Tata Motors- Ratio Analysis

A STUDY ON FINANCIAL PERFORMANCE ANALYSIS

TATA MOTORS LIMITED A Project report submitted to Prof: Lisha Dawan Submitted By Deepa Chandirrasekar

IIPM GURGAON – SS09-11

Profitability Ratios

------- Management Accounting ---- Ratio Analysis – TATA Motors Limited -------

1

1. Return on Investment (ROI)/Return on Capital Employed [Operating Profit/Capital Employed]

ROI

=

Operating Profit

x 100

Share Capital + Reserves & Surplus + Long Term Loans

Year

ROI

2008

2007

2006

2005

25.88%

32.43%

33.78%

35.32%

40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

ROI

Return On Investments

2. Return On Share Holders Funds ROSF =

Net Profit after Tax & Interest

x

100

Share Holders Funds

Year

ROSF

2008

2007

2006

2005

25.88%

27.85%

27.61%

30.09%


2

31.00% 30.00% 29.00% 28.00% 27.00% 26.00% 25.00% 24.00% 23.00%

ROSF

Return On Shareholders Funds

3.

Return On Total Assets ROTA =

Net Profit after Tax & Interest

x

100

Total Assets

Year

ROTA

2008

2007

2006

2005

14.37%

17.59%

18.04%

18.72%

Return On Total Assets 20.00% 15.00% 10.00% 5.00% 0.00% Year

4.

Return On Gross Capital Employed


3

ROGC =

Net Profit before Tax & Interest

x

100

Total Assets Excluding Fictitious Assets

Year

ROGC

2008

2007

2006

2005

21.26%

27.04%

27.63%

28.51%

Return On Gross Capital Employed 30.00% 20.00% 10.00% 0.00% Year

5. Earning Per Share EPS =

Net Profit after Tax – Preference Divident

x

100

No.Of Equity share

Year

2008

2007

2006

2005

EPS

52.63

49.65

39.93

34.19


4

Equity Per Share 60 50 40 30 20 10 0 Year

6. Price Earning Ratio PER =

Market Price Per Equity Share

x

100

Earning Per share

Year

2008

2007

2006

2005

PER

7.60

8.06

10.02

11.70

Price Earning Ratio 12 10 8 6 4 2 0 Year

7. Gross Profit Ratio


5

GPR =

Gross Profit

x

100

Net Sales

Year

2008

2007

2006

2005

GPR

29.61%

30.47%

32.01%

32.34%

Gross Profit Ratio 33.00% 32.00% 31.00% 30.00% 29.00% 28.00% Year

8. Net Profit Ratio NPR =

Net Profit

x

100

Net Sales

Year

2008

2007

2006

2005

NPR

12.72%

12.84%

13.89%

13.40%


6

Net Profit Ratio 14.00% 13.50% 13.00% 12.50% 12.00% Year

9. Operating Cost Ratio OCR =

Operating Cost

x

100

Net Sales =

100 – Net Profit Ratio

Year

2008

2007

2006

2005

OCR

89.94%

88.49%

87.84%

87.92%

Operating Cost Ratio 90.00% 89.00% 88.00% 87.00% 86.00% Year

10.

Pay Out Ratio


7

POR =

Dividend Per Equity Share

x 100

Earning Per Share

Year

2008

2007

2006

2005

POR

28.51%

30.20%

32.35%

34.31%

Pay Out Ratio 40.00% 30.00% 20.00% 10.00% 0.00% Year

11.

Retained Earning Ratio

RER =

Retained Earning Per Share

x 100

Earning Per Share

=

1 – Dividend Pay Out Ratio

Year

2008

2007

2006

2005

RER

52.63

49.65

39.93

34.19


8

Retained Earning Per Share 75.00% 70.00% 65.00% 60.00% 55.00% Year

12.

Dividend Yield Ratio

DYR =

Dividend Per Share

x

100

Market Price Per share

Year

2008

2007

2006

2005

DYR

3.75%

-

-

-

Market Price - Not Available for the year 2007 2006 2005

Dividend Yield Ratio 4.00% 3.00% 2.00% 1.00% 0.00% Year

Coverage Ratios 1. Fixed Charge Cover Ratio ------- Management Accounting ---- Ratio Analysis – TATA Motors Limited -------

9

FCCR =

Income before Interest & Tax Interest Charges

Year

2008

2007

2006

2005

FCCR

7.05

7.98

7.98

8.65

Fixed Charge Cover Ratio 10 8 6 4 2 0 Year

2. Debt Service Coverage Ratio DSCR =

Net Profit before Interest & Tax Interest +

Principal Repayment 1- Tax Rate

Year

2008

2007

2006

2005

DSCR Principal Amount is not available.

TurnOver Ratios 1. Fixed Asset Turnover Ratio


10

FATR =

Net Sales

Times

Net Fixed Asset

Year

2008

2007

2006

2005

FATR

5.33

7.08

5.77

5.52

Fixed Asset Turnover Ratio 8 6 4 2 0 Year

2. Working Capital Turnover Ratio FATR =

Net Sales

Times

Current Assets – Current Liabilities

Year

WCTR

2008

2007

2006

2005

-105.30

9.87

8.09

31.94


11

Working Capital Turnover Ratio 50 0 -50 -100 -150 Year

3. Debtor Turnover Ratio DTR =

Credit Sales Average Receivable Accounts

Year

DTR

2008

2007

2006

2005

29.27

40.68

33.54

25.25

Debtor Turnover Ratio 50 40 30 20 10 0 Year

4. Debt Collection Period Ratio DCPR =

12 or 365


12

Debtors Turnover Ratio

Year

2008

2007

2006

2005

DCPR

0.41

0.29

0.36

0.48

Debtor Collection Period Ratio 0.5 0.4 0.3 0.2 0.1 0 Year

5. Creditor Turnover Ratio CTR =

Total Purchase

Accounts Payable( Raw Material Cost – Sundry Creditors)

Year

2008

2007

2006

2005

CTR

4.34

4.75

5.03

5.26


13

CreditorsTurnover Ratio 6 5 4 3 2 1 0 Year

6. Debt Payment Period DPP =

Average Accounts Payable Average Monthly Credit Purchase(units in months)

Year

DPP

2008

2007

2006

2005

1.69

1.54

1.42

1.33

Debt Payment Period 2 1.5 1 0.5 0 Year

7. Stock/ Inventory Turnover Ratio STR =

Cost of Goods Sold During the Year Average Inventory


14

Year

2008

2007

2006

2005

STR

3.51

3.35

3.28

3.52

Stock Turnover Ratio 3.6 3.5 3.4 3.3 3.2 3.1 Year

Financial Ratios 1. FIXED ASSET RATIO FAR = Fixed Assets of the company Long Term Funds

2. Current Ratio CR =

Current Asset CA Current Liabilities CL


15

3. Liquidity Ratio Quick Ratio

= CA – Inventory Current Liabilities

4. Debt Equity Ratio DER = Total Long Term Fund Shareholders funds

Profit & Loss Statement ------- Management Accounting ---- Ratio Analysis – TATA Motors Limited -------

16

Gross Sales Sales

Mar 200 Mar 2008 7 Mar 2006 Mar 2005 Mar 2004 12 12 12 12 12 330939.3 318194.8 240041.2 204825.7 154935.2 325218.3 310647 234394.1 202174.2 152087.4

Job Work / Contract receipts

0

0

0

0

0

Prcessing Charges / Service Income

0

0

0

0

0

Others operational income

5721

7547.8

5647.1

2651.5

2847.8

0 0 43631.1 287308.2

0 0 43494.5 274700.3

0 0 34019.2 206022

0 0 30634.4 174191.3

0 0 22703 132232.2

Increase/Decrease in Stock Opening Balances Work In Progress Finished Goods

330

-2736.9

-2569.1

-1458.2

1419.8

3013.2 0

2863.1 0

2644.6 0

1766.4 0

1182.2 0

Shares, Units and Bonds Other Less : Work In Progress Finished Goods

0 11030.2

0 8443.4

0 5332.9

0 4752.9

0 6756.9

2960 0

3013.2 0

2863.1 0

2644.6 0

1766.4 0

Shares, Units and Bonds Other

0 10753.4

0 11030.2

0 7683.5

0 5332.9

0 4752.9

Raw Materials Consumed

201901.9

193749.3

142638.6

119313

83413.9

Opening Raw Materials

8725.9

7326.9

6300.6

3497.2

2380.7

Purchases Raw Materials

184980.6

180556.3

133677.5

115447

79850.6

Closing Raw Materials

7785.7

8725.9

7326.9

6300.6

3497.2

Particulars No of Months

Less :Inter divisional transfers Less: Sales Returns Less: Excise Net Sales EXPENDITURE :


17

Other Direct Purchases / Brought in cost Others Power & Fuel Cost Employee Cost

0 15981.1 3251.9 15260.1

14592 0 3274.1 13556.3

9987.4 0 2585.1 11332.5

6651.2 18.2 2378.1 10295.1

4679.8 0 2145.2 8745.6

Other Manufacturing Expenses

22395.1

19651.3

14852.1

12666.4

9172.6

General and Administration Expenses

1695

1584.4

1354.6

810.3

755.4

Selling and Distribution Expenses

9939.5

12330.5

9919.1

8665.8

7809.3

Miscellaneous Expenses

3631.1

1669.9

850

481.1

468.8

Less: Pre-operative Expenses Capitalised Total Expenditure

0 258404.6

0 243078.9

0 180962.9

0 153151.6

0 113930.6

Operating Profit (Excl OI) Other Income Interest Dividend

28903.6 7640.3 1432.4 1318.9

31621.4 3658.4 554.4 869.4

25059.1 3562.5 671.4 414

21039.7 2297.5 636.6 198.7

18301.6 1001.2 412.2 30.8

Profits on sale of FA

0

0

0

0

0

Profits on sale of Investments

1518.1

354.8

1776.4

312

39.8

Forex Exchange Gains Other Operating Profit Interest PBDT Depreciation

1376.1 1994.8 36543.9 4256.1 32287.8 6523.1

652.1 1227.7 35279.8 3685.1 31594.7 5862.9

0 700.7 28621.6 2934.9 25686.7 5209.4

0 1150.2 23337.2 2178.1 21159.1 4501.6

0 518.4 19302.8 2024.8 17278 3826

Profit Before Taxation & Exceptional Items

25764.7

25731.8

20477.3

16657.5

13452

Exceptional Income / Expenses Profit Before Tax Provision for Tax

0 25764.7 5475.5

0 25731.8 6597.2

56.5 20533.8 5245

-138.5 16519 4149.5

-528.6 12923.4 4820


18

Current Income Tax Deferred Tax Fringe Benefit tax Others Profits After Tax Appropriations General Reserve

1390.1 4015.4 70 0 20289.2 30427.5 0

4760 1772.2 65 0 19134.6 26902.2 0

3633.5 1421.5 190 0 15288.8 20945.4 0

3638.2 511.3 0 0 12369.5 16027.5 0

960 3860 0 0 8103.4 9340.5 0

Proposed Equity Dividend

5784.3

5780.7

4979.4

4521.9

2821.1

Preference Dividend

0

0

0

0

0

Corporate Dividend Tax Statutory Reserve

812.5 0

982.5 0

698.4 0

634.2 0

361.4 0

Other Appropriation

0

0.7

0

15.4

0

Profit & Loss Balance C/F Equity Dividend % Earnings Per Share Book Value

13830.7 150 52.63 202.54

10138.3 150 49.65 177.33

7767.6 130 39.94 143.58

5856 125 34.19 113.15

3658 80 22.96 101.08

Ratios Analysis Sr.No:

Profitability Ratios

2008

2007

2006


2005

19

Return on Investment (ROI)/Return on Capital Employed [Operating Profit/Capital Employed]

(Operating Profit)/(Share Capital+Reserves & Surplus+Long Term Loans)

25.88%

32.43%

33.78%

35.32%

Return on Shareholders Fund

(Net Profit after Income Tax)/ (Share Capital + Total Reserves)

25.88%

27.85%

27.61%

30.09%

3

Return on Equity Shareholders Fund

(Net Profit after Interest, Tax & Preference Dividend)/ (Equity Capital + Total Reserves)

25.88%

27.85%

27.61%

30.09%

4

Return on Total Assets

Net Profit after Tax/(Total Assets)

14.37%

17.59%

18.04%

18.72%

5

Return on Gross Capital Employed

Net PBIT/(Net Fixed Assets + Current Assets)

21.26%

27.04%

27.63%

28.51%

Earning per Share (EPS)

Net Profit after Tax/(Equity Capital/Face Value of the Share)

52.63

49.65

39.93

34.19

Price Earning Ratio

Market Price per Equity Share/Earning Per Share

7.60

8.06

10.02

11.70

8

Gross Profit Ratio

(Net Sales - Cost of goods Sold)/Net Sales = (Net Sales Rawmaterial Cost)/Net Sales

29.61%

30.47%

32.01%

32.34%

9

Net Profit Ratio

Net Operating Profit/Net Sales

12.72%

12.84%

13.89%

13.40%

#

Operating (OR) Expense Ratio

Operating Cost/Net Sales = (1-Net Operating Ratio)

89.94%

88.49%

87.84%

87.92%

Pay-Out Ratio

Dividend per Equity Share/Earning per Equity Share

28.51%

30.20%

32.35%

34.31%

Retained Earnings Ratio

Retained Earnings/Total Earnings = ( 1 - Pay-Out Ratio )

71.49%

69.79%

67.43%

63.44%

7.98

7.98

8.65

1

2

6 7

#

#

Dividend per Share/Market Price per Share

#

Dividend Yield Ratio Coverage Ratios

1

Fixed Interest Cover

2 3

Fixed Dividend Cover Debt Service Coverage Ratio

1

Turnover Ratios (Activity (OR) Efficiency Ratios Fixed Asset Turn Over Ratio

Net Sales/Net Fixed Assets

2

Working Capital Turn Over Ratio

Net Sales/(Currents Assets Current Liabilities)

Debtors Turnover Ratio

Total Sales/Accounts Receivable

3

Income before Interest & Tax/Interest Charges Net Profit after Interest & Tax/Preferred Dividend

3.75%

7.05 NA

NA

NA

NA

5.33

7.08

5.77

5.52

-105.30

9.87

8.09

31.94

29.27

40.68

33.54

25.25


20

Debt Collection Period Ratio

Accounts Receivables(Debtors)/Monthl y Credit Sales (Units in Months)

0.41

0.29

0.36

0.48

5

Creditors Turnover Ratio

Total Purchaces/Accounts Payables = (Rawmaterial Cost/Sundry Creditors)

4.34

4.75

5.03

5.26

6

Debt Payment Period Enjoyed Ratio (Average age of Payable)

Average Accounts Payable/ (Average Monthly Credit Purchase) (Units in Months)

1.69

1.54

1.42

1.33

7

Stock Turnover (OR) Inventory Turnover Ratio

Costs of Goods Sold during the year/Average Inventory

3.51

3.35

3.28

3.52

4

Balance Sheet Balance Sheet

(Rs.in Millions)

Particulars

Mar 2008

Mar 2007

Mar 2006

Mar 2005

Mar 2004

SOURCES OF FUNDS -

Share Capital

3855.40

3854.10

3828.70

3617.90

3530.00

3854.90

3853.60

3828.20

3617.40

3529.50

Adjustments to Equitys

0.00

0.00

0.00

0.00

0.00

Preference Capital Paid Up

0.00

0.00

0.00

0.00

0.00

Unclassified Shares Paid Up

0.00

0.00

0.00

0.00

0.00

10.00

10.00

10.00

10.00

10.00

0.00

0.00

0.00

0.00

38.30

74539.60

64843.40

51542.00

37496.00

32367.70

15372.20

19364.00

18287.00

14738.90

16813.40

0.00

0.00

0.00

0.00

0.00

Profit & Loss Account Balance

13830.70

10138.30

7767.60

5856.00

3658.00

General Reserves

41164.30

31164.30

21306.20

13536.30

8531.50

3343.50

3343.50

3343.50

3341.50

3341.50

Capital Redemption Reserve

22.80

22.80

22.80

22.80

22.80

Exchange Fluctuation reserve

0.00

0.00

0.00

0.00

0.00

Statutory Reserves

0.00

0.00

0.00

0.00

0.00

805.60

810.00

814.40

0.00

0.00

Equity - Paid Up

Face Value Share warrants & Outstandings -

Total Reserve Securities Premium Capital Reserves

Debenture Redemption Reserve

Other Reserves


21

-

Revaluation reserve

255.10

259.50

263.90

0.00

0.00

Shareholder's Funds

78395.00

68697.50

55370.70

41113.90

35897.70

Secured Loans

24619.90

20220.40

8227.60

4898.10

9426.50

1705.00

755.00

755.00

825.00

1625.00

Term Loans – Banks

0.00

0.00

0.00

0.00

2859.80

Term Loans – Institutions

0.00

0.00

0.00

2217.60

2251.10

Working Capital Loans - Bank

0.00

0.00

0.00

0.00

0.00

Deferred Credit

0.00

0.00

0.00

0.00

0.00

Non Convertible Debentures

Hire Purchase / Financial Lease

-

0.00

0.00

0.00

0.00

0.00

Other Secured

24619.90

20220.40

8227.60

2680.50

4315.60

Unsecured Loans

38185.30

19871.00

21140.80

20056.10

3171.20

0.00

0.00

0.00

0.00

0.00

Commercial Paper

1000.00

0.00

0.00

0.00

0.00

Deferred Tax Loan

0.00

0.00

3.60

1.70

2.90

37185.30

19871.00

21137.20

20054.40

3168.30

62805.20

40091.40

29368.40

24954.20

12597.70

141200.20

108788.90

84739.10

66068.10

48495.40

108308.30

87758.00

79715.50

66119.50

59854.00

54435.20

48945.40

44015.10

34542.80

30236.90

0.00

0.00

0.00

0.00

0.00

53873.10

38812.60

35700.40

31576.70

29617.10

0.00

0.00

0.00

0.00

0.00

50649.60

25133.20

9511.90

5388.40

2860.90

Pre-operative Expenses pending

0.00

0.00

0.00

0.00

0.00

Assets in transit

0.00

0.00

0.00

0.00

0.00

49102.70

24770.00

20151.50

29120.60

30567.70

4896.90

2182.80

2182.80

2772.80

2779.00

10170.50

4133.30

4127.70

3737.30

4142.20

7907.90

519.90

1755.50

10007.50

14909.60

26127.40

17934.00

12085.50

12603.00

8736.90

25305.50

13230.80

15500.00

12608.50

7327.60

Fixed Deposits – Public

Other Unsecured Loan Total Debts

Total Liabilities APPLICATION OF FUNDS : Gross Block

Less: Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment A/c Capital Work in Progress

-

Investments Quoted Equity Unquoted Equity Units

Other Investments

Market Value of Quoted Investements


22

Current Assets, Loans & Advances -

Inventories

24218.30

25009.50

20122.40

16013.60

11474.40

Raw Materials

7785.70

8725.90

7326.90

6300.60

3497.20

Work-in Progress

2960.00

3013.20

2863.10

2644.60

1766.40

0.00

0.00

0.00

0.00

0.00

Finished Goods Stores and Spare Other Inventory -

Sundry Debtors

Debtors more than Six months Debtors Others

Less : Provisions for Doubtful Debts Cash and Bank

1111.50

1390.00

1355.00

1423.50

1078.10

12361.10

11880.40

8577.40

5644.90

5132.70

11307.30

7821.80

7157.80

8113.20

6149.90

956.80

883.60

698.60

717.40

1379.20

10696.50

7256.20

6802.10

7916.80

5801.10

346.00

318.00

342.90

521.00

1030.40

23973.10

8267.60

11194.30

20050.40

7704.90

Other Current Assets

8402.00

7217.90

353.20

309.40

212.60

Loans and Advances

35937.10

56803.70

57785.40

26975.40

11415.20

103837.80

105120.50

96613.10

71462.00

36957.00

Sundry Creditors

46531.80

40799.40

28384.80

22697.30

22771.40

Acceptances

37385.10

20038.00

26973.90

28072.80

15843.30

0.00

0.00

0.00

0.00

0.00

80.40

66.30

54.80

35.40

70.10

287.50

254.20

190.80

195.90

160.40

2387.20

2478.90

3398.90

3746.30

3398.80

19894.30

13643.20

12150.40

11260.60

4306.40

5784.30

5780.70

4979.40

4521.90

1421.60

Total Current Assets

Less : Current Liabilities and Provisions

Bank Overdraft / Short term credit

Unclaimed Dividend

Interest Accrued But Not Due

Other Liabilities

-

Provisions

Proposed Equity Dividend


23

Provision for Corporate Dividend Tax

812.50

982.50

698.40

634.20

182.10

Provision for Tax

0.00

0.00

0.00

0.00

0.00

Other Provisions

13297.50

6880.00

6472.60

6104.50

2702.70

106566.30

77280.00

71153.60

66008.30

46550.40

-2728.50

27840.50

25459.50

5453.70

-9593.40

60.50

100.90

141.20

181.60

221.90

Deferred Tax Assets

3974.50

1766.00

1507.50

1026.90

1350.60

Deferred Tax Liability

13731.70

9634.30

7732.90

6679.70

6492.10

-9757.20

-7868.30

-6225.40

-5652.80

-5141.50

141200.20

108788.90

84739.10

66068.20

48532.70

20430.00

14717.50

9928.60

3116.20

2672.80

Total Current Liabilities

Net Current Assets

Miscellaneous Expenses not written off

Deferred Tax Assets / Liabilities

Total Assets

Contingent Liabilities


24

Tata Motors- Ratio Analysis

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