1 | Page

INTRODUCTION OF THE COMPANY

LITERATURE REVIEW

RESEARCH METHODOLOGY

THEORITICAL FRAME WORK OF RATIO

11

RATIO ANALYSIS

15

CONCLUSION AND RECOMENDATION

31

APPENDIXES
6

Balance sheet

32

Profit and loss A/c

7

REFERENCES

36

EXECUTIVE SUMMARY
2 | Page

The report included the ratio anaysisof TATA MOTORS. To see the prefomance of the
company with the help of the ratio anaylsis the investor can easily measure companies
stability. . For this analysis to be conducted, data is needed. Balance sheet and profit and loss
account of the company are used which is purely a secondary data (given in appendixes) to
make such analysis. The time period taken for conducting this analysis is from 2009 to 2013
i.e. five years. The conclusion made from this analysis is that TATA MOTORS has been
declining and is performing not well in last two years, the company is going at declining sage
as per the all ratio.

For this study five years comparative Income Statement & Balance Sheet have been taken
for calculating ratio analysis. Main objective in undertaking this project is to supplement
academic knowledge with absolute practical exposure to day to day functions of the sector.

Financial analysis which is the topic of this project refers to an assessment of the
viability, stability and profitability of a business. This important analysis is performed usually
by finance professionals in order to prepare financial or annual reports. These financial
reports are made with using the information taken from financial statements of the company
and it is based on the significant tool of Ratio Analysis. These reports are usually presented to
top management as one of their basis in making crucial business decisions.

OBJECTIVES OF THE STUDY:3 | Page

There have been various objectives for this study,

A detailed analysis of the financial statements that is the balance sheet and the income
statement of TATA MOTORS

The understanding and assessment of financial ratios based on the statements of the company.

To recognize the position of the company through those ratios and data available. This
recognition is a leading factor in changes of each and every company and the base and root of
lots of management decisions.

4 | Page

INTRODUCTION
Tata Motors Limited (formerly TELCO, short for "Tata Engineering and Locomotive
Company") is an Indian multinational automotivemanufacturing company headquartered
in Mumbai, Maharashtra, India and a subsidiary of the Tata Group. Its products include
passenger cars, trucks, vans, coaches, buses and military vehicles. It is the world's eighteenthlargest motor vehicle manufacturing company, fourth-largest truck manufacturer and secondlargest bus manufacturer by volume. Founded in 1945 as a manufacturer of locomotives, the
company manufactured its first commercial vehicle in 1954 in a collaboration with DaimlerBenz AG, which ended in 1969. Tata Motors entered the passenger vehicle market in 1991
with the launch of the Tata Sierra, becoming the first Indian manufacturer to achieve the
capability of developing a competitive indigenous automobile. Tata launched the Indica in
1998, the first fully indigenous Indian passenger car. Although initially criticised by autoanalysts, its excellent fuel economy, powerful engine and an 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-favourite. Tata Motors also successfully exported large quantities of
the car to. So, On 27 September 2004, Tata Motors rang the opening bell at the New York
Stock Exchange (NYSE) to mark the listing of Tata Motorsuth Africa. The success of Indica
played a key role in the growth of Tata Motors.
TATA OPERATION
Tata Motors Cars
Tata Motors is among the top four in passenger vehicles in India with products in the
compact, midsize car and utility vehicle segments. The companys manufacturing base in
India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar
Pradesh), Pantnagar (Uttarakhand), Dharwad (Karnataka) and Sanand (Gujarat). Tata's
dealership, sales, service and spare parts network comprises over 3,500 touch points. Tata
Motors has more than 250 dealerships in more than 195 cities across 27 states and 4 Union
Territories of India.[23] It has the 3rd largest Sales and Service Network after Maruti
Suzuki and Hyunduai
Tata Daewoo
In 2004, Tata Motors acquired Daewoo Commercial Vehicle Company of South Korea. The
reasons behind the acquisition were:

Company's global plans to reduce domestic exposure. The domestic commercial

vehicle market is highly cyclical in nature and prone to fluctuations in the domestic
economy. Tata Motors has a high domestic exposure of ~94% in the MHCV segment and
~84% in the light commercial vehicle (LCV) segment. Since the domestic commercial
vehicle sales of the company are at the mercy of the structural economic factors, it is
increasingly looking at the international markets. The company plans to diversify into
various markets across the world in both MHCV as well as LCV segments.
5 | Page

To expand the product portfolio Tata Motors recently introduced the 25MT GVW Tata
Novus from Daewoos (South Korea) (TDCV) platform. Tata plans to leverage on the
strong presence of TDCV in the heavy-tonnage range and introduce products in India at
an appropriate time. This was mainly to cater to the international market and also to cater
to the domestic market where a major improvement in the Road infrastructure was done
through the National Highway Development Project
.

Tata Daewoo is the second-largest heavy commercial vehicle manufacturer in South Korea.
Tata Motors has jointly worked with Tata Daewoo to develop trucks such as Novus and
World Truck and buses including GloBus and StarBus. In 2012, Tata will start developing a
new line to manufacture competitive and fuel efficient commercial vehicles to face the
competition posed by the entry of international brands like Mercedes-Benz, Volvo and
Navistar into the Indian market.
Tata Hispano
Tata Hispano Motors Carrocera, S.A. is a bus and coach cabin manufacturer based in
Zaragoza, Aragon, Spain and a wholly owned subsidiary of Tata Motors. Tata Hispano has
plants in Zaragoza, Spain and Casablanca, Morocco. Tata Motors first acquired a 21% stake
in Hispano Carrocera SA in 2005, and acquired the remaining 79% for an undisclosed sum in
2009, making it a fully owned subsidiary, subsequently renamed Tata Hispano
Jaguar Land Rover
Jaguar Land Rover PLC is a British premium automaker headquartered in Whitley, Coventry,
United Kingdom and has been a wholly owned subsidiary of Tata Motors since June 2008,
when it was acquired from Ford Motor Company.[25] Its principal activity is the development,
manufacture and sale of Jaguar luxury and sports cars and Land Rover premium four wheel
drive vehicles. It also owns the currently dormant Daimler, Lanchester and Rover brands.[26]
Jaguar Land Rover has two design centres and three assembly plants in the UK. Under Tata
ownership, Jaguar Land Rover has launched new vehicles including the Range Rover
Evoque, Jaguar F-Type and the fourth-generation Range Rover.

6 | Page

Review of literature:
The Economic Times (September15,2013), stated that, Auto major Tata Motors today said it
will go ahead with planned investment of Rs 3,000 crore during the fiscal to support growth
in future despite the economic slowdown. "As of now, there is no change in our plan. We will
continue with our game plan of investment that we had planned during the beginning of this
fiscal and we will continue to stay with that investment," Tata Motors Senior VP Commercial
Passenger Vehicle Business Unit.
Auto major Tata Motors today said its global sales, including Jaguar Land Rover, declined
by 16.21 percent to 81,457 units in August, 2013. The company had sold 97,225 units in the
corresponding period of 2012. Global sales of all passenger vehicles in August 2013 stood at
43,474 units, down 7.77 percent from 47,141 units sold in August 2012, Tata Motors said in a
statement. Sales of the company's luxury brand Jaguar Land Rover, however, rose by 28.40
percent to 30,895 units during August, as compared to 24,060 units in August 2012.
The BSE (September 11,2013),stated that,Tata Motors Ltd has informed BSE regarding a
Press Release dated titled "Tata Motors Group global wholesales at 81,457 in August 2013".
The Tata Motors Group global wholesales in August 2013, including Jaguar Land Rover,
were 81,457 numbers. Cumulative wholesales for the fiscal were 416,609 numbers. Global
wholesales of all commercial vehicles Tata, Tata Daewoo and the Tata Hispano Carrocera
range -- were 37,983 numbers. Cumulative commercial vehicles wholesales for the fiscal
were 199,156 numbers.

7 | Page

RESEARCH METHODOLOGY
RESEARCH DESIGN:A research design is the way or the methods or the procedure followed to conduct an
scientific research. Some of the types of research design are exploratory research design,
descriptive research design and causal research design. Each has its own meaning. Causal
research design helps us to know a cause and effect relation between two variables, whereas
exploratory research design is used to find new ideas and insight. Descriptive research design
is a type of research method that is used when one wants to get information on the current
status of a person or an object. in this study there only one company and no new ideas are to
be found. The major focus would be on to know current financial position of TATA
MOTORS. For this a descriptive type of research design is used.

TIME PERIOD:Data from 2009 to 2013 are collected to analyze the performance of the Ashok Leyland.

OBJECTIVES OF THE STUDY:There have been various objectives for this study,
A detailed analysis of the financial statements that is the balance sheet and the income
statement of TATA MOTORS
The understanding and assessment of financial ratios based on the statements of the company.
To recognize the position of the company through those ratios and data available. This
recognition is a leading factor in changes of each and every company and the base and root of
lots of management decisions.

DATA COLLECTION METHOD: There are two ways one can collect data i.e. through primary source (which means generating
ones own information by surveys or interviews etc.) or through secondary source (which are
readily available like information in newspaper, magazines, websites etc.). For this report
only secondary data are used as the basic objective is to study TATA MOTORS financial
position, there is no need to conduct a survey or interviews, which are sources of primary
data.

TYPE OF DATA:Data included in the balance sheet, profit and loss account of the company are used.

8 | Page

METHOD OF ANALYSIS:Various financial ratios are used to evaluate the corporate financial positions along with
various graphs and charts.

LIMITATION OF THE STUDY:No study can have zero limitations. So this report is no exception either.
1) Secondary data is never cent percent correct. So if the data used in the report for
evaluation are incorrect or incomplete the results would be misleading.
2) Alteration of data at source of origin can alter the results.
3) Time constraints.

9 | Page

THEOROTICAL FRAMEWORK OF RATIO

FINANCIAL RATIO ANALYSIS

Ratio analysis is such a significant technique for financial analysis. It indicates relation of
two mathematical expressions and the relationship between two or more things.
Financial ratio is a ratio of selected values on an enterprise's financial statement.
There are many standard ratios used to evaluate the overall financial condition of a
corporation or other organization. Financial ratios are used by managers within a firm, by
current and potential stockholders of a firm, and by a firms creditor. Financial analysts use
financial ratios to compare the strengths and weaknesses in various companies.
Values used in calculating financial ratios are taken from balance sheet, income statement and
the cash flow of company, besides Ratios are always expressed as a decimal values, such as
0.10, or the equivalent percent value, such as 10%.
Essence of ratio analysis:
Financial ratio analysis helps us to understand how profitable a business is, if it has enough
money to pay debts and we can even tell whether its shareholders could be happy or not.
Financial ratios allow for comparisons:
1. between companies
2. between industries
3. between different time periods for one company
4. between a single company and its industry average
To evaluate the performance of one firm, its current ratios will be compared with its past
ratios. When financial ratios over a period of time are compared, it is called time series or
trend analysis. It gives an indication of changes and reflects whether the firms financial
performance has improved or deteriorated or remained the same over that period of time. It is
not the simply changes that has to be determined, but more importantly it must be recognized
that why those ratios have changed. Because those changes might be result of changes in the
accounting polices without material change in the firms performances.
Another method is to compare ratios of one firm with another firm in the same industry at the
same point in time. This comparison is known as the cross sectional analysis. It might be
more useful to select some competitors which have similar operations and compare their
ratios with the firms. This comparison shows the relative financial position and performance
of the firm. Since it is so easy to find the financial statements of similar firms through
publications or Medias this type of analysis can be performed so easily.
10 | P a g e

To determine the financial condition and performance of a firm, its ratios may be compared
with average ratios of the industry to which the firm belongs. This method is known as the
industry analysis that helps to ascertain the financial standing and capability of the firm in the
industry to which it belongs.
Industry ratios are important standards in view of the fact that each industry has its own
characteristics, which influence the financial and operating relationships. But there are certain
practical difficulties for this method. First finding average ratios for the industries is such a
headache and difficult. Second, industries include companies of weak and strong so the
averages include them also. Sometimes spread may be so wide that the average may be little
utility. Third, the average may be meaningless and the comparison not possible if the firms
with in the same industry widely differ in their accounting policies and practices. However if
it can be standardized and extremely strong and extremely weak firms be eliminated then the
industry ratios will be very useful.

What does ratio analysis tell us?

After such a discussion and mentioning that these ratios are one of the most important tools
that is used in finance and that almost every business does and calculate these ratios, it is
logical to express that how come these calculations are of so importance.
What are the points that those ratios put light on them? And how can these numbers help us in
performing the task of management?
The answer to these questions is:
We can use ratio analysis to tell us whether the business:
1. is profitable
2. has enough money to pay its bills and debts
3. could be paying its employees higher wages, remuneration or so on
4. is able to pay its taxes
5. is using its assets efficiently or not
6. has a gearing problem or everything is fine
7. is a candidate for being bought by another company or investor
But as it is obvious there are many different aspects that these ratios can demonstrate. So for
using them first we have to decide what we want to know, then we can decide which ratios
we need and then we must begin to calculate them.
Which Ratio for whom:
As before mentioned there are varieties of people interested to know and read these
information and analyses, however different people for different needs. And it is because each
of these groups have different type of questions that could be answered by a specific number
and ratio.

11 | P a g e

Therefore we can say there are different ratios for different groups, these groups with the
ratio that suits them is listed below:
1. Investors: These are people who already have shares in the business or they are
willing to be part of it. So they need to determine whether they should buy shares in
the business, hold on to the shares they already have or sell the shares they already
own. They also want to assess the ability of the business to pay dividends. As a result
the Return on Capital Employed Ratio is the one for this group.
2. Lenders: This group consists of people who have given loans to the company so they
want to be sure that their loans and also the interests will be paid and on the due time.
Gearing Ratios will suit this group.
3. Managers: Managers might need segmental and total information to see how they fit
into the overall picture of the company which they are ruling. And Profitability Ratios
can show them what they need to know.
4. Employees: The employees are always concerned about the ability of the business to
provide remuneration, retirement benefits and employment opportunities for them,
therefore these information must be find out from the stability and profitability of
their employers who are responsible to provide the employees their need. Return on
Capital Employed Ratio is the measurement that can help them.
5. Suppliers and other trade creditors: Businesses supplying goods and materials to
other businesses will definitely read their accounts to see that they don't have
problems, after all, any supplier wants to know if his customers are going to pay them
back and they will study the Liquidity Ratio of the companies.
6. Customers: are interested to know the Profitability Ratio of the business with which
they are going to have a long term involvement and are dependent on the continuance
of presence of that.
7. Governments and their agencies: are concerned with the allocation of resources
and, the activities of businesses. To regulate the activities of them, determine taxation
policies and as the basis for national income and similar statistics, they calculate the
Profitability Ratio of businesses.
8. Local community: Financial statements may assist the public by providing
information about the trends and recent developments in the prosperity of the business
and the range of its activities as they affect their area so they are interested in lots of
ratios.
9. Financial analysts: they need to know various matters, for example, the accounting
concepts employed for inventories, depreciation, bad debts and so on. therefore they
are interested in possibly all the ratios.
10. Researchers: researchers' demands cover a very wide range of lines of enquiry
ranging from detailed statistical analysis of the income statement and balance sheet
data extending over many years to the qualitative analysis of the wording of the
statements depending on their nature of research.
12 | P a g e

BALANCE SHEET OF COMPANY

Balance sheet of Tata Motors
Mar
Mar
Mar
Mar
'13
'12
'11
'10
Sources Of
Funds
Total Share
638.07
Capital
Equity Share
638.07
Capital
Share
0
Application
Money
Preference Share
0
Capital
Reserves
18,496.
77
Revaluation
0
Reserves
Networth
19,134.
84
Secured Loans 5,877.7
2
Unsecured
8,390.9
Loans
7
Total Debt
14,268.
69
Total Liabilities 33,403.
53
Mar
'13
Application Of
Funds
Gross Block
Less: Accum.

Mar
'09

634.75

634.65

570.6

514.05

634.75

634.65

570.6

514.05

3.06

18,709. 19,351. 14,208. 11,855.

16
40
55
15
23.75
24.19
24.63
25.07
19,367.
66
6,915.7
7
4,095.8
6
11,011.
63
30,379.
29

20,013.
30
7,766.0
5
8,132.7
0
15,898.
75
35,912.
05

14,803.
78
7,742.6
0
8,883.3
1
16,625.
91
31,429.
69

12,394.
27
5,251.6
5
7,913.9
1
13,165.
56
25,559.
83

Mar
'12

Mar
'11

Mar
'10

Mar
'09

30,312. 27,111. 21,883. 18,416. 13,905.

14
76
32
81
17
11,611. 9,965.8 8,466.2 7,212.9 6,259.9
13 | P a g e

Depreciation
Net Block
Capital Work in
Progress
Investments
Inventories
Sundry Debtors
Cash and Bank
Balance
Total Current
Assets
Loans and
Advances
Fixed Deposits
Total CA, Loans
& Advances
Deffered Credit
Current
Liabilities
Provisions
Total CL &
Provisions
Net Current
Assets
Miscellaneous
Expenses
Total Assets

Contingent
Liabilities
Book Value (Rs)

44
18,700.
70
1,507.8
4
19,934.
39
4,455.0
3
1,818.0
4
462.86

7
17,145.
89
2,073.9
6
20,493.
55
4,588.2
3
2,708.3
2
1,115.0
8
6,735.9 8,411.6
3
3
5,305.9 6,400.6
1
5
0
725.88

5
13,417.
07
4,058.5
6
22,624.
21
3,891.3
9
2,602.8
8
638.79

2
11,203.
89
5,232.1
5
22,336.
90
2,935.5
9
2,391.9
2
612.16

0
7,645.2
7
6,954.0
4
12,968.
13
2,229.8
1
1,555.2
0
638.17

5,939.6
7
5,248.7
1
1,141.1
0
12,329.
48
0
16,909.
30
2,763.4
3
19,672.
73
7,343.2
5
0

4,423.1
8
5,909.7
5
503.65

12,041.
84
0
16,580.
47
2,200.7
7
18,781.
24
6,739.4
0
0

7,133.0
6
5,852.4
2
1,790.1
3
14,775.
61
0
15,740.
69
3,222.7
1
18,963.
40
4,187.7
9
0

15,538.
16
0
21,271.
45
3,600.8
2
24,872.
27
9,334.1
1
0

10,836.
58
0
10,968.
95
1,877.2
6
12,846.
21
2,009.6
3
2.02

33,403. 30,379. 35,912. 31,429. 25,559.

53
29
05
69
83
2,838.6 3,284.1 4,798.8 3,708.3 5,433.0
7
2
3
3
7
59.98
60.95 314.93 259.03 240.64
14 | P a g e

PROFIT AND LOSS

Profit and loss account Tata Motor
Mar
Mar
Mar
Mar
'13
'12
'11
'10
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock
Adjustments
Total Income
Expenditure
Raw Materials

Mar
'09

49,319. 59,220. 52,067. 38,173. 28,538.

73
94
87
39
20
4,554.0 5,003.7 4,110.6 2,800.1 2,877.5
1
2
3
0
3
44,765. 54,217. 47,957. 35,373. 25,660.
72
22
24
29
67
1,662.3 -11.16 341.53 1,220.8 921.29
3
6
143.6 623.84 354.22 606.63 -238.04
46,571. 54,829. 48,652. 37,200. 26,343.
65
90
99
78
92
33,764. 41,081. 35,047. 25,366. 18,801.
40
79
05
12
37
15 | P a g e

Power & Fuel

Cost
Employee Cost

484.66

550.89

471.28

PBDIT
Interest
PBDT
Depreciation
Other Written
Off
Profit Before Tax
Extra-ordinary
items
PBT (Post Extraord Items)

304.94

2,837.0 2,691.4 2,294.0 1,836.1 1,551.3

0
5
2
3
9
95.61 2,386.9 1,753.4 1,289.6 866.65
1
6
0

Other
Manufacturing
Expenses
Selling and
0
3,248.9 2,790.1
Admin Expenses
1
9
Miscellaneous
6,963.4 1,610.6 2,067.4
Expenses
7
9
2
Preoperative Exp -953.8 -907.13 -817.68
Capitalised
Total Expenses
43,191. 50,663. 43,605.
34
51
74
Mar
Mar
Mar
'13
'12
'11

Operating Profit

362.62

2,126.1 1,652.3
0
1
1,707.0 1,438.8
6
9
-740.54 -916.02
31,947. 23,699.
09
53
Mar
Mar
'10
'09

12
mths

12
mths

12
mths

1,717.9
8
3,380.3
1
1,387.7
6
1,992.5
5
1,817.6
2
0

4,177.5
5
4,166.3
9
1,218.6
2
2,947.7
7
1,606.7
4
0

4,705.7
2
5,047.2
5
1,383.7
9
3,663.4
6
1,360.7
7
106.17

174.93

1,341.0 2,196.5 2,829.5 1,013.7

3
2
4
6
0
0
0
15.29

0
174.93

12
mths

12
mths

4,032.8 1,723.1
3
0
5,253.6 2,644.3
9
9
1,246.2 704.92
5
4,007.4 1,939.4
4
7
1,033.8 874.54
7
144.03 51.17

1,341.0 2,196.5 2,829.5 1,029.0

3
2
4
5
16 | P a g e

Tax
Reported Net
Profit
Total Value
Addition
Preference
Dividend
Equity Dividend
Corporate
Dividend Tax
Per share data
(annualised)
Shares in issue
(lakhs)
Earning Per
Share (Rs)
Equity Dividend
(%)
Book Value (Rs)

-126.88 98.8
384.7 589.46
12.5
301.81 1,242.2 1,811.8 2,240.0 1,001.2
3
2
8
6
9,426.9 9,581.7 8,558.6 6,580.9 4,898.1
4
2
9
7
6
0
0
0
0
0
645.2
77.55

1,280.7 1,274.2
0
3
181.54 192.8

859.05

311.61

132.89

34.09

31,901. 31,735. 6,346.1 5,705.5 5,140.0

16
47
4
8
8
0.95
3.91
28.55
39.26
19.48
100

200

200

150

60

59.98

60.95

314.93

259.03

240.64

17 | P a g e

CLASSIFICATION OF RATIOS
In isolation, a financial ratio is a useless piece of information. In context, however, a financial
ratio can give a financial analyst an excellent picture of a company's situation and the trends
that are developing. A ratio gains utility by comparison to other data and standards.
Financial ratios quantify many aspects of a business and are an integral part of financial
statement analysis. Financial ratios are categorized according to the financial aspect of the
business which the ratio measures. Although these categories are not fixed in all over the
world however there are almost the same, just with different names:
1. Profitability ratios which use margin analysis and show the return on sales and
capital employed.
2. Rate of Return Ratio (ROR) or Overall Profitability Ratio: The rate of return
ratios are thought to be the most important ratios by some accountants and analysts.
One reason why the rate of return ratios is so important is that they are the ratios that
we use to tell if the managing director is doing their job properly.
3. Liquidity ratios measure the availability of cash to pay debt, which give a picture of
a company's short term financial situation.
4. Solvency or Gearing ratios measures the percentage of capital employed that is
financed by debt and long term finance. The higher the gearing, the higher the
dependence on borrowing and long term financing. The lower the gearing ratio, the
higher the dependence on equity financing. Traditionally, the higher the level of
gearing, the higher the level of financial risk due to the increase volatility of profits. It
should be noted that the term Leverage is used in some texts.
5. Turn over Ratios or activity group ratios indicate efficiency of organization to
various kinds of assets by converting them to the form of sales.
6. Investors ratios usually interested by investors.

18 | P a g e

Financial analysis of TATA MOTORS

1. CURRENT RATIO:
The two liquidity ratios, the current ratio and the acid test ratio, are the most important ratios
in almost the whole of ratio analysis and they are also the simplest to use. Liquidity ratios
provide information about a firms ability to meet its short- term financial obligations. They
are of particular interest to those extending short term credit to the firm. Two frequently-used
liquidity ratios are current and quick ratio.
While liquidity ratios are most helpful for short-term creditors/suppliers and bankers, they are
also important to financial managers who must meet obligations to suppliers of credit and
various government agencies. A company's ability to turn short-term assets into cash to cover
debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts
and mortgage originators frequently use the liquidity ratios to determine whether a company
will be able to continue as a going concern. A complete liquidity ratio analysis can help
uncover weaknesses in the financial position of the business. Generally, the higher the value
of the ratio, the larger the margin of safety that the company possesses to cover short-term
debts.
Current Assets
Current ratio = ------------------------Current Liabilities
Rupees (in Cores)
YEAR
2009
Current Assets
4423.18

2010
5939.67

2011
7133.06

2012
8411.63

2013
6735.93

Current Liabilities 10968.95

16909.30

15740.69

21271.45

16580.47

CURRENT
RATIO

0.35

0.45

0.39

0.40

0.40

19 | P a g e

Current ratio
0.5
0.45
0.4

0.45
0.4

0.39

0.4

0.35

0.35
0.3

Current ratio

0.25
0.2
0.15
0.1
0.05
0
2009

2010

2011

2012

2013

ANALAYSIS:
As per the figure shown the company current liabilities are more than company assets,for the
good position the ratio should be above the one,but hers the tatamotors current ratio is less
than one,the assets stabilities are less than liablities
2. QUICK OR ACID TEST RATIO:
The essence of this ratio is a test that indicates whether a firm has enough short-term assets to
cover its immediate liabilities without selling inventory. So it is the backing available to
liabilities that must be paid almost immediately. There are two terms of liquid asset and liquid
liabilities in this formula, Liquid asset is all current assets except the inventories and prepaid
expenses, because prepaid expenses cannot be converted to cash. The liquid liabilities include
all current liabilities except bank overdraft and cash credit since they are not required to be
paid off immediately.
Liquid Assets
Quick or Acid test Ratio = ----------------------Liquid Liabilities
Rupees (in Cores)
YEAR
Liquid Assets

2009
2193.37

2010
3004.08

2011
3,241.67

2012
3,823.40

2013
2,280.90

Liquid Liabilities

10968.95

16909.30

15740.69

21271.45

16580.47

QUICK RATIO

0.20

0.18

0.20

0.18

0.14
20 | P a g e

0.2
0.18
0.16
0.14
0.12
0.1

Quick ratio

0.08
0.06
0.04
0.02
0
2009

2010

2011

2012

2013

ANALYSIS:
The above graph suggests that the company has more liquid liabilities than liquid assets, it is
bad sign for the company, company should not be able to meet the liquid liabilities which are
higher as compare to liquid assets. The company liquid assets are continuously shows
negative impact on liquid assets
3. TURN OVER RATIO:
Accounting ratios that measure a firm's ability to convert different accounts within their
balance sheets into cash or sales. Companies will typically try to turn their production into
cash or sales as fast as possible because this will generally lead to higher revenues.
Such ratios are frequently used when performing fundamental analysis on different
companies.
I.

CURRENT ASSETS TURN OVER RATIO:

It is almost like the fixed asset turnover ratio, it calculates the capability of organization to
earn sales with usage of current assets. So it indicates with what ratio current assets are
turned over in the form of sales.
Net Sales
Current Assets turn over ratio = ---------------------Current Assets

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Rupees (in Cores)

YEAR
Net Sales

2009
25,660.67

2010
35,373.29

2011
47,957.24

2012
54,217.22

2013
44,765.72

Current Assets

4423.18

5939.67

7133.06

8411.63

6735.93

CURRENT
ASSETS
TURNOVER
RATIO

5.80

5.95

6.72

6.44

6.64

Current Asset Turnover Ratio

6.72

6.8

6.64
6.44

6.6
6.4
6.2
6

Current Asset Turnover

Ratio

5.95
5.8

5.8
5.6
5.4
5.2
2009

2010

2011

2012

2013

ANALYSIS:
As per the graph shown the companies current turnover ratio is rapidly is increase but 2011 is
at highest 6.72TIMES

II.

WORKING CAPITAL TURNOVER RATIO:

As its name suggests it is the relationship between turnover and working capital. It is a
measurement comparing the depletion of working capital to the generation of sales over a
given period. This provides some useful information as to how effectively a company is
using its working capital to generate sales.

A company uses working capital to fund operations and purchase inventory. These operations
and inventory are then converted into sales revenue for the company. The working capital
turnover ratio is used to analyze the relationship between the money used to fund operations
and the sales generated from these operations.
22 | P a g e

The formula related is:

Net Sales
Working Capital turnover ratio = ---------------------Working Capital
Rupees (in Cores)
YEAR

2009

2010

2011

2012

2013

Net Sales

25,660.67

35,373.29

47,957.24

54,217.22

44,765.72

Working Capital

6,545.77

10,969.63

8,607.63

12,859.82

9,844.54

WORKING CAPITAL
TURNOVER RATIO

3.92

3.22

5.58

4.22

4.55

Working Capital Turnover Ratio

6

5.58

5
4

4.22

3.92

4.55

3.22
3
2
1
0
2009

2010

2011

2012

2013

Analysis:
The graph shows that when shareholders invested their money in to the business, it helps to
increase the sales. At the year starting in increasing continuously, it means that 1 rupees the
shareholders investing the result shows direct impact on sales, the net sales in increasing
reasoned may be requirement of working capital or machinery etc. But in the last year it gives
decreasing trend.
III.

CAPITAL EMPLOYED TURNOVER RATIO:

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The capital employed turnover ratio tells us the state of the relationship between the
shareholders' investment in the business and the sales that the management of the business
has been able to generate from it.
Net Sales
Capital employed turnover ratio = ----------------------Capital Employed
Rupees (in Cores)
YEAR

2009

2010

2011

2012

2013

Net Sales

25,660.67

35,373.29

47,957.24

54,217.22

44,765.72

Capital Employed

25,559.83

31,429.69

35,912.05

30,379.29

33,403.53

CURRENT
EMPLOYED
TURNOVER RATIO

1.00
TIMES

1.13 TIMES

1.34 TIMES

1.78 TIMES

1.34 TIMES

Current Employed Turnover Ratio

1.78
1.8
1.6

1.34

1.4
1.2

1.34

1.13
1

Current Assets Turnover

Ratio

1
0.8
0.6
0.4
0.2
0
2009

2010

2011

2012

2013

.
Analysis:
The graph shows that when shareholders invested their money in to the business, it helps to
increase the sales. At the year starting in increasing continuously, it means that 1 rupees the
shareholders investing the result shows direct impact on sales, the net sales in increasing
reasoned may be requirement of working capital or machinery etc.. But in the last year it
gives negative trend.
IV.

SOLVENCY OR GEARING RATIO:

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Gearing is concerned with the relationship between the long terms liabilities that a business
has and its capital employed. The idea is that this relationship ought to be in balance. It is a
general term describing a financial ratio that compares some form of owner's equity (or
capital) to borrowed funds. The shareholders and lenders of long term loans may be interested
in this ratio.
DEBT EQUITY RATIO:
This ratio reflects the relative claims of creditors and share holders against the assets of the
firm, debt equity ratios establishment relationship between borrowed funds and owner capital
to measure the long term financial solvency of the firm. The ratio indicates the relative
proportions of debt and equity in financing the assets of the firm.
It is calculated as:
Debt equity ratio =

Debt
------------------------Shareholders fund

The debts side consists of all long term liabilities of the firm. The shareholders fund is the
share capital plus reserve and surpluses. The lower the debt equity ratio the higher the degree
of protection enjoyed by the creditors.
The debt equity ratio defined by the controller of capital issue, debt is defined as long term
debt plus preference capital which is redeemable before 12 years and shareholders fund is
defined as paid up equity capital plus preference capital which is redeemable after 12 years
plus reserves & surpluses.
The general norm for this ratio is 2:1. on case of capital intensive industries as norms of 4:1 is
used for fertilizer and cement industry and a norms of 6:1 is used for shipping units.
Rupees (in Cores)
YEAR

2009

2010

2011

2012

2013

Debt

13,165.56

16,625.91

15,898.75

11,011.63

14,268.69

Shareholders
Fund

514.05

570.6

634.65

634.75

638.07

CURRENT ASSETS
TURNOVER RATIO

25.61 TIME

29.14TIME

25.05TIME

17.35TIME

22.36TIME

25 | P a g e

Debt equity ratio

35
29.14

30
25.61

25.05

25

22.36

20

Debt equity ratio

17.35

15
10
5
0
2009

2010

2011

2012

2013

Analysis:
The graph shows that company shareholders have lesser contribution than creditors. The huge
amount of debt is the reason behind that, it is not good for the company to increase his debt
and not fully utilize the shareholders funds. High amount of debt increase the interest upon
it, indirectly it affect to the income and profit.

PROPRITERY RATIO:
It is primarily the ratio between the proprietors funds and total assets. It indicates the
relationship between owners fund and total assets. And shows the extent to which the owner
sfund are sunk in assets or different kinds of it.
NOTE: Owners funds is equal to Shareholders Funds
Proprietary ratio =

Proprietors fund
---------------------Total Assets

Rupees (in Cores)

YEAR

2009

2010

2011

2012

2012

Propriters Fund

514.05

570.6

634.65

634.75

638.07

Total Assets

25,559.83

31,429.69

35,912.05

30,379.29

33,403.53

CURRENT ASSETS
TURNOVER RATIO

2.01%

1.82%

1.77%

2.09%

1.91%

26 | P a g e

Proprietary ratio
2.20%
2.09%

2.10%
2.01%
2.00%

1.91%

Proprietary ratio

1.90%
1.82%
1.77%

1.80%
1.70%
1.60%
2009

2010

2011

2012

2013

Analysis:
As per data, Proprietor ratio shows overall positive relationship between propriters fund and
total assets. When the proprietor fund is increasing at that time investment in assets value or
return also increased. In year 2012 there is boom of 2.09%,but in last year 2013 again
decrease by 1.91%. .

PROFITABILITY RATIO

As the name itself suggests, this ratio is calculated to determine profitability of the firm. The
basic objective of almost every business is to earn profit which is essential for survival of the
business. A business needs profits not only for its existence but also for its expansion and
diversification. The investors want an adequate return on their investments, workers want
higher wages, creditors want higher security for interest and loan and the list could continue.

It is a class of financial metrics that are used to assess a business's ability to generate earnings
as compared to its expenses and other relevant costs incurred during a specific period of time.
For most of these ratios, having a higher value relative to a competitor's ratio or the same
ratio from a previous period is indicative that the company is doing well.

GROSS PROFIT RATIO:

27 | P a g e

The gross profit margin ratio tells us the profit a business makes on its cost of sales. It is a
very simple idea and it tells us how much gross profit our business is earning. Gross profit is
the profit we earn before we take off any administration costs, selling costs and so on. So we
should have a much higher gross profit margin than net profit margin.
High ratios are favorable in this, since it indicates the business is earning a good return on the
sale of its merchandise.

Gross profit ratio =

Gross Profit
------------------ X 100
Net Sales

Rupees (in Cores)

YEAR

2009

2010

2011

2012

2013

Gross Profit

13,905.17

18,416.81

21,883.32

27,111.76

30,312.14

Net Sales

25,660.67

35,373.29

47,957.24

54,217.22

44,765.72

Gross Profit Ratio

54.19 %

52.06%

45.63%

50.01%

67.71%

Gross profit ratio

70.00%
60.00%
50.00%
Gross profit ratio

40.00%
30.00%

67.71%
54.19%

52.06%

2009

2010

45.63%

50.01%

20.00%
10.00%
0.00%
2011

2012

2013

Analysis:
28 | P a g e

From the above graph the Gross profit ratio shows the decrease trend in the GP which is bad
sign for the company, company should have to increase or maintain its high level of GP but is
going in negative way. As compare to year 20110to 2010, there is big increase in gross profit
in all five years, it is 67.71%.
NET PROFIT RATIO:
This shows the portion of sales available to owners after all expenses. A high profit ratio is
higher profitability of the firm. This ratio shows the earning left for shareholder as percentage
of Net sales.
Net Margin Ratio measures the overall efficiency of production, Administration selling,
financing, pricing and Taste Management.
Net Profit After tax
Net profit ratio = ----------------------------- X 100
Net Sales
Rupees (in Cores)
YEAR
2009
2010

2011

2012

2013

NPAT

1,001.26

2,240.08

1,811.82

1,242.23

301.81

Net Sales

25,660.67

35,373.29

47,957.24

54,217.22

44,765.72

Net Profit Ratio

3.90%

6.33%

3.78%

2.29%

0.67%

Net Profit Ratio

7.00%
6.00%
5.00%
Net Profit Ratio

4.00%
6.33%

3.00%
2.00%

3.90%

3.78%
2.29%

1.00%

0.67%

0.00%
2009

2010

2011

2012

2013

29 | P a g e

Analysis:
The graph shows the increase
and decrease trend, in first two
year it was increasing than it
went down, it indicate decrease
in profitability of the
shareholders. As compae frist
two year in last year it has been
boom indecreasing.

OPERATING NET PROFIT RATIO:

The graph shows the increase and decrease trend, in first two year it was increasing than it
went down, it indicate decrease in profitability of the shareholders. As compare to first two
year last year it has been boom indecreasing.
This ratio establishes the relation between the net sales and the operating net profit. The
concept of operating net profit is different from the concept of net profit operating net profit
is the profit arising out of business operations only. This is calculated as follows:
Operating net profit = Net Profit + Non operating expenses non operating income.
Alternatively, this profit can also be calculated by deducting only operating expenses from
the gross profit.
This ratio is calculated with help of the following formula.
Operating net Profit
Operating net profit ratio = ---------------------------- X 100
Net Sales

Rupees (in Cores)

YEAR
Operating Net
Profit
Net Sales

2009

2010

2011

2012

2013

1,723.10

4,032.83

4,705.72

4,177.55

1,717.98

25,660.67

35,373.29

47,957.24

54,217.22

44,765.72

30 | P a g e

Operating Net Profit

Ratio

6.71%

11.40%

9.81%

7.70%

3.84%

Operating Net Profit Ratio

12.00%

11.40%

10.00%

9.81%

8.00%
6.00%

7.70%

Operating Net Profit Ratio

6.71%

4.00%

3.84%

2.00%
0.00%
2009

2010

2011

2012

2013

Analysis:
As shown in graph, in year 2009 the operating net profit ratio increases, it continuous till
second year an than it is going up to its highest level of 11.40. it shows the negative direction
which is decrease in operating net profit ratio. In the last year as compare to first year it goes
to below the first year level.
OVER ALL PROFITABILITY RATIO OR ROR RATIO:
The ROI is perhaps the most important ratio of all. It is the percentage of return on funds
invested in the business by its owners. In short, this ratio tells the owner whether or not all the
effort put into the business has been worthwhile. If the ROI is less than the rate of return on
an alternative, the owner may be wiser to sell the company, put the money in risk-free
investment such as a bank savings account, , and avoid the daily struggles of small business
management.
These Liquidity, Leverage, Profitability, and Management Ratios allow the business owner to
identify trends in a business and to compare its progress with the performance of others
through data published by various sources. The owner may thus determine the business's
relative strengths and weaknesses.

RETURN ON ASSETS RATIO:

31 | P a g e

This ratio actually measures the profitability of the investments in the firm. And the related
formula is:
Net Profit After tax
Returns on assets = ---------------------------- X 100
Assets
Rupees (in Cores)
YEAR

2009

2010

2011

2012

2013

NPAT

1,001.26

2,240.08

1,811.82

1,242.23

301.81

Assets

5435.87

5936.76

6621.14

6607.32

7959.92

Returns on Assets

3.50%

7.14%

9.53%

8.57%

5.45%

Returns on Assets
12.00%
10.00%

9.53%
8.57%

8.00%
7.14%

Returns on Assets

6.00%
4.00%

5.45%
3.50%

2.00%
0.00%
2009

2010

2011

2012

2013

Analysis:
The graph shows the trend increasing in first three years and after that it goes down. In
starting years the return on asset ratio is increase. This means that the company is increasing
their revenue per unit of asset but then it becomes negative. This is bad signs for the
company. But overall company is average returns of 6.8.

RETURNS ON CAPITAL EMPLOYED:

32 | P a g e

This Ratio is considered to be very important. It indicates the percentage of net profits before
interest and tax to total capital employed. It reflects the overall efficiency with which capital
is used. The ratio of a particular business should be compared with other business firms in the
same industry to find out the exact position of the business.

It is calculated as:
Net Profit before interest and tax
----------------------------------------- X 100
Capital Employed

Returns on capital employed =

Note: Capital Employed = Equity Capital + Preference Capital + Reserves and Surplus +
Long Term Debt- Fictitious Assets
Rupees (in Cores)
YEAR

2009

2010

2011

2012

2013

NPBIT

1769.85

4219.82

3686.48

2559.65

1562.69

Capital Employed

25,559.83

31,429.69

35,912.05

30,379.29

33,403.53

Returns on capital
employed

6.92%

13.43%

10.27%

8.43%

4.68%

Return On Capital Ratio

16.00%
14.00%
12.00%
10.00%

Return On Capital Ratio

8.00%
13.43%

6.00%
4.00%

10.27%
6.92%

8.43%
4.68%

2.00%
0.00%
2009

2010

2011

2012

2013

ANALYSIS:
33 | P a g e

In graph, return on capital employed is Decreasing year 2013, , in year 2010 shareholders get
benefit maximum 13.43%.the overall business efficiency is increasing.in last year it is very
less.
RETURNS ON EQUITY:
This ratio also known as return on shareholders funds or return on proprietors funds or
return on net worth, indicates the percentage of net profit available for equity shareholders to
equity shareholders funds and not on total capital employed.
It is calculated as:

NPAT Preference Dividend

Return on equity ratio = --------------------------------------- X 100
Equity shareholders fund
Rupees (in Cores)
YEAR
2009
2010
2011

2012

2013

NPAT

1,001.26

2,240.08

1,811.82

1,242.23

301.81

Equity Shareholder
fund

514.05

570.6

634.65

634.75

638.07

Returns on equity ratio

194.78%

392.58%

285.48%

195.70%

47.30%

Return On Capital Ratio

450.00%
392.58%

400.00%
350.00%

285.48%

300.00%

Series 1

250.00%
200.00%

195.70%

194.78%

150.00%
100.00%

47.30%

50.00%
0.00%
2009

2010

2011

2012

2013

34 | P a g e

Analysis:
The figure shows that the returns on equity is increasing in the beginning and touches highest
level in the year 2010 which is 329.58% then it is declining in last two year the reason is
decrease in company profit

INVESTORS RATIOS

1. EARNINGS PER SHARE:

EPS measures the profit earned per share. The higher EPS will attract more investors to
acquire shares in the company as it indicates that the business is more profitable enough to
pay the dividends in time. So it is of utmost importance to investors in order to decide the
prospects.

It is calculated as:
EPS = N.P.A.T. - Preference Dividend
Number of equity shares Outstanding

YEAR
EPS

2009
0.95

2010
3.91

2011
28.55

2012
39.26

2013
19.48

35 | P a g e

EARNING PER SHARE

45
40
35
30

EARNING PER SHARE

25
20
15
10
5
0
2009

2010

2011

2012

2013

Comments:
As mentioned above, EPS is one of the important criteria for measuring the performance of a
company. If EPS increases, the possibility of a higher dividend per share also increases.
However, the dividend payment depends on the policy of the company. Market price of
shares of a company may also show an upward trend if the EPS is showing a rising trend.
However, it should be remembered that EPS of different companies may vary from company
to company due to the following different practices by different companies regarding stock in
trade, depreciation, source of raising finance, tax-planning measures etc.

36 | P a g e

CONCULSION
From last two years the automobiles sectors has been struggle. After analysing all the ratio,
current ratio has mostly remained below the 1 which means the company has been under
pressure of not having enough assets to repay their short term obligations. Quick ratio
suggests that the company has more liquid liabilities than liquid assets, it is bad sign for the
company, company should not be able to meet the liquid liabilities which are higher as
compare to liquid assets. Current assets turnover ratio shows that company current assets
value is more than 6 times in that year, company capability to earn profit through current
assets is very good. As per the data, the working capital not that much capable to generate the
sales revenue, when company needs the working capital that were not available at that time
so it should defiantly have impact on sales. The capital employed shows that when
shareholders invested their money in to the business, it helps to increase the sales. The net
sales in increasing reasoned may be requirement of working capital or machinery etc.. The
debt equity ratio describes that company creditors have higher contribution than shareholders.
Company is only depending on debt not utilizing the shareholders capital. The gross profit is
continuously going down and net profit ratio also going negative after the three years. The
company overall performance is weak it may be for high debt and increase in interest upon it.
From the ratio analysis the company TATA MOTORS profile is decling due to the decline of
whole automobile industries should be advisable not to invest in the company.

37 | P a g e

BIBLOGRAPHY
http://en.wikipedia.org/wiki/Tata_Motors
https://www.google.co.in/?
gws_rd=cr&ei=eCg_Ut68IMnDrAf1k4HwCw#q=tatamotors.com
http://www.moneycontrol.com/stocks/company_info/stock_news.php?
sc_id=TEL&durationType=Y&Year=2010

38 | P a g e