FINDINGS:

We are discussing about mainly 7 kinds of ratio. All the ratios performs very well in last five
years that gives better profitability & liquidity position to the company.
1. The net profit of Ashok Leyland Limited is moderately satisfactory recently in the year
2009-10. Hence the profit decreases from the year 2007-08 of 6.7% to 5.84% during the
year 2009-10. But there is a fall in the profit rate to 3.17% during the year 2008-09. The
management efficiency is based on the net profit of the concern. The company should
concentrate in the operational efficiency in the forth coming years.
2. Normally, the Gross Profit Ratio should not remain the same from year to year. But in
Ashok Leyland Limited the gross profit increases from 17.01% during the year 2007-08
to 23.76% during the year 2008-09 showing a good sign, subsequently it increases to
53.60% almost double during the recent year 2009-10 which reflects the higher efficiency
of the production and trading operations of the concern.
3. The Fixed Assets Turnover Ratio indicated the extent of utilization of fixed assets.
During 2007-08 the company has utilized the assets in a better way than the recent years
2008-09 and 2009-10. The organization has not utilized the fixed assets effective so the
management should take necessary steps to utilize the fixed assets effectively.
4. The Current Ratio of the year 2009-10 is 1:22. Hence the ratio increased higher than the
ideal ratio 2:1. So the organization can meet out the current liabilities with the current
assets.
5. Debt Equity Ratio:
The company has a debt ratio of 0.04 which means the debt capacity has been almost
exhausted. It is necessary for the company to build up its equity base for this purpose it is
desirable to retain as much profit as possible.
6. Proprietary Ratio: The acceptable ratio is 1:3 the ratio of this company is below 50%
the extent of protection to creditors is to be alerted.
7. Capital Gearing Ratio: Capital Gearing Ratio shows the relationship between the two
groups of funds. In this organization the Capital Gearing ratio increases year by year. So
it indicates that the company is at a greater advantage by indicating that the funds bearing
fixed interest or fixed dividend exceeds the equity share-holder funds.
SUGGESTIONS AND CONCLUSIONS:
From the detail findings, it is suggested and concluded that the company should take
necessary steps to increase the net profit ratio, gross profit ratio by finding out the causes of a
falling gross margin. To improve the fixed assets turnover ratio the available assets should be
utilized to the maximum. The current ratio indicates the sound solvency position of the company.
The Debt Equity Ratio is not satisfactory. The organization may concentrate on rising off long-
term funds to expand their business. The capital gearing ratio is necessary to maintain
satisfactory of 1:1 it is also understood that the company is depend upon outside liabilities. From
the above details it is finally concluded that the overall financial position is satisfactory for this
company but by taking in to consideration the suggestions given about Ashok Leyland limited
can strengthen its financial position.
BIBLIOGRAPHY:

BOOKS:
• PRINCIPLES OF MANAGEMENT ACCOUNTING

-by Dr. S. N .Mageshwari

• MANAGEMENT ACCOUNTING

-by T. S. Reddy and Y. Hariprasad Reddy

• RESEARCH METHODOLOGY

- by C. R. Kothari

WEBSITES:
 www.ashokleyland.com