A

PROJECT REPORT
ON
“Financial Analysis of YAMAHA MOTOR Pvt. Ltd.”
Submitted to

Gujarat Technological University

IN PARTIAL FULFILLMENT OF THE

SUMMER INTERNSHIP PROGRAM (SIP)

UNDER THE GUIDANCE OF

(Channa Joshi)
(Assistant Professor)
GROW MORE FACULTY OF MANAGEMENT

Submitted by

Maherbanali Masi
Enrollment No.: [157130592025]

-------------------------------------------------------------------------------------------------------
GROW MORE FACULTY OF MANAGEMENT
MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmadabad
June-July, 2016
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Batch : 2016-18
Company Certificate

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 Preface

In any organization, the two important financial statements are the Balance Sheet and Profit &
Loss Account of the business. Balance Sheet is a statement of financial position of an enterprise
at a particular point of time. Profit & Loss account shows the net profit or net loss of a company
for a specified period of time. When these statements of the last few year of any organization are
studied and analyzed, significant conclusions may be arrived regarding the changes in the
financial position, the important policies followed and trends in profit and loss etc. Analysis and
interpretation of financial statement has now become an important technique of credit appraisal.
The investors, financial experts, management executives and the bankers all analyze these
statements. Though the basic technique of appraisal remains the same in all the cases but the
approach and the emphasis in the analysis vary. A manager interprets the financial statement so
as to evaluate the financial soundness and stability, the liquidity position and the profitability or
the earning capacity of borrowing concern. Analysis of financial statements is necessary because
it helps in depicting the financial position on the basis of past and current records. Analysis of
financial statements helps in making the future decisions and strategies. Therefore it is very
necessary for every organization whether it is a financial or manufacturing, to make financial
statement and to analyze it.

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 Acknowledgement

No task is single man’s effort. Any job in this world however trivial or tough cannot be
accomplished without the assistance of others. An assignment puts the knowledge and
experience of an individual to litmus test. There is always a sense of gratitude that one likes to
express towards the persons who helped to change an effort in a success. The opportunity to
express my ineptness to people who have helped me to accomplish this task.

I deem it a proud privilege to extend my greatest sense of gratitude to my Project Guide Mrs.
Channa Joshi (Assistant Professor) for the keen interest, inspiring guidance, continuous
encouragement, valuable suggestions and constructive criticism throughout the pursuance of this
report.

I would also like to thank MR. Abidali (Branch Manager, EXPERT YAMAHA, Motipura)
for their valuable support in helping me to gain this opportunity of being associated with an
organization of such esteem.

Last but not the least; it would be unfair if I don’t express my indebted to my parents and all my
friends for their active cooperation which was of great help during the course of my training
project.

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 Executive Summary

As part and partial fulfillment of management course subject of financial research for MBA
program I have selected "YAMAHA MOTOR." for general understanding of the financial
research. However in particular my emphasis was on to fulfill the objective of research and to
find out and to explore the analyses of primary data.

YAMAHA was founded in 1995 by Genichi Kawakami. Yamaha's initial product was a 125cc
two-cycle, single cylinder motorcycle, the YA-1, which was a copy of the German DKW RT125.

This Project Report is to measure the Financial Analysis of YAMAHA; Financial Analysis is a
measure of what is the financial condition of the company.

The study of on this project helped me to know current financial condition of YAMAHA.

Chapter 1 Presents an introduction to Financial Statement Analysis.

Chapter 2 Company’s Profile, it includes background & history of YAMAHA.

Chapter 3 on strategy of YAMAHA covers details of SWOT analysis, Pestle Analysis,

Porter’s 5 Forces model on YAMAHA.

Chapter 4 focuses on Literature Review for the research.

Chapter 5 deals with Data Analysis of the collected data and includes Comparative
Statement, Ratio analysis & Trend Analysis.

Chapter 6 includes findings of the study with conclusion of researchaddressing the

YAMAHA.

The project is done to know, what the financial condition of the YAMAHA is.

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 INDEX

SR NO. Particular PAGE NO.

I Company’s Certificate II

II Preface III

III Acknowledgement IV

V Executive summery V

Chapter1 : Introduction to Financial Statement Analysis

1.1 What is Financial Statement Analysis 10

1.2 Objectives of Financial Statement Analysis 10

1.3 Techniques of Financial Statement Analysis 11

Chapter 2 : Introduction to YAMAHA

2.1 About the YAMAHA 14

2.2 Background 24

2.3 Vision & Mission 28

Chapter 3 : Strategy On YAMAHA

3.1 SWOT Analysis 30

3.2 PESTLE Analysis 31

Chapter 4 : Literature Review

4.1 Literature 35

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Chapter 5 : Research Methodology

5.1 Purpose of the Study 39

5.2 Research Objective of the Study 39

5.3 Research Methodology of the Study 40

Chapter 6 : Data Analysis

6.1 Comparative Statement 43

6.2 Ratio Analysis 50

Chapter 7 : Findings, Suggestion & Conclusion

7.1 Findings 63

7.2 Recommendations/ Suggestions 64

7.3 Conclusion 65

Chapter 8 : Bibliography 67

Annexure

1 Balance Sheet 69

2 Profit & Loss Account 71

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 LIST OF TABLE

TABLE NO. CONTENTS PAGE NO.

Table-1 Balance Sheet of YAMAHA Motors Pvt. Ltd. 69

Table-2 Profit & Loss Statement of YAMAHA Motors Pvt. Ltd 71

Table-3 Comparative Statement of Balance Sheet 43

Table-4 Comparative Statement of Profit & Loss Statement 47

LIST OF GRAPH
GRAPH NO. CONTENTS PAGE NO.
Graph-1 Graph Showing the Working Capital Of YAMAHA Motors 45
Graph-2 Graph Showing the Profit Of YAMAHA Motors 48
Graph-3 Graph Showing Current Ratio 50
Graph-4 Graph Showing Cash Ratio 51
Graph-5 Graph Showing Liquid Ratio 52
Graph-6 Graph Showing Proprietary Ratio 53
Graph-7 Graph Showing Debt-Equity Ratio 54
Graph-8 Graph Showing Gross Profit Ratio 55
Graph-9 Graph Showing Operating Ratio 56
Graph-10 Graph Showing Operating Profit Ratio 57
Graph-11 Graph Showing Net Profit Ratio 58
Graph-12 Graph Showing Return on Capital Employed Ratio 59
Graph-13 Graph Showing Return on Proprietors Fund ratio 60

Graph-14 Graph Showing Return on Equity Capital Ratio 61

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Page | 9
 Chapter – 1

Introduction to Financial Statement Analysis

1.1 WHAT IS FINANCIAL STATEMENT ANALYSIS?

Financial analysis is the process of evaluating businesses, projects, budgets and other
finance-related entities to determine their performance and suitability. Typically, financial
analysis is used to analyze whether an entity is stable, solvent, liquid or profitable enough to
warrant a monetary investment. When looking at a specific company, a
financial analyst conducts analysis by focusing on the income statement, balance sheet and cash
flow statement.

1.2 OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS

The main objective of financial statement analysis is to provide information about the
financial position, performance and changes in financial position of a company that is useful to a
wide range of users in making economic decisions. By examining the past and current financial
data, investors can evaluate a company’s performance and financial position as well as assessing
risks. Financial statement analysis yields valuable information about trends and relationships, the
quality of a company's earnings, and the strengths and weaknesses of its financial position.

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1.3 TECHNIQUES OF FINANCIAL ANALYSIS

Comparative
Analysis

Financial
Statement
Analysis

Ratio
Analysis

 Comparative Statement

Comparative statements deal with the comparison of different items of the Profit and
Loss Account and Balance Sheets of two or more periods. Separate comparative statements are
prepared for Profit and Loss Account as Comparative Income Statement and for Balance Sheets.

As a rule, any financial statement can be presented in the form of comparative statement
such as comparative balance sheet, comparative profit and loss account, comparative cost of
production statement, comparative statement of working capital and the like.

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  Ratio Analysis

The most popular way to analyze the financial statements is computing ratios. It is an
important and widely used tool of analysis of financial statements. While developing a
meaningful relationship between the individual items or group of items of balance sheets and
income statements, it highlights the key performance indicators, such as, liquidity, solvency and
profitability of a business entity. The tool of ratio analysis performs in a way that it makes the
process of comprehension of financial statements simpler, at the same time, it reveals a lot about
the changes in the financial condition of a business entity.

It must be noted that Financial analysis is a continuous process being applicable to every
business to evaluate its past performance and current financial position. It is useful in various
situations to provide managers the information that is needed for critical decisions. The process
of financial analysis provides the information about the ability of a business entity to earn
income while sustaining both short term and long term growth.

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Page | 13
 Chapter – 2

Introduction to YAMAHA MOTOR Pvt. Ltd.

2.1 ABOUT THE YAMAHA

About Yamaha motors India sales Pvt. Ltd. Yamaha made its initial foray into India in
1985. Subsequently, it entered into a 50:50 joint venture with the Escorts Group in 1996.
However, in August 2001, Yamaha acquired its remaining stake as well, bringing the Indian
operations under its complete control as a 100% subsidiary of Yamaha Motor Co., Ltd, Japan.
India Yamaha Motor operates from its state-of-the-art-manufacturing units at Faridabad in
Haryana and Surajpur in Uttar Pradesh and produces motorcycles both for domestic and export
markets. With a strong workforce of 2000 employees, India Yamaha Motor is highly customer-
driven and has a countrywide network of over 400 dealers.

The company pioneered the volume bike segment with the launch of its 100 cc 2-stroke
motorcycle RX 100. Since then, it has introduced an entire range of 2-stroke and 4-stroke bikes
in India. Presently, its product portfolio includes Ray-Z(113cc), VMax(1679cc), YZF
R1(1200cc), FZ 1 (998cc), YZF R15(150cc), FAZER(150cc), FZ-S(150cc), SZ-R(153cc) etc.

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We are committed to:
Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of
YAMAHA products, focusing on serving our customer where we can build long term
relationships by raising their lifestyle through performance excellence, proactive design &
innovative technology. Our innovative solutions will always exceed the changing needs of our
customers and provide value added vehicles.

Build the Winning Team with capabilities for success, thriving in a climate for action and
delivering results. Our employees are the most valuable assets and we intend to develop them to
achieve international level of professionalism with progressive career development. As a good
corporate citizen, we will conduct our business ethically and socially in a responsible manner
with concerns for the environment.

Grow through continuously innovating our business processes for creating value and
knowledge across our customers thereby earning the loyalty of our partners & increasing our
stakeholder value.

Manufacturing Process:
IYMs manufacturing facilities comprises of 2 state-of-the-art Plants at - Faridabad
(Haryana) and Surajpur (Uttar Pradesh). Currently 10 models roll out of the two Yamaha Plants.

The infrastructure at both the plants supports production of motorcycles and its parts for
the domestic as well as oversees market. At the core are the 5-S and TPM activities that fuel our
agile Manufacturing Processes. We have In-house facility for Machining, Welding processes as
well as finishing processes of Electroplating and Painting till the assembly line.

The stringent Quality Assurance norms ensure that our motorcycles meet the reputed
International standards of excellence in every sphere. As an Environmentally sensitive
organization we have the concept of "Environment-friendly technology" ingrained in our
Corporate Philosophy. The Company boasts of effluent Treatment plant, Rain water - Harvesting

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mechanism, a motivated forestation drive. The IS0-14001 certification is on the anvil - early next
year. All our endeavors give us reason to believe that sustainable development for Yamaha will
not remain merely an idea in pipeline. We believe in taking care of not only Your Motoring
Needs but also the needs of Future Generations to come.

Organizational Structure

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YAMAHA Products

Yamaha Motor Company Limited - A Japanese motorized vehicle-producing company

(whose HQ is at 2500 Shanghai, Iwata, Shizuoka), is part of the Yamaha Corporation. After
expanding Yamaha Corporation into the world’s biggest piano maker, then Yamaha CEO
Genichi Kawakami took Yamaha into the field of motorized vehicles on July 1, 1955. The
company’s intensive research into metal alloys for use in acoustic pianos had given Yamaha
wide knowledge of the making of lightweight, yet sturdy and reliable metal constructions. This
knowledge was easily applied to the making of metal frames and motor parts for motorcycles.
Yamaha Motor is the world’s second largest producer of motorcycles (after Honda). It also
produces many other motorized vehicles such as all- terrain vehicles, boats, snowmobiles,
outboard motors, and personal watercraft.

The Yamaha corporate logo is comprised of three tuning forks placed on top of each
other in a triangular pattern.

In 2000, Toyota and Yamaha Corporation made a capital alliance where Toyota paid
Yamaha Corporation 10.5 billion yen for a 5 per cent share in Yamaha Motor Company while
Yamaha and Yamaha Motor each bought 500,000 shares of Toyota stock in return.

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MOTORCYCLE MODELS
Yamaha has made an extensive number of two- and four-stroke scooters, on-road and off-
road motorcycles. The Yamaha XS 650, introduced in 1970, was such an overwhelming success
that it crippled the British monopoly of vertical twin motorcycles.

YAMAHA MOTORCYCLES MODEL IN INDIA

1. VMAX – Exhibit Your Pride

CONCEPT

VMAX the Legend continues…

During the late 90’s Yamaha’s VMAX project team started to work on the rebirth of a
legend. The team understands just how special the original VMAX is to its owners – as well as
those fans who admired the bike without ever riding one. The project team identified a set of four
goals that would enable them to create a worthy successor to the legendary original model.

Awesome acceleration feeling together with strong performance

Distinctive, precise and sharp handling
A sophisticated chassis with unique bodywork.

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 2. YZF-R1 - Embodiment of Your Reflection

CONCEPT
YZF-R1 - State-of-the art race technology

Yamaha R1 represents a paradigm shift in technology, performance and controllability

among liter class sport bikes. The R1 has been designed to be the “Ultimate Cornering Master
1000” of the open super sport class. Inspired by Yamaha’s M1 MotoGP race bike, this latest
generation 998cc R1 features a crossplane crankshaft design with an uneven firing order to
provide outstanding yet easy to control torque and an exceptionally linear throttle feel never
experienced before. But there is far more to R1 than just a revolutionary engine.

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 3. FZ 1 – The Brutal Beauty

CONCEPT

THE BRUTAL BEAUTY

The FZ1 was born for life on the street, and its muscular frame is ready for anything. Its
998cc Supersport-based engine packs a mighty midrange punch. And for 2010, the ECU
mapping has been revised to achieve improved throttle response in the low to mid-rpm range.

The die-cast aluminum frame cuts its way through the curves like a supersport bike, to
ensure that you’re always in charge.

The FZ1 has got heart-pumping performance, with serious attitude on top and a lean and
mean look that's all about raw power. The FZ1 is equipped with an under cowling as standard.

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 4. YZF R15 – Racing Instinct

CONCEPT

Racing Instinct. - Passing on the “R series” DNA -

Humachine Technologies & Sensual Racing Form –

The YZF-R1 and YZF-R6 are equipped with under cowls that are based on the image of a
diffuser, to give them the best form for aero-management. These are not cowls for simply
enclosing the engine, but forms composed of blade surfaces that actively control airflow. This
spirit has been directly inherited by the YZF-R15 version 2.0.

The YZF-R15 version 2.0 is a new model that has been developed under the concept of a
“Graded Up R15.” While maintaining the proven ease of handling of the existing R15, the R15
version 2.0 boasts of spruced up looks and better performance in circuit riding. The design
elements are borrowed from the supersport model YZF-R1 that is adapted from YZR-M1
MotoGP race machine.

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 5. FAZER – For Some One Life is Enough

CONCEPT

OPEN YOUR HEART TO THE TOURING SPIRIT

The Fazer, gets its DNA from the global Fazer series known for their sports touring &
awesome looks. It has a "Look-at-me" appeal with the triple macho design concept giving it a
concentrated form with excellent ergonomics. Fazer is beautifully contoured & has aerodynamic
cowling to keep the wind blast at bay. With its comfortable riding position and seat, rider can
enjoy a week end getaway or head off on a touring holiday.

Fazer has the Monocross suspension to ensure agile running performance and handling.
The placement of its 'MidShip Muffler' is towards the center of the machine which gives it a
good concentration of mass, exhaust efficiency and handling. Fazer has the "140/60-17" size rear
radial tyre with a 60% aspect ratio which contributes to better grip and stability.

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 6. RAY – Hello To New Life

CONCEPT

RAY - LIFE IS AN ADVENTURE

The new RAY offers best in class acceleration, easy handling & maneuverability and
good fuel efficiency. It is equipped with an air-cooled 4-stroke 113cc engine with CVT
(Continuous variable transmission) that boasts excellent reliability.

The engine achieves good fuel economy in the practical-use speed range, a power output
characterized by smooth start-up acceleration and quick passing acceleration and more.
The body has fresh, innovative styling based on a design concept of being “Sophisticated &
Dynamic,” and is full of fine touches that women will appreciate, like a seat designed with easy
leg reach to the ground and ease of mounting in mind, ample storage space and easy to operate
center and side stand.

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2.2 BACKGROUND OF YAMAHA

Beginnings: 1955
The motorcycle division of Yamaha was founded in 1955, and was headed by Genichi
Kawakami. Yamaha's initial product was a 125cc two-cycle, single cylinder motorcycle, the YA-
1, which was a copy of the German DKW RT125. The YA-1 was a competitive success at racing
from the beginning, winning not only the 125cc class in the Mt. Fuji Ascent, but also sweeping
the podium with first, second and third place in the All Japan Auto bike Endurance Road Race
that same year. Early success in racing set the tone for Yamaha, as competition in many varieties
of motorcycle racing has been a key endeavor of the company throughout its history, often fueled
by a strong rivalry with Honda and other Japanese manufacturers.

Yamaha began competing internationally in 1956 when they entered the Catalina Grand
Prix, again with the YA-1, at which they placed sixth. The YA-1 was followed by the YA-2 of
1957, another 125cc two stroke, but with significantly improved frame and suspension. The YD-
1 of 1957 was a 250cc two-stroke twin cylinder motorcycle, resembling the YA-2, but with a
larger and more powerful motor. A performance version of this bike, the YDS-1 housed the
250cc two-stroke twin in a double down tube cradle frame and offered the first five-speed
transmission in a Japanese motorcycle. This period also saw Yamaha offer its first outboard
marine engine.

Success and growth in the 1960s

By 1963 Yamaha's dedication to both the two-stroke engine and racing paid off with their
first victory in international competition, at the Belgium GP, where they won the 250cc class.
Success in sales was even more impressive, and Yamaha set up the first of its international
subsidiaries in this period beginning with Thailand in 1964, and the Netherlands in 1968. 1965
saw the release of a 305cc two-stroke twin, the flagship of the company’s lineup. It featured a
separate oil supply which directly injected oil into the gasoline prior to combustion (traditionally
riders had to pre-mix oil into gasoline together before filling the gas tank on two stroke engines).
In 1967 a new larger displacement model was added to the range, the 350cc two stroke twin R-1.

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In 1968 Yamaha launched their first four-stroke motorcycle, the XS-1. The Yamaha XS-1 was a
650cc four-stroke twin, a larger and more powerful machine that equaled the displacement and
performance of the popular British bikes of the era, such as the Triumph Bonneville and BSA
Gold Star. Yamaha continued on with both the two-stroke line and four-stroke twins at a time
that other Japanese manufacturers were increasingly moving to four cylinder four-stroke
machines, a trend led by Honda in 1969 with the legendary CB-750 four-stroke four-cylinder
cycle.

The four stroke era begins: the 1970s

Not until 1976 would Yamaha answer the other Japanese brands with a multi-cylinder
four stroke of their own. The XS-750 (and later 850) a 750cc triple cylinder machine with shaft
final drive was introduced almost seven years after Honda's breakthrough bike. Yamaha's first
four-cylinder model, the XS-1100 followed in 1978, again with shaft drive. Despite being
heavier and more touring oriented than its rivals it produced an impressive string of victories in
endurance racing.

The 1970s also saw some of the first dedicated off-road bikes for off-road racing and
recreation. Yamaha was an early innovator in dirt-bike technology, and introduced the first
single-shock rear suspension, the trademarked "Monoshock" of 1973. It appeared in production
on the 1974 Yamaha YZ-250, a model which has continued in production, with many updates,
until 2015, making it Yamaha's longest continuous model and name.

Yamaha continued racing throughout the 1960s and 1970s with increasing success in
several formats. The decade of the 1970s was capped by the XT500 winning the first Paris-Dakar
Rally in 1979.

The 1980s: Diversification and Innovation

By 1980 the combination of consumer preference and environmental regulation made
four strokes increasingly popular. Suzuki ended production of their GT two stroke series,
including the flagship water-cooled two-stroke 750cc GT-750 in 1977. Kawasaki, who had
considerable success throughout the 1970s with their two-stroke triples of 250cc, 350cc, 500cc

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and 750cc ended production of road-going two strokes in 1980. Yamaha bucked this trend and
continued to refine and sell two-strokes for the street into the 1980s. These bikes were
performance oriented, water-cooled twin cylinder machines, designed to achieve excellent
performance taking advantage of the lower weight of two strokes. The RZ-250 of 1980 was the
progenitor of this series. The RZ-350, the largest displacement model, was a popular hot-rod
bike of the 1980s and continued to be sold in some countries into the early 1990s.

Throughout the 1980s the motorcycle industry gradually went from building a few basic
but versatile models designed to work well in many roles, to offering many more specialized
machines designed to excel in particular niches. These included racing and performance street
riding, touring, motocross racing, enduro and recreational off-road riding, and cruising. Yamaha
branched out from the relatively small number of UJMs (Universal Japanese Motorcycle) at the
start of the decade to a much larger set of offerings in several clearly defined markets at the end
of the decade.

The XV750 of 1981 featured an air-cooled V-twin four stroke engine and cruiser styling,
and was one of the first Japanese cruiser style motorcycles. By the end of the 1980s Yamaha had
offered dozens of cruiser styled bikes in a variety of displacements and engine configurations.
The RZV500 was one of the first "repli-racers", a near copy of Kenny Roberts competition GP
bike, it featured a liquid-cooled two-stroke motor of 500cc displacement in a V4 configuration,
along with a perimeter frame and full fairing.

A more popular and practical high-performance model for the street was introduced in
1985, the FZ750. It was an innovative 750cc four-stroke inline four cylinder model. It was the
first motorcycle to feature a five valve cylinder head, something Yamaha became well known
for. It also featured a cylinder block canted forward at 45 degrees, and a box-section steel
perimeter frame. Production of the FZ continued until 1991.

The 1990s: Performance bikes and a spin-off brand

In 1998 Yamaha marketed a 1000cc four cylinder road bike called the YZF 'R1', this
model introduced a new style of gearbox design which shortened the overall length of the

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motor/gearbox case, to allow a more compact unit. This, in turn allowed the motor to be placed
in the frame further forward, designed to improve handling in a short wheel-based frame.
In 1995, Yamaha announced the creation of Star Motorcycles, a new brand name for its cruiser
series of motorcycles in the American market. In other markets, Star motorcycles are still sold
under the Yamaha brand. This was an attempt to create a brand identity more closely aligned
with the cruiser market segment, one of the largest and most lucrative in the USA.

The 2000s: Expansion and consolidation

In 2007, Yamaha established the Philippine operations and distributes Yamaha
motorcycles under the corporate name of Yamaha Motor Philippines, Inc., one of more than 20
worldwide subsidiaries operating on all continents.

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2.3 VISION & MISSION

VISION
 We will establish YAMAHA as the "exclusive & trusted brand" of customers by
"creating Kando" (touching their hearts) - the first time and every time with world class
products & services delivered by people having "passion for customers".

MISSION

We are committed to:

 Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of
YAMAHA products, focusing on serving our customer where we can build long term
relationships by raising their lifestyle through performance excellence, proactive design
& innovative technology. Our innovative solutions will always exceed the changing
needs of our customers and provide value added vehicles.

 Build the Winning Team with capabilities for success, thriving in a climate for action and
delivering results. Our employees are the most valuable assets and we intend to develop
them to achieve international level of professionalism with progressive career
development. As a good corporate citizen, we will conduct our business ethically and
socially in a responsible manner with concerns for the environment.

 Grow through continuously innovating our business processes for creating value and
knowledge across our customers thereby earning the loyalty of our partners & increasing
our stakeholder value.

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Page | 29
 Chapter - 3

Strategies on YAMAHA

3.1 SWOT ANALYSIS

• Excellent branding, advertising and global distribution.

• Yamaha Motor Corporation has over 39,000 employees.
• One of the major brand in motorsport like MotoGP, World superbike etc...
Strength Extremely high Size and reach of company.

• Bikes like R15, R1 are quite expensive.

Weakness

• Two-wheeler segment is one of the most growing industries.

• Export of bikes is limited i.e. untapped international markets.
Opportunity

• Strong competition from Indian as well as international brands.

• Dependence on government policies and rising fuel prices.
• Better public transport will affect two-wheeler sales.
Threat

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3.2 PESTEL ANALYSIS

 Political
 Under the UPA rule most of the business from across all industries try and win over as much
political support. The core competitor’s viz. Yamaha and Honda have been coming up with
new higher models while the Bajaj industry has been upgrading its bikes model by only
varying the cc engine. It is believed that Mr. Bajaj has used his political influence to raise the
prices of the competitors‟ models, thereby minimizing his loss of market share. Such
political influences helps the incumbents to gain favorable bargains from the government
making it difficult for new entrants to flourish thereby making Barriers to Entry high.

 Economic
 Tightening of the interest rates by the RBI
 Makes it difficult for companies to arrange for funds for expansion but it effects the new
entrants even more, thus increasing barriers to entry.
 High per capita income results in higher disposable income with the buyers thereby making
them less price sensitive. This will decrease the bargaining power of buyers.
 Deregulation of petrol has led to increase in prices and increase in commission to petrol
pump owners and will continue the spiral.
 This shall increase the cost of ownership of the vehicle thereby making them demand for
more fuel efficient vehicles. Since the choice of the vehicle can save the buyer the running
expenses, this shall make the Bargaining power of buyers high.

 Social
 As education level in the country increases, every customer keeps a basic knowledge about
the standard technology required. The public mentality that a two-wheeler is just for day-to-
day commuting is changing and people are more and more moving towards premium bikes.
The expectations from buyers in this segment are very high since they look as their bikes as a
style statement and a reflection of their attitude towards life. This increases the bargaining

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 power of buyers as people start looking for that exclusive brand image and differentiation. To
target common commuters, Yamaha Motor India launched 3 new bikes namely YBR
125,Yamaha SZ ,Yamaha SZ-Exit also launched sporty bikes like Yamaha Fazer 250 to cater
young Indian population,.

 Technological
 Bikes with higher engine capacities have done commendably well on the Indian roads.
 Bike styling and fuel efficiency has also seen major developments. The new technologies
including the mono shockers, back and front disc brakes, the magnum wheels, DiASil
Cylinder etc. are some things that many companies are looking forward to.
 Yamaha has been able to involve many of these technology trends in its latest bikes i.e. FZ &
FZS. Yamaha also developed CF Aluminum Die Casting Technology for mass production of
Aluminum. This helped in reducing the weight of the parts.

 Environmental
 Demand for two wheelers is increasing and thereby overcrowding the roads. Another
problem is the adherence to emission norms because of the lack of infrastructure for
inspection. Because of Euro II, there will be a lot of pressure on the two-wheeler industry to
come up with greener technologies.
 This shall compel the companies to invest in innovation and R&D thereby reducing their
profits and making the industry unattractive for the new entrants thus decreasing the threat of
new entrants.

 Legal
 Due to the steep fuel prices in India, the sector is driven by demands for fuel efficient
automobile systems. Hence, the regulations on fuel efficiency are less. As discusses before, it
increases the bargaining power of buyers.
 The vehicular emission regulations are taken care by Society of Indian Automobile
Manufacturers (SIAM).

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 Delhi High Court came out with a ruling that a comprehensive insurance policy for vehicles
which also covered the pillion rider on a two-wheeler should be offered by all the insurance
firms. This was accepted by all insurance firms after much deliberation.

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Page | 34
 Chapter – 4

Literature Review

4.1 INTRODUCTION TO FINANCIAL STATEMENT

Finance is defined as the provision of money when it is required. Every enterprise needs
to start and carry out its operation. Finance is the lifeblood of an organization. Therefore, should
be managed effectively.

Financial Statements are prepared primarily for decision making. Financial statement
Analysis refers to the process of determining strength and weakness of the firm by properly
establishing strategic relationship between the items of the balance sheet and profit and loss
account. There are various methods and techniques used in analyzing financial statements such
as comparative statements, trend analysis, common size statement schedule of changes in
working capital, funds flow and cash flow analysis, cost volume profit analysis and ratio analysis
and other operative data. The Analysis of Financial Statement is .used for decision making for
various parties.

Financial statements have two major uses in financial analysis. First, they are used to
present a historical recover of the firm’s financial development. Second, they are used for a
course of action for the firm.

A performance financial statement is prepared for a future period. It is the financial

manager’s estimate of the firm’s future performance.

The operation and performance of a business depends on many individuals are collective
decisions that are continually made by its management team. Every one of these decisions
ultimately causes a financial impact, for better or works on the condition and the periodic results
of the business. In essence, the process of managing involves a series of economic choices that
activates moments of financial resources connected with the business.

Page | 35
 Some of the decisions made by management one will be the major, such as investment in
a new facility, raising large amounts of debts or adding a new line of products or services. Most
other decisions are part of the day to day process in which every functional area of the business
is managed. The combine of effect of all decisions can be observed periodically when the
performance of the business is judged through various financial statements and special analysis.
These changes have profoundly affected all our lives and it is important for corporate managers,
shareholders, tenders, customers and suppliers to investment and the performance of the
corporations on which then relay. All who depend on a corporation for products, services, or a
job must be med about their company’s ability to meet their demands time and in this changing
world. The growth and development of the corporate enterprises is reflected in their financial
statement.

4.1.1 Meaning and Concept of Financial Analysis

The term ‘Financial Analysis’ (also known as analysis and interpretation of financial
statements) refers to the process of determining financial strengths and weakness of the firm by
establishing strategic relationship between the items of the balance sheet and profit and loss
account and operative data.

According to Metcalf and Titard, “Analyzing Financial Statement is a process of

evaluating the relationship between component part of a financial statement to obtain a better
understanding of a firm’s position and performance”.

In the words of Myers, “Financial Statement Analysis is largely a study of relationship

among the various financial factors in a business disclosed by single set of statement and a study
of the trend of these factors as shown in a series of statement”.
The purpose of financial Statement Analysis is to diagnose the information contained in financial
statement so as to judge the profitability and financial soundness of the firm. Just like a doctor
examines his patient by recording his body temperature, blood pressure etc. before making his
conclusion regarding the illness and before giving his treatment, a financial analyst analysis the
financial statements with various tools of analysis before commenting upon the financial health

Page | 36
or weakness of an enterprise. The analysis and interpretation of financial statement is essential to
bring out the mystery behind the figures in financial statements.

Financial Statement Analysis is an attempt to determine the significance and meaning of

the financial statement dates that forecast may be made of the future earnings, abilities to pay
interest and debt maturities (both current and long term) and profitability of a sound dividend
policy.

The term ‘Financial Statement analysis’ includes both analysis and interpretation. A
distinction should therefore be made between the two terms. While the term Analysis is used to
mean the simplification of financial data by methodical classification of the data given in the
financial statements, Interpretation means explaining the meaning and significance of the data so
simplified however, both analysis and interpretation are interlinked and complimentary to each
other Analysis is useless without interpretation and interpretation without is impossible most of
the authors have used the term analysis only to cover the meaning both analysis and
interpretation as the objective of analysis is to study the relation between various items of
financial statement by interpretation. We have also used the term Financial Statement Analysis
or simply Financial Analysis to cover the meaning of both analysis is and interpretation.

Page | 37
Page | 38
 Chapter - 5

Research Methodology
5.1 Purpose of the study
There are some questions, which arise from the study of financial statements. These
could be “Is Company’s profitability adequate? Why is a profit low in spite of increased sales?
Why is there liquidity problem though profitability is good? Why no reasons for changes in
assets, liabilities and equity between two dates? Why no dividends are paid though there are
good profits? From where have come cash flows and how they are applied? These and many
other questions need answers, which can be possible when the financial statements are suitably
analyzed

Thus financial statement analysis deals with meaningful interpretation of financial data
available in financial statements to serve specific purpose of organizations of such data for their
decision making .this involves identifying the purpose and selecting suitable means of analysis.
Financial statement analysis is essentially purposive.

5.2 Research objective of the study

Followings are the main objectives of the project
(i) To analyses the financial position of the YAMAHA Motors Pvt.. Ltd.
(ii) To compare the market position of the YAMAHA Motors Pvt. Ltd with its
competitors.
(iii) To find out the consolidated position of the YAMAHA Motors Pvt. Ltd
(iv) To find out the future prospective of the company.

The role objective of the project is to help the management of the organization in
decision making regarding the subject matter. Calculation of Financial statement and ration is
only the clerical task whereas the interpretation of its needs immense skill intelligence and
foresightedness.

Page | 39
One of the easiest and most popular way of evaluating performance of the organization is to
compare its present ratio with the past ones called comparison and through development action
plan.
It gives an indication of the direction of change and reflects whether the organizations
financial position and predominance has improved deteriorated or remained constant over the
period of time.

5.3 Research Methodology of the Study

5.3.1 Research Design
Research is a careful inquiry or examination to discover new information or relationship
and to expand and verify existing knowledge. Therefore, I used descriptive research in this
study because it will ensure the minimization of bias and maximization of reliability of data
collected.

5.3.2 Data Collection Technique

The data is collected by 1 methods:

1. Secondary data.

Secondary data, which is secondary in nature i.e. already, collected information this secondary
data is collected through Company’s Annual Report and discussion with them. Interpretation of:
 Balance sheet
 Profit and loss account
 Annual reports

Page | 40
5.3.3 SAMPLING DESIGN

 Sample Size:
2 years financial data of YAMAHA Motors Pvt. Ltd

 Sampling Method
Convenience Sampling: Convenience under non probability sampling is applied in this
project. Convenience sampling is a non-probability sampling technique where subjects are
selected because of their convenient accessibility and proximity to the researcher.

5.3.4 Methods of Data Collection

 Instruments for data collection
Basically secondary data was collected in this research.
 Information from the company records, financial documents and balance sheets
 Data collection through internet

5.3.5 LIMITATIONS

 The study provides an insight into the financial matters every study will be bound with
certain boundaries and this study limited up to financial matters.

 One of the factors of the study was lack of availability of ample information. Most of the
information has been kept confidential and as such as not assed as art of policy of
company.

 Time is an important limitation. The whole study was conducted in a period of 45 days,
which is not sufficient to carry out proper interpretation and analysis.

 This study is related to the financial position of the company for the two Financial years
only

Page | 41
Page | 42
 Chapter – 6
Data Analysis

6.1 COMPARATIVE ANALYSIS

Comparative Balancesheet of YAMAHA MOTOR Pvt. Ltd.

(for the year ending on 31st march, 2016 and 31st march, 2017)

Balance sheet of 2017 2016 Change

YAMAHA Motors
Cash & Short Term Investments 156,971 135,720

Cash Only 155,634 135,527

Short-Term Investments 1,337 193

Total Accounts Receivable 314,549 292,874

Accounts Receivables, Net 314,549 292,874

Accounts Receivables, Gross 327,371 304,021

Bad Debt/Doubtful Accounts (12,822) (11,147)

Inventories 307,628 294,289

Finished Goods 198,991 188,032

Work in Progress 52,835 52,694

Raw Materials 55,802 53,563

Page | 43
Other Current Assets 75,865 72,058

Miscellaneous Current Assets 75,865 72,058

Total Current Assets 855,018 794,943

Net Property, Plant & Equipment 347,997 350,668

Property, Plant & Equipment - Gross 972,525 -

Buildings 110,206 102,377

Land & Improvements 83,712 84,936

Machinery & Equipment 105,673 104,723

Construction in Progress 20,653 31,656

Other Property, Plant & Equipment 27,752 26,974

Accumulated Depreciation 624,528 -

Total Investments and Advances 96,188 87,872

LT Investment - Affiliate Companies 26,886 -

Other Long-Term Investments 69,302 87,872

Long-Term Note Receivable 85,927 56,220

Intangible Assets 11,173 8,658

Page | 44
Net Other Intangibles 11,173 -

Other Assets 6,505 7,897

Tangible Other Assets 6,505 7,897

Total Assets 1,415,845 1,318,776

Liabilities 2017 2016

ST Debt & Current Portion LT Debt 191,006 182,486

Short Term Debt 133,725 128,517

Current Portion of Long Term Debt 57,281 53,969

Accounts Payable 154,689 143,789

Income Tax Payable 11,035 8,165

Other Current Liabilities 145,423 140,181

Accrued Payroll 13,965 12,971

Miscellaneous Current Liabilities 131,458 127,210

Total Current Liabilities 502,153 474,621

Long-Term Debt 162,849 182,273

Long-Term Debt excl. Capitalized 162,569 181,960

Leases

Page | 45
Non-Convertible Debt 162,569 181,960

Capitalized Lease Obligations 280 313

Provision for Risks & Charges 54,499 56,158

Deferred Taxes (8,360) (7,275)

Deferred Taxes - Credit 4,675 5,241

Deferred Taxes - Debit 13,035 12,516

Other Liabilities 26,434 25,076

Other Liabilities (excl. Deferred 26,434 25,076

Income)

Total Liabilities 750,610 743,369

Common Equity (Total) 622,802 534,166

Common Stock Par/Carry Value 85,797 85,797

Additional Paid-In Capital/Capital 74,662 74,712

Surplus

Retained Earnings 513,182 434,361

Cumulative Translation (94,226) (93,530)

Adjustment/Unrealized For. Exch.
Gain

Unrealized Gain/Loss Marketable 35,086 28,945

Securities

Revaluation Reserves 10,449 -

Page | 46
Other Appropriated Reserves (1,427) 4,595

Treasury Stock (722) (714)

Total Shareholders' Equity 622,802 534,166

Accumulated Minority Interest 42,430 41,238

Total Equity 665,232 575,404

Liabilities & Shareholders' Equity 1,415,842 1,318,773

Comparative P&L Acc of YAMAHA MOTOR Pvt. Ltd.

(for the year ending on 31st march, 2016 and 31st march, 2017)

P&L Acc of YAMAHA 2017 2016 Change

Motors

Sales/Revenue 1,670,090 1,502,834

Cost of Goods Sold (COGS) incl.

1,211,460 1,100,173
D&A

COGS excluding D&A 1,166,003 1,057,739

Depreciation & Amortization Expense 45,457 42,434

Gross Income 458,630 402,661

SG&A Expense 300,810 278,485

Research & Development 99,200 94,855

Page | 47
Other SG&A 201,610 183,630

Other Operating Expense 8,037 15,580

EBIT 149,783 108,596

Unusual Expense 2,367 1,427

Non Operating Income/Expense 1,370 (7,837)

Non-Operating Interest Income 4,553 4,262

Equity in Affiliates (Pretax) 2,824 781

Interest Expense 3,850 4,644

Gross Interest Expense 3,850 4,644

Pretax Income 152,313 99,730

Income Tax 35,228 25,510

Income Tax - Current Domestic 32,694 28,823

Income Tax - Deferred Domestic 2,533 (3,312)

Consolidated Net Income 117,085 74,220

Minority Interest Expense 15,481 11,066

Net Income 101,604 63,154

Page | 48
Net Income After Extra ordinaries 101,604 63,154

Net Income Available to Common 101,603 63,153

EPS (Basic) 290.93 180.83

Basic Shares Outstanding 349 349

EPS (Diluted) 290.93 180.83

Diluted Shares Outstanding 349 349

EBITDA 195,240 151,030

EBIT 149,783 108,596

An Analysis and interpretation of the above balance sheet reveals

(1) Working Capital is increased from 259874 to 320322, which is a positive signal for the firm
because increase in Working Capital leads to a better financial position and company have more
funds to do business activities.

Page | 49
 Working Capital
350000

300000

250000

200000

150000 Working Capital

100000

50000

0
2015 2016

Net Asset of YAMAHA Motors Pvt. Ltd.

(2) There has been a drastic increase in cash balance 27908. This reflects an positive cash
position.

(3) Fixed Assets has been increased by 9593 and even the Share Capital Has been increased by
43826 this show even after arranging the new funds by share capital company unable to increase
the enough Fixed Capital.

(4) Current Assets have been decreased by (5551) this shows that company does not used the
funds of share capital to invest in current assets and don’t want to make its liquidity situation
better.

Page | 50
(1) Since YAMAHA Motors takes certain time to become a break-even company and
company is suffering losses, However profit has been increased by 8.46% from year 2015
to 2016. This is a positive signal for the company.

Profit
75000
74000
73000
72000
71000
70000
Profit
69000
68000
67000
66000
65000
2015 2016

(2) Loss on sales of non-current assets has been decrease by 83.4% which is showing that the
decisions are taken by the senior person of the company in an accurate direction.

Page | 51
6.2 RATIO ANALYSIS
RATIO ANALYSIS
Balance Sheet Ratios
CURRENT RATIO
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐑𝐚𝐭𝐢𝐨 =
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐥𝐢𝐭𝐢𝐞𝐬

800494
2015 = 540620 = 1.48
𝟕𝟗𝟒𝟗𝟒𝟑
2016 = 𝟒𝟕𝟒𝟔𝟐𝟏 = 1.67

1.7
1.67
1.65

1.6

1.55 current ratio

1.5
1.48
1.45

1.4

1.35
2015 2016

Comment
Current ratio of YAMAHA Motors Ltd is 1.67:1.
A current ratio lower than 2:1 shows-
 Unsatisfactory liquidity/ solvency position
 Low level of current assets and,
 Over trading.

Page | 52
CASH RATIO

𝐂𝐚𝐬𝐡 + 𝐌𝐚𝐫𝐤𝐞𝐭𝐚𝐛𝐥𝐞 𝐒𝐞𝐜𝐮𝐫𝐢𝐭𝐲

𝐂𝐚𝐬𝐡 𝐑𝐚𝐭𝐢𝐨 =
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐥𝐢𝐭𝐢𝐞𝐬
 Cash + Marketable Security
2015= 107617 + 0
2016= 135525 + 0
 Current Liability
2015= 540620
2016= 474621

107617+0
2015 = = 0.2
540620
𝟏𝟑𝟓𝟓𝟐𝟓+𝟎
2016 = = 0.29
𝟒𝟕𝟒𝟔𝟐𝟏

0.35

0.3
0.29
0.25
0.2
0.2

0.15 Cash Ratio

0.1

0.05

0
2015 2016

Comment
This Cash Ratio indicates that the capacity of the company to realize current liabilities with its
liquidity position. The Cash Ratio of YAMAHA Motors Ltd is 0.29:1.

Page | 53
LIQUID RATIO
Liquid ratio compares the quick assets with the quick liabilities. It is expressed in the
form of a pure ratio. It is also known as Quick Ratio or Acid Test Ratio.
𝐋𝐢𝐪𝐮𝐢𝐝 𝐀𝐬𝐬𝐞𝐭𝐬
𝐋𝐢𝐪𝐮𝐢𝐝 𝐑𝐚𝐭𝐢𝐨 =
𝐋𝐢𝐪𝐮𝐢𝐝 𝐋𝐢𝐚𝐛𝐥𝐢𝐭𝐢𝐞𝐬
 Liquid Assets = Current Assets-stock-Pre.exp
2015=800494
2016=794943

 Liquid Liability = Current Liabilities – BOD

2015= 540620
2016= 474621

800494
2015 = 540620 = 1.48
𝟕𝟗𝟒𝟗𝟒𝟑
2016 = 𝟒𝟕𝟒𝟔𝟐𝟏 = 1.67

1.7
1.67
1.65

1.6

1.55

1.5 Liquid ratio

1.48
1.45

1.4

1.35
2015 2016

Comment
Liquid ratio of YAMAHA Motors Ltd is 1.67:1.

Page | 54
PROPRIETORY RATIO
𝐏𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐨𝐫’𝐬 𝐟𝐮𝐧𝐝𝐬 𝐨𝐫 𝐬𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫’𝐬 𝐞𝐪𝐮𝐢𝐭𝐲
𝐏𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐚𝐫𝐲 𝐑𝐚𝐭𝐢𝐨 =
𝐓𝐨𝐭𝐚𝐥 𝐚𝐬𝐬𝐞𝐭𝐬

 Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital

+ Treasury share
2015 = 85782 + 74698 + 390559 + 709 = 550331
2016 = 85797 + 74712 + 434361 + 714 = 594157

 Total Assets = Fixed Assets + Investments + Current Assets

2015 = 1305236
2016 = 1318776

550331
2016 = 𝟏𝟑𝟎𝟓𝟐𝟑𝟔 = 0.42
𝟓𝟗𝟒𝟏𝟓𝟕
2015 = 𝟏𝟑𝟏𝟖𝟕𝟕𝟔 = 0.45

proprietory ratio
0.46

0.45 0.45

0.44

0.43
proprietory ratio
0.42 0.42

0.41

0.4
2015 2016

Comment
Proprietary ratio of YAMAHA Motors Ltd is 45.06%.

Page | 55
DEBT – EQUITY RATIO
This ratio compares the long term debts with shareholder’s funds. It is usually expressed
as a pure ratio.
𝐁𝐨𝐫𝐫𝐨𝐰𝐞𝐝 𝐅𝐮𝐧𝐝𝐬
𝐃𝐞𝐛𝐭 − 𝐄𝐪𝐮𝐢𝐭𝐲 𝐑𝐚𝐭𝐢𝐨 =
𝐏𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐨𝐫 ′ 𝐬 𝐅𝐮𝐧𝐝𝐬
 Borrowed funds includes = Debt + Loans
2015=232915
2016=268750

 Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital

2015 = 85782 + 74698 + 390559 + 709 = 550331
2016 = 85797 + 74712 + 434361 + 714 = 594157

232915
2015 = 550331 = 0.42
𝟐𝟔𝟖𝟕𝟓𝟎
2016 = 𝟓𝟗𝟒𝟏𝟓𝟕 = 0.45

0.455
0.45
0.45
0.445
0.44
0.435
0.43
DEBT - EQUITY
0.425 RATIO
0.42
0.42
0.415
0.41
0.405
2015 2016

Comment
Debt – equity ratio of YAMAHA Motors Ltd is 0.45.

Page | 56
 Revenue Statement Ratios
GROSS PROFIT RATIO
This ratio compares gross profit with net sales. It is usually expressed in the form of
percentage.
𝐆𝐫𝐨𝐬𝐬 𝐩𝐫𝐨𝐟𝐢𝐭
𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐑𝐚𝐭𝐢𝐨 = × 𝟏𝟎𝟎
𝐒𝐚𝐥𝐞𝐬

 Gross profit
2015 = 436525
2016 = 402660

 Net sales
2015 = 1631158
2016 = 1502834

436525
2015 = × 100= 26.76%
1631158
𝟒𝟎𝟐𝟔𝟔𝟎
2016 = × 𝟏𝟎𝟎 = 26.79%
𝟏𝟓𝟎𝟐𝟖𝟑𝟒

26.80%
26.79%
26.79%
26.79%
26.78%
26.78%
26.77%
26.77% gross profit ratio
26.76%
26.76%
26.76%
26.75%
26.75%
2015 2016

Comment
Gross profit ratio of YAMAHA Motors Ltd is 26.79%.

Page | 57
OPERATING RATIO
Operating ratio expresses the relationship between total operating costs and net sales. It is
expressed by way of a percentage.
𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬
𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐑𝐚𝐭𝐢𝐨 = × 𝟏𝟎𝟎
𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬

 Operating Expenses
2015= 306196
2016= 294065

 Net Sales
2015=1631158
2016=1502834

306196
2015 = × 100 = 18.77%
1631158
𝟐𝟗𝟒𝟎𝟔𝟓
2016 = 𝟏𝟓𝟎𝟐𝟖𝟑𝟒 × 𝟏𝟎𝟎 = 19.57%

19.80%

19.60%
92.77%
19.40%

19.20%

19.00%
18.77%
18.80% operating
ratio
18.60%

18.40%

18.20%
2015 2016

Comment
Operating ratio of YAMAHA Motors Ltd is 92.77%.

Page | 58
OPERATING PROFIT RATIO
Operating profit ratio indicates the relationship between operating profit and the sales. It
is usually expressed in the form of a percentage. It is also known as Net Operating Profit Ratio.
𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐏𝐫𝐨𝐟𝐢𝐭
𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐏𝐫𝐨𝐟𝐢𝐭 𝐑𝐚𝐭𝐢𝐨 = × 𝟏𝟎𝟎
𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬

 Operating profit = Gross Profit – Operating Expenses

2015= 436525 – 306196 =130329
2016= 402660 – 294065 =108595

 Net sales
2015=1631158
2016=1502834

130329
2015 = 1631158 × 100 = 7.99%
𝟏𝟎𝟖𝟓𝟗𝟒
2016 = × 𝟏𝟎𝟎 = 7.22%
𝟏𝟓𝟎𝟐𝟖𝟑𝟒

8.20%

8.00%
7.99%
7.80%

7.60%

7.40% operating
7.22% profit ratio
7.20%

7.00%

6.80%
2015 2016

Comment
Operating profit ratio of YAMAHA Motors Ltd is 7.22%.

Page | 59
NET PROFIT RATIO
Net profit ratio indicates the relationship between net profit and the sales. It is usually
expressed in the form of a percentage.
𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭(𝐁𝐞𝐟𝐨𝐫𝐞 𝐓𝐚𝐱)
𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐑𝐚𝐭𝐢𝐨 = × 𝟏𝟎𝟎
𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬
 Net profit (Before tax)
2015= 122599
2016= 99730

 Net sales
2015=1631158
2016=1502834

122599
2015 = × 100 = 7.52%
1631158
𝟗𝟗𝟕𝟑𝟎
2016 = × 𝟏𝟎𝟎 = 6.64%
𝟏𝟓𝟎𝟐𝟖𝟑𝟒

7.60%
7.52%
7.40%

7.20%

7.00%

6.80%
net profit ratio
6.64%
6.60%

6.40%

6.20%
2015 2016

Comment
Net profit ratio of YAMAHA Motors Ltd is 6.64%. This indicates ultimate net profit, after
considering all non- operating incomes and expenses. It is 6.64% of net sales.

Page | 60
 Composite Ratios
RETURN ON CAPITAL EMPLOYED
This ratio measures the relationship between net profit (before interest and tax) and
the capital employed to earn it.
𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐝
𝐏𝐫𝐨𝐟𝐢𝐭 (𝐁𝐞𝐟𝐨𝐫𝐞 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 & 𝐓𝐚𝐱)
= × 𝟏𝟎𝟎
𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐝(𝐁𝐨𝐫𝐫𝐨𝐰𝐞𝐝 𝐅𝐮𝐧𝐝𝐬 + 𝐎𝐰𝐧𝐞𝐫𝐬 𝐅𝐮𝐧𝐝)

 Profit (before interest and tax)

2015=122599
2016=99730

 Capital employed = Borrowed Fund + Owners Fund

2015= 232915 + 550331 = 783246
2016= 268750 + 594157 = 862907
122599
2015 = 783246 × 100 = 15.65%
𝟗𝟗𝟕𝟑𝟎
2016 = × 𝟏𝟎𝟎 = 11.56%
𝟖𝟔𝟐𝟗𝟎𝟕

18.00%
16.00% 15.65%
14.00%
12.00% 11.56%
10.00%
return on capital
8.00%
employed
6.00%
4.00%
2.00%
0.00%
2015 2016

Comment
Return on capital employed of YAMAHA Motors Ltd is 11.56%.

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RETURN ON PROPRIETOR’S FUNDS
This ratio measures the relationship between net profit (after interest and tax) and
the proprietor’s capital. It is usually expressed as a percentage. It is also known as return on
proprietor’s equity or return on net worth.
𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 (𝐀𝐟𝐭𝐞𝐫 𝐓𝐚𝐱)
𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐏𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐨𝐫 ′ 𝐬 𝐅𝐮𝐧𝐝 = × 𝟏𝟎𝟎
𝐏𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐨𝐫 ′ 𝐬 𝐅𝐮𝐧𝐝𝐬
 Net profit (after tax)
2015 = 68429
2016 = 74220

 Proprietor’s Funds = Equity Capital + Reserves & Surplus + Preference Capital

2015 = 85782 + 74698 + 390559 + 709 = 550331
2016 = 85797 + 74712 + 434361 + 714 = 594157

68429
2015 = × 100 = 12.43%
550331
𝟕𝟒𝟐𝟐𝟎
2016 = × 𝟏𝟎𝟎 = 12.49%
𝟓𝟗𝟒𝟏𝟓𝟕

12.50%
12.49%
12.49%
12.48%
12.47%
12.46%
12.45%
12.44% return on
12.43% proprietor's funds
12.43%
12.42%
12.41%
12.40%
2015 2016

Comment
Return on proprietor’s funds of YAMAHA Motors Ltd is 12.49%.

Page | 62
RETURN ON EQUITY CAPITAL
This ratio measures the relationship between net profit (after interest, tax and
preference dividend) and the equity shareholder’s funds.
𝐏𝐫𝐨𝐟𝐢𝐭 𝐀𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞 𝐭𝐨 𝐄𝐪𝐮𝐢𝐭𝐲 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫′𝐬
𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐄𝐪𝐮𝐢𝐭𝐲 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 = × 𝟏𝟎𝟎
𝐄𝐪𝐮𝐢𝐭𝐲 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫 ′ 𝐬 𝐅𝐮𝐧𝐝
 Profit available to equity shareholder’s
2015 = 60023
2016 = 63153

 Equity shareholder’s funds = Share Capital + Retained Earnings – Treasury shares

2015 = 85782 + 390559 – 709 = 475632
2016 = 85797 + 434361 – 714 = 519444

60023
2015 = × 100 = 12.62%
475632
𝟔𝟑𝟏𝟓𝟑
2016 = × 𝟏𝟎𝟎 = 12.16%
𝟓𝟏𝟗𝟒𝟒𝟒

12.70%
12.62%
12.60%

12.50%

12.40%

12.30%

12.20% return on equity

12.16% capital
12.10%

12.00%

11.90%
2015 2016

Comment
As there is no preference capital in the company, therefore, return on equity capital will be same
as return on proprietor’s funds i.e. 46.14%.

Page | 63
Page | 64
7.1 FINDINGS

 Current ratio of the Company is continuously increasing year by year which is positive
indication for the company that company is having ability to meet short term liabilities,
However the current level of Current Ratio is less than the required level (i.e. 2: )

 Cash ratio of the company is in green zone because in the year 2016 company is having
0.29 level of cash ratio which is very high in number as compare to the last year 0.2 and
the Company belongs to the Automobile industry so the level of cash ratio should be high
at every time because at any time company need to be settle a huge claims.

 YAMAHA Motors Ltd. Is a Zero debt Company which means that there is no Fix burden
on the company to pay interest every year, The proprietary ratio of the company is on
increasing phase which is a positive signal for the company, however it is less than 1
every year it means that the all assets are arrange from the funds of equity as it is zero
debt company so all the assets are purchase from the funds of equity.

 Profitability part of the Company is performing very well. The company was registered in
the March 2008 and the impact of that is showing on return on equity share holder it was
positive in year 2015 by 12.62% and after that company makes continuous decrease and
now having ROE 12.16% which is very bad for a Company..

 Fixed Asset of the company are showing a good numbers because in the year 2015 it was
341075 (Million) and in year 2016 it is 350668 (Million), there is a 2.81% increase in the
fixed assets of the company.

Page | 65
7.2 SUGGESTIONS

 The profit Of the Company Is not in a good Position for That Company has to Take
Alternative Actions such As

- Production, and Control in Expenses Like, Administrative, selling Etc.

 The firms have low current ratio so it should increase its current ratio where it can meet
its short term obligation smoothly.

 Liquidity ratio of the firm is not better liquidity position in over past years. So I
suggested that the firm maintain proper liquid funds like cash and bank balance.

 It should enhance its employee’s efficiency, more training needed to its employees in
order to increase its production capacity and minimize mistakes while performing the
tasks, also more safety precaution need to implement to the employees who directly
working on production process.

 The firm high inventory so I suggested that the firm must reduce the stock by increase
sales.

 The firms should have proper check on the manufacturing process of the plant.

Page | 66
 7.3 CONCLUSION

This project of Ratio analysis of concern is not merely a work of the project. But a brief
knowledge and experience of that how to analyze the financial performance of a company. The
study undertaken has brought in to the light of the following conclusions. According to this
project I came to know that from the analysis of financial statements it is clear that YAMAH
Motors Ltd. have been increasing the profit during the period of study. So the firm should focus
on getting of more profits in the coming years by taking care internal as well as external factors.
And with regard to resources, the company is taking utilization of the assets properly.

Finance is the life blood of every business. Without effective financial management a
company cannot survive in this competitive world. A Prudent financial Manager has to measure
the working capital policy followed by the company.

The company’s overall position is at a good position. Through the profits have increased
in the Following Year 2015 to 2016, they were able to come out of it successfully and regain into
increased profitable scenario. Particularly the last two year’s position is very well due to
increase in the profit level from the Following Year 2015 to 2016. It is better for the firm to
diversify the funds to different sectors in the present market scenario. On a whole YAMAHA
Motors Limited has once again demonstrated its potential to ride through the difficult times.

Also other segments are showing promising opportunities to grow. With these many
opportunities at hand along with the potential player who would be able to make use of the
situation well. So from this we can conclude that there is a better opportunities for investors to
invest in this company.

Page | 67
Page | 68
 Bibliography

Investopedia. (2017, July 25). Retrieved July 25, 2017, from Investopedia: http://www.investopedia.com/

(2017). In M. Y. Jain, Financial Management. Tata McGraw-Hill Education.

My Accounting Course. (2017, July 25). Retrieved July 2017, 2017, from My Accounting Course:
http://www.myaccountingcourse.com/financial-ratios/

YAMAHA MOTOR. (2017, July 25). Retrieved July 25, 2017, from Yamaha Motor Corporation:
https://global.yamaha-motor.com/

(Investopedia, 2017) (YAMAHA MOTOR, 2017) (My Accounting Course, 2017) (Jain, 2017)

Page | 69
Page | 70
Balance Sheet of YAMAHA

Balance sheet of YAMAHA Motors 2017 2016

Cash & Short Term Investments 156,971 135,720

Cash Only 155,634 135,527

Short-Term Investments 1,337 193

Total Accounts Receivable 314,549 292,874

Accounts Receivables, Net 314,549 292,874

Accounts Receivables, Gross 327,371 304,021

Bad Debt/Doubtful Accounts (12,822) (11,147)

Inventories 307,628 294,289

Finished Goods 198,991 188,032

Work in Progress 52,835 52,694

Raw Materials 55,802 53,563

Other Current Assets 75,865 72,058

Miscellaneous Current Assets 75,865 72,058

Total Current Assets 855,018 794,943

Net Property, Plant & Equipment 347,997 350,668

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Property, Plant & Equipment - Gross 972,525 -

Buildings 110,206 102,377

Land & Improvements 83,712 84,936

Machinery & Equipment 105,673 104,723

Construction in Progress 20,653 31,656

Other Property, Plant & Equipment 27,752 26,974

Accumulated Depreciation 624,528 -

Total Investments and Advances 96,188 87,872

LT Investment - Affiliate Companies 26,886 -

Other Long-Term Investments 69,302 87,872

Long-Term Note Receivable 85,927 56,220

Intangible Assets 11,173 8,658

Net Other Intangibles 11,173 -

Other Assets 6,505 7,897

Tangible Other Assets 6,505 7,897

Total Assets 1,415,845 1,318,776

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 Liabilities 2017 2016
ST Debt & Current Portion LT Debt 191,006 182,486

Short Term Debt 133,725 128,517

Current Portion of Long Term Debt 57,281 53,969

Accounts Payable 154,689 143,789

Income Tax Payable 11,035 8,165

Other Current Liabilities 145,423 140,181

Accrued Payroll 13,965 12,971

Miscellaneous Current Liabilities 131,458 127,210

Total Current Liabilities 502,153 474,621

Long-Term Debt 162,849 182,273

Long-Term Debt excl. Capitalized Leases 162,569 181,960

Non-Convertible Debt 162,569 181,960

Capitalized Lease Obligations 280 313

Provision for Risks & Charges 54,499 56,158

Deferred Taxes (8,360) (7,275)

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Deferred Taxes - Credit 4,675 5,241

Deferred Taxes - Debit 13,035 12,516

Other Liabilities 26,434 25,076

Other Liabilities (excl. Deferred Income) 26,434 25,076

Total Liabilities 750,610 743,369

Common Equity (Total) 622,802 534,166

Common Stock Par/Carry Value 85,797 85,797

Additional Paid-In Capital/Capital Surplus 74,662 74,712

Retained Earnings 513,182 434,361

Cumulative Translation Adjustment/Unrealized (94,226) (93,530)

For. Exch. Gain

Unrealized Gain/Loss Marketable Securities 35,086 28,945

Revaluation Reserves 10,449 -

Other Appropriated Reserves (1,427) 4,595

Treasury Stock (722) (714)

Total Shareholders' Equity 622,802 534,166

Accumulated Minority Interest 42,430 41,238

Page | 74
Total Equity 665,232 575,404

Liabilities & Shareholders' Equity 1,415,842 1,318,773

Profit & Loss A/C of YAMAHA

P&L Acc of YAMAHA Motors 2017 2016

Sales/Revenue 1,670,090 1,502,834

Cost of Goods Sold (COGS) incl. D&A 1,211,460 1,100,173

COGS excluding D&A 1,166,003 1,057,739

Depreciation & Amortization Expense 45,457 42,434

Gross Income 458,630 402,661

SG&A Expense 300,810 278,485

Research & Development 99,200 94,855

Other SG&A 201,610 183,630

Other Operating Expense 8,037 15,580

EBIT 149,783 108,596

Unusual Expense 2,367 1,427

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Non Operating Income/Expense 1,370 (7,837)

Non-Operating Interest Income 4,553 4,262

Equity in Affiliates (Pretax) 2,824 781

Interest Expense 3,850 4,644

Gross Interest Expense 3,850 4,644

Pretax Income 152,313 99,730

Income Tax 35,228 25,510

Income Tax - Current Domestic 32,694 28,823

Income Tax - Deferred Domestic 2,533 (3,312)

Consolidated Net Income 117,085 74,220

Minority Interest Expense 15,481 11,066

Net Income 101,604 63,154

Net Income After Extra ordinaries 101,604 63,154

Net Income Available to Common 101,603 63,153

EPS (Basic) 290.93 180.83

Basic Shares Outstanding 349 349

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EPS (Diluted) 290.93 180.83

Diluted Shares Outstanding 349 349

EBITDA 195,240 151,030

EBIT 149,783 108,596

Page | 77