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23-Jan-11

Annual Progress Report-2009 1

Tata Motors Ltd.

Created by:

Brijender Singh


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23-Jan-11 Annual Progress Report-2009 2

Ratio Analysis

Ratio

Analysis

Financial

Profitability

Liquidity

Turnover


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Ratio Analysis

Purpose

To identify aspects of a businesss

performance to aid decision makingQuantitative process may need to

be supplemented by qualitativefactors to get a complete picture


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5 main areas of Ratio Analysis

1. Liquidity the ability of the firm to pay its way2. Investment/shareholders information to

enable decisions to be made on the extent ofthe risk and the earning potential of a

bu

siness investment3. Gearing information on the relationshipbetween the exposure of the business toloans as opposed to share capital

4. Profitability how effective the firm is atgenerating profits given sales and or itscapital assets

5. Financial the rate at which the company sellsits stock and the efficiency with which it usesits assets


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Balance Sheet

Period ending 31-Mar-08

Assets

Current Assets

Cash &Cash Equivalents 373800Short Term Investment 19,300

Net Receivables 1,640,600

Inventory 858,100

Other current Assets 219,700

Total Current Assets 3,111,500


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Cont.

Long Term Investment 2,563,100

Property Plant and Equipment 2,489,700

Goodwill 174100

Intangible

A

ssets 77,800

AccumulatedAmortization --

OtherAssets 811,100

Deferred Long Term Asset

Charges

--

Total Assets 9,227,300


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Cont

Liabilities

Current Liabilities

Account Payable 1482600

Short/Current Long Term Debt 1724500

Other Current Liabilities 1390500

Total Current Liabilities 4597600


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Cont.

Long Term Debts 1469100

OtherLiabilities 236600

Deferred Long Term Liabilities

Charges

152900

Minority Interest 140800

Negative Goodwill -

Total Liabilities 6597000


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Cont.

Stakeholders Equity

Misc Stocks Options Warrants --

Redeemable Preferred Stocks --

Preferred Stock --

Common Stock 96,300

Retained Earnings 977,600

Treasury Stock --

Capital Surplus 994,000

Other stockholder Equity 562,400

Total Stockholder Equity 2,630,300

Net Tangible Assets $2,378,400


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Liquidity


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Current Ratio

It is also called as a working capital ratio.

Ability to pay short term obligation.

Ideal Ratio is 2:1.

If Ratio >2:1 underused WC. If Ratio


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Quick Ratio

Also referred to as the Acid ratioor Liquid Ratio.

Ability to pay very short termobligation, like 3 month.

Ideal ratio = 1:1.

Quick Ratio =Quick Assets

Current Liabilities

Quick Assets=Current Assets Stock -Prepaid Expenses

2253400

4597600= 0.49


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Inventory Turnover Ratio

Speed at which assets convertedinto sales.

Higher the ratio higher the profit.

Cost of goods sold

Avg. Inventory

=33123.54

822600

=

= .04


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Working Capital Turn Over Ratio

This ratio reveals how efficientlyWC has been utilized in makingsales.

Higher the Ratio higher the WCshows that efficient use of WC &Quick turnover of current assets.

= net sales or cost of good sold

Avg WC= 33123.54

238400

= .139


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Debt Ratio

Relative contribution of creditorsand owners.

S

atisfactory ratio = 0.5

Debt Ratio =Total long term debts

Total long term Funds

1469100

2630300= .55


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Proprietary Ratio

Owners ratio in the Business

Higher the ratio better for its

creditors.

=Share holder fund

Share holder fund + long term loans

2630300

4099400= = 0.64


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Interest Coverage Ratio

Relationship between operatingprofit and interest liability.

Higher the ratio better it is creditor.

=Earning before interest & tax

Interest Charges

3124.02

704.92= = 4.43


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Profitability Ratio


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Gross profit Ratio

Indicates the efficiency ofproduction

Ascertained and compared withprevious years.

=Gross profit

Net sales

=

2376.23

28767.91

x 100

x 100 = 8.26%


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Net profit Ratio

Indicate profitability position.

Analyzed as time series.

=Net profit

Net salesx 100

2028.92

28767x 100 = 7.05=


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Operating Expense Ratio

Measurement of efficiency &profitability of Business.

Lower the ratio better it is becau

seit will leaved the higher margin ofprofit on sales.

= Cost of Goods sold + Operating Expenses

Net sales

= 28589.17

28767.91

= .99


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Operating Profit Ratio`

Measures the rate of net profitearned in sales, determine theoverall efficiency of business

operation.Comparison between previous &

current year.

=Operating profit

Net salesx 100

=3030.52

28767.91x 100 = 10.53


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Profitability Ratio based on

Investment


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Return on Assets

Measures profitability in relation toassets.

Shows overall efficiency of the firm

=Net profit after taxes & interest

Total assets

=2028.92

9227300x 100

x 100

= .02


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Return on Investment

Shows the productivity of thecompany.

Higher the ratio better it is

=Net Operating profit before taxes & interest

Capitalx100

=

3566700

3030.52x100 = .085


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Return on shareholders fund

Shows the profitability forshareholders

Brand value of Company

= net profit after interest & tax

Total shareholders fundX 100

= 2028.92

2630300X 100 = .08


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Return on equity shareholders funds

Measures how efficiently the equityshareholder fund are being used inbusiness.

Higher the ratio better it is.True measures the efficiency of

management.

= net profit after interest, Pref Dividend & tax

Equity shareholders fund

X 100

2028.92/263030 X100 = .08


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Earning Per share

Profitability on per share basis

Determines market valu

e of share

Net profit after interest, tax & pref. Dividend

No. ofEquity shares

2028.92

X

52.63 = No. of equity shares = 38.55


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Summary of Tata Motors on

Financial Ratio

Ratios help to: Evaluate performance

Structure analysis

S

how the connection between activities andperformance

Benchmark with Past for the company

Industry

Ratios adjust for size differences


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Ratios and Forecasting

Common stock valuation based on

Expected cashflows to stockholders

ROE and V are major determinants of

cashflows to stockholdersRatios influence expectations by:

Showing where firm is now

Providing context for current performance

Cu

rrent information influ

encesexpectations by:

Showing developments that will alter futureperformance


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Queries??


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Thank you

Tata Motors_tr

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