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ASSIGNMENT

ON RATIO COMPARISON OF
TATA MOTORS FOR 2007 AND 2008.

Submitted to:
K.L. Chawla
Head, Department of Finance
INMANTEC

Submitted By
Kamal Kant Soni @ PG-08-36
Esha Raj @ PG-08-29
Chitrangda Jaiswal @ PG-08-27

INCOME STATEMENT OF TATA MOTORS


Revenues
Other Revenues
TOTAL REVENUES
Cost of Goods Sold
GROSS PROFIT
Selling General & Admin Expenses, Total
R&D Expenses
Depreciation & Amortization, Total
Other Operating Expenses
OTHER OPERATING EXPENSES, TOTAL
OPERATING INCOME
Interest Expense
Interest and Investment Income
NET INTEREST EXPENSE
Income (Loss) on Equity Investments
Currency Exchange Gains (Loss)
Other Non-Operating Income (Expenses)
EBT, EXCLUDING UNUSUAL ITEMS

Gain (Loss) on Sale of Assets


Other Unusual Items, Total
EBT, INCLUDING UNUSUAL ITEMS
Income Tax Expense
Minority Interest in Earnings
Earnings from Continuing Operations
NET INCOME

(2007)
323,612.0
19.6
325,143.8
234,753.6
90,390.2
30,811.0
850.2
6,880.9
17,508.5
56,050.6
34,339.6
-4,650.6
592.5
-4,058.1
394.2
652.1
-1.4
31,326.4

--52.2
31,274.2
8,832.1
-742.2
21,699.9
21,699.9

(currency in million Rs.)


(2008)
356,514.8
65.0
358,086.0
254,571.5
103,514.5
35,136.3
659.5
7,820.7
24,046.6
67,663.1
35,851.4
-9,127.2
1,696.6
-7,430.6
652.0
1,376.1
-0.6
30,448.3

1,103.6
-37.0
31,514.9
8,515.4
-1,322.5
21,677.0
21,677.0

BALANCE SHEET OF TATA MOTORS


Assets
Cash and Equivalents
TOTAL CASH AND SHORT TERM INVESTMENTS
Accounts Receivable
Notes Receivable
Other Receivables
TOTAL RECEIVABLES
Inventory
Prepaid Expenses
Other Current Assets
TOTAL CURRENT ASSETS
Gross Property Plant and Equipment
Accumulated DepreciationNET PROPERTY PLANT AND EQUIPMENT
Goodwill
Long-Term Investments
Deferred Charges, Long Term
Other Intangibles
Other Long-Term Assets
TOTAL ASSETS
LIABILITIES & EQUITY
Accounts Payable
Accrued Expenses
Short-Term Borrowings
Current Income Taxes Payable
Other Current Liabilities, Total
Unearned Revenue, Current
TOTAL CURRENT LIABILITIES
Long-Term Debt
Capital Leases
Minority Interest
Deferred Tax Liability Non-Current
TOTAL LIABILITIES
Common Stock
Additional Paid in Capital
Retained Earnings
Comprehensive Income and Other
TOTAL COMMON EQUITY
TOTAL LIABILITIES AND EQUITY

(2007)(2008)
(currency in millions Rs.)
11,542.738,331.7
11,542.738,331.7
17,022.220,605.1
84,553.76,938.9
62.711.9
101,638.597,555.9
31,669.032,946.4
1,247.33,334.8
16,681.720,504.7
162,779.2192,673.5
129,408.3182,484.4
-54,266.5-57,652.4
75,141.8124,832.0
4,430.15,661.6
11,745.926,658.3
119.32,442.1
--1,429.6
--254,216.3353,697.1

48,723.3
4,704.9
34,325.
1,084.2
38,789.2
6.7
127,633.7
38,693.6
-2,499.6
8,172.7
176,999.6
3,853.6
19,364.0
44,087.8
9,911.3
77,216.7
254,216.3

67,832.8
5,389.3
52,503.2
901.4
62,104.1
218.0
188,948.8
63,345.5
-4,683.1
9,744.5
266,721.9
3,854.9
15,372.2
58,523.7
9,224.4
86,975.2
353,697.1

Liquidity ratio

Current ratio = Current assets / Current liability


2008

2007

Current Assets

192,673.5

162,779.2

Current Liability

188,948.8

127,633.7

Current Ratio (2008)


Current Ratio (2007)
Quick Ratio (2008)
Quick Ratio (2007)
Interval measure For 2008Avg. daily cash oper. Exp Interval measure For 2007
Avg. daily cash oper. Exp Interval measure -

192,673.5/ 188,948.8 = 1.01


162,779.2/ 127,633.7 = 1.27
C.A. - Invent. / C.L.
192,673.5 - 32,946.4 / 188,948.8 = .85
162,779.2- 31,669.0/127,633.7 = 1.02
Current assets-inven. / avg. daily cash oper. Exp

Total cash exp./ 365


67,663.1/ 365 = 185.3
192,673.5 - 32,946.4 / 185.3 = 862 days

56,050.6/ 365 = 153.5


162,779.2- 31,669.0 / 153.5 = 854 days

In liquidity ratio, we observe that current ratio in 2008 is less in comparison of


2007. it means companies efficiency decreases in paying current liability. And in
quick ratio, it also decreases. In 2008, regular cash meet was 862 days in
comparison of 854 of 2007. It means firms ability to pay its daily exp. Increases.

Leverage Ratio
Total debt ratio

Total debt / capital employed

For 2008
Total debtCapital employed Or

For 2007
Total debtCapital employed -

Debt equity ratio


For 2008
For 2007
Capital equity ratio For 2008
For 2007

63,345.5
Net worth + borrowing
Share capital + debt.
86,975.2+ 63,345.5= 150320.7
63,345.5 / 150320.7 = .42
38,693.6
77,216.7 + 38,693.6= 115910.3
(shr. cap) (debt)
38,693.6 / 115910.3 = .33
- Net worth / total debt
Net worth = share cap.
86,975.2/63,345.5 = 1.37
77,216.7 /38,693.6 = 1.99
Capital employed / net worth
150320.7 / 86,975.2= 1.73
115910.3 / 77,216.7 = 1.50

Interest coverage ratio EBIT + depreciation / Interest

Earning before tax


Add- Interest

2008
30,448.3
9,127.2
39575.5

2007
31,326.4
4,650.6
35977

For 2008

- 39575.5 + 7,820.7/9,127.2 = 5.19

For 2007

- 35977 + 6,880.9 / 4,650.6= 9.21

In 2008, the long term financial position getting strong than 2008. Capability of
paying long term debt. is increases. As we seen, debt ratio increases. And the
contribution of debt is increases in 2008 than 2007. and the part of share capital is
also increases in total capital employed than 2007. it means, company is increasing
its capital through shares.

Activity Ratio
Inventory Turnover Ratio:- Cost of goods sold / Inventory

Cost of goods sold


Inventory

(2008)
254,571.5
32,946.4

(2007)
234,753.6
31,669.0

For 2008:-

254,571.5 / 32,946.4

7.72

For 2007 :-

234,753.6 / 31,669.0

7.41

Debtor Turnover Ratio :- Sales / debtor


For 2008 :-

358,086.0 (sales) / 97,555.9 (debtor) =

3.67

For 2007 :-

325,143.8 (sales) / 101,638.5 (debtor) =

3.20

Average collection period (2008) = 360 / 3.67 =

98 days

Average collection period (2007) = 360 / 3.20 =

112 days

Assets Turnover Ratio :- Sales / Net assets or capital employed


For 2008 :-

358,086.0 (sales) / 150320.7 (c.e.) =

2.38

For 2007 :-

325,143.8 (sales) / 115910.3 (c.e.) =

2.80

Working Capital Turnover Ratio:- Sales / Net working capital


Net Working Capital =Current assets Current liability
For 2008
For 2007

= 192,673.5 - 188,948.8 = 3724.7


= 162,779.2 - 127,633.7 = 35145.5

For 2008 :-

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

For 2007 :-

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

As we seen, companys efficiency of using its assets is increasing in 2008 than


2007. The inventory turnover ratio which shows its efficiency of selling product is
increasing. Average collection period is decreasing means company is selling its
product more on cash basis in 2008 than 2007. but companys assets turnover
ratio is decreasing means sales is not growing according to its capital employed
and working capital.

Profitability Ratio
Gross Margin

Gross profit / Sales

Gross Margin (2008) =

103,514.5 / 358,086.0 = .29

Gross Margin (2007) =

90,390.2 / 325,143.8 = .28

EBIT Ratio

PAT / EBIT

For 2008
For 2007

=
=

21,677.0 / 37878.9
21,699.9 / 35384.5

EBIT / Capital employed

=
=

39575.5 / 150320.7 = .26


35977 / 115910.3 = .31

PAT / Net worth

=
=

21,677.0 / 86,975.2 = .25


21,699.9 / 77,216.7 = .28

Return on investment
For 2008
For 2007
Return on equity
For 2008
For 2007

= .57
= .61

In profitability ratio, the gross profit ratio is increasing in 2008 than 2007. it
means its profit is growing in sales. But companys EBIT ratio is decreasing means
interest on capital and tax rate is increased in 2008 than 2007 which is responsible
in decreasing its PAT. And companys return on investment is decreased that
indicates that its earning on capital employed is decreased in 2008 than 2007. and
its ROE is also decreases means its PAT on its share capital is decreased.