Dissertation Report

A study on Ratio Analysis of Mahindra and

Mahindra

Prepared by
Shreyans Gautam Barlota

Enrollment Number: 20IIMPBBA232

BBA Batch 2020-23

Under the guidance of

Prof. Sachin Hadpad

ACADEMIC YEAR
2023-24

Submitted To
Shree Chanakya Education Society’s
Indira Institute of Management-BBA, Pune

Affiliated To
An Autonomous Institute affiliated with SPPU
1
1
 Student’s Declaration

I undersigned Shreyans Gautam Barlota a student at Indira Institute of Management,

Pune BBA 6th semester, declare that the Dissertation report

titled “A study on A Ratio Analysis of Mahindra and MAHINDRA” is a result of my work and my
indebtedness to other work publications, references, if any, have been duly acknowledged. If I am
found guilty of copying any other report or published information and showing it as my original work,
I understand that I shall be liableand punishable by Institute or University, which may include ‘Fail’
in the examination, ‘Repeat study & re- submission of the report’ or any other punishment that
Institute or University may decide.

Name of Student: Shreyans Gautam Barlota

Enrollment Number: 20IIMPBBA232

Signature:

2
 Acknowledgment

I would like to take this opportunity to express my gratitude to all those who havecontributed to the
successful completion of this project report.

First and foremost, I would like to express my deepest appreciation to my supervisor Prof. Sachin
Hadpad sir for his constant support, guidance, and valuable suggestions throughout this project. I
am grateful for the time and effort he invested in reviewing my work and providing insightful
feedback that helped meimprove the quality of this report.

I would also like to extend my appreciation to my friends for their assistance in data collection,
analysis, and research. Without their efforts, this report would nothave been possible.

Thank you all for your support, guidance, and contributions.

Name of Student: Shreyans Gautam Barlota

Enrollment Number: 20IIMPBBA232

Signature:

3
Table of Contents

Sr. No. Particulars Page No.

Chapter 1 Introduction

Chapter 2 Industry Profile

Chapter 3 Company Profile

Chapter 4 Objectives and Scope

of Research
4.1 Statement of Problem
4.2 Scope of Study
4.3 Objectives of Study
Chapter 5 Research Methodology

Chapter 6 Data Analysis and

Interpretation

Chapter 7 Findings and Suggestion

Chapter 8 Conclusion

Chapter 9 Bibliography

4
 SERIAL NO CONTENT PAGE NO

1. NET PROFIT RATIO

2. OPERATING RATIO

3. INVENTIRY TURNOVER RATIO

4. RETURN ON NET WORTH/EQUITY

5. RETURN ON ASSET

6. RETURN ON CAPITAL EMPLOYED

7. CURRENT RATIO

8. QUICK RATIO

9. DEBT TO EQUITY

10. PROPRIETORY RATIO

5
CHAPTER 1
INTRODUCTION

6
INTRODUCTION

Ratio analysis is a process of identifying the strength and weakness of the firm by
properly establishing relationship. Analysis of financial statements means
establishing relationship between the items in financial statements for determining
the financial strength and weakness of the business. Therefore, the main purpose
of financial statement analysis is to utilise information about the past performance
of the company in order to predict how it will fare in the future. Another important
purpose of the analysis of financial statements is to identify potential problem
areas and troubleshoot those.

The ultimate aim of any business enterprise is to earn maximum profit. A firm
should earn profits to survive and grow over a long period of time. Profit is an
excess of revenues over associated expenses for an activity over a period of time.
Profit is an excess of revenues over associated expenses for an activity over a
period of time. Management should try to maximise its profit keeping in mind the
welfare of the society. The creditors want to get interest regularly and principle
regularly.
Owners want to get reasonable return on investment. At the end of accounting
period financial statements are prepared by the business enterprise to know the
result of the business operation and the financial position. The financial statement
provides a summarised view of financial position and operation of a firm. Therefore,
much can be learned about a firm from careful examination of its financial
statement

Mahindra and Mahindra Limited has marked its presence with significant
achievements and commands a market leadership status with regard to its
service. It is one of the largest manufactures in Indian automotive industry. Over
the years the company improved with regard to its service. This project is thus
an earnest attempt to analyse profitability of Mahindra and Mahindra Limited

7
ADVANTAGE OF FINANCIAL STATEMENT ANALYSIS

The advantages of financial statement analysis are listed below:

• 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

analyzing the taxation owed to the firm. Above all, the company is able to
analyze its own performance over a specific time period

LIMITATION OF FINANCIAL STATEMENT ANALYSIS

• Financial Statements Are Derived from Historical Costs -Transactions

are initially recorded at their cost. This is a concern when reviewing
the balance sheet, where the values of assets and liabilities may
change over time. Some items, such as marketable securities, are
altered to match changes in their market values, but other items, such
as fixed assets, do not change. Thus, the balance sheet could be
misleading if a large part of the amount presented is based on
historical costs.

• Financial Statements Only Cover a Specific Period of Time - A user

of financial statements can gain an incorrect view of the financial
results or cash flowsof a business by only looking at one reporting
period. Any one period may vary from the normal operating results of
a business, perhaps due to a sudden spike in sales or seasonality
8
 effects. It is better to view a large number of consecutive financial
statements to gain a better view of ongoing results.

• Financial Statements Could be Wrong Due to Fraud- The

management team of a company may deliberately skew the results
presented. This situation can arise when there is undue pressure to
report excellent results, such as when a bonus plan calls for payouts
only if the reported sales level increases. One might suspect the
presence of this issue when the reported results spike to a level
exceeding the industry norm, or well above a company’s historical
trend line of reported results.

• Financial Statements Do Not Cover Non-Financial Issues-The

financial statements do not address non-financial issues, such as the
environmental attentiveness of a company's operations, or how well it
works with the local community. A business reporting excellent
financial results might be a failure in these other areas.

• Financial Statements May Not Have Been Verified- If the financial

statements have not been audited, this means that no one has
examined the accounting policies, practices, and controls of the issuer
to ensure that it has created accurate financial statements. An audit
opinion that accompanies the financial statements is evidence of such
a review.

• Financial Statements Have No Predictive Value- The information in a

set of financial statements provides information about either historical
results or the financial status of a business as of a specific date. The
statements do not necessarily provide any value in predicting what
will happen in the future. For example, a business could report
excellent results in one month, and no sales at all in the next month,
because a contract on which it was relying has ended.

9
Methods or tools or technique of financial statement analysis

Ratio analysis – Ratio analysis is a technique of analysis, comparison and

interpretation of financial statement. It is a process through which various ratio
are calculated and on that basis conclusions are drawn which become the
base of managerial decision.

Ratio analysis is the comparison of line items in the financial statements of a

business. Ratio analysis is used to evaluate a number of issues with an entity,
such as its liquidity, efficiency of operations, and profitability. 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.

Importance of ratio analysis

1. Financial Statement Analysis- Understanding financial statements are

important for stakeholders of the company. Ratio analysis helps in
understanding the comparison of these numbers; furthermore, it helps in
estimating numbers from income statements and balance sheets for the
future. For e.g. Equity shareholder looks into the P/E ratio ,the Dividend
payout ratio, etc. while creditors observe Debt to Equity ratio, Gross margin
ratio, Debt to asset ratio, etc.

2. Efficiency of Company-Ratio analysis is important in understanding

the company’s ability to generate profit. Return on Asset, Returns on Equity
tell us how much profit the company is able to generate over assets of the
firm and equity investments in the firm, while gross margin and operating
margin ratios tell us the company’s ability to generate profit from sales and
operating efficiency.

10
3. Planning and Forecasting- From a Management and investor point of
view, ratio analysis helps to understand and estimate the company’s future
financials and operations. Ratios formed from past financial statement
analysis helps in estimating future financials, budgeting, and planning for the
future operations of the company.

4. Identifying Risk and Taking Corrective Actions- The company

operates under various business, market, operations related risks. Ratio
analysis helps in understanding these risks and helps management to
prepare and take necessary actions. Leverage ratios helping performing
sensitivity analysis of various factors affecting the company’s profitability like
sales, cost, debt. Financial leverage ratios like Interest Coverage ratio and
Debt Coverage ratio tell how much the company is dependent on external
capital sources and the company’s ability to repay debt.

5. Peers Comparison- Investor, as well as the company’s management,

makes a comparison with Competitors Company to understand efficiency,
profitability and market share. Ratio analysis is helpful for companies to
perform SWOT (Strengths, Weakness, Opportunities, and Threats) analysis
in the market. It also tells whether the company is able to perform growth or
not over a period from past financials and whether the company’s financial
position is improving or not.

6. Financial Solvency- The company’s ability to pay short-term debt is

determined by liquidity. Current Ratio, Acid-test ratio tells us whether a
company is able to pay its short-term obligation within a year. The company
continuously runs analysis on past financial statements to understand and
prepare for payment of short-term obligations.

11
7. Decision Making- Ratios provide important information on the
operational efficiency of the company, and the utilization of resources by the
company. It helps management to forecast and planning for future, new
goals, concentrate on the different markets, etc.

Types of Ratio

Liquidity ratios – liquidity refers to the ability of a concern to meet

its current obligations as and when they become due. Liquidity
ratios measures the short term solvency of a business and for this
purpose following ratio can be computed:

a) Current ratio = current ratio is a most widely used ratio to judge

short term financial position or solvency of a firm. it can be
defined as relationship between current assets and current
liabilities. current ratio of 2 : 1 is considered as satisfactory.

Current Ratio= current assets / current liabilities

b) Liquidity Ratio = it is also called as Quick ratio or Acid test ratio,

measures the ability of business to pay its short term liabilities
by having assets that are readily converted into cash. These
assets are namely cash, marketable securities and account
receivables.

Liquid Ratio= current asset–inventory–prepaid expenses /current liabilities

c) Absolute liquid Ratio= This ratio is also known as super quick

ratio and establishes relationship between absolute liquid
assets

12
 and liquid liabilities. The ideal level of absolute liquid ratio is
0.5:1 .

Absolute liquid ratio= cash and bank balance/current liabilities

d) Cash ratio = the cash ratio is a measures of the liquidity of a

firm, namely the ratio of the total assets and cash equivalents.

Cash ratio= cash and bank balance/ current assets

Solvency Ratio

Solvency ratio - this ratio examines whether the total realizable

amount from all assets of a firm is enough to pay all of its
external liability or not. In this context this ratio shows the
relationship between total assets and external liabilities of the
firm.

Solvency means ability of a firm to pay its liability on due date.

Solvency is tested on the basis of the ability of the concern to
pay its long term liability at due time.
The ratios to be used for this purpose are called as ‘ ratio of
financial position’ or stability ratio. The main ratio of this
category are as follows;

a) Debt equity Ratio- this ratio reflects the long term financial
position of a firm and is calculated in the form of relationship
between external equities or outsider’s funds and internal
equities or shareholders fund. Debt equity ratio may also be
called as ‘ratio long term debt to shareholders funs’.

13
 Debt Equity Ratio= long term debts/ shareholder funds
Or debt/equity

b) Proprietary ratio- This ratio indicates the relationship

between proprietors fund and total assets. Greater is the
proprietor funds better is the position of the creditor.

Proprietary ratio=proprietary funds or

shareholders funds/Total assets

Profitability ratio
- Profitability ratio is used to evaluate the company’s ability togenerate
income as compared to its expenses and other cost associated with
the generation of income during a particular period. This ratio
represents the final result of the company.

The main category of this ratio are :

a) Gross profit ratio- This ratio measures the marginal profit of the
company. This ratio is also used to measure the segment revenue. A
high ratio represents the greater profit margin and it’s good for the
company.

Gross profit ratio = Gross Profit /Sales × 100

Gross Profit= Sales + Closing Stock – opening stock – Purchases –

Direct Expenses

b) Net profit ratio-This ratio measures the overall profitability of company

considering all direct as well as indirect cost. A high ratio represents
a positive return in the company and better the company is.

14
 Net profit ratio = Net Profit / Sales × 100
Net Profit = Gross Profit + Indirect Income – Indirect Expenses

c) Return on equity - This ratio measures Profitability of equity fund

invested the company.
It also measures how profitably owner’s funds have been utilized to
generate company’s revenues. A high ratio represents better the
company is.

Return on equity =Profit after Tax/ Net worth x 100

Where, Net worth = Equity share capital, and Reserve and Surplus

d) Return on capital employed- Return on capital employed (ROCE) is a

financial ratio that can be used in assessing a company's profitability
and capital efficiency. In other words, this ratio can help to understand
how well a company is generating profits from its capital as it is put to
use.

Return on capital employed (ROCE) = net profit before interest and tax /capital employed X 100

e) 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.

Operating profit ratio = operating profit / net sales X 100

15
 Chapter 2:
INDUSTRY PROFILE

16
 INDUSTRY PROFILE

The India automotive market demand was pegged at 4,266,062 units in 2019. The
market is expected to expand at a compound annual growth rate (CAGR) of 11.3% from
2020 to 2027. According to statistics published in April 2018 by the European
Automobile Manufacturers Association (ACEA), India is ranked fourth in the top ten
global car-
producing countries. The country’s automotive sector is powered by the rising
population, increasing disposable income, and ease of availability of credit and financing.
Additionally, the market is expected to experience elevated demand for commercial
vehicles from the flourishing logistics and passenger transport sector. Government
initiatives and policies are prominent factors influencing market growth and are expected
to upkeep the growth over the coming years
.
In an attempt to promote market growth, the Ministry of Finance had announced a cut in
the corporate tax rate in 2019. This revision in corporate taxes is anticipated to attract
FDI in the country’s manufacturing sector, which is expected to help the automotive
industry marginally. Furthermore, Government initiatives like Make in India and
Automotive Mission Plan 2026 have boosted the Indian automotive sector. The
Automotive Mission Plan 2026 is a collective vision of India's automotive industry and
the government that aims to make the Indian automotive industry the driving factor of the
Make in India initiative. In February 2019, the Indian government approved a fund
requirement of USD
1.39 Billion for the financial years 2020-22 for the FAME-II scheme.

Apart from growing passenger vehicle demand, Light Commercial Vehicles (LCVs) are
anticipated to record substantial growth in the next seven years. LCVs' growth prospects
look favorable, owing to a positive outlook of the country's overall logistics industry. As
retail e-commerce has witnessed a boom over the last few quarters, the hub-n-spoke
business model's proliferation is anticipated to favor sales of LCVs. Vendors are
increasingly focusing on untapped regional markets, including rural and semi-urban
areas, in the country to improve sales. Better credit and financing options are expected
to elevate growth opportunities in these markets over the forecast period.

The increasing adoption of technology in vehicles, industry supply chain and business
models is projected to change the automotive market outlook over the forecasted period.
The advent of automated, electrified, and connected vehicles are aiding the market
growth by making driving easier, safer, and comfortable. Growing awareness of
environmental hazards of emissions from ICE vehicles promotes the users to adopt
alternative fuel vehicles. Government focuses on the shift to electric mobility by providing
tax rebates and
17
subsidies for the adoption of electric vehicles. Thus, the electric mobility trend coupled
with the emergence of technologically advanced vehicles is expected to upkeep the
market growth from 2020 to 2027.
The India automotive market has experienced considerable growth in recent years and
achieved record sales in 2018. However, the market experienced a slump in the year
2019 due to its economic slowdown. Although the market was anticipated to revive in
2020, the spread of the novel coronavirus has further delayed the revival. Growing
preferences for Sports Utility Vehicles (SUVs), rising demand for commercial vehicles in
the logistic sector, and pent-up demand are certain factors expected to drive the market
over the coming years. Additionally, the electrification of vehicles, especially, three-
wheelers, and small passenger cars, is expected to be a major factor influ encing market
growth in the future

18
CHAPTER 3

19
COMPANY PROFILE

Mahindra & Mahindra Limited is an Indian multinational vehicle manufacturing company.

Its headquarter in Mumbai, Maharashtra, India. The company operate in 21 key
industries, providing insightful and ingenious solutions to customers. The company have
an operational presence in over 100 countriesand employ more than 200,000 people and
operate across vast geographies, governing spirit of “Rise” binds as one Mahindra,
dictating that empower people everywhere to not only chart new frontiers, but to conquer
them too

Mahindra & Mahindra Limited established in 1945.

 1945, the company was founded as steel trading company in Ludhiana as

Mahindra and Muhammad.
 1948, the company renamed Mahindra and Mahindra.
 In 1999, the company purchased 100% of Gujarat Tractors from the
Government of Gujarat.
 2007, the company acquired Punjab Tractor Limited (PTL) making it the world’s
largest tractor manufacturer.
 2009, PTL was merged into M&M and transformed as Swaraj division of Mahindra
& Mahindra.
 2011 Mahindra and Mahindra acquired South Korea’s SsangYong Motor
Company.
 2017, the company signed a memorandum of understanding (MOU) agreement
with Belgium-based Dewulf, a supplier of a full line of potato and root crop
machinery. Under the agreement, Mahindra will manufacture and market potato
planting equipment in India, for which the co-branded planter is developed.
 2020, the company ended its joint venture with Renault and buying outRenault’s
stake. The company is expanding its business in all over theworld.

Founder

Mahindra & Mahindra Limited founded by Jagdish Chandra Mahindra, KailashChandra

Mahindra and Sir Malik Ghulam Muhammad.

20
J.C Mahindra

Jagdish Chandra Mahindra was born on 1892 at Ludhiana, Punjab. He was

an Indian businessman and founder of the company. Jagdish was the
eldestchild of none children. He started his career with Tata steel, as the
senior sales manager. At an early age, the responsibility of the family
placed on hisshoulders. He believed strongly in the power of education and
ensure that allhis brothers and sisters studied hard. In 1951, he died.

K.C. Mahindra

Kailash Chandra Mahindra is second in Mahindra brothers. He was born on 1894 at

Ludhiana. Kailash attended Government college. He joined Messrs. Martin & Company,
where he edited the monthly magazine India and, briefly,the Hindustan Review. In 1942,
he was appointed Head of the Indian Purchasing Mission in the United States. He
contributed to develop strategic coal policies and applying the latest methods of coal
mining in India, helped shape the industry and his Coal Commission Report became a
seminal document in the industry. He served as a Director of the Reserve Bank of India,
Air India, and Hindustan Steel. On 1963, he died

M.G. Muhammad

M.G. Muhammad was an Indian businessman and the founder of Mahindra & Mahindra
company. He was born on 1895 and was a Pakistani politician and financier who served
as the third Governor-General of Pakistan. He did education from Aligarh Muslim
university. After his graduation, he joined
the Indian Civil Service as a chartered accountant at the Indian Railway Accounts Service.
He was very talented. Along with J.C Mahindra, he founded Mahindra & Mahindra
company. on 1956, he died.

Recently, the Chairman of the company is Anand Mahindra and Managing Director and
Chief Executive Officer of Mahindra is Pawan Kumar Goenka.

Networth

Mahindra & Mahindra Limited is an Indian automobile industry. In 2022, thecompany

revenue was approximatley 557.5 billion Indian rupees in fiscal year 2022.

21
It is one of the largest vehicle manufacturers by production in India and the largest
manufacturer of tractors in the world. Mahindra & Mahindra is a part ofMahindra Group.

Points Information

Company Name Mahindra & Mahindra Limited

Jagdish Chandra Mahindra

Founder Name Kailash Chandra Mahindra
Malik Gulam Muhammad

Owner Mahindra Group

Date of Establishment 2 October 1945

Establishment Place Ludhiana, Punjab

Revenue INR 1.06 lakh crores (In 2020)

CEO Anand Mahindra

Mahindra & Mahindra Limited, Gateway

Registered Address
Building, Apollo Bunder, Mumbai 400 001, India

Corporate Identity Number(CIN) L65990MH1945PLC004558

Telephone No. +91 22 22021031

Fax +91 22 22875485

22
Company Status Active

Website www.mahindra.com

23
CHAPTER 4
OBJECTIVE AND SCOPE OF RESEARCH

4.1 STATEMENT OF PROBLEM

The analysis of financial statement is a process of evaluating the relationship
between component parts of financial statements to obtain and understanding of
the firm's position and performance. Here the financial performance of Mahindra
and Mahindra Limited is analyzed by using ratio analysis. It includes ratio analysis
in this environment, a study on financial performance of Mahindra and Mahindra
Limited is helpful in determining the financial strength and weakness of the firm
by establishing strategic relationship between the items of the balance sheet and
profit and loss account. Here the problem is to analyse the financial performance
of the company is satisfactory or not.

4.2 Scope of study

The scope of the study is limited to India. An attempt is made to make a study of
financial statements of Mahindra and Mahindra Ltd. The analysis of profitability will help
one to understand the financial strength and weakness of the company. This study will
provide the necessary information of financial and operational result over a period of
time. This will facilitate the evaluation of the financial position, efficiency and
performance easily

4.3 Objectives of the study

➢ To analyze overall profitability of Mahindra and Mahindra Limited over the last
three years

➢ To study the trend of profit of Mahindra and Mahindra Limited over the past three years

. ➢Achieve the overall financial position of the company

CHAPTER 5
RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem.

It may be understood as a science of studying how research is done
scientifically. So the research methodology not only talks about the research
methods but also consider the logic behind the method used in context of the
research study.

Research design

Descriptive research used in this study because it will ensure the

minimization of bias and maximization of reliability of data collected .The
researcher had to use fact and information already available through financial
statements of earlier years and analyse these to make critical evaluation of
available material. Hence by making the type of research conducted to be
both Descriptive and Analytical in nature.

Secondary data

Secondary data implies second hand information which is already collected

and recorded by any person other than a user for a purpose, not relating to
the current research problem. It is the readily available form of data collected
from various sources like censuses, government publication, internal records
of the organizations , reports books ,journal articles, websites and so on.

Sources of data

The required data for the study are basically secondary in nature and the
data are collected from the audited reports of the company. The sources of
data are from the annual reports of the company from the year 2020-22
Methods of data analysis

The data collected were classified and tabulated for analysis. The analytical
tool used in this study.

The study employs the following analytical tools:

• Graph

• Ratio analysis

LIMITATIONS OF STUDY
The study is based on secondary data, obtained from the publish report and
as its finding depends entirely on the accuracy of such data.
DATA ANALYSIS AND INTERPRETATION

This chapter is considered to be the core part of this project work. It is mainly
indented to examine the profitability of the company for the last five years. The
ratio analysis is one of the most powerful tools of financial analysis. It is a process
of computing and interpreting various accounting ratios for arriving at conclusions
about financial position and performance of an enterprise. They are the pointers
or indicators of financial strength, soundness, position or weakness of a concern.
One can draw conclusions about the exact financial position of an enterprise with
the help of financial ratios.

PROFITABILITY RATIOS

A profitability ratio measures a company's ability to generate earning relative to

sales, assets and equity. It reveals the financial strength and weakness of a firm.
The operation efficiency of the firm its ability to ensure adequate return to its
shareholders depends ultimately on the profit earned by it. The profitability of a
firm can be measured by its profitability ratio. Profitability ratios measure the
ability of a firm to earn an adequate return on sales, total assets and invested
capital. There are two types of profitability ratios. First, profitability ratios based
on sales and second, profitability ratios based on investment.

Net profit ratio

YEAR NET PROFIT NET SALES RATIO(%)

2020 1348.28 46173.97 2.92
2021 235.73 39954.12 .59
2022 5397.22 62831.43 8.59

10
8
6
4
2
0
RATIO

2020 2021 2022

 ANALYSIS

Net profit ratio shows the relationship between net profit and net sales. Higher the ratio indicates
that operational efficiency of the concern. It can be observed from table that the net profit ratio of
Tata steel shows that there is increase in the net profit margin from the year 2020 to 2023.The higher
net profit ratio was observed in the year 2022 that was 8.59% and the lower in the year 2021 and
2020 which is(0.59%) and(2.92%) respectively

OPERATING PROFIT RATIO

YEAR OPERATIN NET SALES RATIO%

G PROFIT
2020 5247.54 46173.97 11.42
2021 5490.27 39954.12 13.74
2022 6666.77 62831.43 10.61

15 Chart Title
10

0
RATIO
2020 2021 2022

ANALYSIS
This ratio is used to measure the operational efficiency of the management. It is inferred from
the table that from the 2020 to 2022, the operating profit ratio of the company is11.42% for
2020 and for the year2021 is 13.74% and has dropped to 10.61%2022 .
INVENTORY TURNOVER RATIO

YEAR NET SALES AVERAGE RATIO%

INVENTOR
Y
2020 46173.97 3450.96 13.38
2021 39954.12 3507.82 11.39
2022 62831.43 7634.45 8.23

Chart Title
15
10
5
0
RATIO

2020 2021 2022

ANALYSIS:
The Inventory ratio tells us about the average left and the part of inventory sold. In case of
Mahindra and Mahindra the inventory turnover ratio is falling from 13.38% to 8.23 %.
 Return on Net Worth/Equity

YEAR NET INCOME SHARE RATIO%

HOLDER
EQUITY
2020 132820.41 34467.84 3.86
2021 26814.96 3450192 .77
2022 493407.41 38960.95 12.66

Chart Title
15
10
5
0
RATIO

2020 2021 2022

ANALYSIS
The return on equity signifies how good the company is at generating returns on the investment it
received from its shareholders. It is inferred from the table that the return on equity of Tata steel is
lower in the year 2020 (3.86%) and (.77%) in the year 2021 and the higher in 2022 that was
(12.66%).
 Return on assets (ROA)

YEAR NET INCOME TOTAL ASSEST RATIO%

2020 132820.41 50502.06 2.63
2021 26814.96 59588.8 .45
2022 493407.41 67130.26 7.35

Chart Title
8

0
RATIO

2020 2021 2022

ANALYSIS
The return on assets signifies how good the company is at generating returns on the investment it
has made on assets. It is inferred from the table that the return on equity of Tata steel is lower in
the year 2020 (2.63%) and the lower in 2022 that was (.45 %) and 7.35% for the year 2022..
Return on capital employed

YEAR Operating PROFIT CAPITAL RATIO%

EMPLOYE
D
2020 5247.54 39574.24 13.26
2021 5490.27 44455.63 12.35
2022 6666.77 48309.97 13.80

Chart Title
14

13

12

11
RATIO

2020 2021 2022

ANALYSIS
Return on capital employed measures the efficiency with which investment is made by the
shareholders. It is inferred from the table that the return on capital employed is lower in the year
2023 (13.26%) and in the year 2021 has drop to (12.35%)and in the year 2022 (13.80%).

Current Ratio
YEAR CURRENT CURRENT RATIO
ASSETS LIABILITIES

2020 15141.49 10972.82 1.38

2021 20312.30 15133.17 1.34
2022 25,917.70 18,820.29 1.38

ANALYSIS

The current ratio compares current assets with current liabilities and tell us whether the current
assets are enough to settle current liabilities. It is inferred from the table that the higher current ratio
of Mahindra and Mahindra in the year 2020 was 1.38 in the year 2022 was the same. But in 2021
it fell by 0.04;the ideal ratio is 2:1is usually considered safe. Mahindra and Manidra is condition
which is dissatisfactory.

Chart Title
1.4

1.38

1.36

1.34

1.32
RATIO

2020 2022 2023

Quick ratio

YEAR QUICK ASSET CURRENT RATIO%

LIABILITIE
S
2020 11740.92 10972.82 1.07
2021 16343.82 15133.17 1.08
2022 19949.5 18820.29 1.06

Chart Title
1.09

1.08

1.07

1.06

1.05
RATIO

2020 2021 2022

ANALYSIS
A ratio of 1.1 is said to be the ideal quick ratio. To indicate that the company has in its possession
enough assets which may be immediately liquidated to pay off the current liabilities. The table shows
that the highest liquid ratio of Tata steel is 1.08 in the year 2021and 1.07 in the year 2020 and it
is 1.06 for the year2022 that is more than the ideal ratio. Hence the liquid ratio of the company is
satisfactory
 LONG TERM FINANCIAL POSITION RATIO OR SOLVENCY RATIO

DEBT EQUITY RATIO

YEAR DEBT SHARE RATIO
HOLDER FUND
2020 3102.1 34467.84 .09
2021 7245.40 34501.92 .21
2022 6623.36 38960.95 .17

Chart Title
0.3

0.2

0.1

0
RATIO

2020 2021 2022

ANALYSIS:
The debt equity ratio is a financial ratio indicating the relative proportion of shareholders’ equity and debt
used to finance a company’s assets. In all the years the debt equity ratio of a company is less than
Hence the company is good at maintaining its debt position
PROPRIETARY RATI0

Proprietary ratio = shareholder funds / total assets

(Rs crore)
year Shareholders Total assets Proprietary
fund ratio

2020 34467.84 50502.06 .68

2021 34501.92 59588.8 .58
2022 38960.95 67130.26 .58

Chart Title
0.7

0.6

0.5
RATIO

2020 2021 2022

ANALYSIS
The high proprietary ratio indicates that a company has a sufficient amount of equity to support the
function of business. The ideal value of the proprietary ratio depends on the risk appetite of the
investors. If the investor agrees to take a large amount of risk, then a lower proprietary ratio is
preferred. It is inferred from the table that the proprietary ratio of Mahindra and Manidra in the year
2020 (0.68) and in the year 2021 (0.58) and in the year 2022 is same as2021 . Hence the proprietary
ratio of the company is satisfactory.
CHAPTER 7 – FINDINGS AND SUGGESTIONS

FINDINGS

The current ratio of the company is not good as it is below the standard level which
is 2:1 whereas Mahindra & Mahindra Limited has a current ratio of 1.38:1 in the
year 2020, 1.34:1 in the year 2021 and 1.38:1 in the year 2022 respectively.
Return on Asset for the year 2022 was 7.35% which is considered as good,
whereas ROA for the year 2020 and 2021 was relatively poor (2.63% for the year
2020 and .45% for the year 2021).
The company’s net profit ratio for the year 2020 and 2021 was relatively low
compared with the year 2022 as it has the net profit ratio of 8.59% (it was 2.92%
for the year 2020 and .59% for the year 2021).
The Operating Profit Ratio of the company was 11.42% in the year 2020, it was
13.74% in the year 2021 while it was 10.61% in the year 2022 all of them are
considered as average compared to the standard ratio of 20%.
The Inventory Turnover Ratio of the company is high for all three years and
higher the inventory turnover ratio the better (it was 13.38% in the year 2020,
11.39% in the year 2021 and 8.23% in the year 2022). A lower inventory turnover
ratio is a sign of weak sales or excessive inventory, also called as overstocking.
The Debt Equity Ratio of the company is .09 in the year 2020, it was .21 in the
year 2021 and .17 in the year 2022 which is relatively poor compared with the
standard ratio of 2 or 2.5.
The company has a good proprietary ratio for all three years (.68 in the year 2020,
in the year 2021 it was .58 and in the year 2022 it was .58)
7.1 SUGGESTIONS
The company should focus more towards the efficiency and proper sales
management to increase their sales margin and earn profit.
Improving the customer satisfaction level by understanding their wants and
needs will also help in retention and expansion of customer base.
Improving management quality with adoption of new methodologies that
reduce operating cost.
Working capital management is to be effectively managed to increase the
liquidity position of the company.
Revise management of capital employed through equity to generate more
Returns.
Provide customized services to look unique and stand out from the market
competition.
 CHAPTER 8 – CONCLUSION

The study was conducted with the main objective of analyzing the profitability position
of Mahindra and Mahindra ltd over the last three years from 2020 to 2022. It is found
that ratios are calculated from the financial statements’ which are prepared as desired
by the management and policies adopted on depreciation and stock values and thus
produce only a collection of facts expressed in monetary term and cannot produce
complete and authentic picture of the business and also may not highlight other factors
which affects performance.

Profitability ratios shows that the company profits are very fluctuating every year,
sometimes it is relatively high or close to the average or standard ratio or sometimes it
is very low. The company is becoming inefficient in the utilization and application of
resources to get maximum return. So this is the right time to revise their policies to
overcome the decrease in returns. It is better to change the strategies on sales and in
managing cost of the company.
CHAPTER – 9 BIBLIOGRAPHY

www.moneycontrol.com
https://auto.mahindra.com
wikipedia.com