DELHI PUBLIC SCHOOL, GURGAON

CBSE ACCOUNTANCY PROJECT

CLASS XII

NAME: Shlok Gupta

CLASS: XII- D

Specific Problem
Project on Ratio Analysis and Comparative Statement of Tata Motors Ltd.

1. Name of the Project: Analyze the financial data of the company using tools
of
analysis.

2. Period of study: Financial years 2019-20 and 2020-21.

3. Objective: To assess the financial soundness and understand whether the

company has performed better than before.

4. Tools of analysis
i. Ratio Analysis
ii. Comparative Statement

5. Source Material: Financial Statements of Tata Motors Limited from the

annual
report from the website of the company.

6. Process of Analysis: In order to make assessment of the direction of the

business in terms of growth, the following ratios have been computed:
a) Current Ratio to assess short term financial position of the company.
b) Debt Equity Ratio to assess the long-term financial position and soundness
of the enterprise.
c) Total Assets to Debt Ratio to measure safety margin available to lenders of
long-term debts.
d) Net Profit Ratio to measure the overall efficiency of the business.
A comparative statement has been prepared to analyze the changes
individual
items of Balance Sheet and see the trend of different items of assets, equity
and
liabilities.
7. Company Profile: Two paragraphs should be written about the company
stating its
history, objectives/sectors of the company and leadership team along with
relevant
pictures.

COMPANY PROFILE – TATA MOTORS LIMITED

Tata Motors is a $35 billion global automobile manufacturing company. Its

diverse portfolio includes an extensive range of cars, sports utility vehicles,
trucks, buses, and defence vehicles. Tata Motors is one of India's largest
OEMs offering an extensive range of integrated, smart, and e-mobility
solutions

Tata Motors believes in ‘Connecting aspirations’, by offering innovative

mobility solutions that are in line with customers' aspirations. India's largest
automobile manufacturer, Tata Motors continues to take the lead in shaping
the Indian commercial vehicle landscape, with the introduction of leading-edge
powertrains and electric solutions packaged for power performances and user
comfort at the lowest life-cycle costs. The new passenger cars and utility
vehicles are based on Impact Design and offer a superior blend of
performance, driveability and connectivity.

The focus on connecting aspirations and a pipeline of tech-enabled products

keep Tata Motors at the forefront of the market. Six key mobility drivers will
lead Tata Motors into the future – modular architecture, complexity reduction
in manufacturing, connected & autonomous vehicles, clean drivelines, shared
mobility, and low total cost of ownership.
The sub-brand TAMO is an incubating centre of innovation that sparks new
mobility solutions through new technologies, business models and
partnerships.

The Tata Motors mission - across its globally dispersed organisation – is to be

passionate in anticipating and providing the best vehicles and experiences
that excite global customers.
 LEADERSHIP TEAM

1. N Chandrasekaran is the Chairman (Executive, Non-Independent Director) of

Tata Motors Limited.

2. Saurabh Agrawal is the group chief financial officer of Tata Sons, the holding
company and promoter of over 100 Tata companies including Tata Motors
FINANCIAL STATEMENTS
Comparision of Current Ratios:

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Formula used =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
S.no Particulars Calculation Current Ratio
(Rs. in crores)
1. Year ending 31st March, 2020 13,568.76/25,810.82 0.52 : 1
2. Year ending 31st March, 2021 15,854.59/26,251.55 0.60 : 1
 Comparison of Current Ratios

Ideal Current Ratio is 2:1

In both the years, the current ratio is less than the ideal current ratio and under 1. A
ratio under 1.00 indicates that the company’s short term financial position in both the
years is not comfortable

Comparison of Debt Equity Ratios:

𝐷𝑒𝑏𝑡
Formula used =
𝐸𝑞𝑢𝑖𝑡𝑦

S.no Particulars Calculation Current Ratio

(Rs. in crores)
1. Year ending 31st March, 2020 17,923.23/18,387.65 0.974 : 1
2. Year ending 31st March, 2021 18,952.09/19,055.97 0.994 : 1

Comparison of Debt Equity Ratios

Ideal Debt to Equity Ratio is 2:1
In both the years, the Debt to Equity ratio is less than the ideal ratio. This means that
Tata Motors is dependent more on shareholders’ funds than external equities. In
effect, lenders are at lower risk and have higher safety cover.

Comparison of Total Assets to Debt Ratios:

𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Formula used =
𝐷𝑒𝑏𝑡

S.no Particulars Calculation Current Ratio

(Rs. in crores)
1. Year ending 31st March, 2020 65,059.66/17,923.23 3.62 : 1
2. Year ending 31st March, 2021 62,589.87/18,952.09 3.30 : 1

Comparison of Total Assets to Debt

Ratios

High ratio means higher safety cover for lenders to the business. On the other
hand, a low ratio means lower safety for lenders as the business depends
largely on outside loans for its existence. In other words, investment by the
proprietor is low.

Comparison of Net Profit Ratios:

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑇𝑎𝑥

Formula used = × 100
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑓𝑟𝑜𝑚 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠
S.no Particulars Calculation Current Ratio
(Rs. in crores)
1. Year ending 31st March, 2020 (-2,395.44)*100/46,559.39 - 5.144%
2. Year ending 31st March, 2021 (-7,289.63)*100/43,485.76 - 16.762%

Comparison of Net Profit Ratios

Net Profit Ratio is an indicator of overall efficiency of the business. Higher the
Net Profit Ratio, better the business. The ratio helps in determining the
operational efficiency of the business. An increase in the ratio over the
previous period shows improvement in the operational efficiency and decline
means otherwise. A comparison with the industry standards is also an
indicator of the efficiency of the business.

COMPARITIVE STATEMENT

 Last page of the project file.

How project work has helped me:

The project has helped me in the following ways:

1. It has provided me the practical knowledge of subject.

2. It has encouraged logical thinking.

3. It has provided better understanding of subject and has made it practical oriented.
4. The team spirit we had while doing the project has given a sense of
belongingness.

BIBLIOGRAPHY

Annual Report of Tata Motors Limited Company