ACCOUNTING

ASSIGNMENT

COMPANY NAME :- BAJAJ AUTO

1. COMPANY LIFECYCLE STAGE

2. OPERATING CASH FLOWS
3. ACCRUALS MANAGEMENT
4. REAL EARNINGS MANAGEMENT

NAME:- NAND BHUSHAN

ROLL NUMBER:- 31NMP35
 COMPANY LIFECYCLE STAGE
• The debt/equity ratio for FY2016-17 is not meaningful as
there is no long term debt capital on the Company’s
balance sheet.
• Dividend per share (DPS) to earnings per share (EPS) trend
is plotted below for 5 years to FY2016-17

DPS/EPS

51%
45%
43% 42%
41%

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

 COMPANY LIFECYCLE STAGE
• The PE ratio on 31st March 2017 was 19.91 as against
17.14.
• In FY2017, Bajaj Auto sold over 2 million motorcycles in
India, which was 5.4% higher than in the previous year.
• Asset turnover ratio is 1.48 for FY 2016-17 compared to
1.96 in the previous year.
• Inventory & investment turnover both are 31.70 compared
with 33.35 in the previous years.
• Return on equity is 25.26% for FY 2016-17 compared to
32.80% & 27.72% in preceding years
• From above ratio trends, it seems that the company is a
mature company with moderate profits.
 OPERATING CASH FLOWS
• Cash realization ratio stood at .872 (Cash generated from
operations/Net Income =₹3339.2Cr/₹3827.56Cr) compared
with 1.002 for previous year.
• Cash realization ratio slightly less than 1 signals low earnings
quality.
• Days sales outstanding (DSO) is 16.27 days compared to
11.83 days for previous year
• Days inventory outstanding(DIO) is 20 days compared to
19.12 days for previous year.
• Days payable outstanding (DPO) is 46.23 days compared to
40.61 days for previous year.
• Cash conversion cycle (CCC = DIO + DSO – DPO)has
improved to -9.9 days compared to -9.6 days for previous
year on account of increased DPO.
 ACCRUALS MANAGEMENT
• Depreciation & amortization expenses were 1.44% of
revenues from operations compared to 1.38% for previous
year.
• Provision for Warranty claims during the year were 20.99 Cr
compared to 25.30 Cr for previous year.
• Retirement/Employee benefits stood at 4.7% of revenues
compared to 4.1% for previous year.
• Provision for doubtful debts stood at ₹4,27 Cr compared to
₹3.33 Cr for previous year.
• Bad debts written off during the year were ₹0.74 Cr. As
compared to 0.11 Cr. debts in the previous year.
• Accruals reflect moderate increase in provisioning in 2017
as compared to 2016.
 REAL EARNINGS MANAGEMENT
• Advertising and publicity expenses were 1.8% of revenues
from operations compared to 2.0% for previous year.
• Research & development expenses were 1.62% of sales as
compared to 1.43% for previous year.
• Closing inventory of finished goods & work-in progress is
increased by ₹43.68 Cr (10 % change).
• Compared to revenues the earnings management levers
reflect a slightly different trend on year to year basis.
Management is looking forward to develop new technology
in order to increase sales.