A Financial Analysis Of Tata Motors

The company is the India ‘s largest car bring forthing industry in the state. The company is holding 24000 employees all across their units. The company was established in 1945 and enrolled its first vehicle in Uttar Pradesh in 1954 and taking over decree in 1954.

Hire a custom writer who has experience.
It's time for you to submit amazing papers!


order now

It is the first Indian car company which is listed in the New York stock exchange in September 2004. The company has many amalgamations and accusals with other foreign companies like panther, land wanderer, and decree to come in the foreign market and do the state aware of the foreign merchandises present in the market.

( hypertext transfer protocol: //www.tatamotors.com/our_world/profile.php )

Traveling further with the strengths and failing of the company: –

Strengths of the company: –

The company has assorted scopes of merchandises to fulfill all sorts of consumers present in the market.

New merchandises every clip as there are assortment of merchandises for all sort of consumers get downing from lower category to upper category.

With amalgamations and acquisitions high terminal net income and market leader in the state with the merchandises and launching of new merchandises.

New technological accomplishments and high terminal employees for merchandise creative activity exclusive distributers and makers of the cars for lower in-between category.

Failing: –

A weak safety criterion as there is less safety in Tata autos so consumer switches over to the other merchandise.

The company follows a low cost scheme in its luxury autos besides but the consumers when buys a luxury auto of the company is non satisfied with the section so shifts over to the other trade name vehicle.

Stockholders non acquiring profit out of the company due to low ROI.

Opportunities-

The company produces low cost vehicles so the company chiefly can aim lower and in-between category sections for their merchandising as in the state in-between and low category people are more than higher category.

Company can fabricate and convey up new luxury autos in the market as there are fewer participants for luxury autos in the market.

Geting with new joint ventures in other states to advance the trade name and the vehicle.

Menaces: –

Low safety criterions of the merchandise so it could be sold less.

Rising monetary values of Diesel, gasoline so bring forthing more efficient vehicles.

Rivals following the same scheme that the Tata Company is following.

( hypertext transfer protocol: //www.freeswotanalysis.com/automobile/76-tata-motors-swot-analysis.html )

We would look into the ratio analysis of the company and compare both the fiscal old ages of the company that is 2009 and 2010 so as to see the advancement of the company.

Profitability Ratio: –

Gross Margin =

Gross net income / Gross saless

Gross Margin ( 2010 ) =103,514.5 / 358,086.0 =.29

Gross Margin ( 2009 ) =90,390.2 /325,143.8 =.28

EBIT Ratio=PAT / EBIT

For 2009

=21,677.0 / 37878.9=.57

For 2010

=21,699.9 / 35384.5=.61

Tax return on investment=EBIT / Capital employed

For 2009

=39575.5 / 150320.7=.26

For 2010

=35977 / 115910.3

A .3 1Return on equity

=PAT / Net worth

For 2009

=21,677.0 / 86,975.2 =.25

For 2010

=21,699.9 / 77,216.7=.28

In profitableness ratio, the gross net income ratio is increasing in 2010 than 2009. It

means its net income is turning in gross revenues. But company ‘s EBIT ratio is diminishing agencies

involvement on capital and revenue enhancement rate is increased in 2010 than 2009 which is responsible

in diminishing its PAT.

Activity Ratio

Inventory Turnover Ratio: -Cost of goods sold / Inventory

( 2010 )

( 2009 )

Cost of goods sold

254,571.5

234,753.6

Inventory

32,946.4

31,669.0

For 2008: –

254,571.5 / 32,946.4

=7.72

For 2009: –

234,753.6 / 31,669.0

=A 7.4 1

Debtor Turnover Ratio: -Sales / debitor

For 2010: –

358,086.0 ( gross revenues ) / 97,555.9 ( debitor ) =

3.67

For 2009: –

325,143.8 ( gross revenues ) / 101,638.5 ( debitor ) =

3.20

Average aggregation period ( 2010 ) = 360 / 3.67=

98 yearss

Average aggregation period ( 2009 ) = 360 / 3.20=

112 yearss

Assetss Turnover Ratio: – Gross saless / Net assets or capital employed

For 2010: –

358,086.0 ( gross revenues ) /150320.7 ( c.e. ) =

2.38

For 2009: –

325,143.8 ( gross revenues ) / 115910.3 ( c.e. ) =

2.80

Working Capital Turnover Ratio: – Gross saless / Net working capital

Net Working Capital=

Current assets – Current liability

For 2010

=192,673.5 -188,948.8 = 3724.7

For 2009

=A 162,779.2 – 127,633.7 = 35145.5

For 2010: –

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

For 2009: –

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

As we seen, company ‘s efficiency of utilizing its assets is increasing in 2010 than

2009. The stock list turnover ratio which shows its efficiency of selling merchandise is

increasing.

INCOME STATEMENT OF TATA MOTORS

( Currency in 1000000s )

( 2009 )

( 2010 )

Grosss

323,612.0

356,514.8

Other Grosss

19.6

65.0

Sum REVENUES

325,143.8

358,086.0

Cost of Goods Sold

234,753.6

254,571.5

GROSS Net income

90,390.2

103,514.5

Selling General & A ; Admin Expenses, Total

30,811.0

35,136.3

R & A ; D Expenses

850.2

659.5

Depreciation & A ; Amortization, Total

6,880.9

7,820.7

Other Operating Expenses

17,508.5

24,046.6

OTHER OPERATING EXPENSES, TOTAL

56,050.6

67,663.1

OPERATING Income

34,339.6

35,851.4

Interest Expense

-4,650.6

-9,127.2

Interest and Investment Income

592.5

1,696.6

Net Interest Expense

-4,058.1

-7,430.6

Income ( Loss ) on Equity Investings

394.2

652.0

Currency Exchange Gains ( Loss )

652.1

1,376.1

Other Non-Operating Income ( Expenses )

-1.4

-0.6

EBT, EXCLUDING UNUSUAL ITEMS

31,326.4

30,448.3

Gain ( Loss ) on Sale of Assetss

1,103.6

Other Unusual Items, Total

-52.2

-37.0

EBT, INCLUDING UNUSUAL ITEMS

31,274.2

31,514.9

Income Tax Expense

8,832.1

8,515.4

Minority Interest in Net incomes

-742.2

-1,322.5

Net incomes from Continuing Operationss

21,699.9

21,677.0

Net Income

21,699.9

21,677.0

BALANCE SHEET OF TATA MOTORS

( 2009 )

( 2010 )

Assetss

( Currency in 1000000s Rs )

Cash and Equivalents

11,542.7

38,331.7

Entire CASH AND SHORT TERM INVESTMENTS

11,542.7

38,331.7

Histories Receivable

17,022.2

20,605.1

Notes Receivable

84,553.

76,938.9

Other Receivables

62.7

11.9

Sum Receivables

101,638.5

97,555.9

Inventory

31,669.0

32,946.4

Prepaid Expenses

1,247.3

3,334.8

Other Current Assetss

16,681.7

20,504.7

TOTAL CURRENT ASSETS

162,779.2

192,673.5

Gross Property Plant and Equipment

129,408.3

182,484.4

Accumulated Depreciation

-54,266.5

-57,652.4

Net Property PLANT AND EQUIPMENT

75,141.8

124,832.0

Good will

4,430.1

5,661.6

Long-run Investings

11,745.9

26,658.3

Deferred Charges, Long Term

119.3

2,442.1

Other Intangibles

1,429.6

Other Long-Term Assetss

TOTAL ASSETS

254,216.3

353,697.1

LIABILITIES & A ; EQUITY

Histories Collectible

48,723.3

67,832.8

Accrued Expenses

4,704.9

5,389.3

Short-run Borrowings

34,325.

52,503.2

Current Income Taxes Payable

1,084.2

901.4

Other Current Liabilities, Total

38,789.2

62,104.1

Unearned Revenue, Current

6.7

218.0

Entire CURRENT LIABILITIES

127,633.7

188,948.8

Long-run Debt

38,693.6

63,345.5

Capital Leases

Minority Interest

2,499.6

4,683.1

Deferred Tax Liability Non-Current

8,172.7

9,744.5

Entire LIABILITIES

176,999.6

266,721.9

Common Stock

3,853.6

3,854.9

Additional Paid in Capital

19,364.0

15,372.2

Retained Net incomes

44,087.8

58,523.7

Comprehensive Income and Other

9,911.3

9,224.4

Entire COMMON EQUITY

77,216.7

86,975.2

Entire LIABILITIES AND EQUITY

254,216.3

353,697.1

Liquidity ratio

Current ratio=Current assets / Current liability

2010

2009

Current Assetss

192,673.5

162,779.2

Current Liability

188,948.8

127,633.7

Current Ratio ( 2008 )

192,673.5/ 188,948.8 =1.01

Current Ratio ( 2007 )

162,779.2/ 127,633.7 =1.27

Quick Ratio ( 2008 )

C.A. – Invent. / C.L.

192,673.5 – 32,946.4 / 188,948.8 =.85

Quick Ratio ( 2007 )

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

Interval step -Current assets-inventory. / Avg. day-to-day hard currency oper. Exp

For 2010-

Average. Daily hard currency operational. Exp –

Entire hard currency exp. / 365

67,663.1/ 365 = 185.3

Interval measure-

192,673.5 – 32,946.4 / 185.3 =A 862 yearss

For 2009

Avg. day-to-day hard currency operational. Expenses –

56,050.6/ 365 = 153.5

Interval measure-

162,779.2- 31,669.0 / 153.5=A 854 yearss

In liquidness ratio, we observe that current ratio in 2010 is less in comparing of

2009. It means company ‘s efficiency decreases in paying current liability. And in

speedy ratio, it besides decreases..

( ( hypertext transfer protocol: //www.scribd.com/doc/14405118/Ratio-Analysis-of-TATA-MOTORS )

HONDA Motors: –

i? Honda motors was born in late 1960 foremost in Japan coming up with its first auto in the universe known as K 360 and establishing the auto in Japan and North Korea with all its power and motive. The Honda motors came into India in 2000 and launched its first auto in India the Honda metropolis with the best marketer hailing auto in India and making maximal net incomes out of it. The company besides started bring forthing automatons in 2005 and Genets in 2006 for viing Yamaha in the long tally and besides is the largest maker of motorcycles in the universe.

( www.hondamotors.com/history.html )

Talking about the strengths and failing of the company: –

Strengths: –

The company is the largest maker of two Wheelers in the universe and there is no close competition in the market of the company.

New engineering and new advanced techniques.

Fuel efficient autos and merchandises

Assorted sections aiming assorted groups and sections.

Failing: –

Competition in different states about the merchandise they are establishing.

Low profile vehicles non suited in all states

High on cost harmonizing to the consumer point of position.

Opportunities: –

Rising demand for merchandises in assorted states like India and Pakistan.

Planing of assorted theoretical accounts needed by the consumers

New advanced engineering and people in the company for new merchandises establishing.

Menaces: –

The company designs merely gasoline and intercrossed vehicles which is the biggest menace to the company as the company faces tonss of competition in the market due to which market launches diesel vehicles and Honda does non hold Diesel merchandises in the market.

( hypertext transfer protocol: //kninn.blogspot.com/2010/03/swot-analysis-of-honda.html )

HONDA MOTORS RATIO ANALYSIS: –

RATIO ANALYSIS

a. CURRENT Ratio:

Current Ratio shows a house ‘s ability to run into current liabilities with its current assets.

Calculation:

Current Ratio =Current Assets/ Current Liabilitiess

2009 ( for Honda )

Current Ratio = 5192609/4287527

Current Ratio = 1.21 times.

2010 ( for Honda )

Current Ratio = 5231568/4678550

Current Ratio = 1.11 times.

Company Year

Current Ratio

Honda Motor Co. , Ltd.

2010 1.11

2009 1.21

2010 0.95

Analysis:

The current ratio is lower in 2010 as compared to 2009.There is an addition in all the current assets except other receivables which decreased in 2010. The net current assets increased by A?38959million in 2010 and at the same clip the net current liabilities increased by A?391023 million in 2009.

B. ACID TEST Ratio:

Acid Test Ratio or Quick Ratio shows a house ‘s ability to run into current liabilities with its most liquid

Assetss.

Calculation:

Quick ratio = ( Current Assets-Inventory ) /Current Liabilitiess.

2009A ( for Honda )

Quick ratio = ( 5192609-1183116 ) /4287527

Quick ratio = 0.93 times.

2010A ( for Honda )

Quick ratio = ( 5231568-1199260 ) /4678550

Quick ratio = 0.86 times

8

Company Year

Quick Ratio

Honda Motor Co. , Ltd.

2010 0.86

2009 0.93

Analysis:

We have seen that the company had a lower current ratio in 2010 and was unable to run into its short term duties as compared to 2009. Whereas the speedy ratio identifies the function played by the stock lists in this context. Therefore the ratio shows that in twelvemonth 2010 it has decreased as compared to 2009 due to the fact that the investing in stock lists is increased by A?16144 million merely and current liabilities have increased by A?391023 million.

ASSET MANAGEMENT RATIOS.

c. INVENTORY TURNOVER RATIO

Calculation:

Inventory Turnover Ratio = Sales/Inventory

2009A ( for Honda )

Inventory Turnover Ratio = 9819973/1183116

Inventory Turnover Ratio = 8.32 times

2010A ( for Honda )

Inventory Turnover Ratio = 11304485/1199260

Inventory Turnover Ratio = 9.42 times

Company Year

Inventory Turnover Ratio

Company Year

Quick Ratio

Honda Motor Co. , Ltd.

2010 0.86

2009 0.93

c. INVENTORY TURNOVER RATIO

Calculation:

Inventory Turnover Ratio = Sales/Inventory

2007A ( for Honda )

Inventory Turnover Ratio = 9819973/1183116

Inventory Turnover Ratio = 8.32 times

2010 ( for Honda )

Inventory Turnover Ratio = 11304485/1199260

Inventory Turnover Ratio = 9.42 times

Company Year

Inventory Turnover Ratio

Honda Motor Co. , Ltd.

2010 9.42

2009 8.32

d. FIXED ASSETS TURNOVER RATIO

This ratio measures the extent of turnover or volume of gross income generated by the fixed assets of a

Company or in other words the efficiency in their use.

Calculation:

Fixed Assets Turnover Ratio = Sales/Fixed Assetss

2009A ( for Honda )

Fixed assets Turnover Ratio = 9819973/2078728

Fixed assets Turnover Ratio = 4.72 times

2010A ( for Honda )

Fixed assets Turnover Ratio = 11304485/2201299

Fixed assets Turnover Ratio = 5.13 times

Company Year

Fixed Asset Turnover Ratio

Honda Motor Co. , Ltd.

2010 5.13

2009 4.72

e. TOTAL ASSETS TURNOVER RATIO

Calculation:

Entire Assets Turnover Ratio = Sales/Total Assetss

2009A ( for Honda )

Entire Assets Turnover Ratio=9819973/120336500

Entire Assets Turnover Ratio = 0.81 times

2010A ( for Honda )

Entire Assets Turnover Ratio=11304485/12615543

Entire Assets Turnover Ratio = 0.89 times

Company Year

Entire Assets Turnover Ratio

Honda Motor Co. , Ltd.

2010 0.89

2009 0.81

f. NET Net income TURNOVER RATIO

Calculation:

Net Net income Turnover Ratio = Sales/Net Net income

2009A ( for Honda )

Net Net income Turnover Ratio = 9819973/592322

Net Net income Turnover Ratio = 16.57 times

2010A ( for Honda )

Net Net income Turnover Ratio = 11304485/600039

Net Net income Turnover Ratio = 18.83 times

Company Year

Net Net income Employee turnover Ratio

Honda Motor Co. , Ltd.

2010 18.83

2009 16.57

( hypertext transfer protocol: //www.scribd.com/doc/7682754/Honda-Financial-Report-2010-Analysis-With-Ratio-Analysis )

x

Hi!
I'm Heather

Would you like to get such a paper? How about receiving a customized one?

Check it out