PROJECT REPORT

(Submitted for the Degree of B. Com. Honours in Accounting & Finance under the
University of Calcutta)

Title of the Project

Submitted by

Name of the Candidate: - Amlan Saha

College Roll No:- 171004
Registration No: - 043-1112-0004-17
Roll No: - 171043-21-0034
Name of the College: - Heramba Chandra College

Supervised by

Name of the Supervisor: - Priyanka Banik

Designation: - Faculty of Commerce
Name of the College: - Heramba Chandra College

Month & Year of Submission

September,2020
 Acknowledgement

I being a benefited student of HERAMBA CHANDRA COLLEGE, affiliated

Under the University of Calcutta, would like to take this opportunity to Express
my profound gratitude and regards to my supervisor, and to the entire department
of Commerce for their exemplary guidance, monitoring and constant
encouragement throughout the course of the completion of the project
“FINANCIAL STATEMENT ANALYSIS”.

The guidance given by them time to time shall carry me a long way in the journey
of my career on which I am about to embark. I would also like to Express my
thankfulness to the college and university committee for providing me with the
opportunity to work on this project, and for their cordial support, valuable
information and guidance, which helped me in completing this task through its
various stages.

AMLAN SAHA
HERAMBA CHANDRA COLLEGE
ROLL NO: 171043-21-0034
REGISTRATION NO: 043-1112-0004-17

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Annexure-I

Supervisor’s Certificate

This is to certify that Amlan Saha student of B.Com. Honours in Accounting &
Finance of Heramba Chandra College under the University of Calcutta has
worked under my supervision and guidance for his project work and prepared a
project report with the title ‘FINANCIAL STATEMNET ANALYSIS’

The project report, which he is submitting, is his genuine and original work to the
best of my knowledge.

Place:
Date:

Signature:
Name: Prof. Priyanka Banik
Designation: Faculty of Commerce
Name of the College: Heramba Chandra College

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Annexure-II

Student’s Declaration

I hereby declare that the Project Work with the title ‘FINANCIAL STATEMENT
ANALYSIS’ submitted by me for the partial fulfilment of the degree of B. Com
Honours in Accounting & Finance under the University of Calcutta is my original
work and has not been submitted earlier to any other University/Institution for
the fulfilment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has been
duly acknowledged providing details of such literature in the references.

Place:
Date:
Signature:
Name: - Amlan Saha
Address: - 5 Sahid Binoy Bose Road, Kol-
700070
Registration No: - 043-21-0034
Roll No: - 171043-21-0034

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 Table of Contents

Serial No CONTENTS PAGE NO

1 INTRODUCTION 5-10

1.1 Background of the study 6

1.2 Literature review 7

1.3 Objectives of the study 8

1.4 Limitation of the study 9

1.5 Research methodology 10

1.6 Chapter planning 10

2 CONCEPTUAL FRAMEWORK 11-18

2.1 Introduction 12
2.2 Features of financial statement analysis 12
2.3 Necessity of financial statement analysis 13
2.4 Objectives of financial statement analysis 14

2.5 Advantages of financial statement analysis 15

2.6 Limitation of financial statement analysis 15

2.7 Tools and techniques of financial statement analysis 16

2.8 users of financial statement analysis 17

3 DATA COLLECTION AND ANALYSIS 19-31

4 CONCLUSION AND RECOMANDATION 32-33

4.1 Conclusion 33
4.2 Recommendation 33
BIBLIOGRAPHY 34

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 CHAPTER 1
INTRODUCTION

Page | 5
1.1 Background of the Study: -

After preparation of the financial statements, one may be interested in knowing the position of
an enterprise from different points of view. This can be done by analysing the financial
statement with the help of different tools of analysis such as ratio analysis, funds flow analysis,
cash flow analysis, comparative statement analysis, etc. Here I have done financial analysis by
ratios. In this process, a meaningful relationship is established between two or more accounting
figures for comparison.

Before understanding the meaning of analysis of ratios, it is necessary to understand the

meaning of analysis and Ratio.

Analysis means establishing a meaningful relationship between various items of the two
financial statements with each other in such a way that a conclusion is drawn.

Ratio is a mathematical yardstick that measures the relationship between two figures or groups
of figures which are related to each other and are mutually interdependent. It can be expressed
as a pure ratio, percentage, or as a rate Ratio allow for better comparison through time or
between companies.

Ratio Analysis is a method or process by which the relationship of items or groups of items in
the financial statements are computed, and presented. It is important tool of financial analysis.
It is used to interpret the financial statements so that the strengths and weaknesses of a firm, its
historical performance and current financial condition can be determined.

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1.2 Literature Review: -

YEAR SERIAL AUTHOR NAME OF THE FINDING

NO. PROJECT
2013 1 Dharmaraj and Kathirvel Analysing the In India there is a
Financial huge scope for
Performance of automobile
Selected Indian companies. They
Automobile are financially
Companies strong and they are
growing at the rate
of 17 per cent per
annum and
contributing to the
Indian economy
reasonably.
2013 2 Moses Joshuva Daniel A Study on The company has
Financial Status stable growth and it
of TATA Motors shows a greater
Ltd. status in all the
areas it works.
2012 3 Amir Hossein Jamali and Management Using Minitab 14
Asghar Asadi Efficiency and and conducting
Profitability in Pearson Coefficient
Indian correlation test on
Automobile variables of the
Industry study including
Gross Profit Ratio
and Assets
Turnover Ratio.

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 2012 4 Kartik Chandra Nandi Trends in Company always
Liquidity tries to maintain
Management and adequate amount of
Their Impact on net working capital
Profitability in relation to
current liabilities so
as to keep a good
amount of liquidity
throughout the
study period.
2011 5 Kale Dinar Impact of Indian Automobile
Financial Crisis Sector showed
on The Financial resilience and was
Performance of not affected
The Indian significantly by the
Automobile recession.
Industry

1.3 Objectives of the Study: -

The objective of study of five-year comparative ratio analysis of India’s largest Automobile
listed Company i.e. Mahindra and Mahindra Ltd. are as follows: -

1.) Enable Comparison of the performance of the company in different years with its budgets
and forecast & with other companies in similar trades.

2.) Provide information of the company in respect of the liquidity, profitability, use of assets
and capital structure.

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3.) To ascertain the ability of the company to meet its obligation in the short run.

4.) The use of debt finance long term solvency of the firm can be examined by using leverage
or capital ratios.
5.) To measures the overall efficiency of production, Administration selling, financing, pricing
and Tax Management.

1.4 Limitation of the Study: -

The study conducted and done is analytical, subject to the following limitations; -

1.) The study is mainly carried out based on the secondary data provided in the financial
statements.

2.) There may be some fractional differences in the calculated ratios.

3.) Different definitions of capital employed may cause confusion.

4.) Changes in price level will affect the comparability of the ratios between two financial
periods.

5.) Changes in external environment will affect the comparison.

6.) Due to lack of availability of information all purchases and sales are considered to be made
on credit for calculation purpose.

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1.5 Research Methodology: -

Research methodology is away to systematically solve the research problem. It may be

understood as science of study a phenomenon. It is important for research to know not only the
research method but also to know methodology. The procedure by which research ago about
their work of describing, explaining and predictions phenomenon is called methodology.
Method comprises the procedures used for generating collecting and evaluating data.

Data connection is an important step in any project and success of it will be largely depend
upon how accurately you will able to collect the data and how much time, money required to
collect the necessary data.

There are two types of Data Collection methods:

➢ Primary data the data which is collected fresh first hand and for first time, which is
original in nature. It can be collected through personal interview, questionnaire etc.

➢ Secondary data the data which is collected from records, annual reports, journal, books,
website is known as secondary data.

My project based on the analysis of secondary data of the company. It is including the
information of the company annual reports which includes financial statements and other
information from the data available on internet.

1.6 Chapter Planning: -

This study is divided into 4 chapters with references:

Chapter1- Introduction.

Chapter2- Conceptual Framework.

Chapter3- Data collection and analysis.

Chapter4- Conclusion and Recommendation.

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 CHAPTER 2
CONCEPTUAL
FRAMEWORK

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2.1 Introduction: -

Financial analysis is the process of examining a company’s performance in the context of its
industry and economic environment in order to arrive at a decision or recommendation. Often,
the decisions and recommendations addressed by financial analysts pertain to providing capital
to companies—specifically, whether to invest in the company’s debt or equity securities and at
what price. An investor in debt securities is concerned about the company’s ability to pay
interest and to repay the principal lent. An investor in equity securities is an owner with a
residual interest in the company and is concerned about the company’s ability to pay dividends
and the likelihood that its share price will increase.
Overall, a central focus of financial analysis is evaluating the company’s ability to earn a return
on its capital that is at least equal to the cost of that capital, to profitably grow its operations,
and to generate enough cash to meet obligations and pursue opportunities.

2.2 Features of Financial Statement Analysis: -

1. The financial statement should not be effected by inconsistencies arising out of personal
judgement and procedural choices exercised by the accountant.

2. Financial Statements should comply with the legal requirements if any, as regards form,
contents, and disclosures and methods. In India, companies are required to present their
financial statements according to the Companies Act, 1956.

3. They should be easily comparable with previous statements or with those of similar concerns
or industry. Comparability increases the utility of financial statements.

4. They should be prepared in a classified form so that a better and meaningful analysis could
be made.

5. The financial statements should be prepared and presented at the right time. Undue delay in
their preparation would reduce the significance and utility of these statements.

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6. Financial statements are always expressed in monetary terms. They ignore qualitative
aspects. In other words, the non-monetary events do not come under the scope of financial
statements.

7. Financial statements are always prepared for a certain period of time. They generally cover
the period of one year.

8. Financial statements are historical in nature since they always present the past
performance. Hence, they do not carry the futuristic approach.

2.3 Necessity of Financial Statement Analysis: -

Measurement of profitability-it helps to measure profitability and financial health of the

business by using:
1) G.P ratio
2) N.P ratio
3) Return on investment
4) Operating profit ratio
5) Earnings per share
6) Dividend per share

➢ Holding of Share: Shareholders are the owners of the company. Time and again, they
may have to take decisions whether they have to continue with the holdings of the
company's share or sell them out. The financial statement analysis is important as it
provides meaningful information to the shareholders in taking such decisions.

➢ Reduces uncertainty: It reduces our reliance on hunches, guesses and intuition & also
diminishes uncertainty in decision making.

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 ➢ Extension of Credit: The creditors are the providers of loan capital to the company.
Therefore, they may have to take decisions as to whether they have to extend their loans
to the company and demand for higher interest rates or not. The financial statement
analysis provides important information to them for their purpose.

➢ Diagnostic tools: It is a Diagnostic tool in assessing financing, Investing and

operating activities and is a managerial and other business decisions.

2.4 Objectives: -

1. Assessment of Past Performance: Past performance is a good indicator of future

performance. Investors or creditors are interested in the trend of past sales, cost of goods sold,
operating expenses, net income, cash flows and return on investment. These trends offer a
means for judging management's past performance and are possible indicators of future
performance.

2. Assessing the current position & operational efficiency: Financial statement analysis helps
to assess the operational efficiency of the management of a company. The actual performance
of the firm which are revealed in the financial statements can be compared with some standards
set earlier and the deviation of any between standards and actual performance can be used as
the indicator of efficiency of the management.

3. Predicting growth & profitability prospects: Financial statement analysis helps in

assessing and predicting the earning prospects and growth rates in earning which are used by
investors while comparing investment alternatives and other users in judging earning potential
of business enterprise.

4. Loan decision by Financial Institutions and Banks: Financial analysis helps the financial
institutions, loan agencies & banks to decide whether a loan can be given to the company or not.
It helps them in determining the credit risk, deciding the terms and conditions of a loan if
sanctioned, interest rate, maturity date etc.

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5. Prediction of bankruptcy and failure: Financial statement analysis is a significant tool in
predicting the bankruptcy and failure probability of business enterprises. After being aware
about probable failure, both managers and investors can take preventive measures to
avoid/minimise losses. Corporate managements can effect changes in operating policy,
reorganise financial structure or even go for voluntary liquidation to shorten the length of time
losses.

2.5 Advantages of Financial Statement Analysis: -

➢ The most important benefit if financial statement analysis is that it provides an idea to
the investors about deciding on investing their funds in a particular company.

➢ Another advantage of financial statement analysis is that regulatory authorities like

IASB can ensure the company following the required accounting standards.

➢ Financial statement analysis is helpful to the government agencies in analysing the

taxation owed to the firm.

➢ Above all, the company is able to analyse its own performance over a specific time
Period.

2.6 Limitation of Financial Statement Analysis: -

➢ Comparability between periods: The company preparing the financial statements

may have changed the accounts in which it stores financial information, so that
results may differ from period to period. For example, an expense may appear in

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 the cost of goods sold in one period, and in administrative expenses in another
period.

➢ Comparability between companies: An analyst frequently compares the financial

ratios of different companies in order to see how they match up against each other.
However, each company may aggregate financial information differently, so that
the results of their ratios are not really comparable. This can lead an analyst to draw
incorrect conclusions about the results of a company in comparison to its
competitors.

➢ Operational information: Financial analysis only reviews a company's financial

information, not its operational information, so you cannot see a variety of key
indicators of future performance, such as the size of the order backlog, or changes
in warranty claims. Thus, financial analysis only presents part of the total picture.

➢ Financial Statements Mainly Show Historical Information: As the financial

statements are compiled on the basis of historical costs, they fail to take into account
such factors as the decrease in money value or increase in the price level changes. Since
these statements deal with past data only, they are of little value in decision-making.

2.7 Tools and Techniques of Financial Statement Analysis: -

➢ Comparative Statements: -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.

➢ Common Size Statements: -A vertical presentation of financial information is

followed for preparing common-size statements. Besides, the rupee value of financial
statement contents is not taken into consideration. But, only percentage is considered
for preparing common size statement.

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 ➢ Fund Flow Analysis: -Fund flow analysis deals with detailed sources and application
of funds of the business concern for a specific period. It indicates where funds come
from and how they are used during the period under review. It highlights the changes
in the financial structure of the company.

➢ Cash Flow Analysis: - Cash flow statement is prepared to project the manner in which
the cash has been received and has been utilized during an accounting year. It is an
important analytical tool. Analysis of cash flow explains the reason for a change in cash.
It helps in assessing the liquidity of the enterprise and in evaluating the operating
investment & financing decisions.

➢ Ratio Analysis: - Quantitative analysis of information contained in a company’s financial

statements is ratio analysis. It describes the significant relationship which exists between
various items of a balance sheet and a statement of profit and loss of a firm. To assess the
profitability, solvency, and efficiency of a business, management can go through the
technique of ratio analysis.

➢ Trend Analysis: - Also known as the Pyramid Method. Studying the operational results
and financial position over a series of years is trend analysis. Calculations of ratios of
different items for various periods is done & then compared under this analysis. Whether
the enterprise is trending upward or backward, the analysis of the ratios over a period of
years is done. By observing this analysis, the sign of good or poor management is detected.

2.8 Users of Financial Statement Analysis: -

There are a number of users of financial statement analysis. They are:

➢ Creditors: Anyone who has lent funds to a company is interested in its ability to
pay back the debt, and so will focus on various cash flow measures.

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 ➢ Investors: Investors are the owners of the company, they would like to understand
keep update with the financial performance of the company. They would like to make
the decision based on the financial statement whether they need to keep invested or
move out of the company based on its performance.

➢ Lenders: Lenders of funds such as banks and other financial institutions are interested
in the company’s ability to pay liabilities upon maturity (solvency).

➢ Customers: When there is a long-term involvement or contract between the company

and its customers, the customers become interested in the company’s ability to
continue its existence and maintain stability of operations. This need is also
heightened in cases where the customers depend upon the entity.

➢ Regulatory authorities: If a company is publicly held, its financial statements are

examined by the Securities and Exchange Commission (if the company files in the
United States) to see if its statements conform to the various accounting standards
and the rules of the Securities and Exchange Commission.

➢ Government and Government agencies: Government agencies like the Income-tax

department, the sales tax department would like to go through the company’s financial
statements to keep a check if the company paid appropriate taxes. They would like to
do future tax predictions based on the performance of the company and industry
practices.

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 CHAPTER 3
DATA COLLECTION &
ANALYSIS

Page | 19
3.1 Corporate Profile of Mahindra and Mahindra Ltd.
Mahindra & Mahindra Limited (M&M), the flagship company of the US$ 3 billion Mahindra
Group, was set up in 1945 to make general-purpose utility vehicles for the Indian market. It
soon branched out into manufacturing agricultural tractors and LCV and later expanded its
operations from automobiles and tractors to other sectors. The company has recently started a
new division, Mahindra Systems and Automotive Technologies (MSAT) in order to focus on
developing components and to offer engineering services.

M&M has two main operating divisions - Automotive division and Farm Equipment division.
The company entered into collaboration with Willys Overland Corporation (now part of the
Daimler Chrysler group) to import and assemble the Willys Jeep for the Indian market.
Thereafter, in 1965 the company started producing LCV. It went on to develop its
manufacturing technology to indigenously produce vehicles within a short time of signing the
collaboration agreement with Willys. Today, the Automotive Division of M&M manufactures
and markets MUV, LCV and three-wheelers.

In 2005, the company entered into a joint venture with Renault of France for the manufacture
of a mid-sized sedan, Logan, a newly developed vehicle that meets all the European regulations
for emissions and safety. The Logan is expected to be launched in the Indian market in 2007.
M&M has also launched a joint venture with International Truck & Engine Corporation, one
of the leading commercial vehicle producers in the USA, for manufacture of trucks and buses
in India.

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3.2 Profit and Loss Account of Mahindra and Mahindra Ltd.

PROFIT & LOSS MAR 19 MAR 18 MAR 17 MAR 16 MAR 15

ACCOUNT OF MAHINDRA
AND MAHINDRA (in Rs.
Cr.)

12 MThs 12 MThs 12 MThs 12 MThs 12 MThs

INCOME

REVENUE FROM 52,960.80 48,871.76 46,709.17 43,150.58 40,579.30

OPERATIONS [GROSS]

Less: Excise/Service 0.00 759.44 3,330.24 2,763.83 2,187.69

Tax/Other Levies

REVENUE FROM 52,960.80 48,112.32 43,378.93 40,386.75 38,391.61

OPERATIONS [NET]

TOTAL OPERATING 53,614.00 48,685.55 44,053.50 40,875.07 38,945.42

REVENUES

Other Income 1,688.97 1,036.36 1,345.46 849.93 848.94

TOTAL REVENUE 55,302.97 49,721.91 45,398.96 41,725.00 39,794.36

EXPENSES

Cost Of Materials Consumed 27,095.07 23,265.31 21,129.65 19,364.88 20,272.48

Operating And Direct 0.00 0.00 0.00 0.00 0.00

Expenses

Changes In Inventories Of -950.19 194.87 57.87 -257.97 323.63

FG,WIP And Stock-In Trade

Employee Benefit Expenses 2,980.22 2,840.89 2,714.43 2,348.72 2,316.93

Finance Costs 113.39 112.20 159.59 186.05 214.30

Depreciation And 1,860.40 1,479.42 1,526.38 1,068.10 974.90

Amortisation Expenses

Other Expenses 5,867.23 5,614.45 4,880.33 4,469.50 4,600.57

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 TOTAL EXPENSES 48,948.23 44,053.15 41,224.81 37,509.28 35,961.19

PROFIT/LOSS BEFORE 6,354.74 5,668.76 4,174.15 4,215.72 3,833.17

EXCEPTIONAL,
EXTRAORDINARY ITEMS
AND TAX

Exceptional Items -29.73 433.61 548.46 68.74 335.72

PROFIT/LOSS BEFORE 6,325.01 6,102.37 4,722.61 4,284.46 4,168.89

TAX

TAX EXPENSES-
CONTINUED OPERATIONS

Current Tax 1,179.12 1,211.23 973.67 857.65 835.92

Less: MAT Credit 0.00 0.00 0.00 0.00 92.72

Entitlement

Deferred Tax 349.85 535.13 105.55 222.24 104.58

Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00

TOTAL TAX EXPENSES 1,528.97 1,746.36 1,079.22 1,079.89 847.78

PROFIT/LOSS AFTER TAX 4,796.04 4,356.01 3,643.39 3,204.57 3,321.11

AND BEFORE
EXTRAORDINARY ITEMS

PROFIT/LOSS FROM 4,796.04 4,356.01 3,643.39 3,204.57 3,321.11

CONTINUING
OPERATIONS

PROFIT/LOSS FOR THE 4,796.04 4,356.01 3,643.39 3,204.57 3,321.11

PERIOD

OTHER ADDITIONAL
INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 40.29 36.64 30.69 53.05 56.23

Diluted EPS (Rs.) 40.13 36.47 30.54 52.80 53.66

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 VALUE OF IMPORTED
AND INDIGENIOUS RAW
MATERIALS STORES,
SPARES AND LOOSE
TOOLS

Imported Raw Materials 0.00 0.00 0.00 0.00 539.80

Indigenous Raw Materials 0.00 0.00 0.00 0.00 19,732.68

STORES, SPARES AND

LOOSE TOOLS

Imported Stores And Spares 0.00 0.00 0.00 0.00 2.66

Indigenous Stores And 0.00 0.00 0.00 0.00 43.05

Spares

DIVIDEND AND DIVIDEND

PERCENTAGE

Equity Share Dividend 932.00 925.25 841.12 846.95 745.31

Tax On Dividend 79.92 0.00 0.00 0.00 101.58

Equity Dividend Rate (%) 170.00 150.00 260.00 240.00 240.00

Source: Dion Global Solutions Limited

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3.3 Ratio Analysis: -

The ratios which determine the financial performance of the company are:

• Profitability Ratio: -

A. Gross Profit Ratio: -

G.P Ratio= [(Gross Profit/Sales)*100]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

8.91 9.74 6.78 8.68 8.21

COMMENT: The ratio can be used to test the business condition by comparing it with past
years’ ratio and with the ratio of other companies in the industry. A consistent improvement in
gross profit ratio over the past years is the indication of continuous improvement. But for the
year ending May 2017 we can see the significant drop in the gross profit ratio.

B. Operating Profit Ratio: -

O.P Ratio= [(Operating Profit/Net Sales)*100]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

12.38 12.78 10.24 11.30 10.71

COMMENT: The operating profit ratio indicates how much profit a company makes after
paying for variable costs of production such as wages, raw materials, etc. A higher operating
margin is more favourable compared with a lower ratio because this shows that the company
is making enough money from its ongoing operations to pay for its variable costs as well as its
fixed costs. Here we can see that the companies operating profit ratio is increasing which is
good.

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C. Net Profit Ratio: -

N.P Ratio= [(Net Profit/Sales)*100]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

8.94 8.94 8.27 7.83 8.52

COMMENT: Here we can see that from the year 2015 to 2016 there is a decrease in a net
profit ratio but from 2017 it started to increase again. Increase in net profit ratio may indicate
low direct and indirect costs which will result in a higher net profit of the organization.

• Liquidity/Solvency Ratio: -

A. Current Ratio: -

C.R Ratio= [Current Assets/Current Liability]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

1.08 1.06 1.12 1.10 1.05

COMMENT: Here we can see that from the year 2015 to 2017 there is an increase in a current
ratio but it is decreased in 2018 but from the next year it started to increase again. It is assumed
that higher the ratio, higher is the liquidity.

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B. Quick Ratio: -

Quick Ratio= [(Cash + Investments + Accounts Receivable)/Current Liabilities]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

0.90 0.92 0.89 0.90 0.84

COMMENT: A quick ratio that is greater than 1 means that the company has enough quick
assets to pay for its current liabilities. But here we can see that the company has the quick ratio
below 1 but not so far from 1which is quiet decent.

C. Long Term Debt Equity Ratio: -

Long Term Debt Equity Ratio= [Long-term debt /Total Shareholders’ Equity]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

0.6 0.7 0.8 0.7 0.13

COMMENT: Long term debt equity ratio should be always less than 1. Here we can see it
is less than 1 it means that the portion of assets provided by stockholders is greater than the
portion of assets provided by creditors.

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 • Management Efficiency Ratios: -

A. Debtors Turnover Ratio: -

Debtors Turnover ratio= [Net Credit Sales/Average Accounts Receivable]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

15.06 15.93 16.17 16.13 15.37

COMMENT: Debtors turnover ratio used to determine if a company is having difficulties

collecting sales made on credit. It is seemed that here debtor’s turnover ratio is 15.37 to16.17
it means the company do not face any difficulties regarding collection of credit.

B. Inventory Turnover Ratio: -

Inventory Turnover Ratio= [Cost of Goods Sold/Average Inventory at Cost]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

13.96 18.30 17.18 16.24 16.87

COMMENT: Inventory turnover ratio measures the velocity of conversion of stock into sales.
A high inventory turnover/Stock velocity indicates efficient management of inventory because
more frequently the stocks are sold, the lesser amount of money is required to finance the
inventory.

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C. Assets Turnover Ratio: -

Assets Turnover Ratio= [Net Sales/Average Total Assets]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

1.54 1.55 1.64 1.77 1.84

COMMENT: The ratio measures the efficiency of how well a company uses assets to produce

sales. A higher ratio is favourable, as it indicates a more efficient use of assets.

• Earnings Per Share: -

Earnings Per Share= [Net Profit after Taxes – Preference Dividends) / Number of Equity
Shares]

MAR’19 MAR’18 MAR’17 MAR’16 MAR’15

40.29 36.64 30.69 53.05 56.23

COMMENT: Earnings per share are most frequently present in financial statements and is a
very reliable figure for investors. It is useful for existing and new equity shareholders for
forecasting the value of the shares in the future. A high EPS is a sign of better earnings, strong
financial position and therefore a reliable company to invest in. The EPS for several years
indicates the growth pattern of the company. It also helps in comparison to figures of different
companies in the same industry.

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 Earnings Per Share

60

50

40

30

20

10

0
2019 2018 2017 2016 2015

Earnings Per Share

This chart showing increase and decrease of last 5 years Earning Per Share of Mahindra
and Mahindra Ltd.

• Comparison with other top automobile companies.

(Rs in crore)

Name of the company Earnings per share

2019 2018 2017 2016 2015

1.Maruti Suzuki 248.30 255.62 243.32 177.58 123.00

2.Mahindra and Mahindra Ltd. 38.58 35.04 58.66 51.07 53.47

3.Tata Motors 5.95 -3.05 -7.15 -0.15 -14.72

4.Force Motors 111.70 111.53 136.55 136.17 76.93

5.Ashok Leyland 6.76 5.87 4.30 1.37 1.18

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 (Rs in crore)

Name of the company Net sales

2019 2018 2017 2016 2015

1.Maruti Suzuki 86020.30 79762.70 68034.80 57538.10 49970.60

2.Mahindra and Mahindra Ltd. 53614.00 48685.55 44053.50 40875.07 38945.42

3.Tata Motors 69202.76 58831.41 44316.34 42845.47 36294.74

4.Force Motors 3652.10 3422.60 3068.99 3059.80 2363.72

5.Ashok Leyland 29054.95 26356.40 20140.13 18937.30 13562.18

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 Net Sales in crores

60,000.00

50,000.00

40,000.00

30,000.00

20,000.00

10,000.00

0.00
2019 2018 2017 2016 2015

Net Sales

Diagram showing increase in Net Sales of Mahindra and Mahindra Ltd for the last 5
years.

3.4 ANALYSIS: -
It is seen that Mahindra and Mahindra Ltd.is performing well or rather better many other
company. This company managed to increased their sales from the last 5 years but their EPS
we can see some fluctuations. EPS is very important and crucial tool for investors. Higher EPS
is always good as compare to lower one. Higher ratio means company is not only profitable
but it has more money or profits to distribute among the shareholders. It can be seen that in
respect of there is fluctuation nature of EPS and Net sales but the company has stable growth.

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 CHAPTER 4
CONCLUSION &
RECOMANDATION

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4.1 Conclusion: -

Financial analysis determines a company’s health and stability, providing an understanding of

how the company conducts its business. But it is important to know that financial statement
analysis has its limitations as well. Different accounting methods adopted by different firms’
changes the visible health and profit levels for either better or worse. Different analysts may
get different results from the same information. Hence, we must conclude that financial
statement analysis is only one of the tools (although a major one) while taking an investment
decision.

Ratio analysis in view of its several limitations should be considered only as tool for analysis
rather than as an end itself. The reliability and significance attached to ratios will largely hinge
upon the quality of data on which they are based. They are as good or as bad as the data itself.
Nevertheless, they are an important tool of financial analysis.

4.2 Recommendation: -

i) Considering the potential customers in rural areas, the companies should give advertisements
in local newspapers to create more and more awareness & to promote their brand to increase
sales.

ii) Organization can conduct some of the motivational programs like conducting some
competitions among the employees which will motivate them to take part actively and help
them to reduce their success.

iii) A majority of the customer give opinion that they are satisfied is the factor, service and
design of the product of the company should take not only maintain the existing standard but
also enhance them.

iv) The company can undertake research and development to improve their product to increase
the customer satisfaction.

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Bibliography/References: -

www.moneycontrol.com

www.capitalmarket.com

www.money.rediff.com

www.accountingnotes.net

www.wikippedia.org

www.mahindra.com

www.slideshare.net

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