Ratio Analysis

Financial Management
 Ratio Analysis
• Assessment of the firm’s past, present and future
financial conditions
Objectives of Ratio Analysis
• Standardize financial information for comparisons
• Evaluate current operations
• Compare performance with past performance
• Compare performance against other firms or industry
standards
• Study the efficiency of operations
 Liquidity Ratios

Firm’s ability to satisfy its short-

term obligations as they come
due.
 Liquidity Ratios

Current Ratio Quick Ratio

 Current Ratio

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Look at the ratio between

current assets and current
liabilities.
 Ratios 2008 2009 2010 2011 2012

Current 1.31 1.25 1.49 1.45 1.45

Ratio

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Mostly Current Ratio of 2 is consider acceptable. For

Atlas Honda, current ratio is less than acceptable but
improved during last 5 years and remain stable in last 2
years at level of 1.45 which is quite acceptable.
 Current Ratio
Current Ratio

1.55

1.5
1.49

1.45 1.45 1.45

1.4

1.35

1.31
1.3

1.25 1.25

1.2

1.15

1.1
2008 2009 2010 2011 2012
 Quick Ratio

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Is similar to the current ratio

but it excludes inventory
from current assets.
 Ratios 2008 2009 2010 2011 2012

Quick 0.84 0.70 1.02 0.9 1

Ratio

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

A Quick Ratio of 1 or greater is acceptable. For Atlas

Honda, Quick Ratio mostly remain below 1 but in 2010
and 2012 it’s acceptable.
 Quick Ratio
Quick Ratio

1.2

1.02
1 1

0.9
0.84
0.8

0.7

0.6

0.4

0.2

0
2008 2009 2010 2011 2012
 Activity Ratios
Measure how
effectively the firm is
using its assets.
 Inventory Asset
Turnover Ratio Turnover Ratio

Activity Ratios

Average Average
Collection Period Payment Period
 Inventory Turnover Ratio

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟=
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

Measures the activity of a

firm’s inventory.
 Ratios 2008 2009 2010 2011 2012

Inventory 7.13 10.36 14.15 15 16.3

Turnover
Ratio

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟=
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
Inventory turnover for ATLAS HONDA is improved very fast
during last 5 years and a level of 16.3 is quite remarkable.
Higher Inventory Turnover leads to reducing holding cost and
increase the net income and profitability. But company need to
remain conscious about inventory turnover because higher
level of inventory turnover may indicate inadequate inventory
level, which may leads to a loss for the business.
 Inventory Turnover
Inventory Turnover

18

16.3
16
15
14 14.15

12

10.36
10

8
7.13

0
2008 2009 2010 2011 2012
 Asset Turnover Ratio

𝑆𝑎𝑙𝑒𝑠
𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Indicates the firm’s

efficiency to use assets for
generating sales.
 Ratios 2008 2009 2010 2011 2012

Asset 2.39 1.84 3 3.38 3.47

Turnover
Ratio

𝑆𝑎𝑙𝑒𝑠
𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

It is generally consider that the higher the firm total asset

turnover, the more efficiently its assets have been used.
Asset turnover for ATLAS HONDA is improving and have
excellent level.
 Asset Turnover
Asset Turnover

3.5 3.47
3.38

3 3

2.5
2.39

2
1.84

1.5

0.5

0
2008 2009 2010 2011 2012
 Average Collection Period

𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐶𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑜𝑛𝑝𝑒𝑟𝑖𝑜𝑑 = × 365
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑒𝑠

Shows the time needed to

collect accounts receivables.
 Ratios 2008 2009 2010 2011 2012

Average 7 8.5 6 4.5 6

Collection
Period

𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐶𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑜𝑛𝑝𝑒𝑟𝑖𝑜𝑑 = × 365
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑒𝑠

ATLAS HONDA have very good credit and collection

policies. Average collection period of less than 1 week is
amazing.
 Average Collection Period
Avg. Collection Period

9
8.5
8

7 7

6 6 6

5
4.5
4

0
2008 2009 2010 2011 2012
 Average Payment Period

𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑃𝑎𝑦𝑎𝑏𝑙𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑎𝑦𝑚𝑒𝑛𝑡 𝑝𝑒𝑟𝑖𝑜𝑑= × 365
𝐴𝑛𝑛𝑢𝑎𝑙 𝑃𝑢𝑟𝑐h𝑎𝑠𝑒𝑠

Shows the time needed to

pay accounts payables.
 Ratios 2008 2009 2010 2011 2012

Average 61 76 48 51 50
Payment
Period

𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑃𝑎𝑦𝑎𝑏𝑙𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑎𝑦𝑚𝑒𝑛𝑡 𝑝𝑒𝑟𝑖𝑜𝑑= × 365
𝐴𝑛𝑛𝑢𝑎𝑙 𝑃𝑢𝑟𝑐h𝑎𝑠𝑒𝑠

Average payment period is decreased as compared to

2009. But company still using its credit worth very well
and taking full advantage of credit period from suppliers.
 Average Payment Period
Avg. Payment Period

80
76

70

60 61

50 51 50
48

40

30

20

10

0
2008 2009 2010 2011 2012
 Activity Ratios

The company asset performance appears to

be in a good shape. It is clear that company
has efficiently use the various components
of working capital cycle. It has been able to
effectively control the receivables and
inventories.
 Debt Ratios

Indicates the amount the firm

uses to generate profits from
others’ money.
 Debt Ratios

Times Interest Fixed-Payment

Debt Ratio
Earned Ratio Coverage Ratio
 Debt Ratio

𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Measures the proportion of

total assets financed by the
firm’s creditors.
 Ratios 2008 2009 2010 2011 2012

Debt 60.89 55.63 54.33 51.95 50.54

Ratio

𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

The higher degree of debt ratio shows the greater the

firm’s degree of indebtedness. Debt ratio for Atlas Honda
in 2008 was nearly 61% which was not very favorable
for the organization. But during the last 5 years, the debt
ratio decrease continuously and reach to nearly 50%
which is not very good but fair enough.
 Debt Ratio
Debt Ratio

70

60 60.89

55.63
54.33
51.95
50 50.54

40

30

20

10

0
2008 2009 2010 2011 2012
 Times Interest Earned Ratio

𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐵𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡∧𝑇𝑎𝑥𝑒𝑠

𝑇𝑖𝑚𝑒𝑠 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 𝑅𝑎𝑡𝑖𝑜=
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡

Measures the firm’s ability to make

contractual interest payments. It is
also called Interest Coverage Ratio.
 Ratios 2008 2009 2010 2011 2012

Times 4.98 2.4 10.56 16 139.26

Interest
Earned
Ratio

𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐵𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡∧𝑇𝑎𝑥𝑒𝑠

𝑇𝑖𝑚𝑒𝑠 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 𝑅𝑎𝑡𝑖𝑜=
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡

Interest Coverage Ratio of Atlas Honda increase during

the last 5 years but you can see a surprising increase in
this ratio in 2012. You can understand this increase by
comparing Debt and Interest coverage ratio.
 Interest Coverage Ratio
Interest Coverage Ratio

160

140 139.26

120

100

80

60

40

20
16
10.56
4.98
2.4
0
2008 2009 2010 2011 2012
 Debt Ratios
In this graph you can see a negative relationship
between Debt and Interest coverage ratio. As the
company debt ratio decrease, the company times
interest earned ratio increase rapidly. It is due to
company policy introduced in 2010 to reshape its
balance sheet approach and worked to reduce the
interest bearing liabilities to improve its balance
sheet. The outcome of this policy is the
Achievement of “DEBT FREE STATUS” in 2012.
 Profitability Ratios

Measures the firms’ profits with

the given level of sales.
Gross-Profit Operating-Profit Net-Profit
Ratio Ratio Ratio

Profitability Ratios

Earning Return on Return on

Per Share Total Assets Common Equity
 Gross-Profit Ratio

𝑆𝑎𝑙𝑒𝑠 −𝐶𝐺𝑆 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑅𝑎𝑡𝑖𝑜= =
𝑆𝑎𝑙𝑒𝑠 𝑆𝑎𝑙𝑒𝑠

Measures the percentage of each

sales dollar remaining after the
firm has paid for its goods.
 Ratios 2008 2009 2010 2011 2012

Gross-Profit 7.46 7.02 7.82 7.5 7.3

Ratio

𝑆𝑎𝑙𝑒𝑠 −𝐶𝐺𝑆 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑅𝑎𝑡𝑖𝑜= =
𝑆𝑎𝑙𝑒𝑠 𝑆𝑎𝑙𝑒𝑠

Gross profit margin for ATLAS HONDA is unstable and

mostly deteriorating. But separate using gross profit
margin for measuring company profitability is not a good
measure.
 Gross Profit Margin
Gross Profit Margin

7.82
7.8

7.6

7.5
7.46
7.4

7.3

7.2

7.02
7

6.8

6.6
2008 2009 2010 2011 2012
 Operating-Profit Ratio

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑅𝑎𝑡𝑖𝑜=
𝑆𝑎𝑙𝑒𝑠

Measures the percentage of each sales

dollar remaining after all costs &
expenses other than Interests and Taxes
are deducted.
 Ratios 2008 2009 2010 2011 2012

Operating-Profit 6.02 4.4 4.65 4.62 4.3

Ratio

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑅𝑎𝑡𝑖𝑜=
𝑆𝑎𝑙𝑒𝑠

Operating profit margin for ATLAS HONDA decreased in

2009, but remain quite stable after that.
 Operating Profit Margin
Operating Profit Margin

6 6.02

5
4.65 4.62
4.4
4.3
4

0
2008 2009 2010 2011 2012
 Net-Profit Ratio

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑅𝑎𝑡𝑖𝑜=
𝑆𝑎𝑙𝑒𝑠

Measures the percentage of each

sales dollar remaining after all costs &
expenses including Interests and
Taxes are deducted.
 Ratios 2008 2009 2010 2011 2012

Net-Profit 3.37 1.63 2.78 3.08 3.16

Ratio

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑅𝑎𝑡𝑖𝑜=
𝑆𝑎𝑙𝑒𝑠

Net profit margin also decreased during 2009 but

company recovered very well and its net profit
continuously increasing from last 3 years.
 Net Profit Margin
Net Profit Margin

3.5
3.37
3.16
3.08
3
2.78

2.5

1.63
1.5

0.5

0
2008 2009 2010 2011 2012
 Earnings Per Share (EPS)

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝐸𝑃𝑆=
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆h𝑎𝑟𝑒𝑠 𝑜𝑓 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Represents the dollar amount earned

on behalf of each outstanding share of
common stock.
 Ratios 2008 2009 2010 2011 2012

Earnings 4.75 14.86 11.39 16.03 16.74

Per
Share
(EPS)

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝐸𝑃𝑆=
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆h𝑎𝑟𝑒𝑠 𝑜𝑓 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Over the years, the company is focused on maintaining

steady growth in EPS. In 2012, company delivered EPS
of Rs.16.74 which is outstanding.
 Earning Per Share
Earning Per Share

18

16.74
16 16.03

14.86
14

12
11.39

10

4.75
4

0
2008 2009 2010 2011 2012
 Profitability Ratios

The Company’s Gross profit margin declined

but it is due to the higher cost of goods sold.
While the Operating and Net profit margin is
improving so we can evaluate that company
profitability is improving.
Return on Total Assets (ROA)

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝑅𝑂𝐴=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Measures the overall effectiveness of the

management in generating profits with its
available assets. It is also called Return
on Investment (ROI).
 Ratios 2008 2009 2010 2011 2012

Return 8.07 3 8.36 10.42 10.98

on Total
Assets
(ROA)

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝑅𝑂𝐴=
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

The higher the firm’s return on total asset consider the

better. Return on total asset of ATLAS HONDA appear to
be improved in last 3 year and rose to 11% despite
significant in assets base on account of capacity
expansion.
 Return on Asset
Return on Asset

12

10.98
10.42
10

8.36000000000001
8 8.07

0
2008 2009 2010 2011 2012
Return on Common Equity (ROE)

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝑅𝑂𝐸=
𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘 𝐸𝑞𝑢𝑖𝑡𝑦

Measures the return earned on the

common stockholders’ investment
in the firm.
 Ratios 2008 2009 2010 2011 2012

Return 20.65 6.76 18.30 21.68 22.21

on
Common
Equity
(ROE)

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘h𝑜𝑙𝑑𝑒𝑟

𝑅𝑂𝐸=
𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘 𝐸𝑞𝑢𝑖𝑡𝑦

Return on equity also have the same case like ROA. It is

also improved after declining in 2009 and now rose to
22% due to steady income growth.
 Return on Equity
Return on Equity

25

22.21
21.68
20.65
20

18.3

15

10

6.76

0
2008 2009 2010 2011 2012
 Market Ratios

Relates the firms’ market value as

measured by its current share price,
to certain accounting values.
 Market Ratios

Price/Earnings Market/Book
Ratio Ratio
 Price/Earnings Ratio (P/E)

𝑀𝑎𝑟𝑘𝑒𝑡 𝑃𝑟𝑖𝑐𝑒 𝑃𝑒𝑟 𝑆h𝑎𝑟𝑒 𝑜𝑓 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘

𝑃 / 𝐸 𝑅𝑎𝑡𝑖𝑜=
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑃𝑒𝑟 𝑆h𝑎𝑟𝑒

Measures the amount that investors

are willing to pay for each dollar of a
firm’s earnings.
 Ratios 2008 2009 2010 2011 2012

Price/ 14.1 18.7 10.9 8.8 8.5

Earnings
Ratio
(P/E)

𝑀𝑎𝑟𝑘𝑒𝑡 𝑃𝑟𝑖𝑐𝑒 𝑃𝑒𝑟 𝑆h𝑎𝑟𝑒 𝑜𝑓 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘

𝑃 / 𝐸 𝑅𝑎𝑡𝑖𝑜=
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑃𝑒𝑟 𝑆h𝑎𝑟𝑒

The higher level price earnings ratio consider the better.

Price earnings ratio for ATLAS HONDA decrease during
previous years but it not due of low earning but due to
the higher market price of ATLAS HONDA’s shares.
 Price Earning Ratio
Price Earning Ratio

20

18.7
18

16

14 14.1

12
10.9
10

8.8
8.5
8

0
2008 2009 2010 2011 2012