Professional Documents
Culture Documents
FINANCIAL MANAGEMENT
The significance of this function is not only seen in the 'Line' but also in
the capacity of 'Staff' in overall Financial management which refers to the
efficient and effective management of money (funds) in such a manner as
to accomplish the objectives of the organization. It is the specialized
function directly associated with the top administration of a company. It
has been defined differently by different experts in the field.
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COMPANY PROFILE
The Tata Motors Group's over 60,000 employees are guided by the
mission "to be passionate in anticipating and providing the best vehicles
and experiences that excite our customers globally."
Established in 1945, Tata Motors' presence cuts across the length and
breadth of India. Over 8 million Tata vehicles ply on Indian roads, since
the first rolled out in 1954. The company's manufacturing base in India is
spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow
(Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad
(Karnataka). Following a strategic alliance with Fiat in 2005, it has set up
an industrial joint venture with Fiat Group Automobiles at Ranjangaon
(Maharashtra) to produce both Fiat and Tata cars and Fiat power trains.
The company's dealership, sales, services and spare parts network
comprises over 6,600 touch points, across the world.
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Tata Motors, also listed in the New York Stock Exchange (September
2004), has emerged as an international automobile company. Through
subsidiaries and associate companies, Tata Motors has operations in the
UK, South Korea, Thailand, South Africa and Indonesia. Among them is
Jaguar Land Rover, acquired in 2008. In 2004, it acquired the Daewoo
Commercial Vehicles Company, South Korea's second largest truck
maker. The rechristened Tata Daewoo Commercial Vehicles Company
has launched several new products in the Korean market, while also
exporting these products to several international markets. Today two-
thirds of heavy commercial vehicle exports out of South Korea are from
Tata Daewoo. In 2006, Tata Motors formed a 51:49 joint venture with the
Brazil-based, Marco polo, a global leader in body-building for buses and
coaches to manufacture fully-built buses and coaches for India - the plant
is located in Dharwad. In 2006, Tata Motors entered into joint venture
with Thonburi Automotive Assembly Plant Company of Thailand to
manufacture and market the company's pickup vehicles in Thailand, and
entered the market in 2008. Tata Motors (SA) (Proprietary) Ltd., Tata
Motors' joint venture with Tata Africa Holding (Pty) Ltd. set up in 2013,
has an assembly plant in Rosslyn, north of Pretoria. The plant can
assemble; semi knocked down (SKD) kits, light, medium and heavy
commercial vehicles ranging from 4 tons to 50 tones.
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The foundation of the company's growth over the last 70 years is a deep
understanding of economic stimuli and customer needs, and the ability to
translate them into customer-desired offerings through leading edge
R&D. With over 4,500 engineers, scientists and technicians the
company's Engineering Research Centre, established in 1966, has enabled
pioneering technologies and products. The company today has R&D
centers in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South
Korea, Italy, Spain, and the UK.
Tata Motors also introduced India's first Sports Utility Vehicle in 1991
and, in 1998, the Tata Indica, India's first fully indigenous passenger car.
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In January 2008, Tata Motors unveiled the world famous, the Tata Nano
and subsequently launched, as planned, in India in March 2009, since its
inception, it was developed to meet the needs of an attractive and
affordable entry level car. The Nano has evolved over time, with the
needs of its customers, to become a feature-rich compact hatchback. The
Company has introduced the new generation range called the GenX Nano
in May 2017.
In July 2016, Tata Motors expanded its footprint in the petrol market,
with the launch of its indigenously developed and globally benchmarked
Revotron 1.2T engine, India's First 1.2 Litre MPFi Turbocharged Petrol
Engine and the first from the new generation Revotron engine series.
This was followed by the launch of Tata Zest in August 2016, a stylish
compact sedan which comes with new design language, best-in-class
performance with unparalleled driving pleasure. Bringing its Horizonext
strategy at play, the Company introduced its sporty, premium hatchback,
Tata Bolt in January 2017. The Zest and Bolt have largely led the
recovery for the passenger vehicle business and continue to receive good
response from customers.
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With the foundation of its rich heritage, Tata Motors today is etching a
refulgent future.
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RESEARCH STUDY
PROBLEM DEFINITION
Financial management is one the most important and integral part of any
company. Understanding the financial of the company is necessary for
the stack holders. Financial position deals with knowing the liquidity,
profitability, solvency, and leverage that is risk involved in the company.
The terms and financial jargons are least understood by layman. The
project would try to solve the problem of understanding the financial
problem in easy and presentable form in better way to help the
shareholders for their decision making process.
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OBJECTIVES
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The study has been pursued to test the following hypothesis with
references to Tata Motors:
That proper management of working capital improves both
Liquidity and Profitability position of the firm.
During the period of observation 2013 2017, TATA MOTORS
LTD has shown a positive trend in the net profit, liquidity of the
company.
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THEORETICAL PERSPECTIVE
MEANING OF RATIO
RATIO ANALYSIS
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3. Comparison of the calculated ratios with ratios of the past period of the
firm.
4. Helpful in Forecasting.
7. Effective Control.
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CLASSIFICATION OF RATIOS
The ratios may be grouped in accordance with the purposes they serve of
different users of accounting information. On this basis, ratios are
classified as follows:
LIQUIDITY RATIO
LEVERAGE RATIO
ACTIVITY RATIO
PROFITABILITY RATIO
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LIQUIDITY RATIO
It refers to the ability of the firm to meet its current liabilities. The
liquidity ratio, therefore, are also called Short-term Solvency Ratio.
These ratios are used to assess the short-term financial position of the
concern. They indicate the firms ability to meet its current obligation out
of current resources.
Current Ratio
Current Ratio
This ratio explains the relationship between current assets and current
liabilities of a business.
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Quick Ratio
Quick ratio indicates whether the firm is in a position to pay its current
liabilities within a month or immediately.
Liquid Assets means those assets, which will yield cash very shortly.
LEVERAGE RATIO
This ratio discloses the firms ability to meet the interest costs regularly
and Long term indebtedness at maturity.
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Debt equity ratio is calculated for using second approach. This Ratio is
calculated to assess the ability of the firm to meet its long term liabilities.
Generally, debt equity ratio of is considered safe. If the debt equity ratio
is more than that, it shows a rather risky financial position from the long-
term point of view, as it indicates that more and more funds invested in
the business are provided by long-term lenders. The lower this ratio, the
better it is for long-term lenders because they are more secure in that
case. Lower than 2:1 debt equity ratio provides sufficient protection to
long-term lenders.
ACTIVITY RATIO
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This ratio indicates the relationship between the cost of goods during the
year and average stock kept during that year.
This ratio indicates whether stock has been used or not. It shows the
speed with which the stock is rotated into sales or the number of times the
stock is turned into sales during the year. Higher the ratio, the better it is,
since it indicates that stock is selling quickly. In a business where stock
turnover ratio is high, goods can be sold at a low margin of profit and
even than the profitability may be quite high.
This ratio indicates the relationship between credit sales and average
debtors during the year:
While calculating this ratio, provision for bad and doubtful debts is not
deducted from the debtors, so that it may not give a false impression that
debtors are collected quickly. This ratio indicates the speed with which
the amount is collected from debtors. The higher the ratio, the better it is,
since it indicates that amount from debtors is being collected more
quickly. The more quickly the debtors pay, the less the risk from bad-
debts, and so the lower the expenses of collection and increase in the
liquidity of the firm. By comparing the debtors turnover ratio of the
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current year with the previous year, it may be assessed whether the sales
policy of the management is efficient or not.
This ratio indicates the relationship between credit purchases and average
creditors during the year.
Note: - If the amount of credit purchase is not given in the question, the
ratio may be calculated on the bases of total purchase.
This ratio indicates the speed with which the amount is being paid to
creditors. The higher the ratio, the better it is, since it will indicate that
the creditors are being paid more quickly which increases the credit
worthiness of the firm.
This ratio reveals how efficiently the fixed assets are being utilized.
Fixed Assets Turnover Ratio = Cost of Goods Sold/ Net Fixed Assets
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This ratio reveals how efficiently working capital has been utilized in
making sales.
PROFITABILITY RATIO
This ratio shows the relationship between gross profit and sales.
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This ratio measures the margin of profit available on sales. The higher the
gross profit ratio, the better it is. No ideal standard is fixed for this ratio,
but the gross profit ratio should be adequate enough not only to cover the
operating expenses but also to provide for depreciation, interest on loans,
dividends and creation of reserves.
This ratio shows the relationship between net profit and sales. It may be
calculated by two methods:
This ratio measures the rate of net profit earned on sales. It helps in
determining the overall efficiency of the business operations. An increase
in the ratio over the previous year shows improvement in the overall
efficiency and profitability of the business.
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RESEARCH METHODOLOGY
RESEARCH
Primary data
Secondary data
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DATA COLLECTION
Secondary data comes from resources that have already been published.
You may have a running list of certain sources but there are so many
published items in the world, it can be hard to find the one thing that will
make a difference to your project. Collection of data from secondary
sources is a treasure hunt and we are skilled researchers with an eye for
diamonds. We have developed extensive lists of secondary sources of
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data collection and will utilize them for your project. Just because
something is listed as a secondary source for data collection doesnt mean
that its less important though.
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LIQUIDITY RATIO
Current Ratio
Current Ratio
2013 2014 2015 2016 2017
1.1
1.35
0.96 1.5
1.02
Interpretation
The Current Ratio for the financial year 2013 is 1.10, for the financial
year 2014 is 1.50, for the financial year 2015 is 1.02, for the financial
year 2016 is 0.96, for the financial year 2017 is 1.35.
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Quick Ratio
Quick Ratio
2013
2017 19%
26%
2014
20%
2016
18%
2015
17%
Interpretation
The Quick Ratio for the financial year 2013 is 1.01, for the financial year
2014 is 1.01, for the financial year 2015 is 0.87, for the financial year
2016 is 0.91, for the financial year 2017 is 1.33.
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LEVERAGE RATIO
15%
21%
2013
2014
17%
2015
2016
24% 2017
23%
Interpretation
The Debt Equity Ratio for the financial year 2013 is 0.97, for the
financial year 2014 is 1.11, for the financial year 2015 is 1.03, for the
financial year 2016 is 0.75, for the financial year 2017 is 0.69.
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PROFITABILITY RATIO
2013
2017 19%
27%
2014
21%
2016
19%
2015
14%
Interpretation
The Gross Profit Ratio for the financial year 2013 is 10.47, for the
financial year 2014 is 11.05, for the financial year 2015 is 7.59, for the
financial year 2016 is 9.96, for the financial year 2017 is 14.14.
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17%
30% 2013
2014
2015
20%
2016
2017
22%
11%
Interpretation
The Net Profit Ratio for the financial year 2013 is 5.64, for the financial
year 2014 is 6.48, for the financial year 2015 is 3.78, for the financial
year 2016 is 7.28, for the financial year 2017 is 9.82.
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2013
2017 15%
28%
2014
17%
2016
22% 2015
18%
Interpretation
The Return on Assets Ratio for the financial year 2013 is 82.12, for the
financial year 2014 is 93.81, for the financial year 2015 is 96.93, for the
financial year 2016 is 115.26, for the financial year 2017 is 147.95.
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CONCLUSION
2. Current Ratio of the firm increased in the year 2014. The highest figure
was 1.50 recorded in the year 2014.
5. There is flexibility in the gross profit ratio of the company. The highest
gross profit was 14.14 recorded in the year 2017.
6. There is a positive trend in net profit of the company. The highest Net
Profit Ratio was 9.82 recorded in the year 2017.
7. Return on asset ratio was highest 147.95 recorded in the year 2017.
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2. The company should increase fixed assets which raise the profitability
of the company.
3. The company should reduce the current liability for the smooth
working of the company.
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BIBLIOGRAPHY
Websites
www.tatamotors.com
www.moneycontrol.com
www.economictimes.indiatimes.com
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ANNEXURE
Sources Of Funds
Total Share Capital 643.78 643.78 638.07 634.75 637.71
Equity Share Capital 643.78 643.78 638.07 634.75 637.71
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 14,195.94 18,510.00 18,473.46 18,967.5119,351.40
Net worth 14,839.72 19,153.78 19,111.53 19,602.2619,989.11
Secured Loans 4,803.26 4,450.01 5,877.72 6,915.77 7,708.52
Unsecured Loans 15,277.71 10,065.52 8,390.97 4,095.86 6,929.67
Total Debt 20,080.97 14,515.53 14,268.69 11,011.6314,638.19
Total Liabilities 34,920.69 33,669.31 33,380.22 30,613.8934,627.30
Mar '17 Mar '16 Mar '15 Mar '14 Mar '13
Application Of Funds
Gross Block 27,973.79 26,130.82 25,190.73 23,676.4621,002.78
Less: Revaluation Reserves 22.87 22.87 23.31 23.75 24.19
Less: Accum. Depreciation 12,190.56 10,890.25 9,734.99 8,656.94 7,585.71
Net Block 15,760.36 15,217.70 15,432.43 14,995.7713,392.88
Capital Work in Progress 6,040.79 6,355.07 4,752.80 4,036.67 3,799.03
Investments 16,987.17 18,458.42 19,934.39 20,493.5522,624.21
Inventories 4,802.08 3,862.53 4,455.03 4,588.23 3,891.39
Sundry Debtors 1,114.48 1,216.70 1,818.04 2,708.32 2,602.88
Cash and Bank Balance 944.75 226.15 462.86 1,840.96 2,428.92
Total Current Assets 6,861.31 5,305.38 6,735.93 9,137.51 8,923.19
Loans and Advances 4,270.67 4,374.98 5,305.91 5,832.03 5,426.95
Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Total CA, Loans &
11,131.98 9,680.36 12,041.84 14,969.5414,350.14
Advances
Deferred Credit 0.00 0.00 0.00 0.00 0.00
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