2022 Mba Mba Batchno 90

A COMPARATIVE STUDY ON FINANCIAL
PERFORMANCE ANALYSIS OF TATA MOTORS LTD AND

MARUTI SUZUKI LTD
Submitted in partial fulfilment of the requirements for the award of
MASTER OF BUSINESS ADMINISTRATION
by
LAVANYA R
Register No.40410090
SCHOOL OF MANAGEMENT STUDIES
SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with Grade “A” by NAAC I 12B Status by UGC
Approved by AICTE
JEPPIAAR NAGAR, RAJIV GANDHI SALAI, CHENNAI-
600119
APRIL 2022
SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with “A” grade by NAAC I 12B Status by UGC I Approved
by AICTE
Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai – 600 119
www.sathyabama.ac.in
SCHOOL OF MANAGEMENT STUDIES
BONAFIDE CERTIFICATE
This is to certify that this Project Report is the bonafide work of AAKASH A
40410001 who carried out the project entitled “A STUDY ON CHANGE IN
CONSUMER BEHAVIOUR FROM OFFLINE TO ONLINE PURCHASES”
under my supervision
from January 2022 to March 2022.
Dr. DHIVYA SATHISH

Internal guide External
Guide
Dr. BHUVANESWARI. G
Dean – School of Management Studies
Submitted for Viva voce Examination held on
Internal Examiner External

Examiner
DECLARATION
I LAVANYA R (Reg.No.40410090) hereby declare that the Project Report

entitled “A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE
ANALYSIS OF TATA MOTORS LTD AND MARUTI SUZUKI LTD” done by me
under the guidance of Dr.DHIVYA SATHISH is submitted in partial fulfillment of
the requirements for the award of Master of Business Administration degree.
DATE:
PLACE: LAVANYA R
ACKNOWLEDGEMENT
I am pleased to acknowledge my sincere thanks to Board of Management of

SATHYABAMA for their kind encouragement in doing this project and for
completing it successfully. I am grateful to them.
I convey my sincere thanks to Dr. G. BHUVANESWARI, Dean - School of

Management Studies and Dr. A. PALANI, Head - School of Management Studies
for providing me necessary support and details at the right time during the
progressive reviews.
I would like to express my sincere and deep sense of gratitude to my Project

Guide DR. DHIVYA SATHISH for her valuable guidance, suggestions and
constant encouragement paved way for the successful completion of my project
work.
I wish to express my thanks to all Teaching and Non-teaching staff members of

the School of Management Studies who were helpful in many ways for the
completion of the project.
LAVANYA R
TABLE OF CONTENTS
CHAPTER CONTENT PAGE NO

I INTRODUCTION
1.1. Financial performance: An Overview 1
1.2. Financial Statements 3
1.3. Objectives of Financial Analysis 4
1.4. Significance of Financial Analysis 5
1.5. Limitations of Financial Statement Analysis 6
1.6. Types of Financial Analysis 7
1.7. Techniques or Tools of Financial Statement Analysis 9
1.8. Methods of Ratio Analysis 18
1.9. Industry Profile 25
1.10. Indian Automobile Industry Swot Analysis 32
1.11. Company Profile 34
II REVIEW OF LITERATURE 39
2.1. Reviews on Financial Analysis 39
III RESEARCH METHODOLOGY 47
3.1. Objectives of the Study 47
3.2. Significance of the Study 47
3.3. Scope of the Study 47
3.4. Limitations of the Study 48
3.5. Sample Design 48
3.6. Sample Size 48
3.7. Sample Selection 48
3.8. Period of the Study 48
3.9. Methods of Data Collection 49
3.10. Need for the Study 49
3.11. Accounting Tools Used for the Study 49
IV DATA ANALYSIS & INTERPRETATION 50
4.1. Ratio Analysis 50
4.2. Trend Analysis 62
4.3. Comparative Income Statement 70
v FINDINGS, SUGGESSTIONS AND CONCLUSION 86
BIBLIOGRAPHY
LIST OF TABLES
S.NO TABLE NAME PAGE NO
4.1.1 Current Ratio of Tata Motors 50
4.1.2 Current Ratio of Maruti Suzuki 50
4.1.3 Consolidated Current Ratio of Tata Motors And Maruti Suzuki 51
4.1.4 Liquid ratio of Tata motors 52
4.1.5 Liquid ratio of Maruti Suzuki 52
4.1.6 Consolidated Liquid Ratio of Tata Motors And Maruti Suzuki 53
4.1.7 Cash Position Ratio of Tata Motors 54
4.1.8 Cash Position Ratio of Maruti Suzuki 54
4.1.9 Consolidated Cash Position Ratio of Tata Motors And Maruti 55
Suzuki
4.1.10 Debt Equity Ratio of Tata Motors 56
4.1.11 Debt Equity Ratio of Maruti Suzuki 56
4.1.12 Consolidated Debt Equity Ratio of Tata Motors And Maruti Suzuki 57
4.1.13 Interest Coverage Ratio of Tata Motors 58
4.1.14 Interest Coverage Ratio of Maruti Suzuki 58
4.1.15 Consolidated Interest Coverage Ratio of Tata Motors And Maruti 59
Suzuki
4.1.16 Gross Profit Ratio of Tata Motors 60
4.1.17 Gross Profit Ratio of Maruti Suzuki 60
4.1.18 Consolidated Gross Profit Ratio of Tata Motors And Maruti Suzuki 61
4.2.1 Trend Analysis of Sales of Tata Motors 62
4.2.2 Trend Analysis of Sales of Maruti Suzuki 62
4.2.3 Consolidated Trend Analysis of Sales of Tata Motors and Maruti 63
Suzuki
4.2.4 Trend Analysis of Current Assets of Tata Motors 64
4.2.5 Trend Analysis of Current Assets of Maruti Suzuki 64
4.2.6 Consolidated Trend Analysis of Current Assets of Tata Motors 65

and Maruti Suzuki
4.2.7 Trend Analysis of Current Liabilities of Tata Motors 66
4.2.8 Trend Analysis of Current Liabilities of Maruti Suzuki 66
4.2.9 Consolidated Trend Analysis of Tata Motors and Maruti Suzuki 67
4.2.10 Trend Analysis of Share Capital of Tata Motors 68
4.2.11 Trend Analysis of Share Capital of Maruti Suzuki 68
4.2.12 Consolidated Trend Analysis of Tata Motors and Maruti Suzuki 69
4.3.1 TATA MOTORS: 70
COMPARATIVE INCOME STATEMENT FOR THE YEAR

ENDING 31ST MARCH 2017 AND 2018.



4.3.5 MARUTI SUZUKI: 78



LIST OF CHARTS
SI.NO NAME PAGE NO

4.1.1 Current Ratio of Tata and Maruti 51
4.1.2 Liquid Ratio of Tata Motors and Maruti Suzuki 53
4.1.3 Cash Position Ratio of Tata Motors and Maruti 55
Suzuki
4.1.4 Debt Equity Ratio of Tata Motors and Maruti Suzuki 57
4.1.5 Interest Coverage Ratio of Tata Motors and Maruti 59

Suzuki
4.1.6 Gross Profit Ratio of Tata Motors And Maruti Suzuki 61
4.2.1 Trend Analysis of Sales of Tata Motors and Maruti 63
Suzuki
4.2.2 Trend Analysis of Current Assets of Tata Motors and 65
Maruti Suzuki
4.2.3 Trend Analysis of Current Liabilities of Tata Motors 67
and Maruti Suzuki
4.2.4 Trend Analysis of Share Capital of Tata Motors and 69

Maruti Suzuki
ABSTRACT
Financial ratio analysis is the process of reviewing the financial position of the company.
Ratio analysis is extensively used by firms as a technique to forecast the financial soundness
of the company to build future growth. This study aims at analyzing the financial performance
of Tata Motors and Maruti Suzuki by calculating financial ratios. The primary objective of this
study is to evaluate the performance of Tata Motors and Maruti Suzuki during the last 5
years. The reference period taken for study is 5 years starting from 2016 to 2021.Ratios like
Current ratio, liquid ratio debt equity ratio, interest coverage ratio and gross profit ratio were
calculated to serve the purpose of assessing the financial performance of the company.
Further trend analysis and comparative income statement were also analyzed. Secondary
data was collected from annual reports of Tata Motors and Maruti Suzuki to derive relevant
information. The results reveal that the company has performed reasonably well during the
reference period. The company has shown a good potential by earning returns for their
shareholders.
CHAPTER I
INTRODUCTION
This chapter introduces the thesis of “A COMPARATIVE STUDY ON FINANCIAL

PERFORMANCE ANALYSIS OF TATA MOTORS LTD AND MARUTI SUZUKI LTD”.
The introduction provides an overview about financial statement analysis, and
explores the necessity of financial analysis. Further this chapter states the objectives,
significance, scope, research gap, and limitations of the study.
1.1. FINANCIAL PERFORMANCE: AN OVERVIEW
Every business organization, be it manufacturing or

service oriented,needs finance for carrying on its activities. Even if the organization
possesses sufficient money to support its activities, the success of the business
depends on how well the management utilizes them, funds its capital and how
efficiently it operates out of the invested capital to generate profits.
Financial performance analysis is the process of

interpreting the firm’s financial statement (i.e. Profit & Loss a/c, Balance Sheet, Cash
Flow Statement, Fund Flow Statement etc) to determine the financial operations and
characteristics of a firm. It gives an insight into the efficiency and performance of the
firm’s financial management. Financial analysis is a management tool used by the
analysts, executives and investors in evaluating the comprehensive position of the
company. By consolidating the financial statements, it gives in depth analysis about
the liquidity position, long term solvency, financial viability and profitability of a firm.
Ratio analysis shows whether the firm is escalating or deteriorating in the past
financial years.Comparison of numerous financial aspects according to the needs of
executives or investors can be done effectively.
1
The analyst measures the firm’s solvency, liquidity, profitability and other indicators to
know whether the business is conducted in a rational manner. The analyst gives
overall emphasis on certain significant factors in any research on financial
performance of a business organization. They are,
1. Assessing short term and long term solvency
2. Assessing the liquidity and profitability
3. Identifying the efficiency of financial operations
4. Analyzing the factors determining the solvency level of liquidity and profitability.
Financial performance analysis helps the clients/investors to assess, evaluate and

decide in which firm they should invest so that they can reap maximum benefit out of
it with minimal risk involved. Financial statement analysis and interpretation is
significant especially for the shareholders, management, creditors and government. In
short, Financial Statement Analysis gives an overview about the fiscal status of an
organization.
2
1.2. FINANCIAL STATEMENTS:
Financial statements are formal records prepared by the company’s

management to depict a clear picture of its financial performance and position at a
point of time. They stand as the principal method of communicating the business
information of an entity to the outsiders. Technically, financial statements are a
summation of financial position of an entity over a period of time. Generally, financial
statements are prepared to meet the needs of present and potential owners and
creditors. Publicly traded companies are also required to present these statements
along with others to regulatory agencies in a timely manner.
AICP (American Institute of Certified Public Accountants) says “financial

statements are prepared for the purpose of presenting a periodical review or report on
the progress by the management and deal with (i) the status of Investments in the
business and (ii) the results achieved during the period under review”. The basic
financial statements of an enterprise include (i) balance sheet (ii) income statement
(iii) cash flow statement (iv) statement of changes in owner’s equity.
Balance sheet is a snapshot of financial position of an entity, listing all the

assets on one side and liabilities on the other side. The income statement presents a
summary of the revenues, gains, expenses, losses and net income or net loss of an
entity for a specified period. The cash flow statement 13 summarises cash receipts
and cash payments relating to its operating, investing, financing activities during a
particular period. A statement of changes in equity reconciles the opening balance of
equity with its closing balance. Notes to financial statements disclose additional and
detailed information about the various items listed in the financial statements.
3
1.3. OBJECTIVES OF FINANCIAL ANALYSIS:
The primary objective of financial statement analysis is to comprehend the

information contained in the statement analysis inorder to view the profitability and
fiscal strength of the firm and to forecast the potential future prospects. Some of the
objectives are as follows,
1. Assessment of current position: The management will want to know whether

the enterprise is heading towards as per plan or lagging in their targets.
Frequent recording of the financial transactions helps them to identify their
fiscal position.
2. Assessment of past performance: By having information about the past

financial performance of the business, the management can identify their
discrepancies, where they lagged etc. This inturn will help the management to
be precocious while making similar decisions in the future. The investors can
get possible indicators of future performance and invest accordingly.
3. Future decision making: quarterly, half-yearly and annual financial statement

helps to execute plans in a better way. Its objective is to assess and predict the
earning prospects with reliable information so as to help the
executives/investors to make better decisions.
4. Assessment of operational efficiency: financial statements helps to understand

the operations of the firm and determine its efficiency. The calculated financial
performance can be compared with the standards set earlier. Any difference or
deviation between them and the actual performance can be used as the
indicator of efficiency management
4
1.4. SIGNIFICANCE OF FINANCIAL ANALYSIS:
1. Importance to management: The management needs up-to date, accurate

and structured financial data for interpretation of operations of the company.
Financial statements assist the management in comprehending the progress,
prospects, and position of the business counterpart in the industry. It helps to
identify whether the resources of the firm were utilized effectively, to determine
the fiscal strength of the firm and to forecast the future prospects of the
enterprise. Any discrepancies can be dealt with by structuring new policies and
plans according to the result of the analysis.
2. Importance to stock exchange: the value of shares and debentures being

traded in the stock exchange are determined on the basis of financial/fiscal
position and credit worthiness of the company. The financial statements give
accurate and reliable information to fix the price for shares and debentures.
3. Importance to the stakeholders: The stakeholders cannot be present in the

day-day operations of the business. However, they need to be updated with
the firm’s financial position in order to review it. The management prepares the
analysis to present it to the stakeholders in the annual general meeting so as
to make them aware of the firm’s fiscal standards. After evaluating the financial
statements, the investors/stakeholders can make sound decisions for their
future investment strategies.
4. Importance to the Government: The financial statements helps the government

in structuring taxations and regulations policies based on the operations of the
company. The government has the authority to tax a business according to
5
their level of income and assets. The economic viability of a nation is identified
by collecting such financial statements from various sectors.
5. Importance to bankers: By analyzing the financial statement of a company, the
bankers can assess the ability of the enterprise to meet its obligations, short
term and long term solvency, credit worthiness, earring capacity etc. the
borrowing capacity can be identified and the extent of loan can be fixed by the
banker after evaluating the financial statement.
1.5. LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS:
1. Based on past data: only the past data of the firms are included in the financial
statements, which are then further analyzed. The future cannot be just like the
past. So, the analysis of future estimation cannot be taken literally for
forecasting, future budgeting and planning. It can, however, be considered as
a precaution.
2. Problem in comparability: The size of the business concern can be varying

according to their volume of transactions. Hence the figures of different
financial statements and different firms lose the characteristic of comparability.
So the analyst must choose the statements accordingly for comparison.
3. Reliability: Very rarely, in some companies, the financial managers tweak and
manipulate the financial statements to make it look profitable to show favorable
results.
6
4. Not a substitute of actual judgment: the consolidated financial statement
analysis cannot be taken as final judgment. It only acts as a conclusion to the
indicators.
1.6. TYPES OF ANALYSIS:
Analysis and interpretation of financial statements can be done by different methods.
FINANCIAL STATEMENT ANALYSIS
ON THE BASIS OF INFORMATION USED:
External Analysis: This analysis is based on published financial reports of a firm.

Generally, outsiders cannot access the internal records of a firm, so they depend on
such published statements. This analysis is done by the creditors, suppliers,
investors, and government agencies.
7
Internal Analysis: This analysis is based on the internal and unpublished
statements. It is done by executives and very useful for the management in decision
making.
ON THE BASIS OF “MODUS OPERANDI” OF ANALYSIS:
Horizontal Analysis: It is also known as dynamic or trend analysis, as the analysis is

prepared by analysing the statements of a number of years, taking the earliest year
as the basis for calculating percentages.
Vertical Analysis: It is also known as static or structural analysis. This analysis

establishes the quantitative relationship between different items shown in a particular
statement.
8
1.7. TECHNIQUES OR TOOLS OF FINANCIAL STATEMENT ANALYSIS:
The most essential techniques used for analyzing and interpreting the financial
statements are as follows:
(i) Ratio Analysis:
An analysis of financial statements based on ratios is known as ratio analysis. A ratio

is a mathematical relationship between two or more items taken fro the financial
statements. Ratio analysis is the process of computing, determining and presenting
the relation of items. It also included comparison and interpretation of ratios and using
them as basis for the future projections. The ratios can be calculated easily but they
9
need to be analysed and interpreted appropriately to render meaningful results.
Several ratios can be computed, however the analyst has to compute the most
essential ratios that would render the desired objective.
Steps involved in Ratio Analysis:
➢ The first step in ratio analysis is to gather relevant information from financial
statements and calculate appropriate ratios required for decision under
consideration.
➢ The next step is to compare the calculated ratios with the past ratios and
industry ratios in order to assess the relative meaning.
➢ The final step is to interpret the significance of various ratios, draw inferences
and write a report. The report may contain specific action in matter of the
decision situation or may present alternatives with comparative merits or it may
just state facts and interpretations.
Advantages of Ratio Analysis:
➢ Ratios reveal the trends in costs, sales, profit and other inter-related facts,
which will be helpful in forecasting future events.
➢ The analyzed ratios can be used as “instrument of control” regarding sales,
costs and profit.
➢ Ratios help to determine the operational efficiency by comparison of present
ratios with those of the past working and industry ratios.
➢ Ratios facilitates the investment decisions by computing the return on
investment which in turn helps the management in taking effecting decisions
regarding profitable avenues of investment.
Limitations of Ratio Analysis:
10
➢ A single ratio may not provide meaningful sense, for better understanding a
number of ratios need to be calculated, which may lead to confusion.
➢ There are no standard norms for calculating ratios; hence the interpretation
may become difficult.
➢ Each firm follows its own accounting procedure; hence comparison between
the firms may not yield accurate results.
➢ Moreover past ratios may not be effective for future decision making.
➢ Price level changes are not considered while computing ratios; therefore it
makes the ratio interpretation invalid.
(ii) Cash Flow Analysis:
Cash flow statement depicts the cash inflow and cash outflow of a concern. The cash
flow of the firm can be found as a difference between opening and closing cash
balance during a period of time. It clearly shows the sources of cash and how it is
applied to every activity. The loan proceeds, issue of shares, sale of assets are the
various sources of cash. Cash flow analysis is the study of movement of cash and
cash equivalents through the business.
Steps involved in cash flow analysis:
➢ Compare the last two years balance sheet and income statement, to prepare
the statement of cash flows in three parts.
➢ Analyze the various sources and application of cash, and then ascertain the
cash balances which will be useful for future projects.
➢ Cash flow statement can also be prepared by analyzing the cash from
operating, financing and investing activities.
Advantages of cash flow analysis:
11
➢ Cash flow statement provides information regarding liquidity and profitability of
the firm. It helps to ascertain the cash earning capacity of the firm as well as
the efficiency of the firm in paying off its obligations.
➢ It helps to maintain optimum cash balance of the firm, so that the firm can
invest the surplus cash or borrow from lenders to meet the deficit.
➢ Cash flow statement enables proper management of cash, resulting in
effective planning and coordination of various activities.
➢ Preparation of cash budget helps in appraising the performance of the cash of
the firm.
Limitations of cash flow analysis:
➢ Cash flow statement does not provide net income as it does not consider
various noncash items.
➢ Historical costs are the basis of preparation of cash flow statement; hence the
cash flow statement will not be helpful to project the future cash flows.
➢ Inter-industry comparison is not possible as cash flow statement does not
measure the economic efficiency of the firm.
c) Funds flow analysis:
The term ’funds’ refers to working capital. Funds flow statement depicts the internal
and external sources of working capital and how they are spend towards each
activity. Thus funds flow shows the changes in working capital of the firm. Working
capital is ascertained as a difference between current assets and current liabilities of
the company. Fund flow analysis involves three parts,
❖ Schedule of changes in working capital

❖ Statement of funds from operation
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❖ Statement of fund flow.
Steps involved in fund flow analysis:
➢ The first step is to prepare the schedule of changes in working capital, by

analyzing the increase or decrease in the current assets and current liabilities
of the company.
➢ Next is to ascertain the funds earned from the regular business operation by
adding the non-operating expenses to the net profit earned during the period
and then subtracting the non-operating income.
➢ The last step is to prepare the fund flow statement with the help of net
increase/decrease working capital and funds from operation.
Importance of fund flow statement:
➢ Fund flow statement discloses the changes in assets, liabilities and equity of
the company between two balance sheet dates.
➢ It helps to analyse the operational position of the concern.
➢ It helps in proper allocation of resources of the company in an effective and
efficient manner.
➢ It is useful for the investors to interpret the strength and weakness of the firm.
Limitations of fund flow statement:
➢ Fund flow statement fails to consider the non-fund transactions, which may
provide misleading information to the users of financial statements.
➢ Fund flow statement is prepared based on the data provided in the balance
sheet and income statement; hence the reliability of fund flow statement
depends on the accuracy of such statements.
13
➢ It is historical in nature as it prepared with the help of past data.
d) Comparative income statements:
This method establishes the comparison of data, either between two accounting
years or between two firms. Generally these statements include comparative profit &
loss account, comparative balance sheet. These statements indicate the trends in
performance efficiency and financial position. The comparative income statement
combines the data of various accounting periods and presents it in a single table for
interpretation.
Steps involved in comparative income statement:
➢ Tabulate the value of assets, liabilities, income, expenses of the firm for
desired accounting periods.
➢ Compute the increase or decrease amount by finding the difference between
the two year’s values.
➢ Ascertain the percentage change of the current year values in relation to the
previous year.
Advantages of comparative income statement:
➢ Comparative income statement enables inter-comparison as well as intra-

comparison of the financial results of the firm.
➢ It helps in evaluating the overall performance of the company.
➢ It is also useful for predicting the financial distress, so that corporate failures
will also be predicted.
14
Disadvantages of comparative income statement:
➢ Inter-firm comparison would be more effective, when both the firm follows the
same accounting procedures. Therefore mere preparation of comparative
income statement does not yield proper comparison.
➢ It may provide misleading information as there could be negative amount in
base year and positive amount in next year. Moreover percentage calculation
becomes impossible.
e) Common size statements:
Common size statements emphasize the relation of various items to one common
item (expressed as a percentage of some common item) in the financial
statement. This method can be used in balance sheet and income statement. In
case of income statements, sales figure is considered to be the common item to
establish relation. In balance sheet, the total value of assets would be the base.
Steps involved in common size statement analysis:
➢ In case of comparative balance sheet, classify the assets into fixed assets and
current assets; liabilities into proprietor’s funds, long term liabilities, current
liabilities and ascertain its total.
➢ Divide the computed total with the common base and ascertain the
percentage.
➢ Percentage of base = ( individual item amount / common base amount ) *100
15
Advantages of common size statement analysis:
➢ Common-size statement can be easily computed by the analysts using the

financial statements.
➢ It is helpful for comparing the financial performance at a single glance.
➢ It is also useful for understanding the structural composition of various items in
the financial statements in relation to some common base.
Limitations of common size statement analysis:
➢ Common size statement cannot be used as a basis for making decision as it

does not possess standard percentage regarding the change of percentage in
various components.
➢ As it considers only the percentage increase or decrease, it does not provide
details regarding liquidity and solvency position of the firm.
➢ Comparative income statement ignores the qualitative aspects of the firm.
f) Net working capital analysis:
Net working capital is a measure to interpret whether the business has sufficient
liquid assets to pay off its short term obligations. Liquid assets refer to such assets
that can be quickly converted into cash. It includes cash, bank balances,
marketable securities, accounts receivables, and etc. In this method, schedule of
changes in working capital is prepared to analyze the increase or decrease in
working capital. Net working capital is ascertained as difference between current
assets and current liabilities. A positive working capital reveals good financial
16
position of the firm, however too much of working capital denotes that the
company’s funds are idle, not being utilized towards the growth and success of the
firm. It also denotes that either the company fails to take such opportunities
towards growth or it is unaware of them. On the other hand, negative working
capital results in delay in payment of dues to the suppliers, creditors. It may also
lead towards bankruptcy and even liquidation of the firm.
g) Trend analysis:
Trend analysis ascertains the trend percentages of data over a particular period of
time and provides information regarding changes in financial and operating data
between specific periods. Trend analysis is basically analyzing the past and
current data to reveal the future prospects of the firm. There are three types of
trends namely short, intermediate, long term. It is also considered as a form of
comparative analysis.
Steps involved in trend analysis:
➢ The first step is to identify the data that has to be analysed.

➢ Then choose the time period for gathering such data.
➢ Prepare trends and analyse it, so that the future could be predicted.
Advantages of trend analysis:
➢ Trend analysis helps in inter-firm comparison, as it provide absolute figures

over a period of time.
➢ It is useful for analyzing the liquidity, solvency, profitability position of the firm
➢ As it forms as a basis of comparative analysis, it is also useful for decision
making.
17
Limitations of trend analysis:
➢ It is very difficult to select a base year for the purpose of ascertaining trend
analysis.
➢ It is also difficult to use the same accounting policies as the trends will be
changed constantly.
➢ During price level changes, the trend analysis may not yield proper results.
1.8. METHODS OF RATIO ANALYSIS:
1. Current Ratio:
The current ratio is a liquidity ratio which is a liquidity ratio that measures a
company’s ability to pay short term obligations or those due within one year
Current ratio= Current assets

—---------------------
Current liabilities
2. Liquid Ratio:
Liquid ratios are used to determine the debtor's ability to pay off current debt
obligations without raising external debt.
Liquid Ratio= Quick assets

—-------------------
Current liabilities
3. Absolute Liquid Ratio:
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Absolute liquid ratio is a type of liquidity ratio which is calculated to analyze the short
term solvency or financial position of the firm.
Absolute liquid ratio= Cash + Marketable securities

—--------------------------------------
Current liabilities
4. Debt equity ratio:
The debt-to-equity ratio is a financial ratio indicating the relative proportion of

shareholders' equity and debt used to finance a company's assets.
Debt equity ratio= Total long term debt

—---------------------------
Shareholder’s fund
5. Proprietary ratio:
Proprietary ratio is a type of solvency ratio that is useful for determining the amount or
contribution of shareholders or proprietors towards the total assets of the business.
Proprietary ratio= Shareholder’s fund

—--------------------------------
Total tangible assets
6. Fixed assets ratio:
19
Fixed-asset turnover is the ratio of sales to the value of fixed assets. It indicates how
well the business is using its fixed assets to generate sales.
Fixed assets ratio= Fixed assets

—---------------
Long Term funds/ capital employed
7. Gross profit ratio:
Gross profit ratio (GP ratio) is a financial ratio that measures the performance and
efficiency of a business by dividing its gross profit figure by the total net sales.
Gross profit ratio= Gross profit

—-------------- X 100
Net sales
8.Net profit ratio:
It reveals the remaining profit after all costs of production, administration, and
financing have been deducted from sales, and income taxes recognized.
Net profit ratio= Net profit

—------------ X 100
Net sales
9. Operating profit ratio:
The operating profit margin ratio indicates how much profit a company makes after
paying for variable costs of production such as wages, raw materials, etc.
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Operating profit ratio = Earnings before interest and tax
—------------------------------------------- X 100
Net sales
10. Return on capital employed:
Return on capital employed (ROCE) is a financial ratio that can be used to assess 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 = Operating profit

—---------------------- X 100
Capital employed
11. Return on shareholders fund:
Return on shareholders' funds is an accounting measure of the rate of return that

shareholders have obtained on the capital which they have invested in the business.
Return on shareholders fund = Net profit after tax

—------------------------ X 100
Shareholders fund
12. Earnings per share:
21
The earnings per share ratio (EPS ratio) measures the amount of a company's net
income that is theoretically available for payment to the holders of its common stock.
Earnings per share= = Net profit after tax and preference dividend
—----------------------------------------------------------- X 100
Number of equity shares
13. Book value per share:
It is a method to calculate the per-share book value of a company based on common

shareholders' equity in the company.
Book value per share= Share capital + Reserves and Surplus

—-------------------------------------------------
Number of equity shares
14. Dividend payout ratio:
The Dividend Payout Ratio (DPR) is the amount of dividends paid to shareholders in
relation to the total amount of net income the company generates. In other words, the
dividend payout ratio measures the percentage of net income that is distributed to
shareholders in the form of dividends.
Dividend payout ratio= Equity dividend per share
—----------------------------------------- X 100
Earnings per share
15. Working capital turnover ratio:
22
Working Capital Turnover Ratio helps in determining how efficiently the company is
using its working capital (current assets – current liabilities) in the business.
Working capital turnover ratio = Sales

—---------------------
Net working capital
16. Inventory turnover ratio:
The inventory turnover ratio is an effective measure of how well a company is turning
its inventory into sales. The ratio also shows how well management is managing the
costs associated with inventory and whether they're buying too much inventory or too
little.
Inventory turnover ratio = cost of goods sold

—---------------------------
Average inventory
17. Debtors turnover ratio:
Debtor's Turnover Ratio is an accounting measure used to measure how effective a

company is in extending credit as well as collecting debts.
Debtors turnover ratio= sales

—-----------------------------------
Average accounts receivable
23
18. Comparative income statement:
Comparative Income Statement is the income statement in which multiple periods of

the income statement are dealt and compared side by side so as to allow the reader
to compare the incomes from a previous year and make investment decisions on
whether or not to invest in the company.
19. Trend analysis:
Trend analysis is a technique used in technical analysis that attempts to predict future
stock price movements based on recently observed trend data. Trend analysis uses
historical data, such as price movements and trade volume, to forecast the long-term
direction of market sentiment.
24
1.9. INDUSTRY PROFILE
AUTOMOBILE INDUSTRY:
The automobile industry in India is a growing industry that shows promise and is
necessary for the nation’s economic and technological advancement. The availability
of low-cost skilled labour, various research and development centers, and easy cheap
steel production all help make India the viable choice. India is a growing economy
and is a lucrative opportunity for investors.
The automobile industry in India was the fifth largest in the world in 2020. Several
Indian automobile manufacturers have spread their operations globally as well, asking
for more investments in the Indian automobile sector by the MNCs. The CAGR of the
Indian automotive industry’s sales between FY 2009 and FY 2020 comes around 8%.
The vehicle registrations fell by 29% in the financial year 2020-2021 from 295.8
million registered vehicles to 221.85 million in 2020.
25
Top Automobile Companies in India:
Tata Motors
Tata Motors is the largest automobile manufacturing company in India. Established

way back in 1945 Tata Motors is a multinational automobile company with its
headquarters in Mumbai. Previously known as Telco TATA Engineering and
Locomotive Company Tata Motors belongs to Tata Group.
This company manufactures compact medium-sized utility vehicles. Over the last few
decades, it has stood as the undisputed leader in the commercial vehicles segment. It
is also the third-largest producer of passenger cars in India. This automobile company
in India is listed on both the Bombay Stock Exchange and the New York Stock
Exchange. The revenues earned by Tata Motors in 2020 accumulated to 34.7 billion
USD.
Some of the well-known cars manufactured by Tata Motors are Tata Indigo, Tata
Indica, Tata Sumo, Tata Indigo Marina and Tata safari.
26
Hindustan Motors Limited
Hindustan Motors Limited was founded in the year 1942 by B.M Birla. It is an
operative subsidiary of the Birla Technical Services group. This company held the title
of the biggest manufacturer of cars in India before Maruti Udyog.
Hindustan Motors was the pioneer in manufacturing automobiles in India. Some of the
important cars and multi-utility vehicles manufactured by Hindustan Motors Limited
include; Mitsubishi Lancer, Trekker, Contessa, Ambassador, Porter, Pushpak and
Mitsubishi.
Hindustan Motors shut down its factory at Uttarpara in West Bengal State, where it
has been making the Ambassador since 1957.
27
Ashok Leyland
Ashok Leyland is a leading commercial vehicle manufacturer in India. It was

established in 1948. The company over the years has become synonymous with the
production of trucks, passenger buses and emergency military vehicles. It happens to
be the second-largest commercial vehicle producer in India holding a market share of
almost 30 per cent. The company holds a record for selling almost 60, 000 vehicles
and almost 7000 engines per year. Ashok Leyland accounted for consolidated
revenues of Rs. 174.67 billion in 2020. Some of the popular products by this company
are; Panther BS-II Multi-axle Vehicles, Cheetah Bus-III, Tractors and Ecomet, Lynx
BS-II, Diesel and Natural Gas gensets from 15KVA to 250KVA.
28
Maruti Suzuki India Limited
Maruti Suzuki India Limited was established in 1981. A part of this company is owned
by Suzuki Motor Corporation of Japan. It is the country's largest passenger car
manufacturing company.
Credited for having brought in the automobile revolution in the country, Maruti Suzuki
India Limited was known as Maruti Udyog Limited till 2007. With its headquarters in
Delhi, this automobile company in India happens to be the largest producer and
market shareholder of cars.
The company accounted for consolidated revenues of Rs. 71,690.4 crore in 2020.
Maruti Suzuki India Limited has been credited for manufactures a variety of
passenger cars, SUVs, and Sedans.
Some of Maruti's most popular cars are Alto, Gypsy, Omni, Wagon R, Maruti 800,
Versa, Zen, Esteem, Baleno and Swift.
29
Hyundai Motor India Limited
Hyundai Motor India Limited (HMIL) is owned entirely by Hyundai Motors of South
Korea. Hyundai Motors happens to be the largest car manufacturer in South Korea
and the sixth-largest in the world.
This automobile company in India is also the largest passenger cars exporter in India.
Established on May 6 1996 this company in a short period has taken the Indian
automobile industry by storm.
Some of the popular cars manufactured by this company are;
• Santro,
• Getz Prime
• Hyundai i10
• Hyundai i20 Accent
• Verna
• Sonata
30
Bajaj Auto
Bajaj Auto is another important automobile manufacturing company in India. It is one

of India's most trusted car manufacturers. It is an operative subsidy of the Bajaj
Group.
Bajaj Auto happens to be the largest two and three-wheeler manufacturer in India and
also ranks in this field across the globe. This automobile company was established on
2 November 1945.
The company was then known as M/s Bachraj Trading Corporation Private Limited.
The company made a modest beginning by importing and then selling two and three-
wheelers in India. Today Bajaj Auto has become synonymous with two and three-
wheelers in the country.
Some of its popular two-wheelers are;
• Pulsar 220DTS
• Kawasaki Ninja 250R
31
1.10. Indian Automobile Industry SWOT Analysis:
Strengths
• The domestic market is large

• The government provides monetary assistance for manufacturing units
• Reduced labour cost
• Evolving industry
• Continuous product innovation and technological advancement
• Growth shifting to Asian markets
• Increase in demand for luxury commercial vehicles
• Manufacturing facilities in Asian nations to control cost
Weaknesses
• Infrastructural setbacks
• Low productivity
• Too many taxes levied by the government increase the cost of production
• Low investments in Research and Development
Opportunities
• Reduction in Excise duty

• Rural demand is rising
• Income level is at a constant increase
• Introducing fuel-efficient vehicles
• Changing lifestyle and customer demand causing a rise in the sale of two-
wheelers and compact cars
32
Threats
• Increasing rates of interest

• Too much competition
• The rising cost of raw materials
• Steeply rising fuel prices
• Slow economy
• Economic recession
• High fixed costs and investments
33
1.11. COMPANY PROFILE:
Two automobile companies have been chosen for the study. They are tata motors ltd
and maruti suzuki ltd.
TATA MOTORS:
Tata motors is an indian multinational automotive manufacturing company, founded in

1945, 77 years ago, by Jehangir Ratanji Dadabhoy Tata. It is headquartered in
Mumbai, India. The company produces and manufactures passenger cars, trucks,
vans, coaches, buses, luxury cars, sports cars, construction equipment. Tata motors
has vehicle assembly operations in several countries apart from India, including the
United Kingdom, South Korea, Thailand, Spain and South Africa. It further plans to
establish plants in Turkey, Indonesia and Eastern Europe. In India it has
manufacturing and assembly units in Jamshedpur, Ranjangaon, Pune, Lucknow,
Sanand, Pantnagar and goa. The Manufacturing units at Jamshedpur and Pune are
the oldest and largest of Tata Motors. Tata motors has more than 250 dealerships in
more than 195 cities across 27 states and four union territories of India. Tata’s
dealership, sales, service and spare parts network comprises over 3,500 touch
points. Tata also has fanchisee/joint venture assembly operations in Kenya,
Bangladesh, Ukraine, Russia and Senegal. Tata has dealerships in 26 countries
34
across 4 continents.
REVENUE AND INCOME OF TATA MOTORS
Revenue ₹319,247 crore
(US$42 billion) (2021)
Operating Income ₹−2,377 crore
(US$−310 million)
Net income ₹−13,016 crore
(US$−1.7 billion) (2021)
Total Assets ₹343,125 crore
(US$45 billion) (2021)
In Share Market Tata Motors Ltd is traded as,

• BSE: 500570
• NSE: TATAMOTORS
• NYSE: TTM
• NSE: NIFTY 50 constituent
Share Holding Pattern of Tata Motors Ltd

Holder’s Name No of Share % of Share Holding
Promoters 1540885009 46.4%
Foreign Institutions 479896460 14.45%
N Banks Mutual Fund 214929894 6.47%
Central Government 4789854 0.14%
General Public 550123974 16.57%
Financial Institutions 262669799 7.91%
Others 267367017 8.05%
35
The following are the automobiles launched by tata motors over the years,
• 1954 - First commercial vehicle in collaboration with Daimler-Benz AG(Ended

in 1969)
• 1988 - Entered passenger vehicle market with the launch of TataMobile
• 1991 - Tata Seirra, becoming the first Indian Manufacturer to achieve the
capability of developing a competitive indigenous automobile.
• 1998 - Tata Indica, a fully indigenous passenger car.
• 2008 - Tata Nano, The world’s most affordable car.
Current Models:
• Tata Tiago (2015–present)

• Tata Tigor (2016–present)
• Tata Nexon (2017–present)
• Tata Hexa (2017–2019)
• Tata Harrier (2018–present)
• Tata Altroz (2020–present)
• Tata Nexon EV (2020–present)
• Tata Safari (2021–present)
• Tata Tigor EV (2021–present)
• Tata Punch (2021–present)
36
MARUTI SUZUKI:
Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an

Indian automobile manufacturer, based in New Delhi. It was founded in 1981 and
owned by the Government of India until 2003, when it was sold to
the Japanese automaker Suzuki Motor Corporation. As of February 2022 Maruti
Suzuki has a market share of 44.2 percent in the Indian passenger car market.
Maruti Suzuki has 3,598 sales outlets across 1,861 cities in India. The company aims
to increase its sales network to 4,000 outlets by 2020. It has 3,792 service stations
across 1,861 cities throughout India. Maruti's dealership network is larger than that of
enough known companies combined. Service is a major revenue generator of the
company. Most of the service stations are managed on franchise basis, where Maruti
Suzuki trains the local staff. Also, The Express Service stations exist, sending across
their repair man to the vehicle if it is away from a normal service center.
37
The following are the automobiles launched by Maruti Suzuki over the years,
• 1983- Maruti 800

• 1984- Omni
• 1985-Gypsy E
• 1990- Gypsy king
• 1993- 1000
• 1984- Zen
• 1999- Esteem
• 2000- Baleno
• 2001- Baleno Altura
• 2003- Versa
• 2007- Zen Estilo
• 2008- A-Star
• 2008- Swift Dzire
• 2008- Ritz
• 2010- Alto K10
• 2017- Baleno RS
38
CHAPTER II
REVIEW OF LITERATURE
2.1. REVIEWS ON FINANCIAL ANALYSIS
1. Bismark Maka1, Dr. N. Suresh(2018) in their article “Review of financial

performance analysis of corporate organizations”examined that, a standard
shift to financial performance analysis which inspects the internal KPIs like
current ratio, quick ratio, net profit margin, working capital ratio etc on the
overall financial performance of the firms will supplement financial performance
literature both in industry and academia. This approach will later complement
in making decisions with respect to business planning, budgeting processes
and investment decision making. Since the performance of internal KPIs are
trackable and measurable; their significant contribution to the overall
achievement of the goals of the company can be ascertained. Hence the key
indicators which led to the non achievement of financial goals can be
determined and new structure can be modeled to arrest the financial under
performance.
2. Shaikh Salman Masood (2020) in his study Financial Statement Analysis of

Tata Motors Limited carried out for the period 2017, 2018, 2019 has noticed
abnormal amounts of debt of tata motors and pointed out their lack of ability to
pay contractual payments. Out of the 3 financial years, 2017 had the highest
quick and current ratios indicating the firm’s highest liquidity. It has decreased
ever since.
3. Bhupender Kumar Som1 , Himanshu Goel2 (2020) in their journal “Ratio

Analysis: A Study on Financial Performance of Tata Motors”, reviewed the
39
financial performance of Tata Motors from 2016-2020. The results reveal the
Return on capital employed and Net worth were at all time low. The current
ratio of the firm were to be considered a matter of concern for the investors as
it directly influences the company’s financial performance. The company
seemed to produce good results in 2019, before the pandemic, may be due to
the expected reasons such as voluntary retirement scheme and sell-off non-
core assets which worked well in favor of the company.
4. MODI TANVIR R. and KHORAJIYA MAHMADARIF I. (2014) concluded that

Tata Motors Ltd has been decreasing their profitability. Their study “ANALYSIS
OF PROFITABILITY OF TATA MOTORS LIMITED” indicates that even though
the sales revenue of the firm was high the gross profit margin the company
was not increasing. Operating profit was low compared to the sales volume of
the company. Over the period of the study the net profit margin of the company
signifies lower level of profitability of the company.
5. Moses Joushva Daniel A (2013) in his study “A Study on Financial Status of

Tata Motors Ltd” examined the financial performance of the firm from 2006-
2007 to 2010-2011. He concluded that the financial performance was
satisfactory and has had a stable growth over the years. It is said to reduce
expenditure as it’s been increasing every year. The net profit is increased but
the net profit ratio has decreased so in order to have increased actual profit the
firm must increase the sales.
6. V. Gokulapriya (2020) in her journal “A STUDY ON FINANCIAL

PERFORMANCE OF MARUTI SUZUKI MOTORS” concluded that the firm
should increase their profitability level by considering the internal and external
40
factors even though the the firm’s profitability is satisfactory. The firm should
invest more in their current assets as there seems to be a fluctuation in liquidity
position.
7. Biswajit Rout **Abinash Dash ***Baisali Das (2020) in their journal “A Study on
Financial Statement Analysis of Maruti Suzuki India Limited Company”
reviewed the financial performance of the frim from 2009-2019. They
concluded that the prosperity of Maruti Suzuki has been wealthy for the last 10
years. It was found to be in a gradually increasing manner regarding the Net
Sales and Net Profits of the company since 2009 onwards.
8. Sudarshan Kumar (2020) in his article “A study on evaluation of financial

performance of Maruti Udyog Ltd '' analyzed that Maruti Suzuki has
demonstrated that it is consistently ahead of its rivals as a result of continuous
developments. What's more, mechanical upgrades. The organization has set a
benchmark of greatness due to the Exploration and Development movement
as Maruti Suzuki accepts that this action will empower the organization to offer
better and climate cordial items than clients with complete fulfillment. Maruti
Suzuki‟s ecological execution is truly uncountable. Thinking about the
developing vehicle contamination, the organization presented a progressed K-
Series motor in its vehicles which brought about a decrease of CO, THC and
NOx discharges by right around 50%. To the extent financial execution is
concerned, Maruti Suzuki‟s last not many year‟s measurements of Domestic
deals, Fare, portrays that still Maruti Suzuki is the head of Indian Automobile
sector.
9. B Navaneetha, R Padmasri and A Pavithira (2018) in their study “A ratio

analysis of Maruti Suzuki India Ltd '' have concluded that MSIL is following a
41
conservative working capital policy as it maintains minimum level of liquidity.
Companies with low liquidity ratios have a higher risk of meeting its current
obligations. In the case of MSIL the fall in the liquidity ratios is offset by the rise
in profitability ratios. The company allocates more funds on investments to
have an edge over the competitors. MSIL is the king of the Indian automotive
industry. MSIL has been consistently surviving in the industry with the effective
growth rate which is evidenced by high profit earning capacity.
10. MD Qamar Azam and MD Abrar Alam (2020) in their study “FINANCIAL
RATIOS AND ANALYSIS OF TATA MOTORS” found out that the Overall Z
score of Tata motors is lies between 0.71 to 2.44, lowest in 2015. Company
needs serious studies. We can say that its main reason is company's working
capital to total assets is negative during the periods. It's all profitability ratios
are under the average and negative during the years. Debt to total assets is
approx. 60-70% which is above the average. Debt to equity ratio is moving
between 1.5 to 2.2 which is bad for any company. In the case of the liquidity
ratios which are very low relatively to industry. On an average tata motors
financial ratios indicates that its financial conditions are under performance.
11. Sebe-Yeboah and Mensah evaluated the financial performance of ADB by

using varied analytical tools. The study was conducted with the help of
secondary data i.e. audited financial statements and information pertaining to
that domain with the help of important sources. Statements from 2006-2012
were gathered for the study. Descriptive statistics, Du Pont financial ratio
analysis, vertical and horizontal analysis were implemented in the study.The
study found that ADB’s attitude towards the financing of agriculture was
shrinking. The liquidity position of the banks indicated a descending trend and
fell further down in 2010.
42
12. Tehrani (2012) in their study “A model for evaluating financial performance of
companies by data envelopment analysis” developed a model for analyzing
the company’s performance. The performance assessment indexes were
generated from financial statements and ratios from articles and books. Data
envelopment analysis was employed to evaluate the study due to the large
number of variables. Parameters used to measure the performance f the
company were liquidity, activity, leverage, economic added value and
profitability ratios. The result indicated that nine out of thirty six companies
were efficient.
13. Donkor and Tweneboa-Kodua (2013) in their study Profitability, Liquidity and
Efficiency of Rural Banks: Evidence from Ghana looked into the efficiency,
liquidity and profitability of Asante Akyem Rural Bank (AARB) from 2007 to
2011. The parameters of the study were gross and net profit margin. Both
primary data and secondary data were collected. Expect for the financial year
2010, the bank achieved profitability for the rest of the years of study. The
study also concluded that the bank’s liquidity is weak and the management of
the bank is inefficient.
14. Vadiraj Deshpande and Dr.N.S.Narahari (2014) in their study “Statistical

Modelling Approach to Estimation of Average Revenue per User in Telecom
Service- a Case Study” attempted to structure a model for estimating Average
Revenue Per User (ARPU) trends. The model was designed to serve as a
guide to telecommunication service providers for structuring strategies to
improve ARPUs. The study of regression analysis revealed that subscriber
base, new users added periodically and number of operators are the key
determinants of how much a user spends on the average.
43
15. Gahlot, Kishan Lal (2017) in his Analysis of financial statement of Rajasthan
tourism Development Corporation, analyzed the origin and growth of tourism
industry at national and international level. He made significant remarks about
the various policies framed by the Indian Government towards the tourism
sector. The study undertook the period of 2005-2006 to 2014-2015 by using
the financial indicators of solvency, working capital, cash flow etc with the help
of accounting ratios and trend analysis. The study conclude that overall there
is a fluctuating trend in working capital and cash flow.
16. Manickavasugi,S P(July 2011) evaluated the production, sales, profitability

and solvency performance of three major Indian Public Sector oil companies-
Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation
Limited and Indian Oil Corporation Limited after liberalization. The period of
study was from 2001-2002 to 2008-2009. The data were primarily from
secondary sources (annual reports, financial statements of the companies).
Accounting ratios, statistical and mathematical methods were employed to
analyze and arrive at the result that the oil companies showed good
performance during the study period and suggested improving their liquidity
position.
17. Basheer Ahamed, T M (2006) did an analytical study on the performance of

selected units (i.e.), Madras Fertilisers Limited (MFL), Southern Petrochemical
Industries Corporation Limited (SPIC), E.I.D. Parry (India) Limited (PARRY)
and Neyveli Lignite Corporation (NLC) for a period of 10 years (1993- 1994 to
2002-2003). Statistical tools such as mean, regression techniques, correlation
coefficient, autocorrelation coefficient, Durbin-Watson d-test, multicollinearity
and ANOVA techniques were used to interpret the financial statements, and
44
suggested that Capital budgeting appraisal methods such as, pay-back period,
average rate of return, internal rate of return, net present value and profitability
index are to be prudently used by the firms to increase the return to equity
shareholders to certain extent
18. Kharpas, A B (2004) has explained the financial indicators of 6 Public Ltd
Engineering companies in Maharashtra which are selected on regional basis,
for a period of 11 years (1992 – 2002). He evaluated the manufacturing cost
incurred, profitability, short term and long term solvency using accounting
methods and proposed to have standardization in operating and non operating
expenses, adopt common depreciation cost system, and improve exports
19. Maria Nevis Soris N (2003) made a research on “financial viability of major
ports in south India’’ by comparing the financial performance of Tuticorin port
with other ports of South India for a period of 10 years, and revealed that
Tuticorin port’s performance is more satisfactory by earning surplus revenue
for repayment of loans and infrastructure development . And other ports except
Cochin port are also performing well during the study period.
20. Manoharan,Padmaja (2002) had evaluated the profitability of cement industry

in India by analysing the sample of 32 companies ,of which 31 are public
limited companies in private sector and 1 company from the central sector.
These companies where chosen for the reason that, they have financial data
for a continuous period of 10 years (1990-91 to 1999-2000). The sample
consists of 48% of entire cement industry in India. The companies were
classified on the basis of size, age, region for the research. The required data
were collected from the compilation made by the Centre for monitoring Indian
Economy (CMIE). Statistical tools were employed for the study and suggested
45
that Altman’s model and Lambda index would decipher the areas of weakness
and take remedial measures.
21. Gupta,Dinesh chandra (1991) had interpreted the annual reports of cement
industry in India with special reference to UPSCC Ltd from the period 1984-85
to 1988-1989 by explaining the origin, growth and development of cement
industry and various tools of analysis; common size analysis (comparative
financial & operating statements) , trend ratios , ratio analysis , break even
analysis , funds flow analysis . And the study revealed reduced profits, low
capital turnover rate, inadequate sales, deficit working capital and overall down
in the cement industry in early 1990’s.
22. Arya (1984) analysed the financial statements (balance sheet and profit & loss
account) of 12 cement companies in India to determine its cost function during
the period 1951 – 1970. He ascertained that there is no relation in capacity
increase and total cost. And the factors responsible for slow growth of cement
industry could be poor quality coal, power, technological obsolescence, price
controls; by taking prompt measures these defects could be rectified to attain
self sufficiency.
46
CHAPTER III
RESEARCH METHODOLOGY
3.1. OBJECTIVES OF THE STUDY:

PRIMARY OBJECTIVE:
1. To compare and analyze the financial performance of Tata Motors Ltd and
Maruti Suzuki Ltd.
SECONDARY OBJECTIVE:
1. To evaluate the financial performance of Tata Motors Ltd and Maruti Suzuki
Ltd using various financial ratios.
2. To examine the profitability , liquidity , leverage and effective performances of
Tata Motors Ltd and Maruti Suzuki Ltd
3. To review the growth and development and compare the past five years
financial results of Tata Motors Ltd and Maruti Suzuki Ltd.
3.2. SIGNIFICANCE OF THE STUDY:

The study of Financial Performance Analysis can be a learning criterion to the
management as well as the investors to identify significant changes in the fiscal
management and to analyze the financial operations in the enterprise in order to
make investment decisions. This comparative study is done to identify the pattern
and evaluate the areas in which the company is has been affected in order to arrive
at standard solutions.
3.3. SCOPE OF THE STUDY:

• Two automobile companies have been chosen for the study (i.e. tata Motors
and maruti suzuki)
• The study covers the financial aspect of 2 enterprises.
• The study is confined to analyzing the financial performance of the companies
hence the theoretical scope consists of accounting aspects and financial ratios.
47
3.4. LIMITATIONS OF THE STUDY:
• The report focuses only on Tata Motors and Maruti Suzuki Ltd.
• The period of study is limited to 5 years
• The financial reports considered for the study are within the specified 5 years
• Certain ratios were only calculated due to insufficiency of data.
• The study is mainly based on secondary data derived from annual
reports and accounts of Tata Motors and Maruti Suzuki, therefore the
reliability and accuracy of the findings depends on such data.
3.5. SAMPLE DESIGN:

The study undertook convenience sampling to collect the required data.
3.6. SAMPLE SIZE:

Past 5 years of both Tata Motors Ltd and Maruti Suzuki Ltd are taken into
consideration to analyze, evaluate and interpret the results.
3.7. SAMPLE SELECTION:

The balance sheet, Income statement and profit and loss A/C and other related
Financial Reports of Tata Motors and Maruti Suzuki were incorporated in the study.
3.8. PERIOD OF THE STUDY:

The study was carried out from December 2021- March 2022
48
3.9. METHODS OF DATA COLLECTION:
Since the study is primarily based on secondary data, the financial reports, balance
sheets, profit and loss A/Cs were taken from the Company’s official annual reports,
investment websites, previous research projects and journals relating to financial
analysis.
3.10. NEED FOR THE STUDY:

The need for the study is to find out which company performs satisfactorily in terms of
fiscal performance and asset management and to identify the reasons as to why the
enterprise is
3.11. ACCOUNTING TOOLS USED FOR THE STUDY:
• Ratio Analysis
• Trend Analysis
• Comparative Income Statement
49
CHAPTER IV
DATA ANALYSIS & INTERPRETATION
4.1. RATIO ANALYSIS
1. Current ratio = Current assets

—---------------------
Current liabilities
TATA MOTORS:
Table 4.1.1. Current Ratio of Tata Motors
YEAR CURRENT ASSETS CURRENT LIABILITIES RATIO
2016-2017 116,119.75 115,629.52 1
2017-2018 135,972.84 143,219.47 0.95
2018-2019 123,431.16 145,457.43 0.85
2019-2020 119,587.25 140,454.05 0.85
2020-2021 146,887.64 157,749.18 0.93
MARUTI SUZUKI:
Table 4.1.2. Current Ratio of Maruti Suzuki
YEAR CURRENT ASSETS CURRENT LIABILITIES RATIO
2016-2017 8,798.00 13,236.80 1.504523755
2017-2018 7,930.00 15,448.50 1.948108449
2018-2019 12,372.70 14,160.50 1.144495543
2019-2020 8,440.60 11,305.40 1.339407151
2020-2021 18,544.30 16,120.50 0.869296765
50
Table 4.1.3. Consolidated Current Ratio of Tata Motors And Maruti Suzuki
YEAR TATA MARUTI
2016-2017 1 1.5
2017-2018 0.95 1.95
2018-2019 0.85 1.14
2019-2020 0.85 1.34
2020-2021 0.93 0.87
Figure 4.1.1. Current Ratio of Tata and Maruti

INFERENCE: Current ratio indicates the ability of a concern to meet its current
obligations as and when they are due for payment .The expected standard current
ratio is 2:1.All the financial years of both Tata and Maruti didn’t meet the expected
current ratio resulting in inadequate current assets. Whereas, during the years current
ratio of maruti is found to be higher than Tata except for the financial year 2020-2021.
51
2.Liquid Ratio= Quick assets
—-------------------
Current liabilities
TATA MOTORS
Table 4.1.4. Liquid ratio of Tata motors
YEAR QUICK ASSETS CURRENT LIABILITIES RATIO

2016-2017 81,034.44 115,629.52 0.700811004
2017-2018 93,835.21 143,219.47 0.6551847315
2018-2019 84,417.43 145,457.43 0.580358322
2019-2020 82,130.37 140,454.05 0.5847490336
2020-2021 110,799.05 157,749.18 0.7023748079
MARUTI SUZUKI
Table 4.1.5. Liquid Ratio of Maruti Suzuki
YEAR QUICK ASSETS CURRENT LIABILITIES RATIO

2016-2017 5,534.30 13,236.80 0.4180995407
2017-2018 4,769.80 15,448.50 0.3087548953
2018-2019 9,050.10 14,160.50 0.6391087885
2019-2020 5,226.70 11,305.40 0.4623188919
2020-2021 15,495.30 16,120.50 0.9612170838
52
Table 4.1.6. Consolidated Liquid Ratio of Tata Motors And Maruti Suzuki
YEAR TATA MARUTI
2016-2017 0.7 0.42
2017-2018 0.65 0.31
2018-2019 0.58 0.64
2019-2020 0.58 0.46
2020-2021 0.7 0.96
Figure 4.1.2. Liquid Ratio of Tata Motors and Maruti Suzuki

INFERENCE: Liquid ratios are used to determine the debtor's ability to pay off current
debt obligations without raising external debt. The generally accepted quick ratio is
1:1. From the table, both maruti and suzuki have failed to attain the standard quick
ratio. Over the years they both have maintained same quick ratio collectively
53
3. CASH POSITION RATIO =
Cash and bank balances + marketable securities
Current liabilities
TATA MOTORS
Table 4.1.7. Cash Position Ratio of Tata Motors
YEAR CASH CURRENT LIABILITIES RATIO

EQUIVALENTS
2016-2017 57,674.00 115,629.52 0.4987826638
2017-2018 65,188.52 143,219.47 0.455165209
2018-2019 52,913.69 145,457.43 0.3637744046
2019-2020 45,834.91 140,454.05 0.3263338437
2020-2021 61,220.94 157,749.18 0.388090385
MARUTI SUZUKI
Table 4.1.8. Cash Position Ratio of Maruti Suzuki
YEAR CASH CURRENT LIABILITIES RATIO

EQUIVALENTS
2016-2017 1,228.60 13,236.80 0.09281699504
2017-2018 1,542.40 15,448.50 0.09984140855
2018-2019 2,516.70 14,160.50 0.1777267752
2019-2020 2,023.70 11,305.40 0.1790029543
2020-2021 4,350.00 16,120.50 0.2698427468
54
Table 4.1.9. Consolidated Cash Position Ratio of Tata Motors and Maruti Suzuki
YEAR TATA MARUTI
2016-2017 0.5 0.09
2017-2018 0.45 0.09
2018-2019 0.36 0.18
2019-2020 0.37 0.18
2020-2021 0.37 0.27
Figure 4.1.3. Cash Position Ratio of Tata Motors and Maruti Suzuki
INFERENCE: An ideal cash position ratio is 0.75:1 .During the study period,neither
Tata nor Maruti had satisfactory cash ratio. The highest ever cash ratio for Tata and
Maruti was 0.45 and 0.27 for the financial year 2017-2018 and 2020-2021. Between
them, Tata managed to move past Maruti.
55
4.Debt equity ratio= Total long term debt
—---------------------------
Shareholder’s fund
TATA MOTORS
Table 4.1.10. Debt Equity Ratio of Tata Motors
YEAR LONG TERM DEBT SHARE HOLDERS FUND RATIO

2016-2017 70,807.64 58,061.89 1.219520067
2017-2018 78,273.74 95,427.91 0.8202394876
2018-2019 84,163.39 60,179.56 1.398537809
2019-2020 99,994.18 63,078.53 1.585233201
2020-2021 114,949.65 55,246.72 2.080660173
MARUTI SUZUKI
Table 4.1.11. Debt Equity Ratio of Maruti Suzuki
YEAR LONG TERM DEBT SHARE HOLDERS RATIO

FUND
2016-2017 527.7 37,075.10 0.01423327247
2017-2018 638.5 42,559.40 0.01500256113
2018-2019 661.4 47,092.10 0.01404481856
2019-2020 714.5 49,413.00 0.01445975755
2020-2021 492.9 52,500.60 0.009388464132
56
Table 4.1.12. Consolidated Debt Equity Ratio of Tata Motors and Maruti Suzuki
YEAR TATA MARUTI

2016-2017 1.22 0.01
2017-2018 0.82 0.02
2018-2019 1.4 0.01
2019-2020 1.59 0.01
2020-2021 2.08 0.01
Figure 4.1.4. Debt Equity Ratio of Tata Motors and Maruti Suzuki
INFERENCE: The debt-to-equity ratio is a financial ratio indicating the relative

proportion of shareholders' equity and debt used to finance a company's assets. ideal
ratio is 0.5:1 for debt-equity.The debt-equity ratio is far less than 0.5:1 during all the
years of study for Maruti suzuki. This indicates that debt proportion is highly
satisfactory and the company is highly solvent to pay off its long term debts.
Meanwhile the least debt equity ratio for Tata during the study period is 1.4.
57
5. Interest coverage ratio = EBIT/Interest
TATA MOTORS
Table 4.1.13. Interest Coverage Ratio of Tata Motors
YEAR EBIT INTEREST RATIO

2016-2017 12,438.24 4,238.01 2.934924646
2017-2018 13,861.68 4,681.79 2.960765007
2018-2019 4,039.01 5,758.60 0.70138749
2019-2020 -465.21 7,243.33 0.06422598446
2020-2021 11,383.91 8,097.17 1.405912189
MARUTI SUZUKI
Table 4.1.14. Interest Coverage Ratio of Maruti Suzuki
YEAR EBIT INTEREST RATIO

2016-2017 10,043.80 89.4 112.3467562
2017-2018 11,349.40 345.8 32.82070561
2018-2019 10,544.00 75.9 138.9196311
2019-2020 7,118.60 134.2 53.04470939
2020-2021 5,253.80 101.8 51.60903733
58
Table 4.1.15. Consolidated Interest Coverage Ratio of Tata Motors and
Maruti Suzuki
YEAR TATA MARUTI

2016-2017 2.93 112.35
2017-2018 3 32.82
2018-2019 0.7 138.92
2019-2020 -0.06 53.04
2020-2021 1.4 51.61
Figure 4.1.5. Interest Coverage Ratio of Tata Motors and Maruti Suzuki
INFERENCE: The interest coverage ratio is a debt and profitability ratio used to
determine how easily a company can pay interest on its outstanding debt.Generally,
an interest coverage ratio of at least two (2) is considered the minimum acceptable
amount for a company that has solid, consistent revenues. From the above table and
analysis, Maruti has highest interest coverage ratio in all the years compared to tata
with the highest being 138.92 as it meets the standard ratio. It has high possibility of
paying off their interest. Tata only meets the standard ratio in the financial year 2016-
2017 which is 2.93
59
6. GROSS PROFIT RATIO = Gross profit ×100
Net sales
TATA MOTORS
Table 4.1.16. Gross Profit Ratio of Tata Motors
YEAR GROSS PROFIT NET SALES RATIO

2016-2017 27219.78 269692.52 10.09%
2017-2018 32708.62 291550.47 11.22%
2018-2019 -7780.52 301938.41 -2.58%
2019-2020 10845.45 261067.97 4.15%
2020-2021 13072.43 249794.75 5.23%
MARUTI SUZUKI
Table 4.1.17. Gross Profit Ratio of Maruti Suzuki
YEAR GROSS PROFIT NET SALES RATIO

2016-2017 12731.1 68085 18.70%
2017-2018 13926.7 79809.4 17.45%
2018-2019 13644.6 86068.5 15.85%
2019-2020 10631.2 75660 14.05%
2020-2021 8355.1 70372 11.87%
60
Table 4.1.18. Consolidated Gross Profit Ratio of Tata Motors and Maruti Suzuki
YEAR TATA MARUTI

2016-2017 10.09 18.7
2017-2018 11.22 17.45
2018-2019 -2.58 15.85
2019-2020 4.15 14.05
2020-2021 5.23 11.87
Figure 4.1.6. Gross Profit Ratio of Tata Motors and Maruti Suzuki
INFERENCE: Gross profit ratio (GP ratio) is a financial ratio that measures the
performance and efficiency of a business.The above table and figure shows almost a
constant but low decline in the gross profit of Maruti Suzuki, the highest being in the
year 2016-2017 of 18.7. Tata motors has the lowest gross profit. During the financial
year 2018-2019 it had a gross loss of 2.58.
61
4.2. TREND ANALYSIS
TREND ANALYSIS OF SALES
TATA MOTORS
Table 4.2.1. Trend Analysis of Sales of Tata Motors
YEAR SALES TREND % DIFFERENCE %
2016-2017 265,498.47 100 0
2017-2018 288,596.09 108 8
2018-2019 299,190.59 112 12
2019-2020 258,594.36 97 -3
2020-2021 246,972.17 93 -7
MARUTI SUZUKI
Table 4.2.2. Trend Analysis of Sales of Maruti Suzuki
YEAR SALES TREND % DIFFERENCE %

2016-2017 66,924.70 100 0
2017-2018 78,117.10 117 17
2018-2019 83,038.50 124 24
2019-2020 71,704.80 107 7
2020-2021 66,571.80 99 -1
62
Table 4.2.3. Consolidated Trend Analysis of Sales of Tata Motors and Maruti
Suzuki
YEAR TATA TREND % MARUTI TREND %
2016-2017 100 100
2017-2018 108 117
2018-2019 112 124
2019-2020 97 107
2020-2021 93 99
Figure 4.2.1. Trend Analysis of Sales of Tata Motors and Maruti Suzuki
INFERENCE: The table and figure indicates that for Maruti, the sales gradually
increased from 2016-17 to 2019-20, however it decreased by 1 % during 2020-21.
The sale value was highest during 2018-19 with 83,038.50 crores. The huge
increase in current assets is due to increase of the investments in other companies.
Meanwhile for Tata , the sales value were fluctuating having the highest sale value in
the year 2018-19 with 299,190.59 crores.
63
TREND ANALYSIS OF CURRENT ASSETS
TATA MOTORS
Table 4.2.4. Trend Analysis of Current Assets of Tata Motors
YEAR CURRENT ASSETS TREND % DIFFERENCE %
2016-2017 116,119.75 100 0
2017-2018 135,972.84 117 17
2018-2019 123,431.16 106 6
2019-2020 119,587.25 102 2
2020-2021 146,887.64 127 27
MARUTI SUZUKI
Table 4.2.5. Trend Analysis of Current Assets of Maruti Suzuki
YEAR CURRENT ASSETS TREND % DIFFERENCE %
2016-2017 8,798.00 100 0
2017-2018 7,930.00 90 -10
2018-2019 12,372.70 141 41
2019-2020 8,440.60 96 -4
2020-2021 18,544.30 211 111
64
Table 4.2.6. Consolidated Trend Analysis of Current Assets of Tata Motors and
Maruti Suzuki
2016-2017 100 100
2017-2018 117 90
2018-2019 106 141
2019-2020 102 96
2020-2021 127 211
Figure 4.2.2. Trend Analysis of Current Assets of Tata Motors and Maruti Suzuki
INFERENCE: The figure clearly shows that even though the current asset of Maruti
was fluctuating, it reached a direct peak in the year 2020-2021 having 18,544.30
crores worth current asset. The current asset of Tata was steadily declining. The
highest ever it managed to reach was 146,887.64 crores in 2020-2021.
65
TREND ANALYSIS OF CURRENT LIABILITIES
TATA MOTORS
Table 4.2.7. Trend Analysis of Current Liabilities of Tata Motors
YEAR CURRENT LIABILITIES TREND % DIFFERENCE %
2016-2017 115,629.52 100 0
2017-2018 143,219.47 124 24
2018-2019 145,457.43 126 26
2019-2020 140,454.05 121 21
2020-2021 157,749.18 136 36
MARUTI SUZUKI
Table 4.2.8. Trend Analysis of Current Liabilities of Maruti Suzuki
YEAR CURRENT LIABILITIES TREND % DIFFERENCE %
2016-2017 13,236.80 100 0
2017-2018 15,448.50 117 17
2018-2019 14,160.50 107 7
2019-2020 11,305.40 85 -15
2020-2021 16,120.50 122 22
66
Table 4.2.9. Consolidated Trend Analysis of Tata Motors and Maruti Suzuki
2016-2017 100 100
2017-2018 124 117
2018-2019 126 107
2019-2020 121 85
2020-2021 136 122
Figure 4.2.3. Trend Analysis of Current Liabilities of Tata Motors and Maruti
Suzuki
INFERENCE: The current liabilities of Maruti was steadily decreasing from 2017-2018
to 2019-2020. It had the lowest current liability in 2019-2020 with 11,305.40 crores. It
made a sharp rise in 2020-2021 with 15%. Meanwhile Tata maintained a constant
current liability throughout, reaching the highest in 2020-2021 with 157,749.18 crores.
67
TREND ANALYSIS OF SHARE CAPITAL
TATA MOTORS
Table 4.2.10. Trend Analysis of Share Capital of Tata Motors
YEAR SHARE CAPITAL TREND % DIFFERENCE %
2016-2017 679.22 100 0
2017-2018 679.22 100 0
2018-2019 679.22 100 0
2019-2020 719.54 106 6
2020-2021 765.81 113 13
MARUTI SUZUKI
Table 4.2.11. Trend Analysis of Share Capital of Maruti Suzuki
YEAR SHARE CAPITAL TREND % DIFFERENCE %
2016-2017 151 100 0
2017-2018 151 100 0
2018-2019 151 100 0
2019-2020 151 100 0
2020-2021 151 100 0
68
Table 4.1.12. Consolidated Trend Analysis of Tata Motors and Maruti Suzuki
2016-2017 100 100
2017-2018 100 100
2018-2019 100 100
2019-2020 106 100
2020-2021 113 100
Figure 4.2.4. Trend Analysis of Share Capital of Tata Motors and Maruti Suzuki
INFERENCE: Tata Motors had steady share capital till 2018-2019 after which it had
steady rise in 2020-2021 of 13% having 765.81 crore. Over the study period Maruti
Suzuki maintained constant share capital of 151 crores.
69
4.3. COMPARATIVE INCOME STATEMENT:
TATA MOTORS:
TABLE 4.3.1. COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDING

31ST MARCH 2017 AND 2018.
AMOUNT OF
PARTICULARS 2017 2018 INCREASE/DECREASE PERCENTAGE
Revenue From
Operations
[Gross] 270,298.08 289,386.25 19,088.17 7.06%
Less: Excise 4,799.61 790.16 -4,009.45 -83.54%
Other operating
revenues 4,194.04 6,023.09 1,829.05 43.61%
Other Income 754.54 888.89 134.35 17.81%
Total Revenue 270,447.05 295,508.07 17,042.12 6.30%
EXPENSES
Cost Of Materials
Consumed 159,369.55 171,992.59 12,623.04 7.92%
Purchase Of
Stock-In Trade 13,924.53 15,903.99 1,979.46 14.22%
Operating And
Direct Expenses 3,413.57 3,531.87 118.30 3.47%
Changes In
Inventories Of
FG,WIP And
Stock-In Trade -7,399.92 -2,046.58 5,353.34 -72.34%
Employee Benefit
Expenses 28,332.89 30,300.09 1,967.20 6.94%
70
Finance Costs 4,238.01 4,681.79 443.78 10.47%
Depreciation And
Amortisation
Expenses 17,904.99 21,553.59 3,648.60 20.38%
Other Expenses 59,340.16 58,998.93 -341.23 -0.58%
Less: Amounts
Transfer To
Capital Accounts 16,876.96 18,588.09 1,711.13 10.14%
Total Expenses 262,246.82 286,328.18 27,503.62 10.49%
P/L Before
Exceptional
Items & Tax 8,200.23 9,179.89 979.66 11.95%
Exceptional Items 1,114.56 1,975.14 860.58 77.21%
Tax 3,251.23 3,251.23 0.00
Profit after tax 6,063.56 7,903.80 1,840.24 30.35%
INFERENCE:
The above statement discloses that the other income had increased by 17.81%,
resulting in increase of total revenue. Moreover the finance cost increased by
10.47%, the total expenses had increased by 10.49% and the tax expenses were nil.
However the profit increased by 30.35% compared to the previous year. This shows
that the performance of the company was good during the year 2017-18.
71
TATA MOTORS:
4.3.2. A COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDING 31ST

MARCH 2018 AND 2019.
AMOUNT OF
Revenue From
Operations
[Gross] 289,386.25 299,190.59 9,804.34 3.39%
Less: Excise 790.16 0 -790.16 -100.00%
Other operating
revenues 6,023.09 2,747.81 -3,275.28 -54.38%
Other Income 888.89 2,965.31 2,076.42 233.60%
Total Revenue 295,508.07 304,903.71 9,395.64 3.18%
EXPENSES
Cost Of Materials
Consumed 171,992.59 181,009.08 9,016.49 5.24%
Purchase Of
Stock-In Trade 15,903.99 13,258.83 -2,645.16 -16.63%
Operating And
Direct Expenses 3,531.87 4,224.57 692.70 19.61%
Changes In
Inventories Of
FG,WIP And
Stock-In Trade -2,046.58 2,053.28 4,099.86 -200.33%
Employee Benefit
Expenses 30,300.09 33,243.87 2,943.78 9.72%
Finance Costs 4,681.79 5,758.60 1,076.81 23.00%
72
Depreciation And
Amortisation
Expenses 21,553.59 23,590.63 2,037.04 9.45%
Other Expenses 58,998.93 63,144.03 4,145.10 7.03%
Less: Amounts
Transfer To
Capital Accounts 18,588.09 19,659.59 1,071.50 5.76%
Total Expenses 286,328.18 306,623.30 20,295.12 7.09%
P/L Before
Exceptional
Items & Tax 9,179.89 -1,719.59 -10,899.48 -118.73%
Exceptional Items 1,975.14 -29,651.56 -31,626.70 -1601.24%
Tax 3,251.23 -2,437.45 -5,688.68 -174.97%
Profit after tax 7,903.80 -28,933.70 -36,837.50 -466.07%
INFERENCE:
The above statement discloses that total revenue and total expenses had increased
by 3.18% and 7.09% respectively. However the changes in inventories were
decreased by 200.33% The finance cost increased by 23% following the previous
year. The profit increased to 466.07% indicating good performance of the company
during the year 2018-19.
73
TATA MOTORS:

AMOUNT OF
Revenue From
Operations
[Gross] 299,190.59 258,594.36 -40,596.23 -13.57%
Less:Excise 0 0 0
Other operating
revenues 2,747.81 2,473.61 -274.20 -9.98%
Other Income 2,965.31 2,973.15 7.84 0.26%
Total Revenue 304,903.71 264,041.12 -40,862.59 -13.40%
EXPENSES
Cost Of Materials
Consumed 181,009.08 152,671.47 -28,337.61 -15.66%
Purchase Of
Stock-In Trade 13,258.83 12,228.35 -1,030.48 -7.77%
Operating And
Direct Expenses 4,224.57 4,188.49 -36.08 -0.85%
Changes In
Inventories Of
FG,WIP And
Stock-In Trade 2,053.28 2,231.19 177.91 8.66%
Employee Benefit
Expenses 33,243.87 30,438.60 -2,805.27 -8.44%
Finance Costs 5,758.60 7,243.33 1,484.73 25.78%
74
Depreciation And
Amortisation
Expenses 23,590.63 21,425.43 -2,165.20 -9.18%
Other Expenses 63,144.03 58,826.20 -4,317.83 -6.84%
Less: Amounts
Transfer To
Capital Accounts 19,659.59 17,503.40 -2,156.19 -10.97%
Total Expenses 306,623.30 271,749.66 -34,873.64 -11.37%
P/L Before
Exceptional
Items & Tax -1,719.59 -7,708.54 -5,988.95 348.28%
Exceptional Items -29,651.56 -2,871.44 26,780.12 -90.32%
Tax -2,437.45 395.25 2,832.70 -116.22%
Profit after tax -28,933.70 -10,975.23 17,958.47 -62.07%
INFERENCE:
The above statement discloses that the revenue from operations decreased by
13.57%, other operating revenues had decreased by 9.98%, resulting in decrease of
total revenue. Moreover except for the finance cost, all other expenses were
decreased , the total expenses had decreased by 11.37% and the tax expenses
decreased by 116.22%. However the profit increased by 62.07% compared to the
previous year. This shows that the performance of the company was good during the
year 2019-20.
75
TATA MOTORS:

AMOUNT OF
Revenue From
Operations
[Gross] 258,594.36 246,972.17 -11,622.19 -4.49%
Less:Excise 0 0 0 0
Other operating
revenues 2,473.61 2,822.58 348.97 14.11%
Other Income 2,973.15 2,643.19 -329.96 -11.10%
Total Revenue 264,041.12 252,437.94 -11,603.18 -4.39%
EXPENSES
Cost Of Materials
Consumed 152,671.47 141,357.27 -11,314.20 -7.41%
Purchase Of
Stock-In Trade 12,228.35 12,250.09 21.74 0.18%
Operating And
Direct Expenses 4,188.49 5,226.63 1,038.14 24.79%
Changes In
Inventories Of
FG,WIP And
Stock-In Trade 2,231.19 4,684.16 2,452.97 109.94%
Employee Benefit
Expenses 30,438.60 27,648.48 -2,790.12 -9.17%
Finance Costs 7,243.33 8,097.17 853.84 11.79%
76
Depreciation And
Amortisation
Expenses 21,425.43 23,546.71 2,121.28 9.90%
Other Expenses 58,826.20 39,189.82 -19,636.38 -33.38%
Less: Amounts
Transfer To
Capital Accounts 17,503.40 12,849.13 -4,654.27 -26.59%
Total Expenses 271,749.66 249,151.20 -22,598.46 -8.32%
P/L Before
Exceptional
Items & Tax -7,708.54 3,286.74 10,995.28 -142.64%
Exceptional Items -2,871.44 -13,761.02 -10,889.58 379.24%
Tax 395.25 2,541.86 2,146.61 543.10%
Profit after tax -10,975.23 -13,016.14 -2,040.91 18.60%
INFERENCE:
The above statement discloses that the revenue from operations decreased by
4.49%, other income was reduced by 11.10%, while the other operating revenues had
increased by 14.11%, resulting in 4.39% decrease of total revenue. During the
financial year, cost of materials consumed employee benefit expenses depreciation
were decreased resulting in the decrease in overall expenses by 8.32% and increase
in profit of 18.60%. This shows that the performance of the company was good during
the year 2020-21.
77
MARUTI SUZUKI:

AMOUNT OF
PARTICULARS AMOUNT AMOUNT INCREASE/DECREASE PERCENTAGE
Revenue From
Operations [Gross] 76,156.10 80,348.80 4,192.70 5.51%
Less: Excise 9,231.40 2,231.70 -6,999.70 -75.82%
Other operating
revenues 1,160.30 1,692.30 532.00 45.85%
Other Income 2,289.60 2,045.80 -243.80 -10.65%
Total Revenue 70,374.60 81,855.20 11,480.60 16.31%
EXPENSES
Cost Of Materials
Consumed 42,627.90 44,943.20 2,315.30 5.43%
Purchase Of Stock-
In Trade 4,493.60 10,002.10 5,508.50 122.59%
Changes In
Inventories Of
FG,WIP And Stock-
In Trade -379.3 40.8 420.1 -110.76%
Employee Benefit
Expenses 2,360.30 2,863.40 503.10 21.32%
Finance Costs 89.4 345.8 256.4 286.80%
Depreciation And
Amortisation
Expenses 2,603.90 2,759.80 155.90 5.99%
Other Expenses 8,728.00 9,995.60 1,267.60 14.52%
78
Less: Inter Unit /
Segment / Division
Transfer 103.6 99.1 -4.5 -4.34%
Total Expenses 60,420.20 70,851.60 10,431.40 17.26%
Profit/Loss Before
Exceptional,
ExtraOrdinary
Items And Tax 9,954.40 11,003.60 1,049.20 10.54%
Tax 2,616.20 3,286.20 670.00 25.61%
Profit after tax 7,338.20 7,717.40 379.20 5.17%
INFERENCE:
The above statement discloses that the other income had increased by 10.65%,
however other operating revenues were increased by 45.85% resulting in increase of
total revenue. The inventories and stock in trade decreased by 110.76%, the total
expenses had increased by 17.26% and the tax expenses increased by 25.61%.
However the profit increased by 5.17% compared to the previous year. This shows
79
MARUTI SUZUKI:

AMOUNT OF
Revenue From
Operations [Gross] 80,348.80 83,038.50 2,689.70 3.35%
Less:Excise 2,231.70 0 -2,231.70 -100.00%
Other operating
revenues 1,692.30 3,030.00 1,337.70 79.05%
Other Income 2,045.80 2,561.60 515.80 25.21%
Total Revenue 81,855.20 88,630.10 6,774.90 8.28%
EXPENSES
Cost Of Materials
Consumed 44,943.20 45,025.70 82.50 0.18%
Purchase Of Stock-
In Trade 10,002.10 15,026.60 5,024.50 50.23%
Changes In
Inventories Of
FG,WIP And Stock-
In Trade 40.8 211.6 170.8 418.63%
Employee Benefit
Expenses 2,863.40 3,285.00 421.60 14.72%
Finance Costs 345.8 75.9 -269.9 -78.05%
Depreciation And
Amortisation
Expenses 2,759.80 3,020.80 261.00 9.46%
Other Expenses 9,995.60 11,638.50 1,642.90 16.44%
80
Less: Inter Unit /
Segment / Division
Transfer 99.1 122.1 23 23.21%
Total Expenses 70,851.60 78,162.00 7,310.40 10.32%
Profit/Loss Before
Exceptional,
ExtraOrdinary
Items And Tax 11,003.60 10,468.10 -535.50 -4.87%
Tax 3,286.20 2,973.20 -313.00 -9.52%
Profit after tax 7,717.40 7,494.90 -222.50 -2.88%
INFERENCE:
The above statement discloses that the other income had increased by 25.21%, other
operating revenues were increased by 79.05% resulting in increase of total revenue.
During the financial year only the finance cost was reduced by 78.05% in expenses
resulting in the increase in total expense by 10.32%. The profit decreased by 2.88%
compared to the previous year. This shows that the performance of the company was
satisfactory during the year 2018-19.
81
MARUTI SUZUKI:

AMOUNT OF
Revenue From
Operations [Gross] 83,038.50 71,704.80 -11,333.70 -13.65%
Less:Excise 0 0 0 0.00%
Other operating
revenues 3,030.00 3,955.20 925.20 30.53%
Other Income 2,561.60 3,334.40 772.80 30.17%
Total Revenue 88,630.10 78,994.40 -9,635.70 -10.87%
EXPENSES
Cost Of Materials
Consumed 45,025.70 34,634.80 -10,390.90 -23.08%
Purchase Of Stock-
In Trade 15,026.60 18,767.20 3,740.60 24.89%
Changes In
Inventories Of
FG,WIP And Stock-
In Trade 211.6 -238.7 -450.3 -212.81%
Employee Benefit
Expenses 3,285.00 3,416.20 131.20 3.99%
Finance Costs 75.9 134.2 58.3 76.81%
Depreciation And
Amortisation
Expenses 3,020.80 3,528.40 507.60 16.80%
Other Expenses 11,638.50 11,889.60 251.10 2.16%
82
Less: Inter Unit /
Segment / Division
Transfer 122.1 121.7 -0.4 -0.33%
Total Expenses 78,162.00 72,010.00 -6,152.00 -7.87%
Profit/Loss Before
Exceptional,
ExtraOrdinary
Items And Tax 10,468.10 6,984.40 -3,483.70 -33.28%
Tax 2,973.20 1,425.20 -1,548.00 -52.07%
Profit after tax 7,494.90 5,559.20 -1,935.70 -25.83%
INFERENCE:
The above statement discloses that the total revenue had decreased by 10.87%.
During the financial year inventories and cost of material consumed were decreased
by 212.81% and 23.08% resulting in the overall decrease in expense by 7.87%. The
profit decreased by 25.83% compared to the previous year. This shows that the
performance of the company was satisfactory during the year 2019-2020.
83
MARUTI SUZUKI:

AMOUNT OF
Revenue From
Operations [Gross] 71,704.80 66,571.80 -5,133.00 -7.16%
Less:Excise 0 0 0 0.00%
Other operating
revenues 3,955.20 3,800.20 -155.00 -3.92%
Other Income 3,334.40 2,936.30 -398.10 -11.94%
Total Revenue 78,994.40 73,308.30 -5,686.10 -7.20%
EXPENSES
Cost Of Materials
Consumed 34,634.80 33,296.40 -1,338.40 -3.86%
Purchase Of Stock-
In Trade 18,767.20 17,254.10 -1,513.10 -8.06%
Changes In
Inventories Of
FG,WIP And Stock-
In Trade -238.7 273.6 512.3 -214.62%
Employee Benefit
Expenses 3,416.20 3,431.60 15.40 0.45%
Finance Costs 134.2 101.8 -32.4 -24.14%
Depreciation And
Amortisation
Expenses 3,528.40 3,034.10 -494.30 -14.01%
Other Expenses 11,889.60 10,837.50 -1,052.10 -8.85%
84
Less: Inter Unit /
Segment / Division
Transfer 121.7 72.8 -48.9 -40.18%
Total Expenses 72,010.00 68,156.30 -3,853.70 -5.35%
Profit/Loss Before
Exceptional,
ExtraOrdinary
Items And Tax 6,984.40 5,152.00 -1,832.40 -26.24%
Tax 1,425.20 931.9 -493.30 -34.61%
Profit after tax 5,559.20 4,220.10 -1,339.10 -24.09%
INFERENCE:
The above statement discloses that the revenue from operations(gross) had
decreased by 7.16%. Other operating revenues and income were also reduced by
3.92% and 11.94% resulting in the overall decrease in the total revenue of 7.20%.
During the financial year, apart from employee benefit expenses, all other expenses
were decreased which led to total decrease in expenses by 5.35%. The profit
decreased by 24.09% compared to the previous year. This shows that the
performance of the company was poor during the year 2020-2021.
85
CHAPTER V
FINDINGS, SUGGESSTIONS & CONCLUSION
This chapter comprises the project findings, conclusions and suggestions.
5.1. FINDINGS:
• All the financial years of both Tata and Maruti didn’t meet the expected current
ratio resulting in inadequate current assets.
• Both maruti and suzuki have failed to attain the standard quick ratio of 1:1 in
the study period 2017-2021.
• The highest ever cash ratio for Tata and Maruti was 0.45 and 0.27 for the
financial year 2017-2018 and 2020-2021. Between them, Tata managed to
move past Maruti .Neither Tata nor Maruti had satisfactory cash ratio of 0.75:1
• The debt-equity ratio is far less than 0.5:1 during all the years of study for
Maruti suzuki. This indicates that debt proportion is highly satisfactory and the
company is highly solvent to pay off its long term debts. Meanwhile the least
debt equity ratio for Tata during the study period is 1.4.
• From the above table and analysis, Maruti has highest interest coverage ratio
in all the years compared to tata with the highest being 138.92 as it meets the
standard ratio. It has high possibility of paying off their interest . Tata only
meets the standard ratio in the financial year 2016-2017 which is 2.93 with the
standard ratio being minimum 2.
86
• There is a constant but low decline in the gross profit of Maruti Suzuki, the
highest being in the year 2016-2017 of 18.7. Tata motors has the lowest gross
profit. During the financial year 2018-2019 it had a gross loss of 2.58. Highest
being 11.22 in the year 2017-2018
• The sales trend shows fluctuating trend (increasing in the beginning and
declining at the end) during the study period. For both Tata and Maruti.
However during the financial year 2017-2018 and 2018-2019 Maruti had
higher sales Trend with 17% and 24% while tata only had 8% and 12%.
• The current asset trend of Maruti was fluctuating in the start of the study
period, however it reached a direct peak in the year 2020-2021 having
18,544.30 crores worth current asset. The current asset of Tata was steadily
declining. The highest ever it managed to reach was 14,887.64 crores in 2020-
2021.
• The trend percentage of current liabilities of Maruti was steadily decreasing

from 2017-2018 to 2019-2020. It had the lowest current liability in 2019-2020
with 11,305.40 crores. It made a sharp rise in 2020-2021 with 15%. Meanwhile
Tata maintained a high but constant current liability through out, reaching the
highest in 2020-2021 with 157,749.18 crores.
• Trend percentage of share capital of Tata Motors was steady till 2018-2019
after which it had sharp rise in 2020-2021 of 13% having 765.81 crore. Over
87
the study period Maruti Suzuki maintained constant share capital of 151
crores.
• Overall in the financial year 2018-2019 Tata Motors have show high profits of
466.07%, while during the same financial year Maruti Suzuki had a loss of
2.88%
• During the study period 2019-2020, Tata motor had decrease in the expense
by 11.37% having decreased all their expenses and showed a profit of
62.07%. Maruti had decreased expense of 7.87%. Both of the company
showed less expense in the entire study period of 2017-2021.
• Tata motors also had less revenue in the financial year 2019-2020 with -
13.40% and maruti having -10.87. Even though maruti had reduced expenses,
their revenue were also decreased so they had a loss of 25.83%.
• The decrease in overall expenses of tata motors by 8.32% compensated the

reduced revenue of 4.39% resulting in profit of 18.60% for the financial year
2020-2021.
• Tata Motor’s other income had increased by 17.81%, resulting in increase of

total revenue. Moreover the finance cost increased by 10.47%, the total
expenses had increased by 10.49% and the tax expenses were nil. However
the profit increased by 30.35% compared to the previous year. This shows
Maruti suzuki’s other income had increased by 10.65%, other operating
revenues were increased by 45.85% resulting in increase of total revenue. The
88
inventories and stock in trade decreased by 110.76%, the finance cost
increased to 282.60% the total expenses had increased by 17.26% and the tax
expenses increased by 25.61%. However the profit increased by 5.17%
compared to the previous year. This shows that the performance of the
company was good during the year 2017-18.
5.2. SUGGESTIONS
• Both Tata Motors and Maruti Suzuki have to increase their currents assets to
meet the fixed standard.
• Both the company must increase their quick ratio to pay off current debt
obligations without raising external debt.
• The cash ratio must be met with the standard to be able to meet the liquidity of
the company to pay off short term debt.
• Tata must increase their debt equity to pay off long term debts.
• Tata must raise it’s interest coverage ratio to pay off the interest on it’s
outstanding debts.
89
5.3. CONCLUSION:
• Most of the obligations were not met by Tata motors while compared to Maruti
Suzuki.
• During the study period, Tata Motors didn’t meet the qualified standards for
measuring ratios like current ratio, quick ratio, cash position ratio, debt equity
ratio and interest coverage ratio, which are the primary factors and indicators
for the fiscal well being of the company.
• The trend analysis of Tata in terms of sales, current assets were declining
compared to Maruti. Only the Trend analysis of Current liabilities was high in
Tata Motors.
• The overall profits of Tata Motors were low when compared to Maruti Suzuki.
Finally the company is loss making or rather we can say decreasing their
profitability but they have good future opportunities.
90
BIBLIOGRAPHY:
Journals and Publications
1. Gahlot, Kishan Lal, Analysis of financial statement of Rajasthan tourism

Development Corporation 2017; https://sg.inflibnet.ac.in/handle/10603/237447
2. Manickavasugi, S P, Analysis of financial statement of selected Indian public sector
oil companies July, 2011; https://sg.inflibnet.ac.in/handle/10603/4916
3. Basheer Ahamed, T M, Financial analysis of fertiliser industry in Tamil Nadu, 2006;
https://sg.inflibnet.ac.in/handle/10603/114904
4. Kanchana P, A study of financial statement of Sambandam spinning mills limited
Salem 02/01/2006; http://hdl.handle.net/10603/23260
5. Chitrabalu P Financial performance analysis of Tata Elxsi LTD Chennai
03/10/2006; http://hdl.handle.net/10603/23233 6. Vanitha G A study on financial
statement analysis of Lakshmi vilas bank LTD 01/09/2006;
http://hdl.handle.net/10603/23203
7. Kharpas, A.B. Financial statement analysis of engineering industries in
Maharashtra state 20/12/2004; https://sg.inflibnet.ac.in/handle/10603/106466
8. Maria Nevis Soris, N Financial viability of major ports in South India 2003;
http://hdl.handle.net/10603/63848
9. Manoharan, Padmaja, Profitability of cement industry in India an analytical study
31/03/2002; http://hdl.handle.net/10603/102275
10. Gupta, Dinesh Chandra Analysis of financial statement of public sector cement
industry in India with special reference to UP ,1991 ;
https://sg.inflibnet.ac.in/handle/10603/260703
11.I.C. Arya, "Cost function is cement industry in India", Artha —vikas volume.20,
No.1 & 2 Jan — Dec 1984 P.24-48
91
Web links for journals and publications
1. https://www.lloydbusinessschool.edu.in/Research-Publication/pdf/complete-paper-
himanshu-goel-1-3-2021.pdf
2. https://www.researchgate.net/publication/342702846_Financial_Statement_Analyses_
of_Tata_Motors_Limited
3. https://www.researchgate.net/publication/325535534_Review_of_Financial_Performa
nce_analysis_of_Corporate_Organizations
4. http://www.azadsandesh.com/Upload/EPaper/PDF/1.pdf
5. https://www.worldwidejournals.com/indian-journal-of-applied-research-
(IJAR)/recent_issues_pdf/2013/April/April_2013_1364967428_45cc8_105.pdf
6. https://eprajournals.com/jpanel/upload/1157pm_86.EPRA%20JOURNALS-5755.pdf
7. https://www.ijcrt.org/papers/IJCRT2003042.pdf
8. https://www.theeconomicsjournal.com/article/view/68/4-1-4
9. https://www.allresearchjournal.com/archives/2018/vol4issue3/PartA/4-2-78-543.pdf
10. https://eprajournals.com/jpanel/upload/926pm_3.EPRA%20JOURNALS-5462.pdf
92
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A COMPARATIVE STUDY ON FINANCIAL

PERFORMANCE ANALYSIS OF TATA MOTORS LTD AND

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF MANAGEMENT STUDIES

SCHOOL OF MANAGEMENT STUDIES

Dr. DHIVYA SATHISH

Submitted for Viva voce Examination held on

Internal Examiner External

I LAVANYA R (Reg.No.40410090) hereby declare that the Project Report

I am pleased to acknowledge my sincere thanks to Board of Management of

I convey my sincere thanks to Dr. G. BHUVANESWARI, Dean - School of

I would like to express my sincere and deep sense of gratitude to my Project

I wish to express my thanks to all Teaching and Non-teaching staff members of

CHAPTER CONTENT PAGE NO

4.2.4 Trend Analysis of Current Assets of Tata Motors 64

4.2.5 Trend Analysis of Current Assets of Maruti Suzuki 64

4.2.6 Consolidated Trend Analysis of Current Assets of Tata Motors 65

COMPARATIVE INCOME STATEMENT FOR THE YEAR

4.3.2 TATA MOTORS: 72

COMPARATIVE INCOME STATEMENT FOR THE YEAR

COMPARATIVE INCOME STATEMENT FOR THE YEAR

COMPARATIVE INCOME STATEMENT FOR THE YEAR

COMPARATIVE INCOME STATEMENT FOR THE YEAR

COMPARATIVE INCOME STATEMENT FOR THE YEAR

COMPARATIVE INCOME STATEMENT FOR THE YEAR

SI.NO NAME PAGE NO

4.1.5 Interest Coverage Ratio of Tata Motors and Maruti 59

4.2.4 Trend Analysis of Share Capital of Tata Motors and 69

This chapter introduces the thesis of “A COMPARATIVE STUDY ON FINANCIAL

1.1. FINANCIAL PERFORMANCE: AN OVERVIEW

Every business organization, be it manufacturing or

Financial performance analysis is the process of

1. Assessing short term and long term solvency

2. Assessing the liquidity and profitability

3. Identifying the efficiency of financial operations

Financial performance analysis helps the clients/investors to assess, evaluate and

Financial statements are formal records prepared by the company’s

AICP (American Institute of Certified Public Accountants) says “financial

Balance sheet is a snapshot of financial position of an entity, listing all the

The primary objective of financial statement analysis is to comprehend the

1. Assessment of current position: The management will want to know whether

2. Assessment of past performance: By having information about the past

3. Future decision making: quarterly, half-yearly and annual financial statement

4. Assessment of operational efficiency: financial statements helps to understand

1. Importance to management: The management needs up-to date, accurate

2. Importance to stock exchange: the value of shares and debentures being

3. Importance to the stakeholders: The stakeholders cannot be present in the

4. Importance to the Government: The financial statements helps the government

1.5. LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS:

2. Problem in comparability: The size of the business concern can be varying

Analysis and interpretation of financial statements can be done by different methods.

FINANCIAL STATEMENT ANALYSIS

ON THE BASIS OF INFORMATION USED:

External Analysis: This analysis is based on published financial reports of a firm.

ON THE BASIS OF “MODUS OPERANDI” OF ANALYSIS:

Horizontal Analysis: It is also known as dynamic or trend analysis, as the analysis is

Vertical Analysis: It is also known as static or structural analysis. This analysis

(i) Ratio Analysis: