A STUDY ON FINANCIAL PERFORMANCE ANALYSIS WITH REFERENCE

TO ASHOK LEYLAND LIMITED

By

Saikumar.j
Register No 1552001020011

Of

SRM UNIVERSITY

RAMAPURAM CAMPUS

PROJECT REPORT

\
 DECLARATION

I, saikumar.j, hereby declare that the project report, entitled A STUDY ON

FINANCIAL PERFORMANCE ANALYSIS WITH REFERENCE TO ASHOK LEYLAND
LIMITED Submitted to the Anna University Chennai in partial fulfillment of the requirement for
the award of the degree of MASTER OF BUSINESS ADMINISTRATION is record of original
and independent work done by me during June-July 2015 under the supervision of
Mr. Dr. V DHAYALAN Assistant Professor, Department of Management Studies, and it has not
formed the basis for the degree or other similar title to any candidate of any university.

Place: Chennai
saikumar.j

Date:

ABSTRACT

The study was carried out to analyze the A STUDY ON FINANCIAL PERFORMANCE
ANALYSIS WITH REFERENCE TO ASHOK LEYLAND. The first chapter contains an
introduction and the company profile followed by literature, which gives the abstract of pervious
researches. This chapter also includes need, scope and objectives of the study in a sequential
manner. The backbone of the study is the research methodology which is explained in detail
including the information with regard to the statistical tools used for the study. The second chapter
deals with the data analysis which includes the tabulated forms of the responses with the
corresponding percentages which are sustained with suitable charts. The data analysis is done based
on the secondary data like balance sheet of the company. The third and final chapter comprises of
the findings arriving from the different type of analysis. This chapter contains suitable suggestion
which are made on the basic of the findings of the study and ends with the conclusion of the project.
 ACKNOWLEDGEMENT

At the outset, I thank the almighty for showering his abundant blessing on me in all my
endeavors.

I would like to thank the management and Our Honorable Founder and Chairman (Late)
Mr. MJF. Ln. LEO MUTHU, Sri Sairam Groups of Institutions, Chennai, for extending their
support in providing all facilities for completing the project.

I express my sincere thanks and gratitude to our respectful Principal Dr.C.V.JAYAKUMAR,

Ph.D., and Director Dr.K.MARAN, Ph.D., Director and Head of the Department, Department
of Management Studies, Sri Sairam Engineering College, Chennai for offering all the support
and encouragement that was instrumental in the successful completion of the project.

I also express a deep sense of gratitude to my guide Dr.V.DHAYALAN, assistant professor,

department of management studies, for having given us valuable suggestions and support to make
this project successful and also for providing the necessary facilities required.

I take my pride and pleasure to thank Mr. C. NEELAKANTAN, DGM Finance Department,
AL and Mr. M. HARI KRISHNAN, Dy. Mgr. Finance Department, AL, for their kind co-
operation and allowing me to pursue my project in Ashok leyland.

Finally deep acknowledgement is felt towards all those individuals whose names are not
mentioned here but have contributed their effort towards the success of this study.
 1.1 INTRODUCTION

The performance of the firm can be measured by its financial results, i.e.., by its size of
earnings, riskiness and profitability are two major factors which jointly determine the value of the
concern. Financial statements are prepared to review the state of investments in a business and
result achieved during the specific period. They reflect recorded facts, accounting conventions and
personal judgments. Financial decisions which increase risk will decrease the value of the firm and
on the other hand financial decisions which increases the profitability will increases value of the
firm. Risk and profitability are two essential ingredients of a business concern. There has been a
considerable debate about the ultimate objective of firm performance, whether it is profit
maximization or wealth maximization. It is observed that while considering the firm performance,
the profit and wealth maximization are linked and are effected by one-another. However. Profit and
loss account is a statement, which is prepared for a particular financial year. In Indian context,
where an analyst has to rely upon the audited financial statements for a particular company, the
performance so to be judged from the financial statements only. This chapter however indicates
some of the techniques, which can be used for such analysis of financial performances.

Usefulness of financial performance to various stakeholders:

The analysis of financial performance is used by most of the business communities. They include
the following:

Trade Creditors
The creditors provide goods/ services on credit to the firm. They always face concern about
the recovery of their money. The creditors are always keen to know about the liquidity position of
the firm. Thus, the financial performance parameters for them evolve short term liquidity condition
of the firm
Suppliers of Long Term Debt
The suppliers of long term debt provide finance for on- going/ expansion projects of the
firm. The long term debt providers will always focus upon the solvency condition and survival of
the business, their confidence in the firm is of utmost importance as they are providing finance for a
longer period of time.

The long term creditors do consider the historical financial statements for financial
performance. However, the financial institution/ bank also depend a lot on the projected financial
statements indicating performance of the firm normally; the projections are prepared on the basis of
expected capacity expansion, projected level of projection level of production/ service and market
trends for the price movements of raw materials as well as finished goods.

Investors
Investors are the persons who have invested their money in the equity share capital of the
firm. They are the most concerned community as they have also taken risk of investments-
expecting a better financial performance of the firm. The investors community always put more
confident in firms growth in earnings. They judge the performances of the company by analyzing
firms present and future profitability, revenue stream and risk position.

Management
Management for a firm is always keen on financial analysis. It is ultimately the
responsibility of the management to look at the most effective utilization of the resources.
Management to look at the most effective balance between the asset liability management, effective
risk management and short term and long term solvency condition.

Techniques/ tools to measure financial performance

Financial Tools
Ratio Analysis
Comparative Balance Sheet
Common-Size Balance Sheet
Statistical tools:

Trend analysis
Ratio analysis:

The financial ratio analysis is considered to be the most powerful tool of financial analysis. In
simple language ratio means relationship between two or more things. It is also said that a ratio is
the indicated quotient of two mathematical expressions. The ratio analysis also helps to summarize
the large quantities of financial data and to make qualitative judgments about the firms financial
performance. There are various liquidity ratios which are quantitative in nature but are helpful to
make qualitative judgments about the firm. The financial ratios involve useful information about the
analysis of the firm. However, stand alone ratio of one firm alone may not be useful to evaluate the
firms performance.

Comparative Statements:

Comparative statement analysis is one of the methods to trace periodic change in the
financial performance of a firm. The changes over the period are described by way of increase and
decrease in income statement and balance sheet. These statements summaries and resent related
data for a number of years, incorporating therein changes in individual items of financial
statements. These statements help in making inter-period and inter firm comparisons and also
highlight the trends in performance efficiency and financial position. An assessment of comparative
financial statements helps to highlight the significant facts and points out the items requiring further
analysis. All annual report of the selected companies provides data related to last 2 financial years.

Common Size Statements:

Common size statement indicates the relationship of various items with some common items,
(expressed as percentage of the common item). In the income statements, the sales figure is taken as
basis and all other figures are expressed as percentage in sales. Similarly, in the balance sheet the
total assets and liabilities is taken as base and all figures are expressed as percentage of this total.
The percentages so calculated are compared with corresponding percentages in other periods or
other firms and meaningful conclusions are drawn. Generally, a common size income statements
and common size balance sheet is prepared.

1.2 INDUSTRY PROFILE

PROFILE OF AUTOMOBILE SECTOR
The Indian automobile sector can be divided into several segments: 2 & 3 wheelers, Passenger cars,
Commercial vehicles (Heavy CVs/ Medium CVs/Light CVs), Utility vehicles (UVs) and Tractors.
Agricultural tractors and Earth Moving Machinery is an associated sector, which keeps the wheels
of the agrarian economy moving. It is heavily reliant and aligned to the automobile and allied
engineering sector and plays a significant role in India.
The automotive Industry in India is now working in terms of the dynamics of an open market.
Many joint ventures have been set up in India with foreign collaboration, both technical and
financial with leading global manufacturers. Also a very large number of joint ventures have been
set up in the auto-components sector and the pace is expected to pick up even further.
The industry is characterized by a very high percentage (75%) of production in the 2/3 wheelers
sector. India ranks as the largest manufacturer of motorcycles and second largest in manufacturing
of scooters in the world. India today is also the second largest manufacturer of tractors, as well.
The industry has intense forward and backward integration. The joint venture list indicates a wide
variation ranging from 10% to 100%. The equity participation is not regulated by Government but
is market driven. It depends upon the market perceptions of the joint venture partners and their
business perceptions primarily in terms of technological, financial and market strengths of the
partners. The large volumes of investment including foreign direct investment in the automobile
manufacturing ventures and technical collaboration are propelling a quantum jump in up gradation
of technology. Domestic demand for passenger cars and multi utility vehicles is projected at
800,000 cars by 2004 A.D. With increased production and capacity creation in the passenger car
sector, foreign countries may use India as an export hub. This tremendous growth is likewise
triggering growth of the auto-component segment. In India, the vehicle population, currently at
sixty million, is growing at a rate of more than 9% per annum. Of this, 63 % are two/three wheelers.
Growth rate has been very high for passenger cars and 2/3 wheeler vehicles.

HISTORY
Indian market before independence was seen as a market for imported vehicles while assembling of
cars manufactured by General Motors and other brands was the order of the day. Indian automobile
industry mainly focused on servicing, dealership, financing and maintenance of vehicles. Later only
after a decade from independence manufacturing started. India's Transportation requirements were
met by Indian Railways playing an important role till the 1950's. Since independence the Indian
automobile industry faced several challenges and road blocks like manufacturing capability was
restricted by the rule of license and could not be increased but still it lead to growth and success it
has achieved today.
For nearly three decades the total production of passenger cars was limited to 40,000 yearly. Even
the production was confined to three main manufacturers Hindustan Motors, Premier Automobiles
and Standard Motors. There was no expertise or research & development initiative taking place.
Initially labor was unskilled and had to go through a process of learning through trial and error.
There were significant changes witnessed by the end of 1970's in the automobile industry. Strong
and huge initiatives like joint ventures for light commercial vehicles did not succeed. Contessa, the
Rover and the Premier 118NE, which were the new models, hit the market. Till later part of 1980's
India by and large followed a socialist system. The main focus of the government was development
through heavy, long gestation, capital intensive projects like steel manufacturing. Priority was to the
quality of the finished good and customer feedback.
The Indian Automobile industry includes two-wheelers, trucks, cars, buses and three-wheelers
which play a crucial role in growth of the Indian economy. India has emerged as Asia's fourth
largest exporter of automobiles, behind Japan, South Korea and Thailand. The country is expected
to top the world in car volumes with approximately 611 million vehicles on the nation's roads by
2050.The Economic progress of this industry is indicated by the amount of goods and services
produced which give the capacity for transportation and boost the sale of vehicles. There is a huge
increase in automobile production with a catalyst effect by indirectly increasing the demand for a
number of raw materials like steel, rubber, plastics, glass, paint, electronics and services.

KEY AUTOMOBILE MANUFACTURES IN INDIA

Maruti Udyog
General Motors
Ford India Limited
Eicher Motors
Bajaj Auto
Daewoo Motors India
 Hero Motors
Hindustan Motors
Hyundai Motors India Limited
Royal Enfield Motors
Telco
TVS Motors
DC Designs
Swaraj Mazda Limited

OVERVIEW AUTOMOBILE INDUSTRY IN RECENT DECADES

The Indian auto industry is one of the largest in the world with an annual production of 23.37
million vehicles in FY 2014-15, following a growth of 8.68 per cent over the last year. The
automobile industry accounts for 7.1 per cent of the country's gross domestic product (GDP).
The Two Wheelers segment with 81 per cent market share is the leader of the Indian Automobile
market owing to a growing middle class and a young population. Moreover, the growing interest of
the companies in exploring the rural markets further aided the growth of the sector. The overall
Passenger Vehicle (PV) segment has 13 per cent market share. India is also a prominent auto
exporter and has strong export growth expectations for the near future. In FY 2014-15, automobile
exports grew by 15 per cent over the last year. In addition, several initiatives by the Government of
India and the major automobile players in the Indian market are expected to make India a leader in
the Two Wheeler (2W) and Four Wheeler (4W) market in the world by 2020.

MARKET SIZE
The industry produced a total 14.25 million vehicles including PVs, commercial vehicles (CVs),
three wheelers (3W) and 2W in April-October 2015 as against 13.83 in April-October 2014,
registering a marginal growth of 3.07 per cent year-on-year.
The sales of PVs grew by 8.51 per cent in April-October 2015 over the same period last year. The
overall CVs segment registered a growth of 8.02 per cent in April-October 2015 as compared to
same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered very strong
growth of 32.3 per cent while sales of Light Commercial Vehicles (LCVs) reduced by 5.24 per cent
during April-October 2015 year-on-year.
In April-October 2015, overall automobile exports grew by 5.78 per cent. PVs, CVs, 3Ws and 2Ws
registered growth of 6.34 per cent, 17.95 per cent, 18.59 per cent and 3.22 per cent respectively in
April-October 2015 over April- October 2014.
TOTAL PRODUCTION OF AUTOMOBILES IN INDIA

INVESTMENT
In order to keep up with the growing demand, several auto makers have started investing heavily in
various segments of the industry during the last few months. The industry has attracted foreign
direct investment (FDI) worth US$ 13.48 billion during the period April 2000 to June 2015,
according to data released by Department of Industrial Policy and Promotion (DIPP).
Some of the major investments and developments in the automobile sector in India are as follows:

Global auto major Ford plans to manufacture in India two families of engines by 2017, a 2.2
liter diesel engine codenamed Panther, and a 1.2 liter petrol engine codenamed Dragon,
which are expected to power 270,000 Ford vehicles globally.
The worlds largest air bag suppliers Autoliv Inc, Takata Corp, TRW Automotive Inc and
Toyoda Gosei Co are setting up plants and increasing capacity in India.
General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase the
capacity at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by 2025.
US-based car maker Chrysler has planned to invest Rs 3,500 crore (US$ 525 million) in
Maharashtra, to manufacture Jeep Grand Cherokee model.
 Mercedes Benz has decided to manufacture the GLA entry SUV in India. The company has
doubled its India assembly capacity to 20,000 units per annum.
Germany-based luxury car maker Bayerische Motoren Werke AGs (BMW) local unit has
announced to procure components from seven India-based auto parts makers.
Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent shares in France-based
Peugeot Motorcycles (PMTC).

GOVERNMENT INITIATIVES
The Government of India encourages foreign investment in the automobile sector and allows 100
per cent FDI under the automatic route.
Some of the major initiatives taken by the Government of India are:

Government of India aims to make automobiles manufacturing the main driver of Make in
India initiative, as it expects passenger vehicles market to triple to 9.4 million units by
2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.
In the Union budget of 2015-16, the Government has announced to provide credit of Rs
850,000 crore (US$ 127.5 billion) to farmers, which is expected to boost the tractors
segment sales.
The Government plans to promote eco-friendly cars in the country i.e. CNG based vehicle,
hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent ethanol blending
in petrol.
The government has formulated a Scheme for Faster Adoption and Manufacturing of
Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020 to
encourage the progressive induction of reliable, affordable and efficient electric and hybrid
vehicles in the country.
The Automobile Mission Plan (AMP) for the period 20062016, designed by the
government is aimed at accelerating and sustaining growth in this sector. Also, the well-
 established Regulatory Framework under the Ministry of Shipping, Road Transport and
Highways, plays a part in providing a boost to this sector.

EMPLOYMENT OPPORTUNITIES
India today is well known as a potential emerging automobile market and jobs in the automobile
industry are rising. Several foreign investments are pouring into Indian automobile industry. It has
become a major three-wheeler market and two-wheeler manufacturer in the world. India is also the
second largest manufacturer of tractors. Candidates with bachelor's degree in mechanical, electrical
or automobile engineering are eligible to get good job opportunities in automobile companies.
For the candidates with diploma courses and ITI courses there are many opportunities in this
industry. Automobile companies even require IT specializations. While technical education is
offered by plenty of engineering and polytechnic colleges in India,. the eligible candidates are
selected by the companies. The considerable wide scope of Automobile sector, it is not that
surprising that more and more candidates are dreaming to develop a career in Automobile Industry.
With foreign automobile companies like Volkswagen, Audi, Renault etc coming in and targeting
India as a base for manufacturing cars, the scope for a career in Automobile Industry is rising
rapidly.

ACHIEVEMENTS
The development story of the Indian automobile industry cannot be complete without mentioning
the Pioneer Mr. J.R.D Tata's role in setting up the Tata group with high standard Engineering
Research Centre (ERC) in 1965 to facilitate technological advancement. Pioneering the
indigenization of scientific knowledge for trucks in collaboration with Mercedes Benz and launched
Maruti 800 in the year 1983 which changed the dynamics of the passenger car sector in India. It was
also known as the people's car. 60% of the Indian commercial vehicle market is dominated by Tata
Motors.

The first automobile was launched in India in the year 1897 in Bombay.
Today India is being recognized as a potential emerging auto market.
80% of the segment size is contributed by two-wheelers & motorcycles.
Indian passenger vehicle market is dominated by cars (79%) unlike the USA.
India is the largest three-wheeler & two-wheeler market in the world. It is second largest
tractor manufacturer in the world, fifth largest commercial vehicle manufacturer in the
world. .
 The industry is expected to grow to US$ 40 billion by 2015 from the current level of US$ 7
billion in 2008. By the year 2016 the industry is expected to contribute 10% of the nation's
GDP.
Very recently history has been created in the world of Automobile Industry by Ratan Tata,
Chairman (Tata Motors) by launching the world's cheapest car NANO. The price of the car
was around one lakh which gained instant recognition in the automobile industry across the
globe. It heralded the coming to age of the Indian Automobile Industry.
India is the second Largest Producer of Motorcycles in the world (5.2 Million) after China.
China which has a production volume of 12
1.3 COMPANY PROFILE

INTRODUCTION:

The Ashok Leyland is a Public Limited Company. Founded in 1948, it is an automobile

industry and the company is one of India's leading manufacturers of commercial vehicles, such as
trucks and buses, as well as emergency and military vehicles. The company is based in Chennai,
India., its also makes spare parts and engines for industrial and marine applications. 11500
employees are working in this company; it sells about 60,000 vehicles and about 7,000 engines
annually. It is the second largest commercial vehicle company in India in the medium and heavy
commercial vehicle segment with a market share of 28%, with passenger transportation options
ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment. The
company claims to carry over 60 million passengers a day, more people than the entire Indian rail
network. The company concentrates on the 16 ton to 25 ton range of trucks. Entire truck range
starting from 7.5 tons to 49 tons.

HISTORY:

The origin of Ashok Leyland, a Hinduja group company can be traced to the urge for self-
reliance, felt by independent India. Pandit Jawaharlal Nehru, India's first Prime Minister persuaded
Raghunandan Saran, an industrialist, to enter automotive manufacture. In 1948, Ashok Motors was
set up in what was then Madras, for the assembly of Austin Cars. The Company's destiny and name
changed soon with equity participation by British Leyland and Ashok Leyland commenced
manufacture of commercial vehicles in 1955. Since then Ashok Leyland has been a major presence
in India's commercial vehicle industry with a tradition of technological leadership, achieved
through tie-ups with international technology leaders and through vigorous in-house R&D. Access
to international technology enabled the Company to set a tradition to be first with technology.

Be it full air brakes, power steering or rear engine busses, Ashok Leyland pioneered all
these concepts. Responding to the operating conditions and practices in the country, the Company
made its vehicles strong, over-engineering them with extra metallic muscles. 'Designing durable
products that make economic sense to the consumer, using appropriate technology', became the
design philosophy of the Company, which in turn has molded consumer attitudes and the brand
personality.

The Hinduja Group is a transnational conglomerate that provides a wide range of products
in over fifty countries worldwide. Today, the Hinduja Group has become one of the largest
transnational business conglomerates in the world with diversified operations, spanning all the
continents. The Group employs over 25,000 people and has offices in many key cities of the world
and all the major cities in India. Ashok Leyland vehicles have built a reputation for reliability and
ruggedness. The 5 00,000 vehicles we have put on the roads have considerably eased the additional
pressure placed on road transportation in independent India. In the populous Indian metros, four out
of the five State Transport Undertaking (STU) buses come from Ashok Leyland. Some of them like
the double-decker and vestibule buses are unique models from Ashok Leyland, tailor-made for
high-density routes. In 1987, the overseas holding by Land Rover Leyland International Holdings
Limited (LRLIH) was taken over by a joint venture between the Hinduja Group, the Non-Resident
Indian transnational group and IVECO. (Since July 2006, the Hinduja Group is 100% holder of
LRLIH).

The blueprint prepared for the future reflected the global ambitions of the company,
captured in four words: Global Standards, Global Markets. This was at a time when liberalization
and globalization were not yet in the air. Ashok Leyland embarked on a major product and process
up gradation to match world-class standards of technology. For over five decades, Ashok Leyland
has been the technology leader in India's commercial vehicle industry, molding the country's
commercial vehicle profile by introducing technologies and product ideas that have gone on to
become industry norms. From 18 seater to 82 seater double-decker buses, from 7.5 tons to 49 tons
in haulage vehicles, from numerous special application vehicles to diesel engines for industrial,
marine and genset applications, Ashok Leyland offers a wide range of products. Eight out of ten
metro state transport buses in India are from Ashok Leyland. With over 60 million passengers a day,
Ashok Leyland buses carry more people than the entire Indian rail network.

VISION:

Achieving leadership in the medium/heavy duty segments of the domestic commercial vehicle
market and a significant presence in the world market through transport solutions that best
anticipate customer needs, with the highest value to cost ratio. Be among the top Indian
corporations acknowledged nationally and internationally for

Excellence in quality of its products.

Excellence in customer focus and service.

MISSION:

Be a leader in the business of commercial vehicles, excelling in technology, quality, value to

customer, fully supported by customer service of the highest order and meeting national and
international environment and safety standards.

Identifying with the customer

Being the lowest cost manufacturer
Global benchmarking our products, processes and people against the best in the industry.

ASSOCIATES COMPANIES:

Automotive Coaches & Components Ltd (ACCL)

Lanka Ashok Leyland

Hinduja Foundries

IRIZAR-TVS

Ashok Leyland Project Services Limited.

MILESTONES:-

1966 - Introduced full air brakes

1967 - Launched double-decker bus

1968 - Offered power steering in commercial vehicles

1979 - Introduced multi-axle trucks

1980 - Introduced the international concept of integral bus with air suspension

1982 - Introduced vestibule bus

1992 - Won self-certification status for defense supplies

1993 - Received ISO 9002

1997 - India's first CNG powered bus joined the BEST fleet

2001 - Received ISO 14001 certification for all manufacturing units

2002 - Launched hybrid electric vehicle2003 - Dheeraj Hinduja Elected Vice Chairman of Ashok
Leyland Board
2004 - The Government of National Capital Territory of Delhi and Ashok Leyland signed an
agreement for setting up a 'state-of-the-art' Driver Training Institute at Burari

2005 - State-of-the-art Driver Training Institute opens in Delhi

2006 - Ashok Leyland and Bosch have joined hands with the Indian Institute of Technology
Madras (IITM) to set up the Ashok Leyland and Bosch Centre of Excellence in Engineering Design
at the IITM campus

2007 - The company unveiled 4921 TT, a 6x4 tractor with a gross vehicle weight of 49 tons

2008 - The company signed an agreement for a joint venture with John Deere, for manufacturing
and marketing of construction equipment.

2009 - Ashok Leyland and Bank of Baroda signed a MoU wherein Bank of Baroda will fund Ashok
Leylands end-customers as well as finance its dealers inventory

2010 - Ashok Leyland has bagged an order for 600 vehicles from VRL Logistics that comprise 500
numbers of 3123 Multi-Axle Vehicle (MAV) in the 8x2 configuration, a newly developed, first of
its kind for the Indian commercial vehicle industry, along with 100 nos. of the Companys 12-metre
buses

2011 - The company launched DOST - its first entry in Indias fast expanding LCV segment.

GOALS:

The companys plan is to acquire smaller car manufacturers in China and in other developing
countries. Ashok Leyland bought a majority stake in the Czech based- Avia. Called Avia Ashok
Leyland Motors s.r.o., this will give Ashok Leyland a channel into the competitive European
market. According to the company, the joint venture sold 518 LCVs in Europe despite tough
economic conditions. The company will expand its product offers into construction equipment. The
company says negotiation is progressing on land acquisition, and the production plans are in place.
Aside from the full expansion planned for the company, Ashok Leyland is also paying close
attention to the environment. They are one of the companies showing the strongest commitment to
environmental protection, utilizing eco-friendly processes in their various plants. Even as they
thrust into different directions, Ashok Leyland maintains an R&D group that aims to uncover ways
to make their vehicles more fuel efficient and reduce emissions.

PARENT

Hinduja group

Ennore Foundaries Limited

Gulf-Aashly Motors Limited

Ashley Holdings Limited

SUBSIDIARIES

Ashley Investments Limited

Ashley Design and Engineering services (ADES)

Avia Ashok Leyland

Ashok Leyland Project Services Limited

Lanka Ashok Leyland

FACILITIES

The company has six manufacturing location in India: Ennore and Hosur, Tamilnadu,
Alwar, Rajasthan, Bhandara, Maharashtra.
The company has an Engine Research and Development facility in Hosur.
The company is setting up a new Plant in the North Indian state of Uttarakhand at pant
Nagar at an investment outlay of Rs. 1200 crores. This plant is expected to go on stream
in the year 2010.
The Plant will have a capacity to produce around 40,000 commercial vehicles and is
expected to cater mainly to the North Indian market taking advantage of the excise
duty and other tax concessions.
ACHIEVEMENTS
Ashok Leyland buses carry 60 million passengers a day, more people than the entire Indian
rail network
Ashok Leyland has a near 85% market share in the Marine Diesel engines markets in India

In 2002, all the vehicle-manufacturing units of Ashok Leyland were ISO 14001 certified for
their Environmental Management System, making it the first Indian commercial vehicle
manufacture to do so.

In 2005, received the BS7799 Certification for its Information Security Management System
(ISMS), making it the first auto manufacturer in India to do so.

In 2006, received the ISO/TS 16949 Corporate Certification, making it the first auto
manufacturer in India to do so.

It is one of the leading suppliers of defense vehicles in the world and also the leading
supplier of logistics vehicles to the Indian Army.

PRODUCT OF THE COMPANY INCLUDES:-

1. Buses
2. Trucks

3. Engines

4. Defense & Special Vehicles

 1.4 OBJECTIVES OF THE STUDY:

Primary objectives:

To analyze the financial performance of Ashok Leyland.

Secondary objectives:

To study the liquidity, solvency, profitability position of the company.

To know the future prospectus of the company.
Ascertaining the past and current financial performances of the firm with the help of
comparative balance sheet.
 1.5 SCOPE OF THE STUDY

The scope of study is limited to the operations of Ashok Leyland. The information obtained
from the primary and secondary sources are limited to Ashok Leyland. The key performance
indicators were taken from annual reports of Ashok Leyland. The information regarding
Annual reports, profit & loss Account, Balance Sheet are taken from last five years.
Comparison Analysis was done with information available in annual reports.
This study helps the company to improve the performance. Effective utilization of financial
resource and that leads to achieve profitability and efficiency of operation. This study will
help to frame strategies and to take decision making.
 1.6 STATEMENT OF THE PROBLEM

The analysis of financial statement is evaluated by using various tools and techniques. The analysis
is maintained by using past five years financial performance of the firm. The problem is based on the
analysis of Balance Sheet, Profit and loss account that is maintained by the firm.
It is seeking the core of evaluation and analysis of changes occurred in the figure of financial
statement that promotes the degree of changes that happened in the corporations financial statements.
The tools and techniques of financial statement are used for the simplification and presentation of data in
more comprehensive manner. However, no one type of analysis is sufficient to support overall findings,
or to serve all types of users.

1.7 NEED OF THE STUDY

 This study is selected to analyze the financial strength and weakness of the company. At
present the company is facing problem in keeping huge level of inventory and also planning
for further expansion. However due to recession in economy expansion plan is put on hold.
This study is based on the secondary data from published annual reports 2010-11 to 2014-15.

1.8 LIMITATION OF THE STUDY

The study has only made a humble attempt at evaluating financial performance and does not
and cannot claim as the perfect study.
The data used for calculation is historical data and may have some adjustments made.
Time constraint, Exact value of Gross Profit could not be obtained.
 REVIEW OF LITERTURE

Doron Nissim & Stephen H Penman (1999)

In his research article on financial performance he has pointed that this paper outlines a
financial statement analysis for use in equity valuation. Standard profitability analysis is incorporated, and
extended, and is complemented with an analysis of growth. The perspective is one of forecasting payoffs
to equities. So financial statement is presented first as a matter of Performa analysis of the future, with
forecasted ratio viewed as building blocks of forecasts of payoffs.

Kennedy And Muller (1999)

 In his research article on financial performance he has pointed that the analysis and inferences/
interpretation of financial statement are an attempt to determine the significance and meaning of financial
statement data so that the forecast may be made of the prospects for future earnings, ability to pay interest
and debt maturates (both current and long term) and profitability and sound dividend policy.

Abate, Juan Manuel De La Fuente Puente, Esther de Quevedo (2003)

This paper reviews the empirical literature analyzing the relationship between corporate
reputation and financial performance. It points out the progress made and the new trends that have become
apparent, reflects on the gaps that have been left in our knowledge and speculates on possible future studies
that will allow us to enlarge our knowledge of this relationship.

Elizabeth Duncan and Elliott (2004)

In this research article on financial performance he has pointed that he had stated that the
paper in the title of efficiency, customer service and financing performance among Australian financial
institutions showed that all financial performance measures as interest margin, return on assets, and capital
adequacy are positively correlated with customer service quality scores.

Jonas Elmerraji (2005)

In his research article on financial performance he has pointed that he tries to say that ratio can
be an invaluable tool for making an investment decision. Even so, many new investors would rather leave
their decision to fate than try to deal with the intimidation of financial ratios. The truth is that ratios arent
that intimidating, even if you dont have a degree in business or finance. Using ratio to make informed
decisions about an investment makes a lot of scenes, once you know how use them.

John j. wild, K.R. Subramanyam & Robert f. Halsey (2006)

In his research article on financial performance he has pointed that he have said that the
financial statement analysis is the application of analytical tool and technique to general- purpose financial
statements and related data to derive estimates and inferences useful in business analysis. Financial
statement analysis reduces reliance on hunches, guesses, and intuition for business decision. It decreases
the uncertainty of business analysis.

I.M Pandey (2007)

 In his research article on financial performance he has pointed that the financial statement
contain information about the financial consequences and sources and uses of financial resources, one
should be able to say whether the financial variable given in financial statements in a meaningful way
which will suggest the actions which one may have to initiate to improve the firms financial condition.

Susan ward (2008)

In his research article on financial performance he has pointed that emphasis that financial
analysis using ratio between key values help investors cope with the massive amount of numbers in
company financial statements. For example, they can compute the percentage of net profit a company is
generating on the funds it has deployed. All other things remaining the same, a company that earns a
higher percentage of profit compared to other companies is a better investment option.

Vedran Capkun, AriPekka Hameri, Lawrence A. Weiss, (2009)

The paper finds a significant positive correlation between inventory performance (total as
well as the discrete components of inventory) and measures of financial performance (at both the gross
and operating levels) for firms in manufacturing industries. The correlation between the performance of
discrete types of inventory and financial performance varies significantly across inventory types. RMI
performance has the highest correlation with all financial performance measures. Between WIP inventory
and FGI performance, the former is more highly correlated with gross profit measures while the latter is
more highly correlated with operating profit measures.

Rachchh Minaxi A (2011)

In his research article on financial performance he has pointed & suggested that the
financial statement analysis involves analyzing the financial statements to extract information that can
facilitate decision making. It is the process of evaluating the relationship between component parts of the
evaluating the relationship between component parts of the financial statements to obtain a better
understanding of an entitys position and performance.

S.M. Tariq Zafar (2012)

The author made study to explored the truth that the ratios are calculated from the financial
statements which are prepared as desired by the management and policies adopted on depreciation and
stock values and thus produce only a collection of facts expressed in monetary term and cannot produce
complete and authentic picture of the business and also may not highlight other factors which affects
performance. They found that to control managers management often overuse ratio and concentrate more
on improving the ratios and also known fact that ratio is simple comparison of numerator and a
denominator and in comparing ratios it become difficult to adjudicate whether differences are due to
change in the numerator or denominator or in both. It is also found that ratios are interconnected but are
often treated by management in isolation and also found that analysis of ratios lack authenticity as data
used in calculation are not accurate but manipulated presentation by the promoters.

Priyaaks (2012)

In this research article on financial performance he has pointed that financial statement analysis is the
process of examining relationships among financial statement elements and making comparisons with
relevant information. It is a tool in decision- making processes related to stocks, bonds.
Jernimo de BurgosJimnez Diego VzquezBrust (2013)

This paper analyses the relationship between environmental protection and midterm financial
performance, focusing on when and why this relationship is positive. In particular, the paper disaggregates
environmental protection, differentiating between environmental management practices, environmental
proactivity and environmental performance of the organization.

Prodromos Chatzoglou , Dimitrios Chatzoudes , Nikolaos Kipraios , (2015)

The purpose of this paper is to explore the relationship between the acquisition of an ISO 9000
certification and the overall financial performance of the certified firms. More specifically, the study
proposes a multidimensional conceptual framework, including customers demand, ISO adoption,
operation efficiency, market efficiency and overall financial performance. Such a multidimensional
approach has randomly been explored in the existing literature, making the examination of the proposed
conceptual framework an interesting research topic.

M. Venkata Subramanian (2016)

Financial analysis referred to financial statement analysis or accounting analysis refers to an

assessment of the viability, stability and profitability of a business, sub-business or project. The main idea
behind this study is to analyze the financial operating position of the company. This research is done with
help of secondary data which is gathered from the annual report of the company. The financial performance
can be measured by using various financial tools such as profitability ratio, solvency ratio, comparative
statement, etc. Based on the analysis, findings have been arrived that the company has got enough funds to
meet its debts & liabilities, the income statement of the company shows sales of the company increased
every year at good rate and profit also increased every year.

CHAPTER 3 ANALYSIS AND INTERPRETATION

3.1 RESEARCH METHODOLOGY

MEANING OF RESEARCH:

Research in common parlance refers to a search for knowledge. One can also define research as a
scientific and systematic search for pertinent information on a specific topic. In fact, research is an
art of scientific investigation. When we talk of research methods but also consider the logic behind
the methods we use in the context of our research study and explain why we are using a particular
method or technique and why we are not using others so that research results are capable of being
evaluated.

DEFINITION OF RESEARCH:
According to Clifford Woody research comprises of define and redefining problem, formulating
hypothesis or suggested solution, collecting, organizing and evaluating data; making deduction and
reaching conclusion; and at last carefully testing the conclusion to determine whether they fit the
formulating hypothesis.

Research can be defined as the search of knowledge or any systematic investigation to establish
fact. The primary purpose for applied research (as opposed to basic research) is discovering,
interpreting and the development of methods and systems for the advancement of human
knowledge on a variety of scientific matters of our world and the universe.

RESEARCH DESIGN

The Research is of various types like Applied Research, Descriptive Research, Analytical Research,
Empirical Research, Exploratory Research etc. The type of research used in this study is analytical
research.

ANALYTICAL RESEARCH:

Analytical research is concerned with determining validity of hypothesis based on analysis of facts
collected. The researcher uses facts or information already available and does analysis to make
critical evaluation of the material.

SOURCES OF DATA COLLECTION

The data collections classified into two types are Primary data and Secondary data.

Primary Data

Primary Data is a data collected for the first time. The information is collected directly from the
source by means of field study. Primary Data are original and are like raw materials. It is the crudest
form of information. The investigator himself collects primary data or supervises its collection. It
may be collected on a sample or census basis or from case studies.

Secondary Data

According to M. M. Blair, Secondary data are those already in existence and which have been
collected for some other purpose. Secondary Data may be abstracted from existing records and
published sources. The data which have already been collected and processed by some persons or
agency and are not used for the first time are termed as secondary data. In simple, it refers to
information gathered from sources that are already in existence. Here it refers to

Companys annual report

Companys website
Manual
Existing records

This study is based on secondary data. The details regarding the company like company profile and
financial data was sourced from companys website and financial records.

Instruments Used

Financial Tools
Ratio Analysis
Comparative Balance Sheet
Common-Size Balance Sheet
Statistical tools:
Trend analysis

TOOLS USED IN FINANCIAL STATEMENT ANALYSIS

1. RATIO ANALYSIS

Ratio analysis is a widely used tool for financial analysis. It can be used to compare the risk and
return relationships of firms of different sizes. It can be defined as the systematic use of ratio to
interpret the financial statements so that the strengths and weaknesses of a firm as well as its
historical performance and current financial condition can be determined.

Modes of Ratios used for analysis

1. Current Ratio

The ratio of current assets to current liabilities is called current ratio. It measures a companys
ability to repay short-term liabilities. A ratio of 2:1 is usually considered the benchmark;
however, this may vary across industries.

Current assets
 Current ratio =

Current liabilities

2. Liquid Ratio

This ratio is also called as Acid test or Quick ratio. It refers to the assets which are quickly
convertible into cash. The higher the value, the lower the level of risk because the company has
more claims to immediate liquidity than the industry norm.

Liquid assets

Liquid ratio =

Current liabilities

Liquid assets= Total assets stock- prepaid expenses.

3. Profit Before Depreciation and Amortization to Current Liabilities (PDACL)

It is defined as net operating profit before tax plus non- cash charges in relation to short-term
debt obligations. This is a powerful ratio because it depicts a companys margin of safety to
meet short-term commitments using cash flow generated from trading operations. Lower risk
companies have a higher margin of safety; higher risk companies have a lower margin of safety.

Profit before Depreciation and Amortization

PDACL =

Current liabilities

4. Debt-Equity Ratio (DE)

It is also called as external-internal equity ratio. It provides an indication of a companys capital
structure and whether the company is more reliant on borrowings (debt) or shareholder capital
(equity) to fund assets and activities.

Total long-term debt

DE ratio =

Shareholders Funds

5. Operating Profit Ratio (OP)

It shows the operational efficiency of the firm and is a measure of the managements efficiency
in running the routine operations of the firm.

Operating profit

OP = Sales X 100

6. Return on Shareholders Funds (ROS)

It is the ratio of net profit to shareholders investment. It is the relationship between net profit
and shareholders fund. This ratio determines the profitability from the shareholders point of
view:

Net profit after interest and tax

ROS = X 100

Shareholders fund

7. Return on Total Assets (ROA)

Here, the profitability ratio is measured in terms of relationship between net profits and assets.
The ROA may N
be also called as profit-to-asset ratio.

Net profit after tax

ROA= X 100

Total Assets

8. Earnings per share (EPS)

This ratio highlights the overall success of the concern from owners point of view and it is
helpful in determining market price of equity shares.

Net Profit after interest & tax

EPS =

Weighted average no. of equity shares

9. Proprietary Ratio (PR)

It is the relationship between the shareholders funds and total tangible assets (or) total assets
excluding intangible asset and goodwill. Proprietary ratio indicates the extent to which assets
are financed by owners fund.

Shareholders funds

PR =

Total Assets

10. Inventory/ Stock turnover ratio (STR)

It is also called stock velocity ratio. It is helpful in evaluating and review of inventory policy
that indicates the number of times the inventory is turned over during a particular accounting
period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies
either strong sales or ineffective buying.

High inventory levels are unhealthy because they represent an investment with a rate of return
of zero.

Cost of goods sold

STR =

Average inventory

11. Fixed assets ratio

The objective of calculating this ratio is to ascertain the proportion of long-term funds invested
in fixed assets.

Fixed assets

FAR =

Long-term funds

12. Overall solvency/ total debt ratio

It is a ratio which relates the total tangible assets (or) total assets excluding intangible and
goodwill with the total borrowed funds. It also measures the extent to which the debt is covered
by assets

Total debt

Overall Solvency = Total Asset

13. Gross profit ratio:

Gross profit ratio is also called as gross margin. It is calculated by dividing gross profit by sales.
The gross margin represents the limit beyond which fall in sales prices are outside the tolerance
limit.

Gross profit

Gross profit margin= X 100

Sales

14. Net profit ratio:

Net profit ratio is also called as net margin. This measures the relationship between net profit
and sales of the firm.

Earnings after interest & taxes

Net profit ratio = X 100

Net sales

15. Return on equity:

This profitability ratio carries the relationship of return to the sources of funds. While ROCE
expresses the profitability of a firm in relation to the funds supplied by the lenders and owners
taken together, the return on shareholders equity measures exclusively the return on the
owners funds.

Net income

Return on Equity= *100

 Shareholders Equity

16. Interest coverage ratio:

It is also called as time-interest-earned ratio. This ratio measures the debt servicing capacity of a
firm insofar as fixed interest on long term loan is concerned. It is determined by dividing the
operating profits or earnings before interest and taxes by the fixed interest charges on loans.

EBIT

Interest coverage ratio =

Interest

17. Working capital turnover ratio:

Working capital turnover ratio 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.

Net Sales

Working capital turnover ratio = Working capital

18. Asset turnover ratio:

This ratio is also known as the investment turnover ratio. It is based on the relationship between
the sales and asset of a firm. The asset turnover ratio measures the efficiency of a firm in
managing and utilizing its asset.

Net Sales

Asset turnover ratio = Total asset

 2. COMPARATIVE BALANCE SHEETS

According to Faulke-

Comparative Balance Sheet analysis is the study of the trend of the same items, group of items
and computed items in two or more balance sheets of same business enterprises on different
dates.

ADVANTAGES

It shows the extent to which there is increase or decrease in assets and liabilities
between two balance sheet dates.
It helps in studying the trends in business firms.
It shows the effect of business operation on its assets, liabilities and capital.

3. COMMON SIZE BALANCE SHEET

A common-size financial statement is simply one that is created to display line items on a
statement as a percentage of one selected or common figure. Creating common-size financial
statements makes it easier to analyze a company over time and compare it with peers.

Using common-size financial statements helps investors spot trends that a raw financial
statement may not uncover. In this, the total assets or liabilities are taken as 100 and all figures are
expressed as percentage of the total.

STATISTICAL TOOLS:

TREND ANALYSIS:
 Trend analysis is one of the tools for the analysis of the companys monetary statements for
the investment purposes. Investors use this analysis tool a lot in order to determine the financial
position of the business. In a trend analysis, the financial statements of the company are compared
with each other for the several years after converting them in the percentage

3.2 DATA ANALYSIS AND INTERPRETATION

The financial performed of a firm can be evaluated by constructing ratio for the various items
appearing in the financial statement. A ratio is a simple artificial expression of the relationship
between two mathematical variables. Ratio analysis is a technique of analysis and interpretation of
financial statement by establishing and interpreting various ratios useful for decision making.

In this chapter I have applied various ratios for analyzing financial position of the company. The
result and interpretation are given below:

RATIO ANALYSIS

CURRENT RATIO:

Table 3.2.1 showing computation of current ratio

 CURRENT
CURRENT CURRENT
YEAR LIABILITIES
ASSETS (Lakhs) RATIO
(Lakhs)
2010-11 3,98,376.00 3,75,987.00 1.06
2011-12 4,30,389.00 4,84,314.00 0.89
2012-13 4,27,689.00 5,29,610.00 0.81
2013-14 3,52,674.00 4,58,660.00 0.77
2014-15 4,69,300.00 5,03,552.00 0.93

INFERENCE:

Current ratio is the measure of liquidity calculated by dividing current asset by the current
liabilities. The ideal current ratio is 2:1. In the financial year 2010-11, the current ratio was 1.06:1 and it
was reduced to 0.77:1 in later years till 2013-14 which indicates the current assets were not enough to
meet the short term obligations. In 2014-15 the ratio increased to 0.93:1 since it is lesser than the ideal
current ratio, it was not enough to meet the short term obligations.

LIQUID RATIO/ QUICK RATIO/ ACID TEST RATIO:

Table 3.2.2 showing computation of Liquid Ratio

LIQUID CURRENT
LIQUID
YEAR ASSET LIABILITIES
RATIO
(Lakhs) (Lakhs)
2010-11 8,38,441.00 3,75,987.00 2.23
2011-12 9,68,512.00 4,84,314.00 2.00
 2012-13 11,20,068.00 5,29,610.00 2.11
2013-14 11,61,930.00 4,58,660.00 2.53
2014-15 11,91,286.00 5,03,552.00 2.37

INFERENCE:

Liquid ratio is a measure of liquidity calculated dividing current assets minus inventory and prepaid
expenses by current liabilities. A liquid ratio of 1:1 is considered as ideal ratio. A quick ratio higher than
1:1 indicates that the business can meet its obligation with available quick funds in hand (2010 to 2015)
whereas a ratio less than 1:1 indicates that the company relies more on inventory or other assets to pay
the obligations.

DEBT EQUITY RATIO:

Table 3.2.3 showing computation of Debt-Equity ratio

TOTAL
SHAREHOLDER DEBT EQUITY
YEAR LONG TERM
FUND (Lakhs) RATIO
DEBT (Lakhs)
2010-11 2,34,813.00 3,96,296.00 0.59
2011-12 2,29,335.00 4,21,233.00 0.54
2012-13 2,73,784.00 4,45,510.00 0.61
2013-14 3,29,650.00 4,44,789.00 0.74
2014-15 2,56,634.00 5,11,869.00 0.50

Chart 3.2.3.1 showing Debt-Equity ratio

INFERENCE:

Debt-Equity ratio measures the ratio of long term or total debt to shareholders equity. In the year
2013-14 the ratio was 0.74:1 which indicates low margin of safety to creditors whereas in the year
2014-15 the ratio became 0.50:1 which indicates moderate margin of safety to creditors.

PROPRIETARY RATIO:

Table 3.2.4 showing computation of Proprietary Ratio

SHAREHOLDER TOTAL ASSETS PROPRIETARY

YEAR
FUND (Lakhs) (Lakhs) RATIO
2010-11 3,96,296.00 10,59,331.00 0.37
2011-12 4,21,233.00 11,91,575.00 0.35
2012-13 4,45,510.00 13,09,670.00 0.34
2013-14 4,44,789.00 12,80,800.00 0.35
2014-15 5,11,869.00 13,31,139.00 0.38
Chart 3.2.4.1 showing Proprietary ratio

INFERENCE:

The Proprietary ratio indicates the extent to which assets are financed by owners fund. It is observed
that the calculated proprietary ratio of the company, from 2011 to13 is consistently reduced which
indicates that the company is heavily depending on debts for its operations. In 2013-14 and 2014-15 the
ratio was 0.35 and 0.38 which indicates there is a less dependence on debt for its operations.

OVERALL SOLVENCY RATIO/DEBT TO ASSET RATIO:

Table 3.2.6 showing computation of Overall Solvency Ratio

TOTAL TOTAL OVERALL

YEAR LIABILITIES ASSETS SOLVENCY
(Lakhs) (Lakhs) RATIO
2010-11 6,63,035.24 10,59,331.45 0.63
2011-12 7,70,757.36 11,91,574.71 0.65
2012-13 8,64,159.75 13,09,670.21 0.66
2013-14 8,36,011.14 12,80,799.57 0.65
2014-15 8,19,279.64 13,31,149.02 0.62
Chart 3.2.6.1 showing Overall Solvency Ratio

INFERENCE:

Overall solvency ratio is a ratio which relates the total tangible assets with the total borrowed
funds. The overall solvency ratio of UBER9 has been increasing from 2010-11 to 2012-13. A higher
ratio indicates greater risk and lower safety to the owners. In 2014-15 the ratio is 0.62 which indicates
low risk and higher safety to the owners.

EARNINGS PER SHARE:

Table 3.2.8 showing computation of EPS

NET WEIGHTED
PROFIT AVERAGE NO. EARNINGS
YEAR
AFTER TAX OF EQUITY PER SHARE
(Lakhs) SHARE
2010-11 63,130.00 2,66,06,76,634.00 2.37
2011-12 56,598.00 2,66,06,76,634.00 2.13
2012-13 43,371.00 2,66,06,76,634.00 1.63
2013-14 2,938.00 2,66,06,76,634.00 0.11
2014-15 33,481.00 2,79,81,81,292.00 1.20
Chart 3.2.8.1 showing EPS

INFERENCE:

EPS reflect upon the capacity of the concern to pay the dividend to its equity shareholders.
The EPS was higher in the year 2010-11 and started declining upto the year 2012-13 is 1.63. In the year
2013-14 the ratio is too less of 0.11 which indicates the company was not in a position to pay dividend
to its shareholders. In 2014-15, the EPS increased to 1.20. This result clearly indicates the company
was regaining from recession and increasing the confidence of the share holders.

GROSS PROFIT RATIO:

Table 3.2.9 showing computation of Gross Profit Ratio

GROSS GROSS
NET SALES
YEAR PROFIT PROFIT
(Lakhs)
(Lakhs) RATIO
2010-11 80,179.93 11,13,304.33 7.20
2011-12 68,997.66 12,88,234.45 5.36
2012-13 47,070.67 12,54,355.15 3.75
2013-14 (9,121.89) 10,00,994.74 (0.91)
2014-15 44,219.67 13,68,665.49 3.23
Chart 3.2.9.1 showing Gross Profit Ratio

INFERENCE:

Gross profit ratio measures the percentage of each sales rupee remaining after the firm has
paid for its goods. The ratio of UBER9 has showed an decreased rate from 2010-11 to 2013-14 (7.20 to
-0.91) which implies that the company has less revenue from operation. The negative ratio indicates
there is no profit and in the year 2014-15 the ratio is 3.23 and the gross profit is expected to be
increased in future to cover the operating expenses, fixed interest rate charges, dividend and transfer to
reserve.

NET PROFIT RATIO:

Table 3.2.10 showing computation of Net Profit Ratio

NET PROFIT NET SALES NET PROFIT

YEAR
(Lakhs) (Lakhs) RATIO
2010-11 63,129.93 11,13,304.33 5.67
2011-12 56,597.66 12,88,234.45 4.39
2012-13 43,370.67 12,54,355.15 3.46
2013-14 2,938.11 10,00,994.74 0.29
2014-15 33,480.60 13,68,665.49 2.45

Chart 3.2.10.1 showing Net Profit Ratio

INFERENCE:

Net profit ratio is a measure of managements efficiency in operating the business successfully from
the owners point of view. In the year 2010-11 the net profit ratio was high which shows better
efficiency in operations whereas in the year 2013-14 the ratio went down to 0.29 which shows the
opposite implication. In 2014-15 there is an increase of 2.45% indicates there is an increase in
efficiency of operation.

PROFIT BEFORE DEPRICIATION AND AMORTIZATION RATIO:

Table 3.2.11 showing computation of PDACL

PROFIT PROFIT BEFORE

CURRENT
BEFORE DEPRICIATION AND
YEAR LIABILITIES
DEPRICATION AMORTIZATION
(Lakhs)
(Lakhs) RATIO
2010-11 80,180.00 3,75,987.00 0.21
2011-12 68,998.00 4,84,314.00 0.14
2012-13 47,071.00 5,29,610.00 0.09
 2013-14 (9,122.00) 4,58,660.00 (0.02)
2014-15 44,220.00 5,03,552.00 0.09
.
Chart 3.2.11.1 showing PDACL

INFERENCE:

Profit before Depreciation and Amortization to Current Liabilities ratio measures a

companys financial performance by computing earnings from core business operations, without
including the effects of capital structure, tax rates and depreciation policies. In the year 2010-11 the
company maintained a very minimum profit and started to decline and became 0.09 in the year 2014-15
which shows that the company was in strain.

RETURN ON TOTAL ASSETS/ PROFIT-TO-ASSET RATIO:

Table 3.2.12 showing computation of Return on total assets

NET PROFIT RETURN ON

TOTAL ASSETS
YEAR AFTER TAX TOTAL
(Lakhs)
(Lakhs) ASSETS
2010-11 63,130.00 10,59,331.00 5.96
2011-12 56,598.00 11,91,575.00 4.75
2012-13 43,371.00 13,09,670.00 3.31
2013-14 2,938.00 12,80,800.00 0.23
2014-15 33,481.00 13,31,139.00 2.52
Chart 3.2.12.1 showing Return on Total Assets

INFERENCE:

ROA measures efficiency of the business in using its assets to generate net income. Higher value of
return on assets shows that business is more profitable. In case of UBER9 the highest return on
asset was recorded in the year 2010-11 that is 5.96%

RETURN ON SHAREHOLDERS FUNDS:

Table 3.2.13 showing computation of Return on shareholders fund

RETURN ON
NET PROFIT SHAREHOLDER SHARE
YEAR
AFTER TAX FUND (Lakhs) HOLDERS
(Lakhs) FUND
2010-11 63,130.00 3,96,296.00 15.93
2011-12 56,598.00 4,21,233.00 13.44
2012-13 43,371.00 4,45,510.00 9.74
 2013-14 2,938.00 4,44,789.00 0.66
2014-15 33,481.00 5,11,869.00 6.54

Chart 3.2.13.1 showing Return on Share holders Fund

INFERENCE:

Return on shareholders fund ratio determines whether the investment in the firm is
attractive or not as the investors would like to invest only where the return is higher. At present the
value is going in negative for the year 2010-11 and it is not seen as attractive for the investors.

OPERATING PROFIT MARGIN:

Table 3.2.15 showing computation of Operating Profit Margin

OPERATING
OPERATING
YEAR PROFIT SALES (Lakhs)
RATIO
(Lakhs)
2010-11 1,02,663.00 11,11,770.90 9.23
2011-12 16,657.00 12,90,432.65 1.29
2012-13 87,647.00 12,48,120.00 7.02
2013-14 1,25,609.00 9,94,342.67 12.63
 2014-15 1,21,369.00 13,56,218.31 8.95

Chart 3.2.15.1 showing Operating Profit Margin

INFERENCE:

Operating profit margin shows the operational efficiency of the firm and is a measure of the
managements efficiency in running the routine operations of the firm. From 2010-11 to 2014-15 the
ratio showed a higher operating efficiency whereas in 2014-15 the operating profit of the company has
been reduced.

RETURN ON EQUITY:

Table 3.2.16 showing computation of Return of Equity

SHARE
NET INCOME HOLDERS RETURN ON
YEAR
(Lakhs) EQUITY EQUITY
(Lakhs)
2010-11 11,22,155.75 3,96,296.21 2.83
2011-12 12,88,234.35 4,20,817.35 3.06
 2012-13 12,54,355.15 4,45,510.46 2.82
2013-14 10,00,994.74 4,44,788.43 2.25
2014-15 13,68,665.49 5,11,869.38 2.67

Chart 3.2.16.1 showing Return of Equity

INFERENCE:

The return on equity measures the return on owners fund. From the year 2011-12 to 2014-15 the ratio
has decreased from 3.06% to 2.67%, it indicates that the owners fund has been used efficiently
whereas in the years 2013-14 & 2014-15 the ratio declined and became negative indicating that the
funds provided by the owners are not used efficiently.

STOCK TURNOVER RATIO/ INVENTORY TURNOVER RATIO:

Table 3.2.17 showing computation of Stock Turnover ratio

STOCK
AVERAGE
TURNOVER
YEAR COGS (Lakhs) INVENTORY
RATIO
(Lakhs)
(Times)
2010-11 (29,729.03) 1,92,357.00 (0.15)
2011-12 48,564.37 2,21,976.50 0.22
2012-13 1,64,634.94 2,06,332.50 0.80
 2013-14 1,97,634.76 1,54,236.00 1.28
2014-15 1,18,135.72 1,29,361.50 0.91

Chart 3.2.17.1 showing Stock turnover ratio

INFERENCE:

Stock turnover ratio is calculated to ascertain the efficiency of inventory management in terms of
capital investment. A higher inventory turnover ratio indicates efficient inventory management and
efficiency of business operations. The companys ratio has been decreasing from 2010-11 to 2014-
15 which indicates that company is not efficient in managing the inventory.

FIXED ASSET TURNOVER RATIO:

Table 3.2.18 showing computation of Fixed Asset ratio

AVERAGE
FIXED ASSET
NET SALES FIXED
YEAR TURNOVER
(Lakhs) ASSET
RATIO
(Lakhs)
2010-11 11,13,304.33 4,90,139.34 2.27
2011-12 12,88,234.45 5,22,673.78 2.46
2012-13 12,54,355.15 5,71,626.26 2.19
 2013-14 10,00,994.74 5,90,610.23 1.69
2014-15 13,68,665.49 5,60,854.55 2.44

Chart 3.2.18.1 showing Fixed Asset turnover ratio

INFERENCE:

In the year 2010-11 the fixed asset turnover ratio was 2.27 shows that there was
inefficiency in managing and utilizing the fixed asset whereas in the year 2014-15 the ratio raised to
2.44 indicating that the fixed asset where used in an efficient way.

WORKING CAPITAL TURNOVER RATIO:

Table 3.2.19 showing computation of Working Capital Turnover ratio

AVERAGE WORKING
NET SALES WORKING CAPITAL
YEAR
(Lakhs) CAPITAL TURNOVER
(Lakhs) RATIO
2010-11 11,13,304.33 22,389.80 49.72
2011-12 12,88,234.45 (53,981.60) (23.86)
2012-13 12,54,355.15 (99,956.53) (12.55)
 2013-14 10,00,994.74 (73,116.70) (13.69)
2014-15 13,68,665.49 (34,252.42) (39.96)

Chart 3.2.19.1 showing Working Capital turnover ratio

INFERENCE:

In the year 2010-12 the highest working capital turnover ratio 49.72 has been recorded indicating
that the working capital was used efficiently while in the year 2014-15 the lowest working capital
turnover ratio (39.96) has been reached indicating that the working capital was used inefficiently.

ASSET TURNOVER RATIO/INVESMENT TURNOVER RATIO:

Table 3.2.20 showing computation of Asset Turnover ratio

AVERAGE
ASSET
NET SALES TOTAL
YEAR TURNOVER
(Lakhs) ASSET
RATIO
(Lakhs)
2010-11 11,13,304.33 9,93,767.85 1.12
 2011-12 12,88,234.45 11,25,453.08 1.14
2012-13 12,54,355.15 12,50,622.46 1.00
2013-14 10,00,994.74 12,95,234.89 0.77
2014-15 13,68,665.49 13,05,974.30 1.05

Chart 3.2.20.1 showing Asset turnover ratio

INFERENCE:

The asset turnover ratio in the year 2010-11 recorded 1.12 indicating that the assets were utilized
efficiently while in the year 2014-15 the lowest rate was recorded 1.02 implying that the assets were
not utilized properly.

COMPARATIVE BALANCE SHEET ANALYSIS

Table 3.2.19 showing comparative analysis of Ashok Leyland ltd as on April 2010 to March 2011

Rs. in lakhs
Previous Year Current Year Increase (+)or Decrease (-)
Particulars 2010 (Rs) 2011 (Rs)

Amount(Rs) Percentage (%)

Assets
Fixed Assets (A) 4,81,102.8
9 4,99,175.79 18,072.90 3.76 %
Current Assets ( B)
Inventory 1,63,824.0
0 2,20,890.34 57,066.34 34.83%
Sundry Debtors 1,02,206.1
5 1,18,521.33 16,315.18 15.96%
Cash& Bank 51,892.0
5 17,952.72 (33,939.33) (65.40)%
Loans & Advances 96,046.2
(17.37)%
3 79,360.14 (16,686.09)
Total Current Assets 4,13,968.4
(B) 5.50%
3 4,36,724.53 22,756.10
Current Liabilities & 2,96,075.7
Provisions (C) 19.17%
2 3,52,827.40 56,751.68
Net Current Assets 1,17,892.7
D=(B-C) (28.84)%
1 83,897.13 (33,995.58)
Investment
&Miscellaneous 33,132.9
Expenditure (E) 2 1,23,431.13 90,298.21 272.53%
Total Assets (A+D+E) 6,32,128.5
2 7,06,504.05 74,375.53 11.77%
Liabilities

Capital And Reserves 3,66,875.8

(A) 1 3,96,296.21 29,420.40 8.02 %
Loan Funds (B) 2,20,389.1
8 2,56,826.48 36,437.30 16.53 %
Deferred Liability 7,654.8
5 8,992.67 1,337.82 17.48 %
Deferred Tax Liability 38,453.6
9 44,388.69 5,935.00 15.43%
Foreign Currency
Monetry Item (1,245.01) -
Total Deffered
Liabillity (C)
18.99 %
44,863.53 53,381.36 8,517.83
Total Liabilities &
Capitals (A+B+C)
6,32,128.52 7,06,504.05 74,375.53 11.77 %
Table 3.2.20 showing comparative analysis for April 2011 to March 2012

Rs. in lakhs
Previous Year Current Year Increase (+)or Decrease (-)
Particulars 2011 (Rs) 2012 (Rs)

Amount(Rs) Percentage (%)

Assets
4,99,175.7
5,46,171.50 46,995.72 9.41
Fixed Assets 8
 Non-Current 1,22,999.6
1,53,447.89 30,448.21 24.75
Investment 8
Long Term Loans 38,463.0
60,823.95 22,360.92 58.14
And Advances 3
Other Non-Current 315.7
742.74 426.95 135.20
Assets 9
Total Non Current 6,60,954.2
7,61,186.08 1,00,231.80 15.16
Assets (A) 8
Current Assets ( B)
2,20,890.3
2,23,062.52 2,172.18 0.98
Inventories 4
1,16,449.8
1,23,024.79 6,574.97 5.65
Trade Receivables 2
Cash And Cash 17,952.7
3,255.58 (14,697.14) (81.87)
Equivalents 2
Short Term Loans 33,439.4
72,709.06 39,269.64 117.44
And Advances 2
Other Current 9,644.8
8,336.68 (1,308.19) (13.56)
Assets 7
Total Current 3,98,377.1
4,30,388.63 32,011.46 8.04
Assets (B) 7
10,59,331.4
11,91,574.71 1,32,243.26 12.48
Total Assets (A+B) 5
Liabilities
Share Holders
3,96,296.2
Fund And Reserves 24,521.14 6.19
1 4,20,817.35
(A)
Non-Current
Liabilities
Long Term 2,34,812.8
Borrowings 3 2,29,335.11 (5,477.72) (2.33)
Deferred Tax 44,388.6
Liabilities (Net) 9 49,036.69 4,648.00 10.47
Other Long Term -
Liabilities 359.03
Long Term 7,846.3
Provisions 5 7,656.30 (190.05) (2.42)

Current Liabilities
Short Term
Borrowings 10,175.00
Trade Payables 2,30,850.6 20.10
 7 2,77,246.10 46,395.43
Other Current 1,03,442.2
49.76
Liabilities 4 1,54,911.69 51,469.45
Short Term 41,694.4
0.82
Provisions 6 42,037.44 342.98
Total Equity & 10,59,331.4
Liabilities 12.48
5 11,91,574.71 1,32,243.26

Table 3.2.21 showing comparative analysis for April 2012 to March 2013

Rs. in lakhs
Previous Year Current Year Increase (+)or Decrease (-)
Particulars 2012 (Rs) 2013 (Rs)

Amount(Rs) Percentage (%)

Assets
Fixed Assets 5,46,171.5 5,97,081.0 9.3
50,909.52
0 2 2
Non- Current 1,53,447.8 2,33,763.1 52.3
Investments 80,315.30
9 9 4
Long Term Loans & 60,823.9 47,969.5 (12,854.40 (21.1
Advances 5 5 ) 3)
Other Non Current 742.7 1,203.2 62.0
Assets 460.47
4 1 0
Total Non-Current 7,61,186.0 8,80,016.9 15.6
Assets (A) 1,18,830.89
8 7 1
Current Assets
Inventories 2,23,062.5 1,89,602.0 (33,460.44 (15.0
2 8 ) 0)
Trade Receivables 1,23,076.4 1,41,941.1 15.3
18,864.71
2 3 3
Cash & Bank 3,255.5 1,394.2 (1,861.34 (57.1
Balances 8 4 ) 7)
Short Term Loans & 72,657.4 89,098.0 22.6
Advances 16,440.61
3 4 3
Other Current Assets 8,336.6 7,617.7 (718.93 (8.6
8 5 ) 2)
Total Current Assets 4,30,388.6 4,29,653.2 (735.39 (0.1
(B) 3 4 ) 7)
Total Assets (A+B) 11,91,574.7 13,09,670.2 9.9
1,18,095.50
1 1 1
Shareholders
Funds
Share Capital 26,606.8 26,606.8
- -
0 0
Reserves & Surplus 3,94,625.8 4,18,903.6 6.1
24,277.84
2 6 5
Non-Current
Liabilities
Long Term 2,29,335.1 2,73,784.1 19.3
44,449.07
Borrowings 1 8 8
Deferred Tax 49,036.6 52,736.6 7.5
3,700.00
Liabilities 9 9 5
Other Long Term 177.8
Liabilities 177.85
5
Long Term 7,656.3 7,851.2 2.5
194.96
Provisions 0 6 5
Current Liabilities
Short Term 10,175.0 76,698.2 653.7
66,523.25
Borrowings 0 5 9
Trade Payables 2,57,096.7 2,48,536.8 (8,559.87 (3.3
2 5 ) 3)
Other Current 1,75,004.8 1,73,506.3 (1,498.49 (0.8
Liabilities 3 4 ) 6)
Short Term 42,037.4 30,868.3 (11,169.11 (26.5
Provisions 4 3 ) 7)
Total Equity & 11,91,574.7 13,09,670.2 9.9
Liabilities 1,18,095.50
1 1 1

Table 3.2.22 showing comparative analysis for April 2013 to March 2014

Rs. in lakhs
Previous Year Current Year Increase (+)or Decrease (-)
Particulars 2013 (Rs) 2014 (Rs)

Amount(Rs) Percentage (%)

Assets
5,97,081.0 5,84,139.4 (12,941.5 (2.1
Fixed Assets
2 4 8) 7)
Non- Current 2,33,763.1 2,40,531.1 6,767.9 2.9
Investments 9 1 2 0
Long Term Loans & 49,933.4 67,276.5 17,343.1 34.7
Advances 1 3 2 3
Other Non Current 1,203.2 3,308.9 2,105.7 175.0
Assets 1 9 8 1
Total Non-Current 8,81,980.8 8,95,256.0 13,275.2 1.5
Assets (A) 3 7 4 1
Current Assets
38,437.4
Current Investments -
8
1,89,602.0 1,18,870.3 (70,731.7 (37.3
Inventories
8 1 7) 1)
1,41,941.1 1,29,901.0 (12,040.0 (8.4
Trade Receivables
3 5 8) 8)
Cash & Bank 1,394.2 1,169.0 (225.1 (16.1
Balances 4 6 8) 5)
Short Term Loans & 87,134.1 80,071.1 (7,063.0 (8.1
Advances 8 0 8) 1)
7,617.7 17,094.5 9,476.7 124.4
Other Current Assets
5 0 5 0
Total Current Assets 4,27,689.3 3,85,543.5 (42,145.8 (9.8
(B) 8 0 8) 5)
13,09,670.2 12,80,799.5 (28,870.6 (2.2
Total Assets (A+B)
1 7 4) 0)
Shareholders
Funds
26,606.8 26,606.8
Share Capital - -
0 0
4,18,903.6 4,18,181.6 (722.0 (0.1
Reserves & Surplus
6 3 3) 7)
Non-Current
Liabilities
Long Term 2,73,784.1 3,29,650.5 55,866.3 20.4
Borrowings 8 1 3 1
Deferred Tax 52,736.6 40,676.6 (12,060.0 (22.8
Liabilities 9 9 0) 7)
Other Long Term 177.8 237.1 59.2 33.3
Liabilities 5 2 7 3
Long Term 7,851.2 6,786.6 (1,064.6 (13.5
Provisions 6 2 4) 6)
Current Liabilities
Short Term 76,698.2 58,740.8 (17,957.4 (23.4
Borrowings 5 1 4) 1)
Trade Payables 2,48,536.8 2,21,415.3 (27,121.4 (10.9
 5 7 8) 1)
Other Current 1,73,506.3 1,69,691.3 (3,814.9 (2.2
Liabilities 4 5 9) 0)
Short Term 30,868.3 8,812.6 (22,055.6 (71.4
Provisions 3 7 6) 5)
Total Equity & 13,09,670.2 12,80,799.5 (28,870.6 (2.2
Liabilities 1 7 4) 0)

Table 3.2.22 showing comparative analysis for April 2014 to March 2015

Rs. in lakhs
Previous Year Current Increase (+)or Decrease (-)
Year
Particulars 2014 (Rs) 2015 (Rs)

Amount(Rs Percentage (%)

)
Assets
Fixed Assets 5,84,139.4 5,37,569.6 (46,569.79 (7.9
4 5 ) 7)
Non- Current Investments 2,40,531.1 2,24,038.1 (16,492.98 (6.8
 1 3 ) 6)
Long Term Loans & 1,00,146.2 98,291.7 (1,854.53 (1.8
Advances 9 6 ) 5)
Other Non Current Assets 3,308.9 1,949.9 (1,359.03 (41.0
9 6 ) 7)
Total Non-Current Assets 9,28,125.8 8,61,849.5 (66,276.33 (7.1
(A) 3 0 ) 4)
Current Assets
Current Investments 38,437.4 40,845.2 6.2
2,407.72
8 0 6
Inventories 1,18,870.3 1,39,852.7 17.6
20,982.41
1 2 5
Trade Receivables 1,29,901.0 1,25,769.2 (4,131.80 (3.1
5 5 ) 8)
Cash & Bank Balances 1,169.0 75,128.7 6,326.4
73,959.73
6 9 3
Short Term Loans & 47,201.3 56,882.1 20.5
9,680.83
Advances 4 7 1
Other Current Assets 17,094.5 30,821.3 80.3
13,726.89
0 9 0
Total Current Assets(B) 3,52,673.7 4,69,299.5 33.0
1,16,625.78
4 2 7
12,80,799.5 13,31,149.0 3.9
50,349.45
Total Assets (A+B) 7 2 3
Shareholders Funds
Share Capital 26,606.8 28,458.8 6.9
1,852.00
0 0 6
Reserves & Surplus 4,18,181.6 4,83,410.5 15.6
65,228.95
3 8 0
Non-Current Liabilities
Long Term Borrowings 3,29,650.5 2,56,633.6 (73,016.90 (22.1
1 1 ) 5)
Deferred Tax Liabilities 40,676.6 51,026.6 25.4
10,350.00
9 9 4
Other Long Term Liabilities 237.1 206.0 (31.08 (13.1
2 4 ) 1)
Long Term Provisions 6,786.6 7,861.3 15.8
1,074.74
2 6 4
Current Liabilities
Short Term Borrowings 58,740.8 2,500.0 (56,240.81 (95.7
1 0 ) 4)
Trade Payables 2,21,415.3 2,82,831.8 27.7
61,416.50
7 7 4
Other Current Liabilities 1,69,691.3 1,92,615.4 13.5
22,924.12
5 7 1
 Short Term Provisions 8,812.6 25,604.6 190.5
16,791.93
7 0 4
Total Equity & Liabilities 12,80,799.5 13,31,149.0 3.9
50,349.45
7 2 3

Common size statement:

PARTICULAR 2011 2012 2013 2014 2015

Assets
Current Assets:
Inventories 15.07
21.60% 19.74% % 10.80% 12.17%
Sundry Debtors 11.28
11.59% 10.89% % 11.80% 10.94%
Cash & Bank Balance 0.11
1.76% 0.29% % 0.11% 6.54%
Loans &Advances 6.92
3.27% 6.43% % 4.29% 4.95%
Other Current Assets 0.61
0.94% 0.7% % 1.55% 2.68%
Total Current Assets (A) 33.98
39.16% 38.09% % 28.55% 37.28%
Fixed Assets (B) 47.44
48.81% 48.3% % 53.08% 46.78%
Investments (C ) 18.57
12.03% 13.58% % 18.36% 15.94%
Total Assets (A+B+C) 100
100% 100% % 100% 100%
Liabilities
Current Liabilities
Provisions 0.74 1.03
% 1.1% % 0.85% 0.97%
Loan Funds 22.17 35.13
% 33.1% % 40.10% 31.01%
Deferred tax liability 4.19 6.77
% 6.3% % 4.95% 6.17%
Total Liabilities (A) 62.59 42.93
% 40.5% % 45.90% 38.15%
Capital & Reserves:
Equity Share Capital 1.26 3.41
% 3.8% % 3.24% 3.44%
Reserves & Surplus 36.15 53.66
% 55.7% % 50.87% 58.41%
Total Shareholder's Funds(B) 37.41 57.07
% 59.5% % 54.10% 61.85%
Total Liabilities & Capital 100 100
(A+B) % 100% % 100% 100%

FINDINGS:

In the table of Common Size Balance Sheet of 2014-2015, Current Assets had grown to 37.28% out
of total assets and Short-term Borrowings have been increased to % out of total liabilities, when
compared with the preceding years. Reserves & Surplus has been decreased to 8.19%, because the
companys profit has gone down
 TREND PROJECTION

LEAST SQUARE METHOD:

The least square method is based on the assumption that the past rate of change of the variable under
study will continue in the future. It is a mathematical procedure for fitting a line to a set of observed
data points in such a manner that the sum of the squared differences between the calculated and
observed value is minimized.
This technique is used to find a trend line which best fit the available data. This trend is then used to
project dependent variable in the future. This method is very popular because it is simple and
inexpensive.

The table values are obtained as follows,

First two columns as year (X) and quantity demand per year (Y) are noted manually.
In the third column, the deviation of x is obtained by the difference between the center value and the
other respective given values.
In fourth column, the value of x square (x2) is obtained by squaring the third column values which
are previously determined.
In the fifth column, the value is obtained by multiplying the quantity demand per year (Y) and x
square(x2).
And in sixth column, Y=a+bx equation values are obtained by calculations.
 PROCEDURE

Step1:

Find the values of a and b using formula as follows,

a= Y/n

b= xY/x2

Step 2:

Find the value of Y from the equation Y=a+bx by substituting the values of a, b, x.

Step 3:

In this step, the Expected value for the upcoming year (i.e in our case 2015, 2016, and 2018) is
fixed in order i.e -1, -2, 0, 1, 2, 3, 4, 5.

Step 4:

Calculate the estimated value for upcoming years are determined using the equation Y=a+bx by
substitution of respective values of a, b, x.

TREND PROJECTIONS FOR GROSS SALES FOR THE YEARS 2016, 2017,
2018

YEAR (x) GROSS DEVIATION X2 xY TREND VALUES

SALES (Y) OF x Y=a+bX

(in Lakhs) (in Lakhs)

2011 1215300 -2 4 -2430600 -30118
2012 1372081 -1 1 -1372081 -15059
2013 1329856 0 0 0 0
2014 1056085 1 1 1056085 15059
2015 1448593 2 4 2897186 30118
2016 45177
2017 60236
 2018 75295
2
n=5 Y=6421915 x=0 x =10 xY= 150590

YEAR TREND
VALUES
Y=a+bX
(in Lakhs)
2011 -30118
2012 -15059
2013 0
2014 15059
2015 30118
2016 45177
2017 60236
2018 75295

INTERPRETAION
 From above, estimated value of Gross sales is determined for next 3 years. Estimated value of Gross
sales for the year 2016, 2017 and 2018 are determined as 45177 Rs (in Lakhs), 60236 Rs (in
lakhs) & 75295 Rs. (in Lakhs).

TREND PROJECTIONS FOR GROSS PROFIT FOR THE YEARS 2016, 2017,
2018

YEAR X GROSS DEVIATION x2 xY TREND

PROFIT OF x VALUES
(in Lakhs) (in Lakhs)
2011 12,38,082.05 -2 4 -2476164.1 -50580
2012 8,44,369.09 -1 1 -844369.09 -25290
2013 10,83,485.62 0 0 0 0
2014 12,90,432.65 1 1 1290432.65 25290
2015 11,41,500.27 2 4 2283000.54 50580
2016 75870
2017 101160
2018 126450
n=5 Y=5597869.68 x=0 x2=10 xY=252900

YEAR TREND
VALUES
(in Lakhs)
2011 -50580
2012 -25290
2013 0
2014 25290
2015 50580
2016 75870
2017 101160
2018 126450
 INTERPRETAION

From above, estimated value of Gross Profit is determined for next 3 years. Estimated value of Gross
Profit for the year 2016, 2017 and 2018 are determined as75870 Rs (in Lakhs), 101160 Rs (in
lakhs) & 126450 Rs. (in Lakhs).
TREND PROJECTIONS FOR NET PROFIT FOR THE YEARS 2016, 2017,
2018

YEAR X NET PROFIT DEVIATION x2 xY TREND

OF x VALUES
(in Lakhs) (in Lakhs)
2011 33,480.60 -2 4 -66961.2 -22591.642
2012 2,938.11 -1 1 -2938.11 -11295.821
2013 43,370.67 0 0 0 0
2014 56,597.66 1 1 56597.66 11295.821
2015 63,129.93 2 4 126259.86 22591.642
2016 33887.463
2017 45183.284
2018 56479.105
n=5 Y=199516.97 x=0 x2=10 xY=112958.21

YEAR TREND VALUES

(in Lakhs)
2011 -22591.642
2012 -11295.821
2013 0
2014 11295.821
2015 22591.642
2016 33887.463
2017 45183.284
2018 56479.105
 INTERPRETAION

From above, estimated value of Net Profit is determined for next 3 years. Estimated value of Net
Profit for the year 2016, 2017 and 2018 are determined as 33887.463 Rs (in Lakhs), 45183.284 Rs
(in lakhs) & 56479.105 Rs. (in Lakhs).

CHAPTER 3
 RESULTS AND DISCUSSIONS

3.1 SUMMARY OF FINDINGS

From the ratio analysis of the company, it is clear that the current ratio is fluctuating.
The companys debtor turnover ratio seems to be stable and has increased in the recent year
which signifies its efficiency in collecting its receivables.
The companys debt collection period has been increased year by year. This indicates the
inefficiency of the firm in collecting its receivables.
The receivables to current assets ratio during the period of 2014-2015 is 26.79.This ratio is
lesser than the last 4 years.
The degree of correlation between working capital and average accounts receivables is
positive. This indicates the change in one variable may have same effect on the other.
The net working capital of the company has been decreased during the year 2014-2015.
From the comparative analysis statement it is inferred that the ratio of current liabilities and
current assets is not stable, current liabilities have increased and vice versa during the period
of 5 years. This indicates that the firm is not in a stable financial position.
The Reserves and surplus has been increased during the year 2014-2015
The trend analysis of net worth of the company shows an increasing trend. This indicates the
sound financial status of the firm..
The Economic value added analysis over a period of 5 years is fluctuating with a higher note
starting from 2010 and later decreasing by 2015.

3.2 SUGGESTIONS

The Company can maintain cash position as it will increase the liquidity of the company.
 The company has to maintain a stable current ratio in order to maintain its current liabilities
lesser than the current assets.

The company can improve its debtor turnover ratio in order to maintain efficiency in
collecting its debts.

The company can maintain its current assets as like this.

The company can maintain its borrowings at a minimum possible level.

The firm has to strengthen its management of receivables by revising the average debt
collection period.

CONCLUSION

The major financial performance indicators of Caliber Financial services for the five year
period in terms of ratios like liquidity ratios, solvency ratio and proprietary ratio of the company
are used in this project work the company is good in its financial aspects. But there are some
fluctuations in between. The firm has to improve its collection efforts to exercise efficient
receivables management. Therefore which simultaneously increases the value of the firm? The
financial performance of Ashok Leyland using Economic Value Added. The study reveals that the
financial performance is fair. It has been maintaining good financial performance and further it can
improve if the company concentrates on its operating, 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.

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Vidya, D. M. (October 2015). A Study on Liquidity Analysis of Indian Automobile Industry . Asian
Research Journal of Business Management; vol. 3, Issue 2 , 24-30.

Salmi, T. and T. Martikainen (1994), "A review of the theoretical and empirical basis of financial ratio
analysis", The Finnish Journal of Business Economics 43:4, Pg no 426-448.

Jae K.Shim, Joel G.Siegel, Schaum's Outline of Theory and Problems of Financial Accounting, 1999,
Pg no 279-298.
 Doron Nissim & Stephen H Penman (March 1999), Columbia university-Columbia business school,
Department of Accounting.

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