Contents

Vision............................................................................................................................................................. 3
Mission .......................................................................................................................................................... 3
Quality Policy ................................................................................................................................................ 4
Analysis of Financial Statements................................................................................................................... 5
Analysis of the financial statement Balance sheet ....................................................................................... 6
Common size analysis ................................................................................................................................... 7
Total assets in 2013,2012,2011 ................................................................................................................ 7
Current assets in 2013, 2012, 2011 .............................................................................................................. 8
Fixed assets 2013,2012,2011 ........................................................................................................................ 9
Current liabilities in 2013, 2012, 2011: ....................................................................................................... 10
Trend Analysis ............................................................................................................................................. 11
Non-current liabilities in 2013, 2012, 2011: ........................................................................................... 11
Fixed assets: ................................................................................................................................................ 13
Current liability ........................................................................................................................................... 14
Long term liabilities:: .................................................................................................................................. 15
Performing the trend analysis can provide the Honda Atlas with the following benefits: ........................ 16
 Identify tends and warning ................................................................................................................. 16
 Determine where the industry is going .............................................................................................. 16
 Capitalize on new opportunities in the near horizon ......................................................................... 16
RATIO ANALYSIS .......................................................................................................................................... 17
Definition ................................................................................................................................................ 17
LIQUIDITY RATIOS ....................................................................................................................................... 18
Interpretation: ........................................................................................................................................ 18
i) Net Working Capital ................................................................................................................................. 18
ii)Current Ratio............................................................................................................................................ 19
Definition: ............................................................................................................................................... 19
Interpretation: ............................................................................................................................................ 20
iii) Quick Ratio ............................................................................................................................................. 20
Definition ................................................................................................................................................ 20
Interpretation: ............................................................................................................................................ 21
Definition ................................................................................................................................................ 21
i) Receivable Turnover ............................................................................................................................... 22

1
Interpretation: ............................................................................................................................................ 23
ii) Payable Turnover .................................................................................................................................... 23
Average Payment Period ............................................................................................................................ 24
Interpretation: ............................................................................................................................................ 25
iii ) Inventory Turnover ............................................................................................................................... 25
Interpretation: ............................................................................................................................................ 26
Average Inventory ....................................................................................................................................... 26
iv) Total Asset Turnover .............................................................................................................................. 27
Interpretation: ............................................................................................................................................ 28
3. DEBT/LEVERAGE RATIO ........................................................................................................................... 29
I) Debt Equity Ratio ................................................................................................................................. 29
ii) Debt Ratio ............................................................................................................................................... 30
iii) Times Interest Earned ............................................................................................................................ 31
4. PROFITABILTY RATIO ............................................................................................................................... 32
i) Gross Profit Margin .............................................................................................................................. 33
ii) Operating Profit Margin ...................................................................................................................... 34
iii) Net Profit Margin ............................................................................................................................... 35
iv) Earnings per share.............................................................................................................................. 36
v) Return on Asset ................................................................................................................................... 37
Operating results: ....................................................................................................................................... 39
Dividends and appropriations: ................................................................................................................ 39
Competitors: ............................................................................................................................................... 40
Conclusion ................................................................................................................................................... 40

2
Vision

Market leader in the motorcycle industry, emerging as a global competitive Centre of production
and exports.

Mission

A dynamic growth oriented company through market leadership, excellence in quality and service
and maximizing export, ensuring attractive returns to equity holders, rewarding associates
according to their ability and performance, fostering a network of engineers and researchers
ensuing unique contribution to the development of the industry, customer satisfaction and
protection of the environment by producing emission friendly green products as a good corporate
citizen fulfilling its social responsibilities in all respects.

3
Quality Policy

 Commitment to provide high quality motorcycles & parts

 Right work in first attempt and on time

 Maintain and continuously improve quality

 Training of manpower and acquisition of latest technology

 Safe, clean and healthy environment

 Market leadership and prosperity for all

4
Analysis of Financial Statements

Common size analysis

Trend analysis
Ratio analysis
Balance sheet
Income Statement
As on Dec, 2011, 2012, 2013

5
 Analysis of the financial statement Balance sheet
Particulars 2013 2012 2011
Assets
Non-current assets
Property plant and equipment 4,421,744 3941610 3,259,193
Intangible assets 5,555 6419 7,137
Long term investment - - -
Long term loan and advancement 25,583 20420 22,403
Long term deposit and payment 8,399 15728 10,765
Total non-current assets 4,461,281 3984177 3,299,498
Current Assets
Store space and loss tools 390,250 348639 325,891
Stock in trade 2,171,536 2161328 2,003,029
Trade debts 514,742 598265 401,435
Loan and advancement 33,253 33152 33,525
Trade deposit 47,722 44832 36,936
Short term investment 1,635,183 1460580 1,338,474
Accrued interest 11,603 4348 8,517
Other receivable 6,302 15338 15,075
Bank balance 2,739,988 160604 68,050
Taxation net 2,578 2149154 2,090,800
Total current assets 755,3157 6976240 6,321,732
Total assets 12,014,438 10960417 9,621,230

Equity and liability

Share capital and reserve
Share capital 827253 719350 625522
Reserve 5732907 4700584 3996882
Total share capital and revenue 8560160 5419934 4622414
Noncurrent liabilities
Long term borrowing - - -
Deferred liabilities 866975 730315 649354
Total noncurrent liabilities 866975 730315 649354
Current Liabilities
Trade and other payable 4587303 4810168 4255584
Accrued markup /interest - - 6378
Short term finances - - -
Current portion long term liabilities - - 87500
Provision for taxation - - -
Total current liabilities 4587303 4810168 4349462
Total equity and liabilities 12014438 10960417 9621230

6
Common size analysis

Total assets in 2013,2012,2011

Total current asset=current 755,3157/ 6976240/10960417 6,321,732/9,621,

assets/total assetsx100 12,014,438 x 230 x 100 =
x 100=63.64%
100=62.86% 65.70 %

Total fixed assets 4,461,281/12,014,43 3984177/10960417 3,299,498/9,621,

8 x 100=37.13% x 100 =36.35% 230 x
100=34.29%

Total current liability 2013,2012 ,2011

Total Current 4587303/120 4810168/10960417 x 4349462/9621230 x 100

liabilities=current 14438 x 100 100 = 43.88% = 45.2 %
liabilities/total = 38.18 %
liabilitiesx100
Total long term liabilities 866975/1201 730315/10960417x10 649354/9621230x100=6.
4438 x 100= 0 =6.6% 75 %
7.2%
Total stock holder’s 8560160/ 5419934/ 10960417 x 4622414/9621230 x 100
equity 12014438 x 100 = 49.45 % = 48.05
100 =
71.25%

7
 Current assets in 2013, 2012, 2011

Current assets 2013 2012 2011

Store space and 390,250/12,014,438 x 348639/10960417 x 325,891/9,621,230 x

loss tools 100=3.24 100=3.18% 100=3.38%

Stock in trade 2,171,536/12,014,438 x 2161328/10960417 2,003,029/9,621,230 x

100=18.07% x 100=19.71% 100=20.81%

Trade debts 514,742/12,014,438 x 598265/10960417 x 401,435/9,621,230 x

100=4.28 100=5.45% 100=4.17%

Loan and 33,253/12,014,438 x 33152/10960417 x 33,525/9,621,230 x

advancement 100=0.27% 100=0.30% 100=0.34%

Trade deposit 47,722/12,014,438 x 44832/10960417 x 36,936/9,621,230 x

and deposit 100=0.39% 100=0.40% 100=0.38%

Short term 1,635,183/12,014,438 x 1460580/10960417 1,338,474/9,621,230 x

investment 100= 13.61% x 100=1.33% 100=13.91%

Accrued 11,603/12,014,438 x 4348/10960417 x 8,517/9,621,230 x

interest 100=0.09% 100=0.03% 100=0.08%

Other 6,302/12,014,438 x 15338/10960417 x 15,075/9,621,230 x

receivable 100= 0.05% 100=0.13% 100=0.15%

Bank balance 2,739,988/12,014,438 x 160604/10960417 x 68,050/9,621,230 x

100=22.80% 100=1.46% 100=0.70%

Taxation net 2,578/12,014,438 x 2149154/10960417 2,090,800/9,621,230 x

100=0.02% x 100=19.60% 100=21.73%

8
 Fixed assets 2013,2012,2011

Fixed assets 2013 2012 2011

Property plant and 4,421,744/4,461,281x 3941610/39841 3,259,193/3,299,4

equipment 100=99.11& 77 98 x100=98.7%
x100=98.93%

Intangible assets 5,555/4,461,281 6419/3984177 7,137/3,299,498

x100=0.12% x100=0.16 x100=0.21%

Long term - - -
investment

Long term loan and 25,583/4,461,281 20420/3984177 22,403/3,299,498

advancement x100=0.57% x100=0.51% x100=0.67

Long term deposit 8,399/4,461,281 15728/3984177 10,765/3,299,498

and payment x100=0.18% x100=0.39 x100=0.32%

9
 Current liabilities in 2013, 2012, 2011:

Current 2013 2012 2011

liabilities
Trade and 4587303/4587303 x 4810168/4810168 x 4255584/4349462 x
other payable 100 =100% 100= 100 % 100 = 97.84%

Accrued - - 6378/4349462 x 100

markup = 0.14%
/internet

Short term - - -
finances

Current - - 87500/4349462x 100

portion long =2.01%
term
liabilities

Provision for - - -
taxation

10
Common analysis has its own significance and is no doubt beneficial in evaluating the overall
trend/tendency of various accounts but as we know everything has some pros and cons.

Vertical/Common size statements came from the problems in comparing the financial statements
of firms that differ in size. It covers a major drawback of trend analysis is that it does not take into
account the size of business while comparing the trends of income statements and balance sheets
of one company with another. The common size analysis was developed to remove this flaw.

Trend Analysis
Non-current liabilities in 2013, 2012, 2011:
Noncurrent 2013 2012 2011
liabilities

Long term borrowing - - -

Differed liabilities 866975/866975x10 730315/730315x100=100 649354/649354x100=100

0=100% % %

Current assets 2013 2012 2011

Stores, pares and loose 390250/325891 348639/325891 325891/325891*100=

tools 119% =106% 100%

Stock-in-trade 2171536/2003029 2161328/2003029 2003029/2003029*100

108% 107.8% 100%

Trade-debts 514742/41435= 598265/401435= 401435/401435=

128% 149% 100%

11
 Loans and 33253/33525 33152/33525 33525/33525
Advancement 99% 98.8% 100%

Trade deposit 47722/36936 44832/36936 36936/36936

129% 121% 100%

Short term investments 1635183/133844 1460580/1338474 1338474/1338474

1221% 109% 100%

accrued interest 11603/8517 4348/8517 8517/8517

136% 51% 100%

other receivables 6302/15075 15338/15075 15075/15075

41.8% 101% 100%
bank balance 2739988/68050 160604/68050 68050/68050
4000% 236% 100%

taxation net 2578/2090800 2149154/2090800 2090800/2090800

0.123% 102% 100%

total current asset 7553157/6321732 6976240/6321732 6321732/6321732

119% 110% 100%

total assets 12014438/962130=1 10960417/9621230 9621230/9621230

24.8% 113% 100%

12
 Fixed assets:
Fixed assets 2013 2012 2011

Property, plant and 4421744/3259193 3941610/3259193 3259193/3259193

equipment 135% 121% 100%

Intangible assets 5555/7137 6419/7137 7137/7137

78% 90% 100%

Long term investment - - -

Long term loans and 25583/22403 20420/22403 22403/22403

advancement 114% 91% 100%

long term deposit and 8399/10765 15728/10765 10765/10765

payment 78% 146% 100%

total fixed assets 4461281/3299498 3984177/3299498 3299498/3299498

135% 120% 100%

13
 Current liability
Current liabilities 2013 2012 2011

Trade and other 4587303/4255584 4810168/4255584 4255584/4255584

payable 107% 113% 100%

Accrued - - 6378/6378
markup/interest 100%

Short term finances - - -

Current portion of - - 87500/87500

non-current liabilities 100%

Provision for taxation - - -

total current liabilities 4587303/4349462 4810168/4349462 4349462/4349462

105% 110% 100%

14
 Long term liabilities::
Long term 2013 2012 2011
liabilities

deferred liabilities 866975/649354 730315/649354 649354/649354

133% 112% 100%

total non-current 866975/649354 730315/649354 649354/649354

liabilities 133% 112% 100%

liabilities 133% 112% 100%

15
Trend analysis is an aspect of technical financial analysis whereby one tries to predict the future

movement of a particular account on the basis of the past data. Trend analysis is based on the idea

that what has usually happened in the past can give an idea of what will happen in the future. The

term "trend analysis" refers to the concept of collecting information and attempting to spot a

pattern, or trend, in the information. Analysts often attempt to determine if trends exist for a firm's

earnings per share.

Performing the trend analysis can provide the Honda Atlas with the following benefits:

 Identify tends and warning

 Determine where the industry is going

 Capitalize on new opportunities in the near horizon

16
 RATIO ANALYSIS

A financial ratio helps investors in analysis of financial health of the company and forms the basis

on which investments are planned. It is a tool used by individuals to conduct a quantitative analysis

of information in a company's financial statements.

Definition

Ratio analysis involves methods of calculating and interpreting financial ratios to analyze and

monitor the firm’s performance.

Generally ratios are divided into four areas that provide different kinds of information. These are:

 Liquidity ratios

 Activity ratios

 Leverage ratios

 Profitability ratios

17
LIQUIDITY RATIOS

The liquidity of a firm is measured by its ability to satisfy short term obligations as they come due.

Liquidity refers to the solvency of the firm’s overall financial position i.e. the ease with which it
can pay its bills. This is done by comparing a company's most liquid assets (or, those that can be
easily converted to cash), to its short-term liabilities. The major liquidity ratios are:

 Net working capital

 Current ratios
 Quick ratios

Interpretation:

In 2013,2012,2011 the firm has excess amount of current Assets of Rs 12,014,438 as compared
to current liabilities. Results are showing that the firm’s liquidity is not good. Although the firm is

able to pay its obligations yet the years show that company is in good position.

i) Net Working Capital

Net working capital refers to the amount by which firm’s current assets exceed its current
liabilities. It is an absolute measure of the firm’s liquidity. It can be either positive or negative. It
is positive when the current assets of the firm are greater than its current liabilities and vice versa.

18
ii)Current Ratio

The current ratio is a popular financial ratio used to test a company's liquidity by deriving the
proportion of current assets available to cover current liabilities.

The concept behind this ratio is to ascertain whether a company's short-term assets (cash,
cash equivalents, marketable securities, receivables and inventory) are readily available to pay
off its short-term liabilities (notes payable, current portion of term debt, payables, accrued
expenses and taxes). The current ratio compares all the Current Assets of a company to all the
Current Liabilities.

Current Ratio:

Current Assets
Current Liabilities

Definition:

It is a measure of liquidity calculated by dividing the firm’s current assets to current assets to
current liabilities.

Years Honda atlas nil

2011 6321732/4349462=1.45 nil

2012 6976240/4810168=1.45 nil

2013 7553157/4587303=1.64 nil

19
Interpretation:

In 2013 the firm has Rs. 1.64 of current asset for every Re. 1 of current liability which increases
to Rs. 1.45 in 2012 and then the same in 2012. Since the ideal ratio is 2:1, so results show that the
firm’s liquidity position is good. Current Ratio (CR) of 2013 is a little bit better than that of
remaining two years but on comparing with standard ratio.

iii) Quick Ratio

The quick assets ratio or the acid test ratio - is a liquidity indicator that further refines the current
ratio by measuring the amount of the most liquid current assets that are available to cover current
liabilities. The quick ratio is more conservative than the current ratio because it excludes inventory
and other current assets, which are more difficult to turn into cash. Therefore, a higher ratio means
a more liquid current position.
Here calculating the quick assets of the firm we have accumulated cash, trade debts, and
receivables

Definition
A measure of liquidity calculated by dividing firm’s quick assets by its current liabilities.

Current Assets – Inventories

Current Liabilities

Years Honda atlas

2011 0.9

2012 0.9

2013 1.1

20
Interpretation:
Likewise current ratios, the results of Acid Test Ratios are also showing fluctuations over the years
2011 – 2013. After excluding inventories, 2011’s Quick ratio is showing 0.9 liquidity, 2013’s ratio
is showing 1.1 liquidity whereas the 2012 year’s liquidity is 0.48. Since the ideal ratio is 1:1, so
results show that 2013 is acceptable while the other two are not. It is obvious from the analysis
that the liquidity of the corporate is not in good position in 2011 & 2012.

2. ACTIVITY RATIOS
With regard to current accounts, measures of liquidity are inadequate because they consider
current assets and current liabilities as a whole but ignore the composition of the former and the
latter. It is therefore imperative to look beyond measure of overall liquidity and to assess the
activity of specific current accounts.

Definition

A ratio used in management accounting consisting of the production achieved for an accounting
period divided by the production level regarded as achievable for that period.

There are a number of ratios available for measuring the activity of most important current
accounts. These are:
 Receivable Turnover
 Inventory Turnover
 Payable Turnover
 Total Assets Turnover

21
 i) Receivable Turnover

It not only shows the no of times the company is converting its receivables into cash. But is also
a measure of how well the company collects sales on credit from its customers, just as Average
Collection Period measures this in days.

The Accounts receivables turnover measures the number of times the receivables were collected
during the year

 Average collection period

It is the approximate amount of time that it takes for a business to receive payments owed, in
terms of receivables, from its customers and clients.

Net Annual Sales on Credit

Average Receivables
years Honda Atlas

2011 81.o Times

2012 63.5 Times

2013 82.2 Times

22
Interpretation:
The RTO of 2011 shows that the firm has converted 81.0 times its receivables into cash; in 2012,
63.5 times whereas in 2013, 82.2 times the firm has received its receivables from its borrowers.
Since the higher value of RTO shows the good position of the firm, so in 2013, the firm’s
position was acceptable, comparing to the other two years.

ii) Payable Turnover

The average duration an item remains in accounts payable, equal to total purchases divided by
average accounts payable. A change over time in the accounts payable turnover means that a
company is paying off their suppliers either faster or slower than they were previously

DEFINITION

The accounts payable turnover ratio shows the number of times that accounts payable are paid
throughout the year.

23
Average Payment Period
The average amount of time needed to pay accounts payable is known as Payable Turnover.
Payable Turnover:

Net Annual Credit Purchases

Average Accounts Payable

Years Honda Atlas

2011 7.1

2012 7.3

2013 8.5

24
Interpretation:
PTO of the firm in 2011 was 7.1 times. In 2012, the firm converted its payables to cash 7.3 times
and the firm paid its payables in 2013, 8.5 times. As we discussed that the higher value of RTO is
best for the firm, so being opposite to RTO, the firm should have as lowest value as possible to
pay its payables. While making comparison among the three years, the year 2013 is the best in
which the firm had to pay its payables 8.05 times

iii ) Inventory Turnover

Inventory turnover reflects how frequently a company flushes inventory from its system within a
given financial reporting period. The measure can be computed for any type of inventory—
materials and supplies used in manufacturing or service delivery, work in progress (WIP), finished
products, or all inventory combined.

Inventory Turnover measures the activity or liquidity of the firm’s inventory. This ratio describes
“how many times” is converting its inventories to cash.

Cost of Goods Sold

Average inventory

Years Honda Atlas

2011 12.09 times

2012 14.04 times

2013 15.1 times

25
Interpretation:

Computed values show that in 2011 the firm has converted its inventory to COGS 12.09 times

which has increased to 14.04 times in 2012 and finally in 2013 the firm’s ITO is 15.1. Since its

increasing value is good for the firm so among the three years, the year 2013 is the best year in

which the firm has converted its inventories to COGS 15.1 times per annum.

Average Inventory

Average age of inventory is another way of looking at inventory turnover. This ratio takes

inventory turnover ratio and divides it into 360 days. It refers to the average number of days’

sales in inventory.

26
iv) Total Asset Turnover
The Total Asset Turnover is similar to Fixed Asset Turnover, which both measures a company's
effectiveness in generating sales revenue from investments back into the company. Total Asset
Turnover evaluates the efficiency of managing all of the company's assets. The higher the
number the better it is. It also indicates pricing strategy. Total asset turnover is an activity ratio
that describes how efficiently the firm is using its fixed assets to generate sales.

Total Assets Turnover:

Sales
Total assets

Years Honda Atlas

2011 3.4

2012 3.5

2013 3.5

27
Interpretation:
The firm’s Total Assets Turn Over in 2011 was 3.4. In 2012, the firm’s efficiency in utilizing the

assets to generate sales was 3.5 and that in 2013 was 3.5. Since higher the value of TATO is

good for the firm, so among the three years, the year 2013 was the most appropriate year in

which the firm has efficiently utilized its assets for the sake of generating sales revenues.

Fixed Assets Turnover:

Sales

Net fixed assets

Years Honda Atlas

2011 10

2012 9.6

2013 9.6

Interpretation:

The firm’s fixed Assets Turn Over in 2011 was 10. In 2012, the firm’s efficiency in utilizing the

assets to generate sales was 9.6 and that in 2013 was 9.6. Since higher the value of fixed asset

turnover is good for the firm, so among the three years, the year 2013 was the most appropriate

year in which the firm has efficiently utilized its assets for the sake of generating sales revenues

28
3. DEBT/LEVERAGE RATIO

The debt ratio gives users a quick measure of the amount of debt that the company has on its
balance sheets compared to its assets. The debt ratio compares a company's total debt to its total
assets, which is used to gain a general idea as to the amount of leverage being used by a
company. Debt ratios are:

 Debt ratios
 Debt equity ratios
 Capitalization ratios
 Times interest earned

I) Debt Equity Ratio

This ratio tells us to what extent the firm is relying on its liabilities and to what extent does it rely
on its equity.

The Debt to Equity Ratio compares the company's rupee amount owed to creditors (Total
Liabilities) to the rupee amount supplied by investors of the company (Total Stockholder's
Equity).

Long term debt

Stockholders’ equity
Years Honda atlas

2011 0.02%

2012 -

2013 -

Interpretation:

Results show that in 2011, total liabilities were 2% of Total Assets, remaining was nil. I.
Computed values of Debt Ratio over the time period (2011 ) show that the firm has relied more
on debt in 2011.

29
ii) Debt Ratio

This tells how much the company relies on debt to finance assets. When calculating this ratio, it is
conventional to consider both current and non-current debt and assets. In general, the lower the
company's reliance on debt for asset formation, the less risky the company is since excessive debt
can lead to a very heavy interest and principal repayment burden.

It is a ratio that indicates what proportion of debt a company has relative to its assets. The measure
gives an idea to the leverage of the company along with the potential risks the company faces in
terms of its debt-load.

Total Liabilities
Total Assets
Years Honda Atlas
2011 1.1%
2012 1.0%
2013 0.83%

Interpretation:
Results show that in 2011, total liabilities were 1.1% of Total Assets, remaining 98.9% was the
Stockholders’ equity. In 2012, total liabilities were 1.0 % while stockholders’ equity was 99%.
Computed values of Debt Ratio over the time period (2011 – 2012) show that the firm has relied
more on debt in 2010.

30
iii) Times Interest Earned
The times interest earned ratio indicates the extent of which earnings are available to meet

interest payments or it indicates the company’s ability meet its debt obligations.

Operating Profits

Interest Expense

Years Honda Atlas

2011 25577

2012 427.9

2013 18.4

Interpretation:

Above calculated figures show that in 2011, the company’s interest coverage was (25577), which,

in 2012, was 427.9 and in was 18.4., so it can be analyzed that the company has a good margin of

safety as it is, ideally, able to pay its finance expenses. Also, the 2011s outcome shows the much

poor performance of the firm.

This measures the firm’s ability to make contractual interest payments. It is calculated by taking a

company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable

on bonds and other contractual debt. If one is not able to pay off these payments, then the company

is technically declared insolvent.

31
4. PROFITABILTY RATIO

Like other ratios, profitability ratios are also considered as a key to understanding financial

statements. To understand what is meant by a profitability ratio it is imperative to be familiar

with the term profitability.

Profitability ratios refer to a class of financial ratios that are used to assess a business's ability to

generate earnings as compared to its expenses and other relevant costs incurred during a specific

period of time. Profitability ratios are:

 Gross profit margin

 Net profit margin

 Operating profit

 Return on assets

 Return on equity

 Earning price ratio

 Price per earning

32
i) Gross Profit Margin

Gross Profit Margin assess a firm's financial health by revealing the proportion of money left over

from revenues after accounting for the cost of goods sold. The Gross Profit Margin measures the

Gross Profit in relation to the Net Sales.

The gross profit margin serves as the source for paying additional expenses and future savings. It

is also known as "gross margin".

Gross Profit

Net Sales

Years Honda Atlas

2011 7.5%

2012 7.3%

2013 8.7%

Interpretation:

Results show that in 2011, the COGS were very large enough to generate no gross profit and thus

the r. In the next year, the company has decreased its gross profit to a satisfactory level as compared

to that in 2012. Finally, the percentage of sales after deducting the cost of goods sold in 2013 is

8.7%. Since, higher the value of ratio gives the better condition of company’s profitability so in

making comparison over the above three years’ time period, the company is most profitable in

2013.

33
ii) Operating Profit Margin

Moving down the income statement, analysts calculate the profits that remain after the firm has

paid all of its non-financial expenses. These profits are known as operating profits.

The operating profit margin measures the earnings before interest and taxes in relation to the net

sales.

Operating Profits

Net Sales

Years Honda Atlas

2011 5.2%

2012 4.3%

2013 5.2%

Interpretation:

Since the COGS have a greater value in 2011 so previously the Gross Profit and now the Operating

Profit is in positive and thus the margin is also in positive. In 2012, the company’s EBIT is 4.3%

of sales which is 5.2% in 2013. Thus, comparing on the basis of operating income, the company’s

best year is 2011 and 2013.

34
iii) Net Profit Margin

The net profit margin describes that how much profit a company makes for every Re.1 it generates

in revenue. It can be defined in the following way. The net profit margin relates net income to

sales. It is calculated by dividing the firm’s net income or income/earnings after tax by the sales.

Net Profit after Tax

Net Sales

Years Honda Atlas

2011 3.1%

2012 3.2%

2013 3.8%

Interpretation:

Computed results are not same trend as seen in the previous two ratios. Due to high COGS, the

company’s earnings are 3.1% in the year 2011. The company’s net profit increases to 1 % in the

next year of 2012 which then in 2013 is 3.8%. Since the larger value of these ratios are good for

the company so the best year in which the corporate has the maximum earnings is 2013 but still

it is not a satisfactory earning, the company must improve its profitability position by reducing its

costs

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iv) Earnings per share

Earnings per share serve as an indicator of a company's profitability. Earnings per share are

generally considered to be the single most important variable in determining a share's price. The

portion of a company's profit allocated to each outstanding share of common stock

Earnings available for Common Stock

No. of Shares for Common Stock

Years Honda Atlas

2011 RS.19.44

2012 RS. 16.74

2013 RS.16.03

Interpretation:

EPS is one of the market ratios, which show earnings against a share/stock. In 2011, the

company has no earnings per share for its stockholder since the value is positive. In 2012, the

EPS is 16.74 whereas in the year 2013, the company has Rs 16.03 for every one share. Since,

this ratio affects the investor’s decisions that whether to purchase the shares or not, so this ratio

must have the highest positive value, and thus, the computations over the period (2011)

demonstrate that the year 2011 has the highest positive value for shareholders against each stock
36
v) Return on Asset

Net Profit after Tax

Total Assets

Years Honda atlas

2011 10.4%

2012 11.o%

2013 13.4%

Interpretation:

Above computed results demonstrate that in 2011 the company has positive return over its

available assets. In 2012, the ROI is 11.0% whereas in 2013, the company has generated profit of

13.4% against each Re. of asset investment. The value of this ratio must be higher for a company

and here in 2013 the value of this ratio is quite higher as compared to the remaining two years but

as a whole, it can be seen that 13.4% is not much enough. The corporate must try to plan in such

a way so as to enhance is ROA.

37
Particulars 2013 2012 2011

Profitability Ratios
Gross profit margin 8.7 7.3 7.5
Profit before tax margin 5.2 4.3 4.3
Net profit margin 3.8 3.2 3.1
Return on capital employed 36.9 32.3 32.2
Return on equity - before tax 33.7 29.9 30.5
Return on equity - after tax 24.5 22.2 21.7
Return on assets 13.4 11.0 10.4
EBITDA Rs. In 2831.9 2122.6 1977.3
million
EBITDA Margin 6.7 5.6 6.1
Equity Ratios
Cash dividend per share (declared) Rs 7.5 6.5 6.5
Stock dividend per share(bonus shares declared for the 2.5 1.5 1.5
year
Bonus shares declares for the year No in 20681 10790 9383
‘000
EPS Rs. 19.44 16.74 16.03
Price earnings ratio times 9.9 8.5 8.8
Market price per share as at year end rs 191.50 142.2 141.8
Market price per share for the year
-Maximum price rs 192 160 172.5
-Minimum price rs 114 108 92
Breakup value per share rs 79.3 75.3 73.9
Dividend yield % 5.2 5.6 5.6
Dividend cover times 1.9 2.1 2.0
Dividend payout % 51.5 47.8 49.9
WACC % - - 14.0
Cost of equity % 10.1 11.8 11.3
Efficiency ratios
Assets turnover times 3.5 3.5 3.4
Fixed assets turnover times 9.6 9.6 10
Inventory turnover times 15.1 14.04 12.9
Debtors turnover times 82.2 63.5 81.0
Creditors turnover times 8.5 7.3 7.1
Capital employed turnover times 6.5 7.0 7.0
Operating cycle
Period of inventory holding days 24 26 28
Period of collection from debtors days 4 6 5
Period of payments to creditors days (44) (50) (51)

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 Operating cycle days (16) (18) (18)
Liquidity Leverage ratios
Current ratio Times 1.6 1.5 1.5
Quick ratio Times 1.1 0.9 0.9
Debt to equity/ Financial leverage ratio Times - - 0.02
Total liabilities to equity Times 0.83 1.0 1.1
Interest cover Times 2577 427.9 18.4
Operating leverage ratio % 3172 52.8 98.6
Cash to current liabilities Times 0.6 0.4 0.5
Cash flow from operations to sales % 5.2 4.5 6.6

Operating results:
The operating results of the company for the year ended March 31, 2013, are summarized as
follows:
Year ended March 31 2013 Year ended March 31 2012
Profit before taxation 2207557 1620001
Taxation
Current year 501853 501853
Adjustment of prior years (22390) (29052)
Deferred 120290 56412
599753 415892
Profit after taxation 1607804 1204109

Dividends and appropriations:

The director have recommended a final cash dividend of Rs. 7.5 (2102:RS6.5) per share along
with a 25 %( 2012:15%) bonus issue. Accordingly following appropriation have been made:

Year ended March 31 2013 Year ended March 31 2012

Profit available for 1620789 1218466
appropriation
Appropriation
Transfer to general reserve 630000 630000
Cash dividend 65 %( 2012:65%) 620440 467578
Bonus shares 25 %( 2012:15%) 206813 107903
1457253 1205481
Un-appropriated carried 163536 12985
forward

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Competitors:

There is no such a big competitor which is listed on stock exchange. Other main competitors are

metro, road prince, united but these are private limited companies. We went to all of these

companies but they rejected our request for disclosing their statements.so we are unable to do

competitors analysis.

Conclusion

From the three years’ analysis of the company Honda Atlas it has been analyzed that Honda Ltd

is going in profit from every aspect. In the coming years, Honda Atlas need to take steps to improve

its performance then, it can be said that the company will soon achieve its goal. Although it has

born various losses in the year 2011, yet it has improved a lot in the next year 2012. The year 2013

is the best year for Honda Atlas from every aspect. But it has declined its performance in the next

year 2012 as compared to 2011. So, Honda also must try to keep increasing its profits as well as

returns to shareholders’ so as to get a position in the market.

40