Yamaha Ratio Analysis

RATIO ANALYSIS
CHAPTER - 1
1.INTRODUCTION
RATIO ANALYSIS
Ratio analysis is the process of identifying the financial strengths and weaknesses of the
firm by properly establishing relationships between the items of the balance sheet and the profit
and loss account. Financial analysis can be undertaken by management of the firm, or by parties
outside the firm, viz. Owners, creditors, investors and others. The nature of analysis will differ
depending on the purpose of the analyst.
Trade Creditors
Trade creditors are interested in firm’s ability to meet their claims over a very short
period of time. Their analysis will, therefore, confine to the evaluation of the firm’s liquidity
position
Suppliers of Long-Term Debt
On the other hand, suppliers of long-term debt are concerned with the firm’s long-term
solvency and survival. They analyse the firm’s profitability over time, its ability to generate cash
to be able to pay interest and repay principal and the relationship between various sources of
funds (Capital structure relationship). Long-term creditors do analyse the historical financial
statements, but they place more emphasis on the firm’s projected, or proforma, financial
statements to make analysis about its future solvency and profitability.
Investors
Investors, who have invested their money in the firm’s shares, are most concerned about
the firm’s earnings. They restore more confidence in those firms that show steady growth in
earnings. As such, they concentrate on the analysis of the firm’s present and future profitability.
They are also interested in the firm’s financial structure to the extent it influences the firm’s
earnings ability and risk.
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Management
Management of the firm would be interested in every aspect of the financial analysis. It is
their overall responsibility to see that the resources of the firm are used most effectively and
efficiently, and that the firm’s financial condition is sound.
Nature of ratio analysis
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the indicated
quotient of two mathematical expressions” and as “the relationship between two or more tings”.
In financial analysis, a ratio is used as a benchmark for evaluating the financial position and
performance of a firm. The absolute accounting figures reported in the financial statements do
not provide a meaningful understanding of the performance and financial position of a firm. An
accounting figure conveys meaning when it is related to some other relevant information. Ratios
help to summarise large quantities of financial data and to make qualitative judgement about the
firm’s financial performance.
Standards of comparison
The ratio analysis involves comparison for a useful interpretation of the financial
statements. A single ratio in itself does not indicate favourable or unfavourable condition. It
should be compare with some standard. Standards of comparison may consist of
Past ratios i.e., ratios calculated from the past financial statements of the same firm;
Competitors’ ratios, i.e., ratios of some selected firms, especially the most progressive and
successful competitor, at the same point in time;
Industry ratios, i.e., ratios of the industry to which the firm belongs; and
Projected ratios, i.e., ratios developed using the projected, or proforma, financial statements of
the same firm.
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1.1 INDUSTRY PROFILE
Yamaha Motor Company Limited Yamaha Hatsudōki Kabushiki-gaisha?) is a Japanese

manufacturer of motorcycles, marine products such as boats and outboard motors, and other
motorized products. The company was established in 1955 upon separation from Yamaha
Corporation (however Yamaha Corporation is still the largest shareholder with 12.21%, as of
June 30, 2015),[1] and is headquartered in Iwata, Shizuoka, Japan. The company conducts
development, production and marketing operations through 109 consolidated subsidiaries as of
2012.
Led by Genichi Kawakami, the company’s first president, Yamaha Motor began
production of its first product, the YA-1, in 1955. The 125cc motorcycle won the 3rd Mount Fuji
Ascent Race in its class.
The company's products includes motorcycles, scooters, motorized bicycles, boats, sail
boats, personal water craft, swimming pools, utility boats, fishing boats, outboard motors, 4-
wheel ATVs, recreational off-road vehicles, go-kart engines, golf carts, multi-purpose engines,
electrical generators, water pumps, snowmobiles, small snow throwers, automobile engines,
surface mounters, intelligent machinery, industrial-use unmanned helicopters, electrical power
units for wheelchairs and helmets. The company is also involved in the import and sales of
various types of products, development of tourist businesses and management of leisure,
recreational facilities and related services.
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 Autobike Endurance Road Race
that same year.[2] 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.
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RATIO ANALYSIS
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. [3] 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 downtube cradle frame and offered the first five-speed
transmission in a Japanese motorcycle. [4] 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 companies 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.
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.
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RATIO ANALYSIS
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 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 [8] 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.[9]
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
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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 exciting and unique nationwide contest which aims at strengthening the role of
Customer Service Engagement, contestants from all over India competed for the coveted title and
an opportunity to represent Yamaha Motor India Sales Pvt. Ltd. in World Technician Grand Prix
in Japan. From the Regional round, 100 winners were selected for 4 zones. From the Zonal
rounds, 20 winners (5 from each zone) were selected to compete in the final round.
The contest was designed to judge the contestants' skill in the areas of "proper service
knowledge", providing service that "communicates the image of the Yamaha products" and
providing amiable customer service. To judge the level of these skills, the contestants were tested
in Theory, trouble shooting, electrical wiring, Engine noise diagnosis, FI Station repair on actual
motorcycles and skill of dealing with customers during vehicle receiving and delivery. The
winners were decided based on cumulative points earned in these areas.
National Technician Grand Prix (NTGP) was first held in India in 2010 and is a yearly
event. It is a contest which is a part of the Yamaha Technical Academy (YTA) program
promoted by Yamaha Motor Co., Japan. The Yamaha Technical Academy (YTA) is the
cornerstone of Yamaha's Technical Training Program. Yamaha's YTA Instructors combine
comprehensive technical model information from the Yamaha Factory with 'real-world'
diagnostic and troubleshooting skills developed over many years of actual dealership experience.
YAMAHA WTGP contest is organized by YMC at Japan once in 2 years to decide the No. 1
Yamaha service technician in the world. This contest is part of "Global Service Education" plan
that Yamaha Motor has been promoting worldwide since 2000.
From September 30 to October 1 2014, 20 of the best Technicians from 18 countries who
have won their national qualifying contests gathered in Japan for the 6th Yamaha World
Technician Grand Prix, At the newly renovated YTA Global Training Center at Yamaha Motor
headquarters in Iwata, these contestants competed in the areas of service knowledge, technical
skills and customer service skills.
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RATIO ANALYSIS
In WTGP 2014, it was the second time when YMIS participated in the World Technician
Grand Prix. Mr Meenakshi Sundaram S (Alagendran Autos,Madurai), & Mr Sunilkanta Singh
Hemam (Pakhangba Motors, Imphal) represented India there. Both the contestants proved the
Indian technicians calibre at this world level contest.
Mr. Meenakshi won the 1st position, and received the world's best Technician's tag. Mr
Sunilkanta also made his mark by securing 5th position in the tough competition.
As the manufacturer of legendary "Yamaha" we are committed to highest level of quality.

We ensure that these quality standards don't get diluted during after sales service and for this
Technical Training is essential. Technical Training is essential to acquire knowledge and
enhancement of skills at all levels, like Yamaha service team and dealer service staff for
delivering highest quality of service.
To ensure that only the highest level of professional technicians work on Yamaha vehicles, India
Yamaha Motor has introduced Yamaha Technical Academy in India in the year 2002. YTA is
Yamaha Motor Corporation, Japan's education system which is in force in all countries where
Yamaha is present. YTA is the cornerstone of Yamaha's Technical Training program. Our
courses combine comprehensive technical information from the Yamaha factory with "real
world" diagnostic and troubleshooting skills developed over many years of actual field
experience.
Through YTA, we are able to develop a highly skilled technical workforce, with greater career
prospects. YTA trained technicians are highly skilled, and are trained for the repair and
diagnostics of the latest models of Yamaha motorcycles. By imparting focused training, YTA
creates "Professional technicians". These trained technicians consistently provide "Best of
Service" to valued "Yamaha customers".
The YTA curriculum which is a global standard was modified to Indian requirements in 2008. In
view of increase in models, technological advancement and growing customer expectations we
have modified our training modules and introduced new programs. As on date the YTA is
imparting the following courses. We have a continuous training program for the mechanics
starting from Beginner then climbing through Bronze, Silver Engine, Silver Body and Silver
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Electrical. Certificates (as shown below) are issued to all successful candidates after training and
same are displayed in the customer lounge of the Yamaha workshops. From these certificates
you can understand each service person's YTA qualification.
This contest seeks to raise the service technician's consciousness of their importance in Yamaha
business, simulate their desire for improvement to become Doctors of motorcycles who can
delight the customers and thereby strengthen Yamaha service.
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RATIO ANALYSIS
1.2 COMPANY PROFILE
Yamaha Motor made its initial foray into India in 1985 as a joint-venture. In August 2001,
it became a 100% subsidiary of Yamaha Motor Co., Ltd, Japan (YMC). In 2008, Mitsui & Co.,
Ltd. entered into an agreement with YMC to become a joint-investor in India Yamaha Motor
Private Limited (IYM).
IYM's manufacturing facilities comprise of 3 State-of-the-art Plants at Surajpur (Uttar

Pradesh), Faridabad (Haryana) and Kanchipuram (Tamil Nadu). The infrastructure at these
plants supports production of two-wheelers and parts for the domestic as well as overseas
markets.
IYM is highly customer-driven and has a country-wide network of over 2,200 customer
touch-points including 500 dealers. Presently, its product portfolio includes Sports models such
as YZF-R3 (321 cc), YZF-R15 version 2.0 (149 cc), YZF-R15S (149 cc); Blue-Core Technology
enabled models such as FZ-S FI (Fuel-Injected, 149 cc), FZ FI (Fuel-Injected, 149 cc), Fazer FI
(Fuel-Injected, 149 cc), SZ-RR version 2.0 (149 cc), Saluto (125 cc), Saluto RX (110 cc),
Fascino (113 cc), Cygnus Alpha (113 cc), Cygnus Ray Z (113 cc), Cygnus Ray ZR (113 cc) as
well as imported models comprising of MT-09 (847cc), VMAX (1,679 cc), YZF-R1M (998 cc)
and YZF-R1 (998 cc).
The other Yamaha Motor Group Companies in India include:
Yamaha Motor India Pvt. Ltd. (YMI) is a 100% subsidiary of YMC and functions as the
regional headquarters and corporate control body of India business operations for YMC. YMI is
responsible for Corporate Planning & Strategy, Business Planning & Business Expansion and
Quality & Compliance Assurance of Yamaha India Business.
Yamaha Motor India Sales Pvt. Ltd. (YMIS) is a 100% subsidiary of YMC and supports
IYM to market and sell its motorcycles & scooters in domestic as well as export markets.
Yamaha Motor Research & Development India Pvt. Ltd. (YMRI) is a 100% subsidiary of YMC and has
been established by YMC to provide R&D and Product development services to IYM for its domestic as
well as export markets. YMRI is the fifth overseas R&D headquarters for Yamaha Motor Group
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following Italy, Taiwan, China, and Thailand.

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.
CORE COMPETENCIES
Customer #1
We put customers first in everything we do. We take decisions keeping the customer in
mind.
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods & services we
provide. We work hard to achieve what we commit & achieve results faster than our competitors
and we never give up.
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Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust, respect,
understanding & mutual co-operation. Everyone's contribution is equally important for our
success.
Frank & Fair Organization
We are honest, sincere, open minded, fair & transparent in our dealings. We actively listen
to others and participate in healthy & frank discussions to achieve the organization's goals.
Paving the Road to Yamaha Motor Corporation
"I want to carry out trial manufacture of motorcycle engines." It was from these words spoken by
Genichi Kawakami (Yamaha Motor's first president) in 1953, that today's Yamaha Motor
Company was born.
"If you're going to do something, be the best."
- Genichi Kawakami
Genichi Kawakami was the first son of Kaichi Kawakami, the third-generation president
of Nippon Gakki (musical instruments and electronics; presently Yamaha Corporation). Genichi
studied and graduated from Takachiho Higher Commercial School in March of 1934. In July of
1937, he was the second Kawakami to join the Nippon Gakki Company. He quickly rose to
positions of manager of the company's Tenryu Factory Company (musical instruments) and then
Senior General Manager, before assuming the position of fourth-generation President in 1950 at
the young age of 38.
In 1953, Genichi was looking for a way to make use of idle machining equipment that had
previously been used to make aircraft propellers. Looking back on the founding of Yamaha
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Motor Company, Genichi had this to say "While the company was performing well and had
some financial leeway, I felt the need to look for our next area of business. So, I did some
research." He explored producing many products, including sewing machines, auto parts,
scooters, three-wheeled utility vehicles, and motorcycles. Market and competitive factors led him
to focus on the motorcycle market. Genichi actually visited the United States many times during
this period.
When asked about this decision, he said, "I had my research division chief and other managers
visit leading motorcycle factories around the country. They came back and told me there was still
plenty of opportunity, even if we were entering the market late. I didn't want to be completely
unprepared in this unfamiliar business so we toured to German factories before setting out to
build our first 125cc bike. I joined in this tour around Europe during which my chief engineers
learned how to build motorbikes. We did as much research as possible to insure that we could
build a bike as good as any out there. Once we had that confidence, we started going."
"If you are going to make it, make it the very best there is." With these words as their motto, the
development team poured all their energies into building the first prototype, and ten months later
in August of 1954 the first model was complete. It was the Yamaha YA-1. The bike was
powered by an air-cooled, 2-stroke, single cylinder 125cc engine. Once finished, it was put
through an unprecedented 10,000 km endurance test to ensure that its quality was top-class. This
was destined to be the first crystallization of what has now become a long tradition of Yamaha
creativity and an inexhaustible spirit of challenge.
The first Yamaha motorcycle... the YA-1
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Then, in January of 1955 the Hamakita Factory of Nippon Gakki was built and production began
on the YA-1. With confidence in the new direction that Genichi was taking, Yamaha Motor Co.
Ltd. was founded on July 1, 1955. Staffed by 274 enthusiastic employees, the new motorcycle
manufacturer built about 200 units per month.
That same year, Yamaha entered its new YA-1 in the two biggest race events in Japan. They
were the 3rd Mt. Fuji Ascent Race and the 1st Asama Highlands Race. In these debut races
Yamaha won the 125cc class and the following year the YA-1 won again in both the Light and
Ultra-light classes of the Asama Highlands Race.
By 1956, a second model was ready for production. This was the YC1, a 175cc single cylinder
two-stroke. In 1957 Yamaha began production of its first 250cc, two-stroke twin, the YD1.
Based on Genichi's firm belief that a product isn't a product until it can hold it's own around the
world, in 1958 Yamaha became the first Japanese maker to venture into the international race
arena. The result was an impressive 6th place in the Catalina Grand Prix race in the USA. News
of this achievement won immediate recognition for the high level of Yamaha technology not
only in Japan but among American race fans, as well. This was only the start, however.
The first Yamaha to compete in America(1957)
Yamaha took quick action using the momentum gained in the USA and began marketing their
motorcycles through an independent distributor in California. In 1958, Cooper Motors began
selling the YD-1 250 and the MF-1 (50cc, two-stroke, single cylinder, step through street bike).
Then in 1960, Yamaha International Corporation began selling motorcycles in the USA through
dealers.
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With the overseas experiences under his belt, in 1960, Genichi then turned his attention to the
Marine industry and the production of the first Yamaha boats and outboard motors. This was the
beginning of an aggressive expansion into new fields utilizing the new engines and FRP
(fiberglass reinforced plastic) technologies. The first watercraft model was the CAT-21, followed
by the RUN-13 and the P-7 123cc outboard motor.
In 1963, Yamaha demonstrated its focus on cutting-edge, technological innovations by

developing the Auto lube System. This landmark solution was a separate oil injection system for
two-stroke models, eliminating the inconvenience of pre-mixing fuel and oil.
Yamaha was building a strong reputation as a superior manufacturer which was reflected in its
first project carried out in the new Iwata, Japan Plant, built in 1966. (The YMC headquarters was
moved to Iwata in 1972.) Toyota and Yamaha teamed up to produce the highly regarded Toyota
2000 GT sports car. This very limited edition vehicle, still admired for its performance and
craftsmanship, created a sensation among enthusiast in Japan and abroad.
Genichi said, "I believe that the most important thing when building a product is to always keep
in mind the standpoint of the people who will use it." An example of the commitment to
"walking in the customers' shoes" was the move in 1966 by Yamaha to continue its expansion.
Overseas motorcycle manufacturing was established in Thailand and Mexico. In 1968, the
globalization continued with Brazil and the Netherlands. With manufacturing bases, distributors
and R&D operations in a market, Yamaha could be involved in grassroots efforts to build
products that truly met the needs of each market by respecting and valuing the distinct national
sensibilities and customs of each country. Yamaha continues that tradition, today.
By the late 1960s, Yamaha had quality products that had proven themselves in the global
marketplace based on superior performance and innovation. Distribution and product diversity
were on the right track. But Genichi knew that beyond quality, success would demand more. He
had this view on the power of original ideas. "In the future, a company's future will hinge on
ideas over and above quality. Products that have no character, nothing unique about them, will
not sell no matter how well made or affordable and that would spell doom for any company."
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He also knew that forward vision, walking hand in hand with original ideas, would create an
opportunity for the company and its customers that could mean years of happiness and
memorable experiences. Genichi said, "In the business world today, so many people are obsessed
with figures. They become fixated on the numbers of the minute and without them are too afraid
to do any real work. But in fact, every situation is in flux from moment to moment, developing
with a natural flow. Unless one reads that flow, it is impossible to start out in a new field of
business. "A real-world illustration of this belief is the Yamaha DT-1. The world's first true off-
road motorcycle debuted in 1968 to create an entirely new genre we know today as trail bikes.
The DT-1 made a huge impact on motorcycling in the USA because it was truly dirt worthy.
Yamaha definitely "read the flow" when it produced the 250cc, single cylinder, 2-stroke, Endure
that put Yamaha On/Off-Road motorcycles on the map in the USA. The DT-1 exemplified the
power of original ideas, forward vision, and quick action coupled with keeping in mind the
customers' desires.
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In years to come Yamaha continued to grow (and continues to this day). Diversity increased with
the addition of products including snowmobiles, race kart engines, generators, scooters, ATV's,
personal watercraft and more. Genichi Kawakami set the stage for Yamaha Motor Company's
success with his vision and philosophies. Total honesty towards the customer and making
products that hold their own enables the company that serves people in thirty-three countries, to
provide an improved lifestyle through exceptional quality, high performance products.
ORGANISATION CHART
BOARD OF DIRECTORS
MANAGING DIRECTOR
GM.FINANCE GM PRODUCTION MARKETING
MARKETING
ACCUONTS TAXATION CASH&BANK
MANAGER MANAGER MANAGER
FIELD STAFF
QUALITY GENERAL
MANAGER MANAGER
GENERAL
MANAGER
H.R PRODUCTION
MANAGER MANAGER
SUPERVISOR
OPERATOR
MACHINE OPERATOR
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CHAPTER-II
REVIEW OF LITERATURE
Financial analysis is the process of identifying the financial strength and
weaknesses of the firm establishing relationship between the items of financial statement viz.,
Balance sheet& Profit and loss Account , does it. Management of the firm or by parties out side
the firm viz., owners , creditors, investors and others can under taken financial analysis Financial
analysis is the starting point for making plans, before using any sophisticated forecasting and
planning procedures. Understanding the past is a prerequisite for anticipating the future.
RATIO ANALYSIS
A term of financial ratio can be explained by defining how it is calculated and what the
objective of this calculation Is.
Calculation basis:
1. A relationship expressed in mathematical terms.
2. Between two individual figures or group of figures
3. Connected with each other in some logical manner
4. And selected form financial statement of the concern.
5. OBJECTIVES OF RATIOS:
 Performance (past ,present and future )
 Strength & weaknesses of a firm
 And can take decisions in relation to the firm
Ratio analysis is the process of determining and interpreting numerical relationship based
on financial statement. It is an assessment of one number in relationship must be established on
the basis of some scientific and logical methods. Thus a ratio is a mathematical relationship
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between two items and expressed in quantitative form. When this definition of ratio is
explained with reference to the items shown in financial statements, then it called “Accounting
Ratio's.
Hence, an accounting ratio is defined as quantitative relationship between two or more

items of the financial statements.
Ratio analysis is the systematic use of ratio to interpret the financial statements so that the
strengths and weakness of a firm as well as its historical performance and current financial
position can be determined.
Nature of Ratio Analysis:
Ratio analysis is a powerful too of financial analysis. In finished analysis a ratio is used
as a benchmark for evaluating the financial position and performance of a firm. The absolute
accounting figures reported in the financial statements to not provide a meaningful understanding
of the performance and financial positions of a firm. An accounting figure conveys meaning
when it is related to some other relevant information.
There are a number of ratios which can be computed from a single set of financial
statements but only a few can be use in any particulars situations to focus on the financial
positions of a business concern. In fact, for tackling any problem initially one should determine
what ratio would be helpful in throwing light on the, above situation and compute only such
ratio. The calculations of all ratios and trying to find use for the subsequently could be quite
unwarranted.
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Utility of Ratio Analysis:

The ratio analysis is the most powerful tool of the financial analysis. Many diverse
groups of people are interested in analysis the financial information’s to indicate their operating
and financial efficiently, and growth of firm.
IMPORTANCE OF RATIOS
A popular technique of analyzing the performance of a business concern is that of
financial ratio analysis. As a tool of financial management, they are of crucial significance. The
importance of ratio analysis lies in the fact that it presents facts on a comparative basis and
enables drawing of inferences regarding the performance of a firm.
Ratio analysis is in respect of the following aspects;

I. Liquidity position
II. Long-term solvency
III. Operating efficiency
IV. Overall profitability
V. Inter-firm comparison
VI. Financial ratios for supporting budgeting
TYPES OF RATIOS
Several ratios, calculated from the accounting data, can be grouped into various classes.
According to financial activity or function to be evaluated. The parties interested in financial
analysis are short-term and long-term creditors, owners and management. Short- Term creditors
main interest in the liquidity position or the short-term solvency of the Firm. Long-term
solvenacy and profitability of the firm. Similarly, owners concentrate on the firm’s profitability
and financial condition. Management is interested in evaluating every aspect of the firm’s
performance. They have to protect the interests of all parties and see that the firm grows
profitability.
In view of the requirements of the various users of ratios, we may classify them into the
following four important categories:
1. Liquidity Ratios
2. Leverage Ratios
3. Activity Ratios
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4. Profitability Ratios
RATIO ANALYSIS
Absolute figures expressed in monetary terms in financial statements themselves are

meaningless. These figures often do not convey much meaning unless expressed in relation to
other figures. Thus, we can say that the relationship between two figures expressed in
arithmetical terms is called a ‘ratio’.
Advantages of Ratio Analysis
Financial statements i.e. Profit & loss account & Balance sheet prepared at the end of the
year do not always convey to the reader the real profitability & financial health of the business.
They contain various facts & figures & it is for the reader to conclude, whether these facts
indicate a good or bad managerial performance. Ratio analysis is the most important tool of
analysing these financial statements. It helps the reader in giving tongue to the mute heaps of
figures given in financial statements. Some important objects & advantages are as follow:
• Helpful in analysis of financial statements
• Simplification of accounting Data
• Helpful in locating the weak spot of the Business
• Fixation of Ideal Standards
Limitations of Ratio Analysis
Ratio analysis is a very important tool of financial analysis. But despite its being
indispensable; the ratio analysis suffers from a number of limitations. These limitations should
be kept in mind while making use of the ratio analysis.
 False accounting data gives False Ratios
 Ratio Analysis becomes less effective due to price level changes.
 Comparison not possible if different firms adopt different Accounting Policies.
 Lack of proper Standards
 Window-Dressing
Page 20
RATIO ANALYSIS
Classification of Ratio Analysis
Ratios can be classified into the four categories as follows:-
1. Liquidity Ratio
2. Leverage or Capital Structure Ratio
3. Activity Ratio
4. Profitability Ratio or Income Ratio
5. Investor’s ratio
1. LIQUIDITY RATIOS:
Liquidity refers to the ability of the firm to meet its obligation in the short run, usually its
(1 year). Liquidity ratios are generally based on the relationship between current assets and
current liabilities. A firm should ensure that it does not suffer from lack of liquidity and also
ensure that it does not have excess liquidity. A very high degree of liquidity is also bad, idle
assets earn nothing. The firm’s funds will be unnecessarily blocked in current assets. There fore
it is necessary to have a proper balance of liquidity. Liquidity ratios are of three types;
 CURRENT RATIO
 QUICK RATIO
 CASH RATIO
A) CURRENT RATIO
The current ratio measures the short-term solvency of the firm. It establishes the
relationship between current assets and current liabilities. A current ratio 2:1 is considered
satisfactory. The higher the current ratio, the greater the margin of safety; the larger the amount
of current assets in relation to current liabilities, the more the firm’s ability to meet its obligation.
It is a crude and quick measure of the firm’s liquidity. It is calculated as follows,
Page 21
RATIO ANALYSIS
Current assets: Current Assets include Cash, Stock, Debtors, Loans and Advances, Prepaid
Expenses, and Bills Receivables.
Current Liabilities: Current liabilities include Creditors, Loans and Advances, Bills Payable,
Outstanding Expenses and Bank Overdraft.
B) ACID TEST
RATIO/ QUICK
Current Assets
RATIO
Current ratio = --------------------------
It has been
Current liabilities
an important
indicator of the firm’s liquidity position. It establishes the relationship between quick assets and
current liabilities. Quick assets are those current assets, which can be converted into cash
immediately or with in reasonable short time with out a loss value. Inventories are considered to
be less liquid. Inventories normally require some time for realising into cash; their value also has
a tendency to fluctuate. The quick ratio is found out by dividing quick assets by current
liabilities.
Quick assets
Quick ratio = ---------------------------------
Current liabilities
Generally a 1:1 Quick ratio sounds good liquidity position of the company.
Quick assets: Quick assets are defined as current assets excluding inventories.
Current liabilities: It includes loans and advances, creditors, accrued expenses and provisions.
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RATIO ANALYSIS
C) CASH RATIO
It shows the relationship between super quick current assets and liabilities. Since cash is
the most liquid asset, a financial analyst may examine cash ratio and its equivalent current
liabilities. If the company carries a small amount of cash there is nothing to be worried about the
lack of cash , if the company has reserves borrowing power.
Cash + marketable securities

Cash ratio = -------------------------------------------------------------
Current liabilities
2. LEVERAGE RATIOS:
The short-term creditors, like bankers and suppliers of raw material, are more concerned with
the firm’s current debt – paying ability. On the other hand, long-term creditors, like debenture
holders, financial institutions are more concerned with the firm’s long-term financial strength. To
judge the long-term financial leverage ratios are calculated. Financial leverage refers to the use
of debt finance. While debt capital is a cheaper source of finance, it is also a riskier sourceof
finance. Leverage ratio help in assessing the risk arising from the use of debt capital. There are
two ratios used to analyse financial leverage;
 Structural ratios
 Coverage ratios
STRUCTURAL RATIO: These ratios are based on the properties of debt and equity in the
financial structure of the firm. The important structural ratios are;
 Debt assets ratio
 Debt equity ratio
COVERAGE RATIO: These ratios show the relationship between debt servicing commitments
and the sources for meeting their obligation. The important coverage ratios are;
 coverage ratio
 Fixed charges coverage ratio
A) DEBT ASSETS RATIO
Page 23
RATIO ANALYSIS
Several debt ratios may be used to analyse the long- term solvency of a firm. The firm may be
interested in knowing the proportion of the interest- bearing debt in the capital structure. It may,
there fore, compute debt ratio by dividing total debt by capital employed or net assets.
Total debt
Debt assets ratio = ------------------------------------------
Total assets
Debt ratio of greater than 1 indicates that a company has more debt than assets; meanwhile, a
debt ratio of less than 1 indicates that a company has more assets than debt
B) DEBT EQUITY RATIO

Debt equity ratio indicates the relationship describing the lender’s contribution for each
rupee of the owner’s contribution is called debt- equity ratio. Debt equity ratio is directly
calculated by total debt by equity. Lower the debt equity ratio higher the degree of protection.
Total debt
Debt equity ratio = ---------------------------------------
Equity
C) INTEREST COVERAGE RATIO

A ratio used to determine how easily a company can pay interest on the outstanding debt.
In this the lender will be interested in finding out whether the business would earn sufficient
profits to pay the interest charges. It is calculated by dividing company’s EBIT of one period by
company’s interest expenses of the same period.
Page 24
RATIO ANALYSIS
The lower the ratio the more the company is burden of debt expenses. The interest
coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy
interest expenses
EBIT
Interest coverage ratio = ---------------------------------------
Interest expenses
3) ACTIVITY RATIO:
Activity ratios are also known as activity ratios or efficiency ratios with which a firm
manages its current assets. It measures how efficiently the assets are employed by the firm. The
following turnover ratios can be calculated to judge the effectiveness of asset use
 INVENTORY TURNOVER RATIO
 DEBTOR TURNOVER RATIO

 ASSETS TURNOVER RATIO
A) INVENTORY TURNOVER RATIO

Inventory turnover ratio indicates the efficiency of the firm in producing and selling its
products. It indicates the number of times the inventory has been converted into sales during the
period. Thus it evaluates the efficiency of the firm in managing its inventory. It is calculated by
dividing the cost of the goods sold by average inventory.
The average inventory is simple average of the opening and closing balances of inventory.
(Opening + closing balances divided by 2). In certain cases opening balance of inventory may
not be known then closing balance of inventory may be considered as average inventory.
Page 25
RATIO ANALYSIS
Net sales
Inventory turnover ratio = ---------------------------------
Closing stock
A) DEBTOR TURNOVER RATIO

A firm sells its goods for cash and credit. When the firm extends credit sales to its
customers, debtors are created in the firm’s account. Debtor’s turnover indicates the number of
times debtors are converted into cash during the year. The higher the value of
Debtor’s turnover, the more efficient is the management of credit. Debtor’s turnover is found out
by dividing credit sales by average debtors.
Credit sales
Debtors turnover ratio = -------------------------------------
Average debtors
A) ASSETS TURNOVER RATIO
The relationship between assets and sales is known as assets turnover ratio. Several assets
turnover ratios can be calculated depending upon the groups of assets, which are related to sales.
1. NET ASSTES TURNOVER RATIO

2. TOTAL ASSETS TURNOVER RATIO
3. FIXED ASSES TURNOVER RATIO
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RATIO ANALYSIS
1. NET ASSETS TURNOVER RATIO

Assets are used to generate sales therefore a firm should manage its assets efficiently to
maximise sales. A firm’s ability to produce a large volume of sales for a given amount of net
assets is the most important aspect of its operating performance.
sales
Net assets turnover ratio = -----------------------------------------
NetSales
assets
Fixed assets turnover ratio = ---------------------------------------------------

Fixed assets
2.
TOTAL ASSETS TURNOVER RATIO

Some analyst likes to compute the total assets turnover in addition to (or) instead of the net assets
turnover. This ratio shows the firm’s ability in generating sales from all financial resources
committed to total assets.
Sales
Total assets turnover ratio = ---------------------------------------------
Total assets
3) FIXED ASSESTS TURNOVER RATIO

This ratio is very important in manufacturing concerns, where the investment in fixed assets is
very high. This ratio reveals how efficiently the fixed assets are utilised. If the there is increase in
this ratio, when compared to the previous year, it indicate the better utilisation of assets. If there
is fall in the ratio, it will show that fixed assets have not been used as efficiently.
4) PROFITABILITY RATIOS
Page 27
RATIO ANALYSIS
The main objective of all the business units is to earn profits. Management of the company,
creditors, share holders, are interested to know the financial position of the firm. The owners
invest their funds in the expectation of reasonable returns. The operating efficiency of the firm
and its ability to ensure satisfactory returns to its shareholders depends ultimately on the profits
earned. The profitability of the firm can be measured by its profitability ratios. Profitability ratios
include the following;
 Profitability ratios based on sales
 Profitability ratio based on investment
1) PROFITABILITY RATIO BASED ON SALES

A) GROSS PROFIT RATIO
The first profitability ratio in relation to sales is the gross profit margin; the gross profit margin
reflects the efficiency with which management produces each unit of product. A high gross profit
margin is a good sign of management. A low gross profit margin may reflect higher cost of
goods sold due to the firm’s inability to purchase raw materials at favourable terms, inefficient
utilisation of plant and machinery , over investment in plant and machinery , due to fall in prices
in market.
Gross profit
Gross profit ratio = ----------------------× 100
Net sales
B) NET PROFIT RATIO

Net profit ratio establishes the relationship between net profit and sales and indicates
management’s efficiency in manufacturing, administration and selling of the products. This ratio
is the overall measure of the firm’s ability to turn each rupee sales into net profit. A firm with a
high net margin ratio would be in a advantageous position to survive in the face of falling selling
prices, rising costs of production, declining demand for the product.
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RATIO ANALYSIS
Profit after tax

Net profit ratio = ------------------------------------------- × 100
Sales
C) OPERATING PROFIT RATIO

This ratio measure the proportion of an enterprise’s cost of sales and operating expenses
in comparison to its sales. The higher the operating expenses ratio is unfavourable since it will
leave a small amount of operating income to meet interest, dividends.
Operating profit
Operating profit ratio = ---------------------------------------------
Sales
Lower the operating ratio, the better it is, because it will leave higher margin of profit on sales.
PROFITABILITY RATIOS BASED ON INVESTMENT

A) RETURN ON EQUITY
A return on shareholder’s equity is calculated to see the profitability of owner’s investment. The
earning satisfactory return is the most desirable objective of a business. ROE indicates how well
the firm has used the resources of the owners.
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RATIO ANALYSIS
Profit after taxes

Return on equity = ------------------------------------
Net worth
B) RETURN ON CAPITAL EMPLOYED

A ratio that indicates the efficiency and profitability of a company’s capital investments. ROCE
should always be higher than the rate at which the company borrows; otherwise any increase in
the borrowing will reduce share holder’s earnings.
EBIT
ROCE = -------------------------------------------------
Total assets - current liabilities
A variation in this ratio is the return on average capital employed (ROCE). This takes the
average of opening and closing capital employed for the time period.
C) RETURN ON ASSETS
An indicator of how profitable a company is relative to its total assets. ROA gives an idea as how
efficient management is at using its assets to generate earnings. It is calculated By dividing
company’s annual earnings by its total assets.
Net income
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RATIO ANALYSIS
ROA = ----------------------------------------------------
Total assets
Sometime it is also referred as “return on investment”.
Note: some investors add interest expenses back into net income when performing this
calculation because they did not like to use operating returns before cost of borrowing.
5) INVESTOR’S RATIO
The main objective of the business is to yield profits and the profits are shared by the owners, in
order to provide the information about the earnings on investment investors’ ratio were used. The
following are various investors’ ratios
a) Earnings per share
b) Dividend per share
c) Dividend payout ratio
d) Price to book ratio
1) EARNINGS PER SHARE

Earning per share acts as an common indicator of company’s profitability. The profitability of
common shareholder’s investment can also be measured in many ways. One such measure is to
calculate the earning per share.
When calculating it is more accurate to use weighted average number of shares outstanding over
the reporting term, because the number of shares outstanding can change over time.
2) DIVIDEND PER SHARE

Dividend per share is the total dividend paid out over an entire year (including interim dividend
but not including special dividends) dividend by number of outstanding ordinary shares
proposed dividend
Dividend Per Share = --------------------------------------------------
Page 31
outstanding shares
RATIO ANALYSIS
Dividends are a form of profit distribution to the shareholder. Having a growing dividend per
share can give a sign that the company’s management believes that the growth can be sustained.
3) DIVIDEND PAYOUT RATIO
Dividend per share

Dividend payout ratio = ------------------------------------------------
Earnings per share
The percentage of earnings paid to shareholders in dividends. The payout ratio provides an idea
of how well earnings support the dividend payments. More mature companies tend to have a
higher payout ratio. Dividend payout ratio is also known as dividend cover.
CHAPTER- III
3. RESEARCH METHODOLOGY
INTRODUCTION:
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying now research is done systematically. In that various steps,
those are generally adopted by a researcher in studying his problem along with the logic behind
them.
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RATIO ANALYSIS
It is important for research to know not only the research method but also know
methodology. The procedures by which researcher go about their work of describing, explaining
and predicting phenomenon are called methodology. Methods comprise the procedures used for
generating, collecting and evaluating the data. All this means that it is necessary for the
researcher to design his methodology for his problem as the same may differ from problem to
problem.
Data collection is important step in any project and success of any project will be largely
depend upon now much accurate you will be able to collect and how much time, money and
effort will be required to collect the necessary data, this is also important step.
Data collection plays an important role in research work. Without proper data available for
analysis you cannot do the research work accurately.
3.1. NEED FOR THE STUDY
The most important functions of the business firm are production, marketing finance. It is
very difficult to separate finance functions from production, marketing and other functions. The
functions of raising funds investing them in assets and distributing returns earned from assets to
share holders are respectively known as financing, investing and dividend decisions. In doing
so, a firm attempts to balance cash inflow and outflows. Finance function call for skillful
planning control and execution of firm’s activities.
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RATIO ANALYSIS
Hence, the study is taken to analyze the firm’s activities through “Ratio Analysis”
Page 34
RATIO ANALYSIS
3.2 OBJECTIVES OF THE STUDY
The study is primarily intended to scan the financial health condition of YAMAHA
MOTORS through financial analysis and evolve package of measures for their betterment. The
following specific objectives set for the study.
 To study the financial performance of the company
 To study the Liquidity, Profitability, position of the company
 To asses and evaluate reliability at different ratio.
 To suggest suitable solution based on the findings of the study.
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RATIO ANALYSIS
3.3 SCOPE OF THE STUDY
The efficient allocation of capital is the most important financial function in the modern
times. It involves decision to commit the firm’s, since they stand the long-term assets such
decision are of considerable importance to the firm since they send to determine its value and
size by influencing its growth and profitability.
The scope of the study is limited to collecting the financial data of YAMAHA MOTORS for
four years and budgeting of each year.
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RATIO ANALYSIS
3.4 METHODOLOGY OF THE STUDY
The research that has been done is of analytical research. As the data that is
required mainly is from secondary sources like annual reports of the organization, it is based
on the analysis done from the collected data.
SOURCES OF DATA:
The present project work covers a period of five years from 2015-2019. The project work is
based on the data collected from primary and secondary sources.
There are two types of techniques
1. Primary data
2. Secondary data
1) Primary data:
The primary data was collected through personal interviews with financial managers and
holding discussions with all parties concerned.
2) Secondary data:
The secondary data collected from published and unpublished manuals, records, broachers, files,
etc; of the organization and books, reports etc;
Managers and supervisors of the organization have also been interviewed to elicit
necessary information on the basis of on structural schedules the secondary information was
collected from the company's manuals and office records pertaining to production, marketing,
personal and financial position.
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RATIO ANALYSIS
3.5 LIMITATIONS OF THE STUDY
Availability of accurate financial information and analytical reports of the company may
limit the analysis of the research to some extent.
 Time is also a limiting factor after study as the project is restricted.
 A ratio analysis stand pertains to relevant industry is also a limiting factor for
comparative analysis.
 The members of financial department are very busy with the audit work; hence they are
not being able to spend more time for me.
 The analysis and interpretation of collected data is restricted to necessary information.
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RATIO ANALYSIS
CHAPTER-IV
4. DATA ANALYSIS AND INTERPRETATION
A) LIQUIDITY RATIOS
1. CURRENT RATIO:
Current assets
Current Ratio =
Current liabilities
(Rs in crs.)
YEAR CURRENT CURRENT CURRENT
ASSETS LIABILITIES RATIO
2014-15 296.41 178.37 1.66
2015-16 349.72 201.94 1.73
2016-17 403.14 261.28 1.54
2017-18 355.73 231.47 1.54
2018-19 411.14 247.10 1.66
Current Ratio
1.75
1.7
1.65
1.6 Current Ratio
1.55
1.5
1.45
1.4
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION:
The current ratio is in increasing and decreasing trend from the last five years, the firm is
not maintaining standard current ratio but it is near to ideal current ratio i.e., 2:1
2. QUICK RATIO
Page 39
RATIO ANALYSIS
Quick assets
Quick ratio =
Current liabilities
YEAR QUICK ASSETS CURRENT LIABILITY QUICK RATIO
2014-15 202.86 178.37 1.13
2015-16 224.93 201.94 1.11
2016-17 243.15 261.28 0.93
2017-18 202.60 231.47 0.88
2018-19 232.95 247.10 0.94
(Rs in Crs)
Current Ratio
1.2
1
0.8
Current Ratio
0.6
0.4
0.2
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION:
In the year of 2011 and 2015 there was good performance in quick ratio but in the year 2011 it
was decreased after that quick ratio has been fluctuating and the company maintained standard
ratio i.e., 1:1. It shows company can convert its current assets into cash quickly.
3. CASH RATIO:
Liquid assets
Page 40
RATIO ANALYSIS
Cash ratio =
Current liability
(Rs in Crs.)
YEAR LIQUID ASSETS CURRENT LIABILITY CASH RATIO
2014-15 86.12 178.37 0.48
2015-16 95.27 201.94 0.47
2016-17 102.45 261.28 0.39
2017-18 106.66 231.47 0.46
2018-19 139.87 247.10 0.56
Cash Ratio
0.6
0.5
0.4
Cash Ratio
0.3
0.2
0.1
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION:
During the study period there was increasing trend in absolute liquid ratio except in the
year 2011(0.39). This shows that company is maintaining sufficient cash balance.
B) LEVERAGE RATIO
1. DEBT ASSETS RATIO:
Total debt
Debts assets ratio =
Page 41
RATIO ANALYSIS
Total assets
(Rs in Crs.)
YEAR TOTAL DEBT TOTAL ASSETS DEBT RATIO
2014-15 0 357.33 0
2015-16 0 404.19 0
2016-17 0 465.82 0
2017-18 0 521.21 0
2018-19 0 561.28 0
INTERPRETATION:
The debt total assets ratio shows that the company have not used the debt for the last
these years.
2. DEBT EQUITY RATIO:

Total debt
Debt equity ratio =
Equity
( Rs in Crs.)
YEAR DEBT EQUITY RATIO
Page 42
RATIO ANALYSIS
2014-15 0 27.68 0
2015-16 0 27.68 0
2016-17 0 27.68 0
2017-18 0 27.68 0
2018-19 0 27.68 0
INTERPRETATION:
The debt equity ratio has come down from 0 From the last 5 years and there was no
outsider’s fund.
3. INTEREST COVERAGE RATIO:
EBIT
Interest coverage ratio =
Interest expense
(Rs in Crs.)
YEAR EBIT INTEREST EXPENSE INTEREST COVERAGE
RATIO
Page 43
RATIO ANALYSIS
2014-15 130.28 0.25 521.12

2015-16 125.97 0.28 449.89
2016-17 149.34 0.37 403.62
2017-18 136.64 0.59 231.59
2018-19 120.31 0.44 273.43
INTEREST COVERAGE RATIO

600
500
400
INTEREST COVERAGE RATIO
300
200
100
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION:
This ratio shows that the company has got enough interest coverage ratios for all the years
because the company is not using much debt in their capital structure.
C) ACTIVITY RATIOS
1. INVENTORY TURNOVER RATIO:
Cost of goods sold
Inventory turnover ratio =
Avg. Inventory
(Rs in Crs.)
YEAR COST OF GOODS AVG.INVENTORY INVENTORY
SOLD TURN OVER
RATIO
2014-15 593.91 702.07 6.27
Page 44
RATIO ANALYSIS
2015-16 699.22 109.17 6.40

2016-17 781.95 142.39 5.49
2017-18 833.17 156.56 5.32
2018-19 849.97 165.66 5.13
INVENTORY TURN OVER RATIO

7
6
5
4 INVENTORY TURN OVER RATIO
3
2
1
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION:
From the year 2011 inventory turnover ratio is decreased and hence the ratio is fluctuating.
Hence the overall turnover is not that efficient, company is not utilizing their Inventory properly.
2. DEBTORS TURNOVER RATIO:

Sales
Debtors turnover ratio =
Avg debtors
(Rs in Crs.)
YEAR SALES AVG. DEBTORS DEBTOR TURNOVER
RATIO
2014-15 711.17 824.54 5.34
2015-16 792.93 88.51 8.95
2016-17 906.60 93.74 9.67
2017-18 945.09 95.39 9.90
2018-19 941.61 90.54 10.4
Page 45
RATIO ANALYSIS
DEBTOR'S TURNOVER RATIO

12
10
8
RATIO
6
8.95 9.67 9.9 10.4
4
2 5.34
0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR
INTERPRETATION:
The debtor’s turnover ratio was 8.95 in the year 2011 and it increased to 10.4 in the year
2015, this represents that the company has a good credit recovery policy. The company can
convert its debtors into cash easily.
3. ASSETS TURNOVER RATIO:

Net sales
Net assets turnover ratio =
Avg. Total assets
(Rs in Crs.)
YEAR NET SALES AVG. TOTAL ASSETS NET ASSETS

TURNOVER RATIO
2014-15 711.17 1364.66 3.23

2015-16 792.93 380.76 2.08
2016-17 906.60 435.005 2.08
2017-18 945.09 493.515 1.91
2018-19 941.61 541.245 1.73
Page 46
RATIO ANALYSIS
NET ASSESTS TURN OVER RATIO

3.5
3
2.5
2 NET ASSESTS TURN OVER RATIO
1.5
1
0.5
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION:
The assets turnover ratio has been decreased, it represents that the ratio is been fluctuating
but from the past three years, it is in decreasing trend. So it is doubtful for the equity
shareholders to invest and earn more returns.
4. FIXED ASSETS TURNOVER RATIO:
Total sales
Fixed assets turnover ratio= assets ¿
Avg . Net ¿
(Rs. in Crs.)
YEAR TOTAL SALES AVG. NET FIXED FIXED ASSETS
ASSETS TURNOVER RATIO
2014-15 711.17 1533.30 2.87
2015-16 792.93 305.995 2.59
2016-17 906.60 322.620 2.81
2017-18 945.09 380.965 2.48
2018-19 941.61 469.205 2.0
Page 47
RATIO ANALYSIS
FIXED ASSETS TURNOVER RATIO

3.5
3
2.5
2
RATIO
1.5 2.87 2.81

2.59 2.48
1 2
0.5
0
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR
INTERPRETATION:
In the year 2011, 2011 and 2015 fixed assets turnover ratio is fluctuating. From the year 2015 it
is in decreasing trend and it shows that company is not using its fixed assets efficiently.
D) PROFITABILITY RATIOS
1. GROSS PROFIT RATIO:
Gross profit
Gross Profit ratio= ∗100
sales
YEAR GROSS PROFIT SALES GROSS PROFIT RATIO

2014-15 135.05 711.17 12%
2015-16 110.03 792.93 14%
2016-17 141.33 906.60 16%
2017-18 131.34 945.09 14%
2018-19 117.58 941.61 19%
Page 48
RATIO ANALYSIS
20%
GROSS PROFIT RATIO
15%
RATIO
10% 19%
14% 16% 14%
5% 12%
0%
2014-15 2015-16 2016-17 2017-18 2018-19
YEAR
INTERPRETATION
Here gross profit is in fluctuating trend, gross profit has been reduced from 19% in 2011
to 14% in 2015. This shows that company has less profit from the past few years.
4. NET PROFIT RATIO:
profit after tax

Net profit ratio= ∗100
sales
YEAR NET PROFIT SALES NET PROFIT RATIO

2014-15 87.51 711.17 12.30%
2015-16 85.63 792.93 10.79%
2016-17 103.63 906.60 11.43%
2017-18 97.67 945.09 10.33%
2018-19 82.32 941.61 8.74%
Page 49
RATIO ANALYSIS
NET PROFIT RATIO

14.00%
12.00%
10.00%
8.00%
RATIO
6.00% 12.30% 11.43%

10.79% 10.33%
4.00% 8.74%
2.00%
0.00%
2014 2015 2016 2017 2018
YEAR
INTERPRETATION:
The net profit margin of the company was 12.30% in the year 2011; The net profit
margin of the company has been good for all the periods and it represents that they have enough
control over their operating expenses.
3) RETURN ON EQUITY:
Profit after tax

Return on Equity = Net Worth
YEAR PROFIT AFTER NET WORTH RETURN ON

TAX EQUITY
2014-15 87.51 357.33 24.48
2015-16 85.63 404.19 21.18
2016-17 103.63 465.83 22.2
2017-18 97.67 521.23 18.7
2018-19 82.32 561.28 14.6
INTERPRETATION:
Page 50
RATIO ANALYSIS
In the year 2011 the return on equity was high when compared to the remaining years. The
ratio also represents that the company has consistent returns on equity, its a favourable sign to
the investors.
4) RETURN ON CAPITAL EMPLOYED:
EBIT
Return on capital employed =
Avg. Total Assets
YEAR EBIT AVG. TOTAL ROCE

ASSETS
2014-15 130.28 400.24 32.48
2015-16 125.97 380.76 33.08
2016-17 149.34 435.05 34.33
2017-18 136.64 493.51 27.68
2018-19 120.31 541.24 22.14
RETURN ON CAPITAL EMPLOYED

40
35
30
25
RATIO
20
15 32.48 33.08 34.33
27.68
10 22.14
5
0
2014 2015 2016 2017 2018
YEAR
INTERPRETATION:
Page 51
RATIO ANALYSIS
The return on capital was high in the year 2011.However the company has got good
returns on their capital in other years also.
E) INVESTOR’S RATIOS
1. Earnings per share:
PAT
Earnings per share = × 100
No. of shares
YEAR PAT No. of shares Earnings per share

2014-15 87.51 553.60 15.80
2015-16 85.63 553.60 15.46
2016-17 103.63 553.60 18.71
2017-18 97.67 553.60 17.64
2018-19 82.32 553.60 14.86
EARNINGS PER SHARE

20
15
RATIO
10 18.71 17.64
15.8 15.46 14.86
5
0
2014 2015 2016 2017 2018
YEAR
INTERPRETATION:
The earnings per share is been fluctuating from year to year which shows that the
company has little uncertainty in the market.
Page 52
RATIO ANALYSIS
5. Dividend per share
Equity dividend
Dividend per share = × 100
Outstanding shares
YEAR Equity dividend Outstanding shares Dividend per share

2014-15 35.98 553.60 6.50
2015-16 35.98 553.60 6.50
2016-17 35.98 553.60 6.50
2017-18 35.98 553.60 6.50
2018-19 35.98 553.60 6.50
2500
2011 2012 2013 2014 2015
2000
1500
YEAR
1000 Dividend per share
500
0
1 2 3 4 5
INTERPRETATION:
Dividend is provided equally for every year which is good and it increases the company good
will in the market.
Page 53
RATIO ANALYSIS
6. DIVIDEND PAYOUT RATIO:
Dividend per share

Dividend Payout Ratio = × 100
Earnings per share
YEAR Dividend per Earnings per share Dividend Payout
share Ratio
2014-15 6.50 15.80 41.13%
2015-16 6.50 15.46 42.64%
2016-17 6.50 18.71 34.74%
2017-18 6.50 17.64 36.84%
2018-19 6.50 14.86 43.74%
DIVIDEND PAYOUT RATIO

50.00%
40.00%
30.00%
RATIO
20.00% 41.13% 42.64% 43.74%

34.74% 36.84%
10.00%
0.00%
2014 2015 2016 2017 2018
YEAR
INTERPRETATION:
Dividend payout ratio is increasing every year and it has given 43.74% in last year which will
hold more shareholders in the market
CHAPTER – V
5.1FINDINGS
Page 54
RATIO ANALYSIS
 During the study period the current ratio is in increasing and decreasing trend but they are
near to ideal ratio.
 Liquidity ratio reveals that the company has enough funds to meets their obligations.
 The inventory turnover ratio is in fluctuating trend and it has been decreasing from the
past three years, Shows Company is not efficiently using its inventory.
 The debtor’s turnover ratio is in increasing trend, it reveals that the credit sales are
quickly converted in cash, it shows efficient debtors management.
 Net profit is decreasing from last year and it is fluctuating if we take overall five years.
Page 55
RATIO ANALYSIS
5.2 SUGGESTIONS
 The firm should maintain standard current ratio 2:1 by reducing liabilities or by maintaining
current assets by increasing current investments like giving loans and advances etc.
 The firm should enhance inventory turnover by using the proper inventory control techniques
like increasing their product marketing activities and increasing demand of product in the
market.
 The firm should maintain debt in its capital in order to get tax advantage.
 The firm should reduce cost of goods sold i.e. reducing manufacturing time labour and
material cost etc in order to enhance gross profit.
Page 56
RATIO ANALYSIS
5.3 CONCLUSION
From the above study on the key ratios, the current ratio is in standard position, debtors
turnover ratio is efficient and by studying all ratios it is concluded that, the financial performance
of the company, YAMAHA MOTORS, has in standard position.
Page 57
RATIO ANALYSIS
YAMAHA MOTOR COMPANY LTD-FINANCIAL STATEMENTS
ANNEXURE
PROFIT & LOSS ACCOUNT FOR YEAR ENDED 2014-15

S.NO PARTICULARS Schedules 2014 2015
Income
Sales (Gross) 1 25307821 33149158
Less excise duty 2 Nil 4020574
Sales tax Nil Nil
Sales 25307821 29128584

Other income 3 215433 420225
Increase or decrease in stock 4 (881092) (397934)
24642162 29150875
Expenditure
Raw materials consumed 5 14203590 16793959
Manufacturing expenses 6 6088445 7577527
Administrative expenses 7 369564 406729
Payments &benefits to employees 8 1831698 1566551
Rates & taxes 9 44008 22100
Financial charges 10 489302 682264
Provisions for doubtful debts 11 Nil 6100
Depreciation 12 963430 865185
23990037 27920415
Profit 13 652125 1230460
Less provisions for income tax 14 Nil Nil
Provision for Fringe Benefit Tax Nil Nil
Provision for deferred tax 276278 205642
a)Tax effect of timing differences 15
originating during the year Nil 174690
b)Tax effect of timing differences 16
reversing during the year (49818) (2188)
226460 378144
Profit After Tax (PAT) 425665 852316

profit from previous year 17 2994674 2148472
less short provision for tax and profit 18 30285 6114
Profit carried to balance sheet 3390054 2994674
Page 58
RATIO ANALYSIS
BALANCE SHEET AS ON 2014-15

Particulars Schedule YEARS
No: 2014 2015
Sources of funds
Share Holder Funds
a. Share capital 1 3902800 3902800
b. Reserves &surplus: 2 3390054 2994674
Loans funds:
a)Secured loans 3 3670451 4492013
b)Unsecured loans - -
Deferred Tax liability 4 1515072 1564890
Total 12478377 12954377
Application of funds
1.fixed assets(gross Block) 5 13412790 13320437
Less: Depreciation 4168011 3213560
Net Block 9244779 10106877
2.current assets loans &
advances
a) Inventories 6 2045587 3155304
b) Sundry Debtors 7 1331451 505180
c) Cash & Bank 8 100216 197880
d) Other assets 9 1972198 2404934
5449452 6263298
Less: Current Liabilities&
provisions
a)Liabilities 10 1546404 2462499
b)provisions 11 669449 953299
2215853 3415798
Total 3233599 2847500
Total 12478378 12954377
Page 59
RATIO ANALYSIS

Income
Sales (Gross) 1 29455716 25307821
Less excise duty 2 2570820 Nil
Sales tax 1132722 Nil
Sales 25752174 25307821
Other income 3 60017 215433
Increase or decrease in stock 4 473188 (881092)
Expenditure
Payments &benefits to 8 1925447 1831698
employees
Rates & taxes 9 43024 44008
Provisions for doubtful debts 11 89051 Nil
Depreciation 12 1067978 963430
25735235 23990037
Profit 13 550144 652125

Less provisions for income tax 14
Provision for Fringe Benefit Tax 175000 Nil
a)Tax effect of timing 15
differences
originating during the year 2104 Nil
b)Tax effect of timing 16
differences
reversing during the year Nil (49818)
192104 226460
less short provision for tax and 18 14615 30285
profit
Page 60
RATIO ANALYSIS
Particulars Schedule No: YEARS

2015 2016
Sources of funds
Share Holder Funds
a. Share capital 1 3902800 3902800
b.Reserves &surplus: 2 3733474 3390054
Loans funds:
a)Secured loans 3 1578137 3670451
Deffered Taxliability 4 1517176 1515072
Total 10731587 12478377
Net Block 9833698 9244779
2.current assets loans & advances
a) Inventories 6 2200699 2045587
c) Cash & Bank 8 191891 100216
d) Other assets 9 2126201 1972198
6594661 5449452
Less: Current Liabilities& provisions
a)Liabilities 10 3683918 1546404
b)provisions 11 2012855 669449
5696773 2215853
Total 897888 3233599

Total 10731586 12478378
Page 61
RATIO ANALYSIS
S.NO PARTICULARS Schedul 2016 2017

es
Income
Sales (Gross) 1 31546070 29455716
Less excise duty 2 Nil 2570820
Sales tax Nil 1132722
Sales 31546070 25752174

Increase or decrease in stock 4 (742958) 473188
30847879 26285379
Expenditure

Rates & taxes 9 50185 43024
Provisions for doubtful debts 11 Nil 89051

Depreciation 12 1134334 1067978
30731284 25735235
Profit 13 116595 550144
Less provisions for income tax 14
Provision for Fringe Benefit Tax 158100 175000
originating during the year (178577) 2104
reversing during the year
(5847) 192104

less short provision for tax and 18 14615
profit
Page 62
RATIO ANALYSIS
Page 63
RATIO ANALYSIS
Particulars Schedule YEARS

No: 2016 2017
Sources of funds
Share Holder Funds
a. Share capital 1 3902800 3902800
Loans funds:
a)Secured loans 3 1594407 1578137
Total 10691728 10731587
Net Block 9460993 9833698
a) Inventories 6 2048876 2200699
c) Cash & Bank 8 331011 191891
d) Other assets 9 4198396 2126201
8497426 6594661
a)Liabilities 10 4166255 3683918
b)provisions 11 3093435 2012855
7259690 5696773
Total 1237736 897888
Total 10698729 10731586
Page 64
RATIO ANALYSIS

Income
Sales (Gross) 1 33156905 31546070
Less excise duty 2 2383692 Nil
Sales tax 1019119 Nil
Sales 29754094 31546070

Increase or decrease in stock 4 284391 (742958)
30662921 30847879
Expenditure
Rates & taxes 9 231023 50185
Provisions for doubtful debts 11 Nil Nil
Depreciation 12 1153808 1134334
30879471 30731284
Profit 13 (216550) 116595
Less provisions for income tax 14 Nil
Provision for deferred tax (286704) 14630
originating during the year Nil (178577)
reversing during the year Nil
(273704) (5847)
less short provision for tax and 18
profit

Page 65
RATIO ANALYSIS
Particulars Schedule No: YEARS

2017 2018
Sources of funds
Share Holder Funds
a. Share capital 1 4847800 3902800
Loans funds:
a)Secured loans 3 7946663 1594407
b)Unsecured loans 4 2033179 -
Total 19792611 10691728
Net Block 8392083 9460993
Capital W/P 6856683 -
Total 15248766 9460993
a) Inventories 7 4248167 2048876
c) Cash & Bank 9 1129883 331011
d) Other assets 10 3475187 4198396
11721701 8497426
a)Liabilities 11 7164256 4166255
b)provisions 12 13000 3093435
7177256 7259690
Total 4544445 1237736
Total 19793211 10698729
Page 66
RATIO ANALYSIS
S.N PARTICULARS Schedules 2018 2019

O
Income
Sales (Gross) 1 46503000 33156905
Less excise duty 2 3344758 2383692
Sales tax 1520175 1019119
Sales 41638067 29754094

Other income 3 302273 624436
Increase or decrease in stock 4 1363850 284391
43304190 30662921
Expenditure
Rates & taxes 9 135020 231023
Provisions for doubtful debts 11 Nil Nil
Depreciation 12 1579349 1153808
42155944 30879471
Profit 13 1154246 (216550)
Less provisions for income tax 14 67086
Provision for deferred tax 481824 (286704)
originating during the year Nil Nil
reversing during the year Nil Nil
559960 (273704)

less short provision for tax and 18
profit
Page 67
RATIO ANALYSIS
Perticulars Schedule No: YEARS

2018 2019
Sources of funds
Share Holder Funds
a.Share capital 1 5402800 4847800
Loans funds:
a)Secured loans 3 8894443 7946663
b)Unsecured loans 4 2085036 2033179
Total 22423359 19792611
Net Block 14238013 8392083
Capital W/P - 6856683
Total 14238013 15248766
a) Inventories 7 6439331 4248167
c) Cash & Bank 9 1667680 1129883
d) Other assets 10 3826802 3475187
13665121 11721701
Less: Current Liabilities & provisions
a)Liabilities 11 5337950 7164256
b)provisions 12 141826 13000
5479776 7177256
Total 8185345 4544445

Total 22423358 19793211
Page 68
RATIO ANALYSIS
BIBLIOGRAPHY
1) I. M., PANDEY, “Financial Management”, 8th Edition, Vikas Publishing House Pvt. Ltd.,
New Delhi, 2002.
2) PRASANNA CHANDHRA, “Financial Management”,5th Edition, Tata-Mc Graw hill

publishing company limited, New Delhi,2002.
3) S.P.JAIN, K.L.NARANG, “Advanced Accountancy”, 10th Edition, Kalyani

Publishers,Ludhiyana,2003.
Website:
www.google.com.in
www.yamaha.com
www.motors.com
www.wikipedia.com
www.academia.com
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Yamaha Ratio Analysis

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RATIO ANALYSIS

Suppliers of Long-Term Debt

Nature of ratio analysis

1.1 INDUSTRY PROFILE

Yamaha Motor Company Limited Yamaha Hatsudōki Kabushiki-gaisha?) is a Japanese

Success and growth in the 1960s

The 1980s: Diversification and Innovation

As the manufacturer of legendary "Yamaha" we are committed to highest level of quality.

1.2 COMPANY PROFILE

IYM's manufacturing facilities comprise of 3 State-of-the-art Plants at Surajpur (Uttar

The other Yamaha Motor Group Companies in India include:

following Italy, Taiwan, China, and Thailand.

Paving the Road to Yamaha Motor Corporation

"If you're going to do something, be the best."

The first Yamaha motorcycle... the YA-1

The first Yamaha to compete in America(1957)

In 1963, Yamaha demonstrated its focus on cutting-edge, technological innovations by

GM.FINANCE GM PRODUCTION MARKETING

Hence, an accounting ratio is defined as quantitative relationship between two or more

Nature of Ratio Analysis:

Utility of Ratio Analysis:

Ratio analysis is in respect of the following aspects;

Absolute figures expressed in monetary terms in financial statements themselves are

Advantages of Ratio Analysis

• Helpful in analysis of financial statements

• Simplification of accounting Data

• Helpful in locating the weak spot of the Business

• Fixation of Ideal Standards

Limitations of Ratio Analysis

 False accounting data gives False Ratios

 Ratio Analysis becomes less effective due to price level changes.

 Comparison not possible if different firms adopt different Accounting Policies.

 Lack of proper Standards

Classification of Ratio Analysis

Ratios can be classified into the four categories as follows:-

2. Leverage or Capital Structure Ratio

4. Profitability Ratio or Income Ratio

Cash + marketable securities

B) DEBT EQUITY RATIO

C) INTEREST COVERAGE RATIO

 INVENTORY TURNOVER RATIO

 DEBTOR TURNOVER RATIO

A) INVENTORY TURNOVER RATIO

A) DEBTOR TURNOVER RATIO

A) ASSETS TURNOVER RATIO

1. NET ASSTES TURNOVER RATIO

1. NET ASSETS TURNOVER RATIO

Fixed assets turnover ratio = ---------------------------------------------------

TOTAL ASSETS TURNOVER RATIO

3) FIXED ASSESTS TURNOVER RATIO

1) PROFITABILITY RATIO BASED ON SALES

B) NET PROFIT RATIO

Profit after tax

C) OPERATING PROFIT RATIO

PROFITABILITY RATIOS BASED ON INVESTMENT

Profit after taxes

B) RETURN ON CAPITAL EMPLOYED

Sometime it is also referred as “return on investment”.

1) EARNINGS PER SHARE

2) DIVIDEND PER SHARE

3) DIVIDEND PAYOUT RATIO

Dividend per share