Functional Project:

A Study of Financial Performance Using Ratio

Analysis at Tata Motors

Submitted By

Yash Deepak Mhaske

UNDER THE GUIDANCE OF

Mrs. Trupti Naik

A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF

MMS TO

VIDYALANKAR INSTITUTE OF TECHNOLOGY

Wadala (East), Mumbai 400 037

March 2020
 Functional Project:

A Study of Financial Performance Using Ratio

Analysis at Tata Motors

Submitted By

Yash Deepak Mhaske

UNDER THE GUIDANCE OF

Mrs. Trupti Naik

A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF

MMS TO

VIDYALANKAR INSTITUTE OF TECHNOLOGY

Wadala (East), Mumbai 400 037

March 2020
 DECLARATION

This is to declare that the study presented by me to Vidyalankar Institute of

Technology, in completion of the Master in Management Studies (MMS) under
the ―A Study of Financial Performance Using Ratio Analysis at Tata
Motors‖ has been accomplished under the guidance of Mrs. Trupti Naik.

Yash Deepak Mhaske

 ACKNOWLEDGEMENT
My project on A Study of Financial Performance Using Ratio Analysis at
Tata Motors has been a great learning experience. I was exposed to the
different areas of research in finance and gained valuable experience, which I
will always recall with a sense of satisfaction and pride.

This is to acknowledge Mrs. Trupti Naik under whose guidance I have been
able to successfully complete this project and effectively come to a very
successful conclusion.

A greater share of inputs and data from Faculty made this project report
possible to its rightful accuracy.

To all my colleagues who have helped me either directly or indirectly, I am

grateful for their valuable inputs. This project would not have been possible
without their help.

Yash Deepak Mhaske

 TABLE OF CONTENT

SR. NO TOPIC PAGE NO

1 EXECUTIVE SUMMARY 5

2 LITERATURE REVIEW 8

3 INDUSTRY OVERVIEW 9

4 COMPANY OVERVIEW 14

5 FINANCIAL ANALYSIS 17

6 SWOT ANALYSIS 46

7 FINDINGS 49

8 REFERENCES 50
 EXECUTIVE SUMMARY
This project is based on the analysis of financial performance of Tata Motors. In
first stage project will focus upon Automobile Industry company details. Later it
briefs relationship between the financial elements of the organization by
studying different ratios. This analysis helps in understanding the firm‘s
financial position in better way.
Financial analysis is the process of identifying, interpreting the financial
statement for the purpose of deriving conclusion for decision making. It helps to
identify the firm‘s financial strength and weaknesses. It plays a dominant role in
managerial decision making. There are various techniques used to analyse the
financial statements – such as ratio analysis, fund flow, cash flow, trend
analysis, comparative balance sheet analysis etc. Financial Analysis helps in
financial management.
This study is purely based on financial analysis on Tata Motors covers a period
of five years from 2015 to 2019. In this project comparison of financial
performance of last five financial years will be done on the basis of ratio
analysis. This analysis will help in understanding liquidity, profitability and
solvency level of the company. It will be useful for the further development of
Tata Motors.

Objectives
 To analyze the financial changes over a period of 5 years:
In this project we have taken into consideration 5 years (2015 to 2019) of
financial data of Tata Motors.
 To compare present performance with past performance of Tata
Motors: Financial data is compared between the 5 years which are
considered so as to get a detailed information about the progress the
 company is making over the years, as well as it helps to know where the
company should improve.
 To study about the financial strengths and weaknesses of Tata
Motors: This helps us to know about the company‘s Internal Strengths
and weaknesses and also the external Opportunities and Threats. Also this
information can help us to know where the company is standing
compared to its competitors in the market.
 To evaluate the financial statement of Tata Motors with the help of
ratios: The financial statements are to be compared on the basis of
various financial ratios which include Liquidity, Leverage, Profitability,
Turnover and Coverage ratios. This can help us to know about the
financial position of the company in the market. And also this can help to
know where the company is leading as well as where the company is
lagging.

Scope
 To identify the major areas of inefficiency.
 This research seeks to investigate and constructively contribute to draw a
conclusion.
 To understand where improvement is required to improve the position.
 Research will help in understanding lacked areas.
 Financial growth will be understood through this research.
 LITERATURE REVIEW
―Rakhi Hotwani‖ reveals in his study ‗Profitability Analysis of Tata Motors that
company has created significant wealth for its stakeholders and provided
handsome return on investment. Companies‘ profit margins have fluctuations.
Return on net worth has been below 10% in 2 years. Any way inner strength of
the company is remarkable. Company can further improve its profitability
through optimum capital gearing and reduction in administration and financial
expenses.

―Daniel Moses Joshuva‖ stated in his study ‗Financial Status of Tata Motors
LTD‘ that company has stable growth and also suggested to reduce the
expenditure. Decrease in expenses will increase the profitability. He
also suggested that company should utilize its working capital efficiency.
―Patel Vivek indicated in his study on ‗Financial Performance of Tata Motors
‗that the company has issued equity capital rather than going for performance
share which means the company‘s dividend will not be fixed but the company
has provided a good amount of dividend to share holders. Despite of having
large reserves, company has opted for loan funds. The company had a good
operating income which shows that the company has a sustainable growth.

Financial analysis of Tata motors was carried out by Rakhi, Daniel & Patel up
to the financial year 2009-10. The methodology adopted by each author is
different. Here in this paper, analysis was carried out from the financial analysis
from 2009 to 2015.
 INDUSTRY OVERVIEW
Introduction
India became the fourth largest auto market in 2018 with sales increasing 8.3
per cent year-on-year to 3.99 million units. It was the seventh largest
manufacturer of commercial vehicles in 2018.
The Two Wheelers segment dominates the market in terms of volume owing to
a growing middle class and a young population. Moreover, the growing interest
of the companies in exploring the rural markets further aided the growth of the
sector.
India is also a prominent auto exporter and has strong export growth
expectations for the near future. Automobile exports grew 14.50 per cent during
FY19. It is expected to grow at a CAGR of 3.05 per cent during 2016-2026. In
addition, several initiatives by the Government of India and the major
automobile players in the Indian market are expected to make India a leader in
the two-wheeler and four-wheeler market in the world by 2020.

Market Size
Overall domestic automobiles sales increased at 6.71 per cent CAGR between
FY13-19 with 26.27 million vehicles getting sold in FY19. Domestic
automobile production increased at 6.96 per cent CAGR between FY13-19 with
30.92 million vehicles manufactured in the country in FY19.
In FY19, year-on-year growth in domestic sales among all the categories was
recorded in commercial vehicles at 17.55 per cent followed by 10.27 per cent
year-on-year growth in the sales of three-wheelers.
Premium motorbike sales in India crossed one million units in FY18. During
January-September 2018, BMW registered a growth of 11 per cent year-on-year
in its sales in India at 7,915 units. Mercedes Benz ranked first in sales
satisfaction in the luxury vehicles segment according to J D Power 2018 India
sales satisfaction index (luxury).
Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in
2017-18.

Investments
In order to keep up with the growing demand, several auto makers have started
investing heavily in various segments of the industry during the last few
months. The industry has attracted Foreign Direct Investment (FDI) worth US$
22.35 billion during the period April 2000 to June 2019, according to data
released by Department for Promotion of Industry and Internal Trade (DPIIT).
Some of the recent/planned investments and developments in the automobile
sector in India are as follows:

 Audi India plans to launch nine all-new models including Sedans and
SUVs along with futuristic e-tron electric vehicle (EV) by the end to
2019.
 MG Motor India to launch MG ZS EV electric SUV in early 2020 and
plans to launch affordable EV in next 3-4 years.
 BYD-Olectra, Tata Motors, Ashok Leyland to supply 5,500 electric buses
for different state departments.
 Premium motorbike sales in India recorded seven-fold jump in domestic
sales reaching 13,982 units during April-September 2019. The sale of
luxury cars stood between 15,000 to 17,000 in first six months of 2019.
 In H1 2019, automobile manufacturers invested US$ 501 million in
India‘s auto-tech companies start-ups, according to Venture intelligence.
 For self-driving and robotic technology start-ups, Toyota plans to invest
US$100 million.
  In India, 7 Series face lift launched by BMW and the new X7 SUV has
been introduced at Rs 98.90 lakh (US$ 0.14 million).
 Ashok Leyland has planned a capital expenditure of Rs 1,000 crore (US$
155.20 million) to launch 20-25 new models across various commercial
vehicle categories in 2018-19.
 Hyundai is planning to invest US$ 1 billion in India by 2020. SAIC
Motor has also announced to invest US$ 310 million in India.
 Mercedes Benz has increased the manufacturing capacity of its Chakan
Plant to 20,000 units per year, highest for any luxury car manufacturing
in India.
 As of October 2018, Honda Motors Company is planning to set up its
third factory in India for launching hybrid and electric vehicles with the
cost of Rs 9,200 crore (US$ 1.31 billion), its largest investment in India
so far.
 In November 2018, Mahindra Electric Mobility opened its electric
technology manufacturing hub in Bangalore with an investment of Rs 100
crore (US$ 14.25 million) which will increase its annual manufacturing
capacity to 25,000 units.

Government Initiatives
The Government of India encourages foreign investment in the automobile
sector and allows 100 per cent FDI under the automatic route.
Some of the recent initiatives taken by the Government of India are -

 Under Union Budget 2019-20, government announced to provide

additional income tax deduction of Rs 1.5 lakh (US$ 2,146) on the
interest paid on the loans taken to purchase EVs.
  The government aims to develop India as a global manufacturing centre
and an R&D hub.
 Under NATRiP, the Government of India is planning to set up R&D
centres at a total cost of US$ 388.5 million to enable the industry to be on
par with global standards.
 The Ministry of Heavy Industries, Government of India has shortlisted 11
cities in the country for introduction of electric vehicles (EVs) in their
public transport systems under the FAME (Faster Adoption and
Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The
government will also set up incubation centre for start-ups working in
electric vehicles space.
 In February 2019, the Government of India approved the FAME-II
scheme with a fund requirement of Rs 10,000 crore (US$ 1.39 billion) for
FY20-22.

Achievements
Following are the achievements of the government in the past four years:

 On 29th July 2019, Inter-ministerial has sanctioned 5,645 electric buses

for 65 cities.
 NATRIP‘s proposal for ―Grant-In-Aid for test facility infrastructure for
Electric Vehicle (EV) performance Certification from NATRIP
Implementation Society‖ under FAME Scheme which had been approved
by Project Implementation and Sanctioning Committee (PISC) on 3rd
January 2019.
 Number of vehicles supported under FAME scheme increased from 5,197
in June 2015 to 192,451 in March 2018. During 2017-18, 47,912 two-
 wheelers, 2,202 three-wheelers, 185 four-wheelers and 10 light
commercial vehicles were supported under FAME scheme.
 Under National Automotive Testing And R&D Infrastructure Project
(NATRIP), following testing and research centres have been established
in the country since 2015
o International Centre for Automotive Technology (ICAT), Manesar
o National Institute for Automotive Inspection, Maintenance &
Training (NIAIMT), Silchar
o National Automotive Testing Tracks (NATRAX), Indore
o Automotive Research Association of India (ARAI), Pune
o Global Automotive Research Centre (GARC), Chennai
 SAMARTH Udyog – Industry 4.0 centres: ‗Demo cum experience‘
centres are being set up in the country for promoting smart and advanced
manufacturing helping SMEs to implement Industry 4.0 (automation and
data exchange in manufacturing technology).

Future of Automobile Industry

The automobile industry is supported by various factors such as availability of
skilled labour at low cost, robust R&D centres and low cost steel production.
The industry also provides great opportunities for investment and direct and
indirect employment to skilled and unskilled labour.
Indian automotive industry (including component manufacturing) is expected to
reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers
are expected to grow 9 per cent in 2018.
 COMPANY OVERVIEW
Tata Motors Limited, incorporated on September 1, 1945, is an automobile
company. The Company is engaged in manufacture of motor vehicles. The
Company's segments include automotive operations and all other operations.
The Company is engaged mainly in the business of automobile products
consisting of all types of commercial and passenger vehicles, including
financing of the vehicles sold by the Company. The Company markets its
commercial and passenger vehicles in various countries in Africa, the Middle
East, South East Asia, South Asia, Australia, and Russia and the
Commonwealth of Independent States countries. The Company operates in over
160 countries across the world.

Automotive Operations
The Company's automotive segment operations include all activities relating to
the development, design, manufacture, assembly and sale of vehicles, including
vehicle financing, as well as sale of related parts and accessories. In the
automotive segment, the Company manufactures and sells passenger cars,
utility vehicles, light commercial vehicles, and medium and heavy commercial
vehicles. The Company further divides these categories based on the size,
weight, design and price of the vehicle. The Company's subcategories vary
between and within Tata and other brand vehicles and Jaguar Land Rover
businesses.
The Company's range of Tata-branded passenger cars includes the Nano
(micro), the Indica, the Bolt and the Tiago both in the compact segment, the
Indigo eCS, and the Zest (mid-sized) in the sedan category. The Company has
expanded its passenger car range with various variants and fuel options. The
Company's Jaguar Land Rover operations have a presence in the passenger car
category under the Jaguar brand name. There are approximately five car lines
manufactured under the Jaguar brand name, including the F-TYPE two-seater
sports car coupe and convertible XF sedan, the XJ saloon, the XE sports saloon
and sport utility vehicle (SUV) called the F-PACE.
The Company manufactures a range of Tata-branded utility vehicles, including
the Sumo and the Safari (SUVs), the Xenon XT (lifestyle pickup), the Tata Aria
(crossover) and the Venture (multipurpose utility vehicle). Under the Safari
brand, the Company offers over two variants, such as the Dicor and the Safari
Storme. Under the Sumo brand, the Company offers the Sumo Gold. There are
approximately five car lines under the Land Rover brand comprising the Range
Rover, the Range Rover Sport, the Range Rover Evoque, 6 the Land Rover
Discovery and the Land Rover Discovery Sport.
The Company manufactures a range of light commercial vehicles (LCVs),
including pickup trucks and small commercial vehicles. This also includes the
Tata Ace, which is a mini-truck with approximately 0.7 ton payload with
different fuel options, the Super Ace and the ACE Mega both with over one-ton
payload, the Ace Zip, with approximately 0.6 ton payload, the Magic and Magic
Iris, both of which are passenger variants for commercial transportation
developed on the Tata Ace platform, and the Winger. The Company's offerings
in the LCV bus segment include the Cityride and the Starbus ranges of buses.
The Company manufactures a range of medium and heavy commercial vehicles,
which include tractors, buses, tippers and multiaxled vehicles, with gross
vehicle weight (GVWs) (including payload) of between 8 tons and 49 tons. In
addition, through Tata Daewoo Commercial Vehicles (TDCV), the Company
manufactures an array of trucks ranging from 215 horsepower to 560
horsepower, including dump trucks, tractor-trailers, mixers and cargo vehicles.
The Company also offers a range of buses, which includes the Semi Deluxe
Starbus Ultra Contract Bus and the new Starbus Ultra. The Company's range of
buses is intended for a range of uses, including as intercity coaches (with both
air-conditioned and non-air-conditioned luxury variants), as school
transportation and as ambulances.
All Other Operations
The Company's all other operations segment mainly includes information
technology (IT) services, and machine tools and factory automation services.
The Company's subsidiary, Tata Technologies Limited (TTL), specializes in
providing engineering services outsourcing, product development IT services
solutions for product lifecycle management (PLM) and Enterprise Resource
Management (ERM), to automotive, aerospace and consumer durables
manufacturers and their suppliers. TTL's services also include product design,
analysis and production engineering, knowledge-based engineering and
customer relationship management systems. TTL also distributes, implements
and supports PLM products from solutions providers around the world, such as
Dassault Systems and Autodesk.
The Company competes with Audi, BMW, Infiniti, Lexus, Mercedes Benz,
Porsche, Volvo, Volkswagen, Isuzu, Nissan and Toyota.
 FINANCIAL ANALYSIS OF TATA MOTORS
Ratio Analysis:
Ratio analysis is a quantitative method of gaining insight into a company's
liquidity, operational, efficiency, coverage and profitability by comparing
information contained in its financial statements. This type of analysis is
particularly useful to analysts outside of a business, since their primary source
of information about an organization is its financial statements.
So for the analysis of financial statements of Tata Motors, the following types
of Ratios will be considered:
 Liquidity Ratios:
A liquidity ratio is a financial ratio that indicates whether a company's current
assets will be sufficient to meet the company's obligations when they become
due.
 Solvency Ratios/ Leverage Ratios:
The leverage ratio is the proportion of debts that a bank has compared to its
equity/capital. Leverage ratios give an indication of the financial health of a
bank and how over-extended they may be.
 Profitability Ratios:
A profitability ratio is a measure of profitability, which is a way to measure a
company's performance. Profitability is simply the capacity to make a profit,
and a profit is what is left over from income earned after you have deducted all
costs and expenses related to earning the income.
 Efficiency Ratios/Turnover Ratios:
Turnover ratios are the financial ratios in which an annual income statement
amount is divided by an average asset amount for the same year. Generally, the
larger the turnover the better. The turnover ratios indicate the efficiency or
effectiveness of a company's management.
 Coverage Ratios:
A coverage ratio, broadly, is a measure of a company's ability to service its debt
and meet its financial obligations. The higher the coverage ratio, the easier it
should be to make interest payments on its debt or pay dividends.
LIQUIDITY RATIOS:

Liquidity ratio analysis refers to the use of several ratios to determine the
ability of an organization to pay its bills in a timely manner. This analysis is
especially important for lenders and creditors, who want to gain some idea
of the financial situation of a borrower or customer before granting them
credit. There are several ratios available for this analysis, all of which use
the same concept of comparing liquid assets to short-term liabilities. These
ratios are:

Cash ratio: Compares the amount of cash and investments to short-term

liabilities. This ratio excludes any assets that might not be immediately
convertible into cash, especially inventory.

Quick ratio: Same as the cash ratio, but includes accounts receivable as an
asset. This ratio explicitly avoids inventory, which may be difficult to
convert into cash.

Current ratio: Compares all current assets to all current liabilities. This ratio
includes inventory, which is not especially liquid, and which can therefore
mis-represent the liquidity of a business.
1. Current Ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations or those due within one year.
A current ratio that is in line with the industry average or slightly higher is
generally considered acceptable. A current ratio that is lower than the industry
average may indicate a higher risk of distress or default. Similarly, if a company
has a very high current ratio compared to their peer group, it indicates that
management may not be using their assets efficiently.The current ratio is called
―current‖ because, unlike some other liquidity ratios, it incorporates all
current assets and liabilities.
The current ratio is also called the working capital ratio.
Ideal Current Ratio is 2:1.

Ratios Formulas 2019 2018 2017 2016 2015

Current
Current
Assets/Current 0.576671 0.61818 0.592296 0.634256 0.42085
Ratio
Liabilities

Analysis: It is observed that the year 2016 showed the highest Current Ratio
i.e. 0.634, and 2015 showed the lowest current ratio i.e. 0.421. If the current
ratio is higher it is better for the company. Higher value of current ratio
indicates more liquid of the firm‘s ability to pay its current obligation in time.

The current ratio helps investors and creditors understand the liquidity of Tata
Motors and how easily that Reliance Industry Ltd will be able to pay off its
current liabilities. This ratio expresses a firm‘s current debt in terms of current
assets. So, a current ratio of 4 would mean that Tata Motors has 4 times more
current assets than current liabilities.
2. Quick Ratio/Acid Test Ratio:
The quick ratio is an indicator of a company‘s short-term liquidity position and
measures a company‘s ability to meet its short-term obligations with its most
liquid assets.
The acid test ratio is a stringent and meticulous test of a firm‘s ability to pay its
short-term obligations ‗as and when they are due. Quick assets and current
liabilities can be associated with the help of Quick Ratio.

Ratios Formulas 2019 2018 2017 2016 2015

(Current assets-
Quick Inventory-Prepaid
0.364731 0.350112 0.32445 0.334692 0.107826
Ratio expenses)/Current
liabilities

Analysis: It is observed that year 2019 has the highest Quick ratio amongst
all the previous years i.e. 0.365, 2015 shows the lowest Quick Ratio i.e. 0.108.
High Acid Test Ratio is an accurate indication that the firm has relatively better
financial position and adequacy to meet its current obligation in time.
The ideal Quick Ratio is 1: 1 and is considered to be appropriate.
Quick ratios are often explained as measures of a Tata Motors ability to pay
their current debt liabilities without relying on the sale of inventory. Compared
with the current ratio, the quick ratio is more conservative because it does not
include inventories which can sometimes be difficult to liquidate. For lenders,
the quick ratio is very helpful because it reveals the Tata Motors ability to pay
off under the worst possible condition.
3. Cash Ratio:

The cash ratio or cash coverage ratio is a liquidity ratio that measures a firm‘s
ability to pay off its current liabilities with only cash and cash equivalents. The
cash ratio is much more restrictive than the current ratio or quick ratio because
no other current assets can be used to pay off current debt–only cash.

Ratios Formulas 2019 2018 2017 2016 2015

Cash and Cash

Cash
Equivalents/Current 0.056956 0.032843 0.015164 0.042158 0.046378
Ratio
liabilities

Analysis: Year 2019 showed the highest cash ratio i.e. 0.057, 2017 showed the
lowest cash ratio i.e. 0.015.
The cash ratio shows how well a company can pay off its current liabilities with
only cash and cash equivalents. This ratio shows cash and equivalents as a
percentage of current liabilities.
A ratio of 1 means that the company has the same amount of cash and
equivalents as it has current debt. In other words, in order to pay off its current
debt, the company would have to use all of its cash and equivalents. A ratio
above ―1‖ means that all the current liabilities can be paid with cash and
equivalents. A ratio below 1 means that the company needs more than just its
cash reserves to pay off its current debt.
As with most liquidity ratios, a higher cash coverage ratio means that the
company is more liquid and can more easily fund its debt. Creditors are
particularly interested in this ratio because they want to make sure their loans
will be repaid. Any ratio above 1 is considered to be a good liquidity measure.
PROFITABILITY RATIOS:
Profitability measures are important to company managers and owners alike. If
a small business has outside investors who have put their own money into the
company, the primary owner certainly has to show profitability to those equity
investors.
Profitability ratios show a company's overall efficiency and performance.
Profitability ratios are divided into two types: margins and returns. Ratios that
show margins represent the firm's ability to translate sales dollars into profits at
various stages of measurement. Ratios that show returns represent the firm's
ability to measure the overall efficiency of the firm in generating returns for its
shareholders.
1. Net Profit Ratio:

Net profit ratio (NP ratio) expresses the relationship between net profit after
taxes and sales. This ratio is a measure of the overall profitability net profit is
arrived at after taking into accounts both the operating and non-operating items
of incomes and expenses. The ratio indicates what portion of the net sales is left
for the owners after all expenses have been met.
For the purpose of this ratio, net profit is equal to gross profit minus operating
expenses and income tax. All non-operating revenues and expenses are not
taken into account because the purpose of this ratio is to evaluate the
profitability of the business from its primary operations. Examples of non-
operating revenues include interest on investments and income from sale of
fixed assets. Examples of non-operating expenses include interest on loan and
loss on sale of assets.

Ratios Formulas 2019 2018 2017 2016 2015

(Profit after
Net profit margin
tax/Net 2.938419 -1.80159 -5.60583 0.379286 -13.2039
ratio
sales) x 100

Analysis: Net Profit ratio was the highest in the Year 2019.

Net profit (NP) ratio is a useful tool to measure the overall profitability of the
business. A high ratio indicates the efficient management of the affairs of
business.
There is no norm to interpret this ratio. To see whether the business is
constantly improving its profitability or not, the analyst should compare the
ratio with the previous years‘ ratio, the industry‘s average and the budgeted net
profit ratio.
The use of net profit ratio in conjunction with the assets turnover ratio helps in
ascertaining how profitably the assets have been used during the period.
2. Operating Profit Ratio:

Operating profit ratio establishes a relationship between operating Profit

earned and net revenue generated from operations (net sales). operating profit
ratio is a type of profitability ratio which is expressed as a percentage.
Net sales include both Cash and Credit Sales, on the other hand, Operating
Profit is the net operating profit i.e. the Operating Profit before interest and
taxes. Operating Profit ratio helps to find out Operating Profit earned in
comparison to revenue earned from operations.
Ratios Formulas 2019 2018 2017 2016 2015
Operating - -
(PBIT/Sales)*100 6.392173 3.07127 4.769468
Profit Ratio 1.02802 5.45908

Analysis:This ratio helps to analyse a firm‘s operational efficiency, a trend

analysis is usually done between two different accounting periods to assess
improvement or deterioration of operational capability.
High – A high ratio may indicate better management of resources i.e. a higher
operational efficiency leading to higher operating profits in the Tata Motors.
Low – A low ratio may indicate operational flaws and improper management of
resources; it is an indicator that the profit generated from operations are not
enough as compared to the total revenue generated from sales.
3. Operating Ratio:

The operating ratio shows the efficiency of a company's management by

comparing the total operating expense (OPEX) of a company to net sales. The
operating ratio shows how efficient a company's management is at keeping
costs low while generating revenue or sales. The smaller the ratio, the more
efficient the company is at generating revenue vs. total expenses.
It is often used to measure a company's operational efficiency. It is useful to
track the operating ratio over a period of time to identify trends in operational
efficiency or inefficiency.

Ratios Formulas 2019 2018 2017 2016 2015

Total expenses-
Operating Finance 97.9596 102.060 105.542 99.7230 111.827
Ratio cost/Revenue from 7 9 9 9 5
operations x 100

Analysis: Year 2019 shows the lowest Operating Ratio of Tata Motors, so here
the expenses are less as compared to Sales of the company.
An operating ratio that is going up is viewed as a negative sign, as this indicates
that operating expenses are increasing relative to sales or revenue. Conversely,
if the operating ratio is falling, expenses are decreasing, or revenue is
increasing, or some combination of both. A company may need to implement
cost controls for margin improvement if its operating ratio increases over time.
4. Gross Profit Ratio:

Gross profit margin is a metric used to assess a company's financial health and
business model by revealing the amount of money left over from sales after
deducting the cost of goods sold. The gross profit margin is often expressed as a
percentage of sales and may be called the gross margin ratio.The ratio thus
reflects the margin of profit that a concern is able to earn on its trading and
manufacturing activity. It is the most commonly calculated ratio.

Ratios Formulas 2019 2018 2017 2016 2015

(Gross
Gross profit
profit/Net 36.3792 35.44608 36.19923 40.96784 38.26993
margin Ratio
sales) x 100

Analysis: Higher gross profit ratio is good for the company. 2016 showed
highest GP ratio. The above figures are in % form, so in 2019 GP ratio was 36%
as compared to Net Sales of that particular year.
5. Return on Capital Employed:

Return on capital employed or ROCE is a profitability ratio that measures how

efficiently a company can generate profits from its capital employed by
comparing net operating profit to capital employed.
ROCE is a long-term profitability ratio because it shows how effectively assets
are performing while taking into consideration long-term financing. This is why
ROCE is a more useful ratio than return on equity to evaluate the longevity of a
company.
Ratios Formulas 2019 2018 2017 2016 2015
Return on
EBIT/Total
capital 11.57679 5.041444 -1.19323 5.318471 -6.62537
capital x 100
employed

Analysis: ROCE was highest in 2019, which is a very good sign as the
comparison here is between EBIT (Net operating Profit) to Total Capital. More
the ROCE better it is for the company.
6. Return on Equity:

Return on equity (ROE) is a ratio that provides investors with insight into how
efficiently a company (or more specifically, its management team) is handling
the money that shareholders have contributed to it. In other words, it measures
the profitability of a corporation in relation to stockholders‘ equity. The higher
the ROE, the more efficient a company's management is at generating income
and growth from its equity financing.
ROE is often used to compare a company to its competitors and the overall
market. The formula is especially beneficial when comparing firms of the same
industry since it tends to give accurate indications of which companies are
operating with greater financial efficiency and for the evaluation of nearly any
company with primarily tangible rather than intangible assets.
Ratios Formulas 2019 2018 2017 2016 2015
(Profit after
Return on
tax/Shareholder's 9.117194 -5.13039 -11.4806 0.690436 -31.8851
Equity
fund) x 100

Analysis: ROE was highest in year 2019, as higher the ROE, more efficient is
the company‘s management at generating profits from its equity financing.
7. Return on Assets:

Return on assets (ROA) is an indicator of how profitable a company is relative

to its total assets. ROA gives a manager, investor, or analyst an idea as to how
efficient a company's management is at using its assets to generate earnings.
Return on assets is displayed as a percentage.
ROA is best used when comparing similar companies or comparing a company
to its previous performance.
ROA takes into account a company‘s debt, unlike other metrics, such as Return
on Equity (ROE).
The higher the return, the more productive and efficient management is in
utilizing economic resources.
Ratios Formulas 2019 2018 2017 2016 2015
Profit after
Return on
tax/Total 3.317374 -1.74769 -4.12648 0.283383 -9.48868
Assets
assets x 100

Analysis:ROE is highest in 2019 which is a good sign, as higher return

indicates that the management is efficient in utilizing the assets.
FINANCIAL LEVERAGE RATIOS:
Leverage ratios are used to determine the relative level of debt load that a
business has incurred. These ratios compare the total debt obligation to either
the assets or equity of a business. A high ratio indicates that a business may
have incurred a higher level of debt than it can be reasonably expected to
service with ongoing cash flows.
Leverage ratios are essentially measures of risk, since a borrower that cannot
pay back its debt obligations is at considerable risk of entering bankruptcy
protection. However, a modest amount of leverage can be beneficial to
shareholders, since it means that a business is minimizing its use of equity to
fund operations, which increases the return on equity for existing shareholders.
1. Debt-Equity Ratio:

The debt-to-equity (D/E) ratio is calculated by dividing a company‘s total

liabilities by its shareholder equity. These numbers are available on the balance
sheet of a company‘s financial statements.
The ratio is used to evaluate a company's financial leverage. The D/E ratio is an
important metric used in corporate finance. It is a measure of the degree to
which a company is financing its operations through debt versus wholly-owned
funds. More specifically, it reflects the ability of shareholder equity to cover all
outstanding debts in the event of a business downturn.

Ratios Formulas 2019 2018 2017 2016 2015

Debt-Equity
Debt/Equity 0.7132 0.734836 0.764429 0.632451 0.98973
Ratio

Analysis:Lesser the debt-equity ratio less riskier is the company. 2019 shows
that the D-E ratio is 0.713 whereas 2018 showed that the D-E ratio was higher
than 2019. So this is a good progress for the company.
2. Debt to Total Asset Ratio:

Total-debt-to-total-assets is a leverage ratio that defines the total amount of debt

relative to assets. This metric enables comparisons of leverage to be made
across different companies.
The higher the ratio, higher is the degree of leverage (DoL) and, consequently,
financial risk. The total debt to total assets is a broad ratio that analyzes a
company's balance sheet by including long-term and short-term debt
(borrowings maturing within one year), as well as all assets—both tangible and
intangible, such as goodwill.
Total-debt-to-total-assets is a measure of the company's assets that are financed
by debt, rather than equity. This leverage ratio shows how a company has
grown and acquired its assets over time. Investors use the ratio not only to
evaluate whether the company has enough funds to meet its current debt
obligations but also to assess whether the company can pay a return on their
investment.
Creditors use the ratio to see how much debt the company already has and
whether the company has the ability to repay its existing debt, which will
determine whether additional loans will be extended to the firm.
Ratios Formulas 2019 2018 2017 2016 2015
Long term
Debt to Debt + Short
Total Asset term 0.636141 0.659345 0.64057 0.58956 0.70241
Ratio Debt/Total
Asset

Analysis:Debt to Total Asset ratio is seen to be less in 2019 as compared to

2018 and 2017. This proves that the total assets of the Tata Motors may have
increased or the Debt of this company may have decreased.
3. Proprietary Ratio:

The proprietary ratio is the proportion of shareholders' equity to total assets, and
as such provides a rough estimate of the amount of capitalization currently used
to support a business. If the ratio is high, this indicates that a company has a
sufficient amount of equity to support the functions of the business, and
probably has room in its financial structure to take on additional debt, if
necessary. Conversely, a low ratio indicates that a business may be making use
of too much debt or trade payables, rather than equity, to support operations
(which may place the company at risk of bankruptcy).
Thus, the equity ratio is a general indicator of financial stability. It should be
used in conjunction with the net profit ratio and an examination of the statement
of cash flows to gain a better overview of the financial circumstances of a
business. These additional measures reveal the ability of a business to earn
a profit and generate cash flows, respectively.

Ratios Formulas 2019 2018 2017 2016 2015

Shareholder's
Proprietary
fund/Total 0.363859 0.340655 0.35943 0.41044 0.29759
Ratio
asset

Analysis:2019 shows the Proprietary ratio 0.364 which is higher as compared to

2018 and 2017. This is a good sign because if the Proprietary ratio is high, this
indicates that the company has sufficient amount of equity to support the
business functions.
COVERAGE RATIOS:
A Coverage ratio is a type of financial ratio. It indicates the ability of a firm to
pay off the outsiders obligations. Normally, a ratio greater than 1 implies a
sound position of a firm to pay off the liability or obligation under concern.
Important coverage ratios include debt service coverage ratio, interest coverage
ratio.
Coverage ratios are important financial ratios from the viewpoint of the long-
term creditors and lenders. It is because the ratios speak of the ability of the firm
to pay off the obligations of creditors and lenders. On the basis of the ratios, the
creditors or lenders take a decision on whether to extend credit or loan or
whatever kind of financial support to the firm or not.
Different coverage ratios are calculated by different stakeholders of a business.
For example, a financial institution or bank extending a loan to the business or
firm will calculate the debt service coverage ratio and interest service coverage
ratio.
1. Interest Coverage Ratio:

The interest coverage ratio (ICR) is a measure of a company's ability to meet its
interest payments. Interest coverage ratio is equal to earnings before interest and
taxes (EBIT) for a time period, often one year, divided by interest expenses for
the same time period. The interest coverage ratio is a measure of the number of
times a company could make the interest payments on its debt with its EBIT. It
determines how easily a company can pay interest expenses on outstanding
debt.
It measures the margin of safety a company has for paying interest on its debt
during a given period. The interest coverage ratio is used to determine how
easily a company can pay their interest expenses on outstanding debt. The ratio
is calculated by dividing a company's earnings before interest and taxes (EBIT)
by the company's interest expenses for the same period. The lower the ratio, the
more the company is burdened by debt expense. When a company's interest
coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be
questionable.
Ratios Formulas 2019 2018 2017 2016 2015
Interest
coverage EBIT/Interest 2.450738 1.011316 -0.28397 1.268624 -1.21568
Ratio

Analysis:2019 shows highest ICR compared to the previous 5 year. This

indicates that the company has the ability to meet its interest expenses.
2. Debt-Service Coverage Ratio:

The Debt Service Coverage Ratio (DSCR) measures the ability of a company to
use its operating income to repay all its debt obligations, including repayment of
principal and interest on both short-term and long-term debt. This ratio is often
used when a company has any borrowings on its balance sheet such as bonds,
loans, or lines of credit. It is also a commonly used ratio in a leveraged
buyout transaction, to evaluate the debt capacity of the target company, along
with other credit metrics such as total debt/EBITDA multiple, net debt/EBITDA
multiple, interest coverage ratio, and fixed charge coverage ratio.
This ratio is especially important because the result gives some indication to the
lender of whether you‘ll be able to pay back the loan with interest. A ratio over
1 is good, and the higher the better.

Ratios Formulas 2019 2018 2017 2016 2015

Debt
Profit after tax+non
Service -
cashexpenses+interest/Repayme 3.854 2.184 1.387 2.563
Coverage 0.325
nt installment amount +interest
Ratio

Analysis: 2019 showed the highest DSCR amongst all previous years. Higher
the ratio better is the debt capacity of the Tata Motors.
TURNOVER RATIOS:
A turnover ratio represents the amount of assets or liabilities that a company
replaces in relation to its sales. The concept is useful for determining the
efficiency with which a business utilizes its assets. In most cases, a high asset
turnover ratio is considered good, since it implies that receivables are collected
quickly, fixed assets are heavily utilized, and little excess inventory is kept on
hand. This implies a minimal need for invested funds, and therefore a high
return on investment. Conversely, a low liability turnover ratio (usually in
relation to accounts payable) is considered good, since it implies that a company
is taking the longest possible amount of time in which to pay its suppliers, and
so retains its cash for a longer period of time.
Receivable turnover ratio: Measures the time it takes to collect an average
amount of accounts receivable. It can be impacted by the corporate credit
policy, payment terms, the accuracy of billings, the activity level of the
collections staff, the promptness of deduction processing, and a multitude of
other factors.
Payable turnover ratio: Measures the time period over which a company is
allowed to hold trade payables before being obligated to pay suppliers. It is
primarily impacted by the terms negotiated with suppliers and the presence of
early payment discounts.
Inventory turnover ratio: Measures the amount of inventory that must be
maintained to support a given amount of sales. It can be impacted by the type of
production process flow system used, the presence of obsolete inventory,
management's policy for filling orders, inventory record accuracy, the use of
manufacturing outsourcing, and so on.
Total Asset turnover ratio: Measures the asset investment needed to maintain
a given amount of sales. It can be impacted by the use of throughput analysis,
manufacturing outsourcing, capacity management, and other factors.
1. Inventory Turnover Ratio

Accounts receivable turnover is the number of times per year that a business
collects its average accounts receivable. The ratio is used to evaluate the ability
of a company to efficiently issue credit to its customers and collect funds from
them in a timely manner.
A high turnover ratio indicates a combination of a conservative credit policy
and an aggressive collections department, as well as a number of high-quality
customers. A low turnover ratio represents an opportunity to collect excessively
old accounts receivable that are unnecessarily tying up working capital. Low
receivable turnover may be caused by a loose or non-existent credit policy, an
inadequate collections function, and/or a large proportion of customers having
financial difficulties. It is also quite likely that a low turnover level indicates an
excessive amount of bad debt.
It is useful to track accounts receivable turnover on a trend line in order to see if
turnover is slowing down; if so, an increase in funding for the collections staff
may be required, or at least a review of why turnover is worsening.
Ratios Formulas 2019 2018 2017 2016 2015
Inventory Cost of goods
Turnover sold/Average 7.944182 6.229365 5.182613 5.039798 9.227347
Ratio inventory

Analysis:2019 showed the Inventory Turnover ratio as 7.944 which is supposed

to be higher than 3previous consecutive years. It is better if the ratio is higher,
as it tells that the debt of the company is less.
2. Inventory Holding Period

The inventory holding period shows the number of days on average that a
business holds inventory. To calculate the inventory holding period we divide
inventory by cost of sales and multiply the answer by 365 for the holding period
in days, or by 12 for the holding period in months. When the inventory turnover
is low, the days' sales in inventory will be high.When the inventory turnover is
high, the days' sales in inventory will be low.

Ratios Formulas 2019 2018 2017 2016 2015

Inventory Month
Holding /Inventory 1.510539 1.92636 2.315434 2.381048 1.300482
Period turnover ratio

Analysis: As seen above and referring the previous ratio, 2019 has a greater
ratio of inventory turnover than 2018 and therefore Holding period of Inventory
in 2019 was less than 2018. This happens because when the inventory turnover
ratio is high, holding period will be low.
3. Receivables Turnover Ratio

Accounts receivable turnover is an efficiency ratio or activity ratio that

measures how many times a business can turn its accounts receivable into cash
during a period. In other words, the accounts receivable turnover ratio measures
how many times a business can collect its average accounts receivable during
the year.
A turn refers to each time a company collects its average receivables. If a
company had Rs 20,000 of average receivables during the year and collected Rs
40,000 of receivables during the year, the company would have turned its
accounts receivable twice because it collected twice the amount of average
receivables.
This ratio shows how efficient a company is at collecting its credit sales from
customers. Some companies collect their receivables from customers in 90 days
while other take up to 6 months to collect from customers.

Ratios Formulas 2019 2018 2017 2016 2015

Credit(sale)
Receivables
revenuefrom 20.4860 20.7690 26.8003 64.4076
Turnover 20.43396
operation/Averag 9 4 7 2
Ratio
e receivables

Analysis: This ratio shows Tata motor‘s efficiency of collecting credit sales
from customers. 2019 shows a slight decrease in the RTR than that of 2018.
Basically the RTR has decreased over the years since 2015. Since the
receivables turnover ratio measures a business‘ ability to efficiently collect
its receivables, it only makes sense that a higher ratio would be more
favourable. Higher ratios mean that companies are collecting their receivables
more frequently throughout the year.
4. Receivables Collection Period

The accounts receivable collection period compares the outstanding receivables

of a business to its total sales. This comparison is used to evaluate how long
customers are taking to pay the seller. A low figure is considered best, since it
means that a business is locking up less of its funds in accounts receivable, and
so can use the funds for other purposes. Also, when receivables remain unpaid
for a reduced period of time, there is less risk of payment default by customers.

Ratios Formulas 2019 2018 2017 2016 2015

Average
Months/Receivable 0.57778 0.44775 0.18631
Collection 0.587258 0.585763
s turnover ratio 3 5 3
Period

Analysis:2019 has the highest collection period than that of the previous years‘
collection periods. A lower average collection period is generally more
favorable than a higher average collection period. A low average collection
period indicates the organization collects payments faster. There is a downside
to this though; as it may indicate its credit terms are too strict. Customers may
seek suppliers or service providers with more lenient payment terms.
5. Payable Turnover Ratio

The accounts payable turnover ratio is a liquidity ratio that shows a company‘s
ability to pay off its accounts payable by comparing net credit purchases to the
average accounts payable during a period. In other words, the accounts payable
turnover ratio is how many times a company can pay off its average accounts
payable balance during the course of a year.
This ratio helps creditors analyze the liquidity of a company by gauging how
easily a company can pay off its current suppliers and vendors. Companies that
can pay off supplies frequently throughout the year indicate to creditor that they
will be able to make regular interest and principle payments as well.

Ratios Formulas 2019 2018 2017 2016 2015

Payable Credits
1.14882 0.90444 1.52255
Turnover Purchase/Averag 1.061024 1.148281
5 4 6
Ratio e payable

Analysis: 2019 shows that the PTR is lower than the previous years i.e. that of
2018 and 2019. A high ratio means there is a relatively short time between
purchase of goods and services and payment for them. Conversely, a lower
accounts payable turnover ratio usually signifies that a company is slow in
paying its suppliers.
6. Average Payment Period

Average payment period (APP) is a solvency ratio that measures the average
number of days it takes a business to pay its vendors for purchases made on
credit.
Average payment period is the average amount of time it takes a company to
pay off credit accounts payable. Many times, when a business makes a purchase
at wholesale or for basic materials, credit arrangements are used for payment.
These are simple payment arrangements that give the buyer a certain number of
days to pay for the purchase.

Ratios Formulas 2019 2018 2017 2016 2015

Average
Months/Payable
Payment 11.30983 10.45041 10.44546 13.26783 7.881484
Turnover Ratio
Period

Analysis: 2019 shows that APP is more than 2018 and 2017. 2016 showed the
highest APP between 2015 to 2019. A shorter payment period indicates prompt
payments to creditors. Like accounts payable turnover ratio, average payment
period also indicates the creditworthiness of the company. But a very short
payment period may be an indication that the company is not taking full
advantage of the credit terms allowed by suppliers.
7. Total Assets Turnover

The asset turnover ratio measures the value of a company's sales

or revenues relative to the value of its assets. The asset turnover ratio can be
used as an indicator of the efficiency with which a company is using its assets to
generate revenue.
The higher the asset turnover ratio, the more efficient a company is at
generating revenue from its assets. Conversely, if a company has a low asset
turnover ratio, it indicates it is not efficiently using its assets to generate sales.
The asset turnover ratio is calculated on an annual basis. The higher the asset
turnover ratio, the better the company is performing, since higher ratios imply
that the company is generating more revenue per rupees of assets.

Ratios Formulas 2019 2018 2017 2016 2015

Net
Total Assets
sales/Average 114.4918 97.28303 75.01344 79.43298 143.7254
Turnover
total assets

Analysis: 2019 shows the Total asset turnover higher than that of 2018, 2017
and 2016. 2015 showed the highest TAT ratio among these 5 years. The higher
the asset turnover ratio, the better the company is performing, since higher
ratios imply that the company is generating more revenue per Rupees of assets.
 SWOT ANALYSIS

Strengths of Tata Motors

1. The internationalization strategy so far has been to keep local managers in

new acquisitions, and to only transplant a couple of senior managers from
India into the new market. The benefit is that Tata has been able to
exchange expertise. For example after the Daewoo acquisition the Indian
company leaned work discipline and how to get the final product ‗right
first time.‘
2. The company has a strategy in place for the next stage of its expansion.
Not only is it focusing upon new products and acquisitions, but it also has
a programme of intensive management development in place in order to
establish its leaders for tomorrow.
3. The company has had a successful alliance with Italian mass producer Fiat
since 2006. This has enhanced the product portfolio for Tata and Fiat in
terms of production and knowledge exchange. For example, the Fiat Palio
Style was launched by Tata in 2007, and the companies have an agreement
to build a pick-up targeted at Central and South America.

Weaknesses of Tata Motors

1. The company‘s passenger car products are based upon 3rd and 4th
generation platforms, which put Tata Motors Limited at a disadvantage
with competing car manufacturers.
2. Despite buying the Jaguar and Land Rover brands; Tata has not got a
foothold in the luxury car segment in its domestic, Indian market. Is
the brand associated with commercial vehicles and low-cost passenger cars
 to the extent that it has isolated itself from lucrative segments in a more
aspiring India?
3. One weakness which is often not recognized is that in English the word
‗tat‘ means rubbish. Would the brand sensitive British consumer ever buy
into such a brand? Maybe not, but they would buy into Fiat, Jaguar and
Land Rover

Opportunities of Tata Motors

1. In the summer of 2008 Tata Motor‘s announced that it had successfully

purchased the Land Rover and Jaguar brands from Ford Motors for UK
£2.3 million. Two of the World‘s luxury car brand have been added to its
portfolio of brands, and will undoubtedly off the company the chance to
market vehicles in the luxury segments.
2. Tata Motors Limited acquired Daewoo Motor‘s Commercial vehicle
business in 2004 for around USD $16 million.
3. Nano is the cheapest car in the World – retailing at little more than a
motorbike. Whilst the World is getting ready for greener alternatives to
gas-guzzlers, is Nano the answer in terms of concept or brand?
Incidentally, the new Land Rover and Jaguar models will cost up to 85
times more than a standard Nano!
4. The new global track platform is about to be launched from its Korean
(previously Daewoo) plant. Again, at a time when the World is looking for
environmentally friendly transport alternatives, is now the right time to
move into this segment? The answer to this question (and the one above) is
that new and emerging industrial nations such as India, South Korea
and China will have a thirst for low-cost passenger and commercial
vehicles. These are the opportunities. However the company has put in
place a very proactive Corporate Social Responsibility (CSR) committee
 to address potential strategies that will make its operations more
sustainable.
5. The range of Super Milo fuel efficient buses are powered by super-
efficient, eco-friendly engines. The bus has optional organic clutch with
booster assist and better air intakes that will reduce fuel consumption by
up to 10%.

Threats of Tata Motors

1. Other competing car manufacturers have been in the passenger car

business for 40, 50 or more years. Therefore Tata Motors Limited has to
catch up in terms of quality and lean production.
2. Sustainability and environmentalism could mean extra costs for this low-
cost producer. This could impact its underpinning competitive advantage.
Obviously, as Tata globalises and buys into other brands this problem
could be alleviated.
3. Since the company has focused upon the commercial and small vehicle
segments, it has left itself open to competition from overseas companies
for the emerging Indian luxury segments. For example ICICI bank and
DaimlerChrysler have invested in a new Pune based plant which will build
5000 new Mercedes-Benz per annum. Other players developing luxury
cars targeted at the Indian market include Ford, Honda and Toyota. In fact
the entire Indian market has become a target for other global competitors
including Maruti Udyog, General Motors, Ford and others.
4. Rising prices in the global economy could pose a threat to Tata Motors
Limited on a couple of fronts. The price of steel and aluminium is
increasing putting pressure on the costs of production.
 FINDINGS

Tata Motors is on the leading brands of the country and it has maintained the
position for very long period of time. To maintain such efficiency a company
needs strict norms and the focus to achieve growth despite of various challenges
it faces.
After analysing financial statements of Tata Motors with the help of Ratios we
get to know following points:
 Liquidity ratio of Tata Motors is not so good, as the Current ratios, Quick
ratios as well as the Cash ratios are lower than the required Ratio Level.
Lower the liquidity ratio lower is the capacity of the company to meet its
short term solvency.
 Profitability ratios of Tata Motors are better, all of the profitability ratios
are observed to be in positive ratio as compared to previous years.
Therefore as the profitability ratios are higher it is better as this is the sign
that Tata Motors are generating good amount of profits.
 Leverage ratios of Tata Motors are better as the Debt-Equity Ratio and
the Debt - Total Asset Ratios are lower. Whereas the Proprietary ratio is
higher as compared to previous years. This indicates that the Tata Motors
has managed to reduce their risk over the years. As the risk is low it will
be able to get more returns with less risk.
 Coverage ratios of Tata Motors are higher than 1 which is a good sign. If
the Coverage ratios are higher than 1, then this indicates that the company
can meet its Interest expenses and the Debt capacity of the Company is
also good.
 Turnover ratio of Tata Motors are good, the turnover ratios help the Tata
Motors to know that they have a better turnover as well as the period of
collection, holding and payment period.
 REFERENCES
 https://www.ibef.org/industry/india-automobiles.aspx
 https://in.reuters.com/finance/stocks/overview/TAMOy.D
 https://www.tatamotors.com/about-us/company-profile/
 https://www.investopedia.com/
 https://www.myaccountingcourse.com/
 https://www.accountingformanagement.org/
 https://www.marketing91.com/swot-tata-motors/
 ANNEXURES
Profit & Loss A/c:
Balance Sheet: