratio From the year 2018 to
2019 and in 2020 to 2022it has Reached the standard. It shows that the company
tends to use more of Borrowed fund than the owner’s fund. The ratio shows
fluctuating Trend.
4. Proprietary ratio is below the standard and it is decreasing year by Year. It shows that
the company is making use of too much debt or Trade payable rather than equity.
5. Working capital turnover ratio shows that the company has not Sufficient short term
funds for fulfilling the sales done for that period. This cause a shortage of funds and
can cause a business to run out of Money
6. Total asset turnover ratio is below the standard. It shows that the Company is not
efficiently using its assets to generate sale.
7. Company’s Net Working Capital Ratio is below the standard and it goes Negative in
the all yeas. This shows that the company Experiences a loss in the value of their
working capital during the period of Time.
8. The company’s cash ratio which measures its ability to cover its short-term
obligation’s Using only cash and cash equivalents has also declined from Overall the
liquidity position of the company is not good
9. In terms of Inventory turnover ratio, the company’s operations are seen to be
inconsistent Indicating that company’s operation has been volatile and that
consistency is needed.

85
5.3 . SUGGESTIONS:

 From the above findings we can say that the company is making losses or, more
accurately, Decreasing its profitability, but it has promising potential prospects. To
avoid meeting tough Financial conditions in the future, it must closely monitor prices,
reduce expenditures, and Manage its finances
 Tata Motors Limited Company Needs to be clearer about the reasons for nil debt
equity ratio by adding borrowed Funds to the capital and reducing the dependency on
the owned-funds.
 The company needs to reduce the overall expenditure so that the Overall profit
increases.

86
5.4 Bibliography :

• Management accounting

• Financial management “SP JAIN AND NARANG”

• Accounting for management “A Vinod-2013”

5.5 Webliography:

https://www.moneycontrol.com/financials/tatamotors/balance-sheetvi/tm03

https://byjus.com/commerce/ratio-analysis

https://www.techtarget.com/whatis/definition/hypothesis?amp=1

https://www.accountingverse.com/accounting-basics/users-of-financial-statements.html

https://byjus.com/commerce/ratio-analysis/?utm_medium=social&utm_source=MobileShare

https://www.aafmindia.co.in/financial-statement-analysis-tools-limitation-uses-process

https://en.m.wikipedia.org/wiki/Tata_Motors

https://www.investopedia.com/terms/f/financial-statement- analysis.asp#:~:text=Financial
%20statement%20analysis%20is%20used,basis%20for%20fina ncial%20statement%20analysi

https://www.uis.edu/learning-hub/writing-resources/handouts/learning-hub/literature- review#:~:text=The
%20purpose%20of%20a%20literature,conducting%20your%20own%20o riginal%20research

87
5.6 APPENDIX :

TATA MOTORS LIMITED

Balance Sheet as on For Last Five Years

31St March 2019 To 31St March 2023

Balance Sheet of Tata

Motors Ltd March March March March March
(In Rs. Cr.) 2023 2022 2021 2020 2019
12 Months 12 Months 12 Months 12 Months 12 Months
EQUITY AND
LIABILITIES
SHAREHOLDER’S
FUNDS
Equity share capital
766.02 765.88 765.81 719.54 679.22

TOTAL SHARE
CAPITAL 766.02 765.88 765.81 719.54 679.22

Reserve and surplus 21,701.37 19,171.88 18,290.16 16,800.61 21,483.30

TOTAL RESERVE
AND SURPLUS 21,701.37 19,171.88 18,290.16 16,800.61 21,483.30

TOTAL
SHAREHOLDERS 22,467.39 19,937.76 19,055.97 18,387.65 22,162.52
FUNDS
NON – CURRENT
LIABILITIES
Long Term Borrowing

88
 10,445.70 14,102.74 16,326.77 14,776.51 13,914.74

Deferred Tax Liabilities

51.16 173.72 266.50 198.59 205.86
Other Long Term
Liabilities 1,411.78 1,212.34 1,786.93 1,646.56 404.11

Long Term Provisions

1,588.75 1,474.11 1,371.94 1,769.74 1,281.59

TOTAL NON-
CURRENT 13,497.39 16,962.91 19,752.14 18,391.40 1,5806.30
LIABILITIES
CURRENT
LIABILITIES
Short Term Borrowing
8,426.74 9,129.91 5,421.95 6,121.36 3,617.12

Trade Payable 7,162.60 6,102.10 8,115.01 8,102.25 10,408.83

Other Current Liabilities

9,805.30 11,152.74 11,671.05 10,180.46 7,765.57

Short Term Provisions

408.89 608.06 1,043.54 1,406.75 1,148.69

TOTAL CURRENT
LIABILITIES 25,803.53 26,992.81 26,251.55 25,810.82 22,940.81

ASSET

NON-CURRENT
ASSETS

89
Tangible Assets 12,129.14 12,065.89 19,540.06 19,540.25 18,316.61

Intangible Asset 2,413.18 2,009.87 6,501.04 5,667.73 3,970.22

Capital Work-in-
progress 575.65 585.21 1,400.82 1,755.51 2,146.96

Other Asset 0.00 0.00 0.00 0.00 0.00

FIXED ASSET 15,627.27 15,543.00 29,429.56 29,702.78 28,573.42

Non – Current
Investment 29,181.62 29,256.39 16,114.91 15,730.86 15,435.19

Deferred Tax Assets

[Net] 1,477.26 0.00 0.00 0.00 0.00
Long Term Loans And
Advance 114.40 48.43 72.39 138.46 143.13

Other Non – Current

Assets 3,870.27 3,432.44 3,588.21 3,449.01 3,529.59

TOTAL NON-
CURRENT ASSETS 50,270.82 48,280.26 49,205.07 49,021.11 47,680.33
CURRENT
ASSETS
Current Investment
3,142.96 5,143.08 1,578.26 885.31 1,433.18

Inventories 3,027.90 3,718.49 4,551.71 3,831.92 4662.00

90
Trade Receivable
2,307.72 2,111.78 2,087.51 1,978.06 3,250.64
Cash And
Cash Equivalents 1,414.65 2,605.43 4,318.94 3,532.19 1,306.61

Short Term loans And

Advance 132.29 139.37 184.49 232.14 200.08

Other Current Assets 1,474.43 1,901.46 3,133.68 3,109.14 2,376.79

TOTAL CURRENT
ASSET 11,499.95 15,619.61 15,854.59 13,568.76 13,229.30

TOTAL ASSET 61,770.77 63,899.87 65,059.66 62,589.87 60,909.63

91
INCOME STATEMENT

TATA MOTORS LIMITED

Profit and Loss Account for the last Five Years

March 2019 to March 2023

Years 2023 2022 2021 2020 2019

12 12 12 12 12
Months Months Months Months Months

INCOME

REVENUE FROM
OPERATIONS 65,298.84 46,880.97 29,769.07 43,485.76 68,764.88
[GROSS]
Less: Excise/Service
Tax/Other Levies 0.00 0.00 0.00 0.00 0.00
REVENUE FROM
OPERATIONS [NET] 65,298.84 46,880.97 29,769.07 43,485.76 68,764.88
TOTAL OPERATING
REVENUES 65,757.33 47,923.59 30,595.02 45,311.22 71,757.42
Other Income 820.94 659.91 419.99 1,383.05 2,554.66
TOTAL REVENUE
66,578.27 47,923.95 30,595.02 45,311.22 71,757.42

EXPENSES

Cost of Materials
Consumed 42,226.81 31,693.11 19,050.74 26,171.85 43,748.77

92
Purchase Of Stock-In-
Trade 6,561.32 5,030.00 3,156.80 5,679.98 6,722.32

Operating And Direct

Expenses 899.06 593.90 348.71 830.24 571.76

Changes In Inventories
Of FG,WIP And Stock- 484.69 -403.87 -609.55 722.68 144.69
In-Trade
Employee Benefit 4,021.63 3,601.51 3,341.53 4,384.31 4,273.10
Expenses
Finance Costs 2,047.51 2,121.73 2,110.83 1,973.00 1,793.57
Depreciation And
Amortisation Expenses 1,766.86 1,760.57 1,730.71 3,375.29 3,098.64

Other Expenses 8,099.50 6,155.52 4,227.35 7,959.75 9,895.68

TOTAL EXPENSES 65,040.65 49,647.05 32,562.19 49,927.64 69,155.42

PROFIT/LOSS
BEFORE 1,537.62 -1723.46 -1,967.17 -4,616.42 2,602.00
EXCEPTIONAL
ITEMS AND TAX
Exceptional Items
-282.82 83.41 -307.55 -2,510.92 -203.07
PROFIT/LOSS
BEFORE TAX 1,254.80 -1,640.05 -2,274.72 -7,127.34 2,398.93

TAX EXPENSES
CONTINUED
OPERATIONS
Current Tax 81.60 51.18 20.16 33.05 294.66
Less: MAT credit
Entitlement 0.00 0.00 0.00 0.00 0.00

93
Deferred Tax -1,554.93 48.00 0.56 129.29 78.33
TOTAL TAX
EXPENSES -1,473.33 99.18 20.72 162.29 378.33

PROFIT/LOSS
AFTER TAX AND
BEFORE 2,728.13 -1,739.23 -2,295.44 -7,289.63 2,020.60
EXTRAORDINARY
ITEMS
PROFIT/LOSS FROM
CONTINUING 2,728.13 -1,739.23 -2,295.44 2,020.60
-7,289.63
OPERATIONS
PROFIT/LOSS FOR
THE PERIOD 2,728.13 -1,390.86 -2,395.44 -7,289.63 2,020.60

94