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CONTENTS

CHAPTERS TITLE PAGE

NUMBER

I INTRODUCTION 1

II REVIEW OF LITERATURE 8

III PROFILE OF THE COMPANY 14

IV RESEARCH METHODOLOGY 27

V ANALYSIS AND INTERPRETATION 31

VI FINDINGS, SUGGESTIONS AND CONCLUSIONS 91

BIBLIOGRAPHY

ANNEXURE

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LIST OF TABLES

TABLE.NO. TITLEPAGE

NUMBER

5.1 TABLE SHOWING CURRENT RATIO 32

5.2 TABLE SHOWING LIQUID RATIO 35

5.3 TABLE SHOWING GROSS PROFIT RATIO 38

5.4 TABLE SHOWING NET PROFIT RATIO 41

5.5TABLE SHOWING FIXED ASSETS

TURNOVER RATIO44

5.6TABLE SHOWING PROPRIETARY RATIO

47

5.7 TABLE SHOWING SOLVENCY RATIO 50

5.8TABLE SHOWING INVENTORY TURNOVER

RATIO53

5.9

TABLE SHOWING DEBTORS TURNOVER

RATIO 56

5.10TABLE SHOWING RETURN ON

SHAREHOLDERS FUNDS59

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5.11TABLE SHOWING WORKING CAPIATL

TURNOVER RATIO62

5.12TABLE SHOWING CASH SALES TURNOVER

RATIO65

5.13TABLE SHOWING CAPITAL TURNOVER

RATIO68

TABLE.NO TITLEPAGE

NO.

5.14COMPARATIVE INCOME STATEMENT FOR

THE YEAR 2011-201271

5.15COMPARATIVE BALANCE SHEET FOR THE

YEAR 2011-201273

5.16COMMON SIZE INCOME STATEMENT FOR

THE YEAR 2011-201276

5.17TABLE SHOWING TREND PERCENATAGE

OF NET SALES79


OF OPERATING PROFIT81


OF CURRENT ASSETS83

5.20 TABLE SHOWING TREND PERCENATAGE 85

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OF CURRENT LIABILITES

5.21 TABLE SHOWING TREND PERCENATAGEOF INVENTORIES 87


OF SUNDRY DEBTORS89

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LIST OF CHARTS

TABLE.NO

TITLE

PAGE

N0

1 CHART SHOWING CURRENT RATIO 33

2 CHART SHOWING LIQUID RATIO 36

3 CHART SHOWING GROSS PROFIT RATIO 39

4 CHART SHOWING NET PROFIT RATIO 42

5CHART SHOWING FIXED ASSETS TURNOVER

RATIO45

6CHART SHOWING PROPREITARY RATIO

48

7 CHART SHOWING SOLVENCY RATIO 51

8CHART SHOWING INVENTORY TURNOVER

RATIO54

9

CHART SHOWING DEBTORS TURNOVER

RATIO 57

10

CHART SHOWING RETURN ON

SHAREHOLDERS FUNDS 60

11CHART SHOWING WORKING CAPITAL

63

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TURNOVER RATIO

12

CHART SHOWING CASH SALES TURNOVER

RATIO 66

13

CHART SHOWING CAPIATL TURNOVER

RATIO 69

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CHART SHOWIBG TREND PERCENTAGE OF

NET SALES 80

18CHART SHOWIBG TREND PERCENTAGE OF

OPERATING PROFIT 82

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CURRENT ASSETS 84

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CURRENT LIABILITIES 86

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INVENTORIES 88

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SUNDRY DEBTORS 90

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CHAPTER-I

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INTRODUCTION

INTRODUCTION

Every business concern wants to know the various financial aspects for effective

decision making. The main aim of preparing a financial statement is to achieve the

objectives of the firm as a whole. The term financial statement refers to an

organized collection of data on the basis of accounting principles and conventions

to disclose its financial information.

DEFINITION

According to John N. Myer (1985), the financial statements provide a

summary of the accounts of a business enterprise, the balance sheet reflecting the

assets, liabilities and capital as on a certain date and the income statement showing

the results of operations during a certain period.

According to Anthony (1976), financial statements, essentially, are interim

reports, presented annually and reflect a division of the life of an enterprise into

more or less arbitrary Accounting period more frequently in a year.

Financial statements are broadly grouped into two groups.

1. Income Statements (Trading, Profit and loss Account)

2. Balance Sheets

NATURE OF FINANCIAL STATEMENTS

Financial statements are prepared on the basis of business transactions

recorded in the books of Original Entry or Subsidiary books, Ledger and Trial

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balance. Recording the transactions in the books of primary entry is supported by

document proofs such as vouchers, invoice notes etc.

According to the American institute of certified Public Accountants,

Financial statement reflects a combination of recorded facts, accounting

conventions and personal judgments; and conventions applied affect them

materially. It is, therefore concluded that the nature and accuracy of the data

included in the financial statements are in the financial statements are influenced

by the following factors:

1. Recorded facts concerning the business transactions.

2. Generally accepted accounting principles.

3. Personal judgments.

4. Accounting conventions adopted to facilitate the accounting technique.

CONCEPT OF FINACIAL STATEMENT

Financial statement also called financial report, refers to such

statements as it contains financial information of the enterprise. They are

over all general purpose entity statement as the report financial position and

operation results of an enterprise business at end of account period. As a

matter of fact, these statements reflect the total of the summary of the

books of account.

FINANCIAL PERFORMANCE ANALYSIS

Financial performance analysis is the process of identifying the financial

strengths and weaknesses of the firm by properly establishing the relationship

between the items of balance sheet and profit and loss account. It also helps in

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short term and long term forecasting and growth can be identified with the help of

financial performance analysis.

The dictionary meaning of analysis is to resolve or separate a thing in to its

element or components parts for tracing their relation to the things as whole and to

each other.

The analysis of financial statement is a process of evaluating the relationship

between the component parts of financial statement to obtain a better

understanding of the firms position and performance. This analysis can be

undertaken by management of the firm or by parties outside the namely, owners,

creditors, investors and others.

MEANING OF FINANCIAL STATEMENT

A financial statement is a collection of data organized according to logical and

consistent Accounting procedures. Its purpose is to convey an understanding of

some financial aspects of a business firm. It may show a position at a moment in

time as in the case of a balance sheet, or it may reveal series of activities over a

given period of time, as in the case of an income statement.

The statement disclosing status of investments is known as balance sheet and

the statement showing the result is known as profit and loss account. Thus, the

term financial statement has been widely used to represent two statements prepared

by accountants at the end of specific period. They are: (i) profit and loss account or

income statement; and (ii) Balance sheet or statement of financial position.

Financial statements are prepared as an end result of financial accounting and

are the major sources of financial information of an enterprise. Financial

statements are also called as financial reports.

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The financial statements are prepared on the basis of recorded facts. The

recorded facts are those which can be expressed in monetary terms. The statements

are prepared for a particular period, generally for one year.

TYPES OF FINANCIAL STATEMENTS

Financialstatements include

A Balance Sheet

An Income Statement

A Statement of Changes

A Statement of Changes in financial position: It is fund flow and cash

flow statement.

The financial statement is prepared with a view to depict financial

position of the concern. A proper analysis and interpretation of this

statement enables a person to judge the profitability and financial

strength of the business.

IMPORTANCE OF FINANCIAL STATEMENTS

(a) For management: Till recently, the feeling was that financial statements aremeant only for owners of the concern and to satisfy legal requirements. Now it is

realized that financial statements are of utmost help to the management of a

concern. Management will be able to take effective decisions only when correct

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and reliable information is at its disposal. If information is not available,

management can neither plan nor fulfill the functions of operation and control.

(b) For the Financiers: Besides managements, financial statements are also of

great importance to the financiers and lenders. Lenders need information regarding

customers financial position, solvency, credit standing, profitability, etc. Financial

statements help the bankers and lenders to decide whether to extend loans to the

customers.

(c) For the Creditors: A Trade creditor is another class for whom financial

statements are important. Trade credit implies extending facilities of deferred

payment for credit purchases by seller buyer. All these facts are revealed by

financial statements with the help of solvency ratios, cash and fund flow analysis,

etc.

(d) For Investors: Present and prospective investors are interested in studying

financial statements to assess earning capacity, growth potential and efficiency of

management. Financial statements provide such information readily to

shareholders and debenture.

LIMITATIONS OF FINANCIAL STATEMENTS

Financial statements are normally prepared on the basis of accounting

principles, conventions and past experiences. Therefore, they op not

communicate much about the profitability, solvency, stability,

liquidity etc. of the undertakers to the users of the statements.

Financial statement emphasis to disclose only monetary facts, i.e.,

quantitative information, but qualitative information is ignored.

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Financial statements disclose only the historical information. It does

not consider changes in money value, fluctuations of price level, etc.

Thus, correct forecasting for future is not possible.

Influences of personal judgments leads to opportunities for

manipulation while preparing financial statements.

Information disclosed by financial statements is based on accounting

concepts and conventions. It is unrealistic because of the difference in

terms and conditions, and changes in economic situations.

Usefulness of financial performance to various stakeholders

The analysis of financial performance is used by most of the business

communities.

1. Trade Creditors

The creditors provide goods / services on credit to the firm. They always

face concern about recovery of their money. The creditors are always keen

to know about the liquidity position of the firm. Thus, the financial

performance parameters for them evolve around short term liquidity

condition of the firm.

2. Suppliers of long term debt

The suppliers of long term debt provide finance for the on-going

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expansion projects of the firm. The long term debt providers will always

focus upon the solvency condition and survival of the business. Their

confidence in the firm is of utmost importance as they are providing

finance for a longer period of time.

3. Investors

Investors are the persons who have invested their money in the equity

share capital of the firm. They are the most concerned community as they

have also taken risk of investments expecting a better financial

performance of the firm. The investors community always put more

confidence in firms steady growth in earnings. They judge the

performance of the company by analyzing firms present and future

profitability, revenue stream and risk position.

4. Management

Management for a firm is always keen on financial analysis. It is

ultimately the responsibility of the management to look at the most

effective utilization of the resources. Management always tries to match

effective balance between the asset liability management, effective risk

management and short-term and long-term solvency condition.

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CHAPTER-II

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REVIEW OF LITERATURE

REVIEW OF LITERATURE

Dr. Kamm:Financial Analysis is designed for finance majors in order to improve

their skills at analyzing companies and to advance their knowledge of finance

theory and application. The overall financial analysis includes: bond valuation,financial statement analysis, financial ratios, financial forecasting, beta and the

CAPM, the weighted average cost of capital, the Gordon Growth model,

discounted cash flow analysis and multiples. Students are expected to integrate

skills of finance, economics, and accounting in the course. The course is

quantitative and analytical in nature; we made use of the trading center throughout

most of the term. Students calculate and interpret financial data, build spreadsheet

models, and make general conclusions about the financial health of a company and

its intrinsic value.

Dr. Laurence M. Crane:Financial statements help assess the financial well-

being of the overall operation. Information about the financial results of each

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enterprise and physical asset is important for management decisions, but by

themselves are inadequate for some decisions because they do not describe the

whole business. An understanding of the overall financial situation requires three

key financial documents: the balance sheet, the income statement and the cash flow

statement.

FINANCIAL PERFORMANCE MEASURES

The recommended measures for financial analysis are grouped into five

broad categories: liquidity, solvency, profitability, repayment capacity and

financial efficiency. Financial measures are intended to help operations

analyze their activities from a financial standpoint and provide useful informationneeded to make good management decisions. By themselves, the financial

measures discussed dont provide answersthey need to be reviewed in relation to

each other and to other non-operation activities. It is not possible to control or

predict all of the factors that influence the final outcome of any operational

decision. Nor is it possible to have available all of the information that would be

ideal. But decision making can be improved through using available information

and through effective financial planning and analysis.

David Harper:Financial statements paint a picture of the transactions that flow

through a business. Each transaction or exchange - for example, the sale of a

product or the use of a rented a building block - contributes to the whole picture.

Let's approach the financial statements by following a flow of cash-based

transactions. In the illustration below, we have numbered four major steps:

1. Shareholders and lenders supply capital (cash) to the company.

2. The capital suppliers have claims on the company. The balance sheet is an

updated record of the capital invested in the business. On the right-hand side of the

balance sheet, lenders hold liabilities and shareholders hold equity. The equity

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claim is "residual", which means shareholders own whatever assets remain after

deducting liabilities. The capital is used to buy assets, which are itemized on the

left-hand side of the balance sheet. The assets are current, such as inventory, or

long-term, such as a manufacturing plant.

3. The assets are deployed to create cash flow in the current year (cash inflows are

shown in green, outflows shown in red). Selling equity and issuing debt start the

process by raising cash. The company then "puts the cash to use" by purchasing

assets in order to create (build or buy) inventory. The inventory helps the company

make sales (generate revenue), and most of the revenue is used to pay operating

costs, which include salaries.

4. After paying costs (and taxes), the company can do three things with its cash

profits. One, it can (or probably must) pay interest on its debt. Two, it can pay

dividends to shareholders at its discretion. And three, it can retain or re-invest the

remaining profits. The retained profits increase the shareholders' equity account

(retained earnings). In theory, these reinvested funds are held for the shareholders'

benefit and reflected in a higher share price.

JohnIrron (Jun 15, 2007)Financial statements are a formal record of the

financial activities of a business, person, or other thing. Financial statements like a

written statement which quantitatively describes the financial strength of a

company. This includes an income statement and a balance sheet, and regularly

also includes a cash flow statement. Financial statements are regularly compiled on

a quarterly and yearly basis. Financial statements are important futures for each

and every business. For a business venture, all the appropriate financial

information, offered in a structured way and in a form simple to understand, are

called the financial statements. The purpose of financial statements is to give

information regarding the financial situation, performance and changes in financial

situation of a venture that is helpful to a wide range of users in making financial

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decisions. Financial statements should be comprehensible, appropriate, reliable and

comparable. Reported property, liabilities and equity are directly connected to an

organization's financial situation. Reported income and operating cost are directly

connected to an organizations financial performance.

Abdullah Mohammad Khan Wahid(October 4, 2007):A financial

analysis is responsible for a wide range of functions such as account processing

payable and receivable operations, taking into account the transfer of assets and the

closing of the books as soon as possible. Properly fulfill these functions is essential

for a company, on the basis of precise handling operations and accurate financial

statements. These activities are clearly on the basis of any successful career infinancial analysis. However, the organizer has exceptional skills in analyzing

appropriate funding for success.

This article was calculated to facilitate analysis financial support for a

breadth and depth of the largest financial analysis.

Traditionally the main objective of the accounting department has been

processing transactions, customer billing, payments to suppliers, etc. These are

routine activities that are invisible, but vital. Most employees of the company, but

it is always necessary for the success of an organization.

However, the role of accounting staff that has been changed companies

facing increasing competition from organizations around the world. Now,

managing a business needs advice and transaction flow smoothly. Accordingly, the

financial analyst is not only to fill the role of traditional transaction processing, butalso to continue to review company operations, evaluating investments,

relationship problems and recommendations for management, and respond to

requests by the management team of Special Investigations. All these new tasks

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can be considered as financial analysis, because require the application of review

procedures for operational activities and financial investment in a company.

Rashid Javed (Jan 19, 2009):All financial statements are essentially

historically historical documents. They tell what has happened during a particular

period of time. However most users of financial statements are concerned about

what will happen in the future. Stockholders are concerned with future earnings

and dividends. Creditors are concerned with the company's future ability to repay

its debts. Managers are concerned with the company's ability to finance future

expansion. Despite the fact that financial statements are historical documents, they

can still provide valuable information bearing on all of these concerns.

Financial statement analysis involves careful selection of data from financial

statements for the primary purpose of forecasting the financial health of the

company. This is accomplished by examining trends in key financial data,

comparing financial data across companies, and analyzing key financial ratios.

MC Donald& Morris(1984,1985):Present the first extensive empirical

studies of the statistical validity of the financial ratio method. The authors use 3models with 2 samples, one with single industry the other with one randomly

selected from each industry branch to investigate the implications of homogeneity

on proportionality.

Dr. P. l. Bhashyam (2003):The financial statement analysis is largely a study

of relationship among various financial factors. The analysis and interpretations of

financial statement, so that forecasting may be made of the future earnings ability

to pay interest & debt maturities& profitability.

VV Reddy& S.B Patkar:(The management a/c, May 2004) has conducted

the study working capital& liquidity management is factoring a comparative study

of SBI and bank factors. For this study he makes ratio analysis percentage method,

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spearmans rank correlation, and test was used to check the significances of

correlation.

Dr. B. Ramachandra Reddy& Dr. Yuvaraja Reddy:(the banking

finance, 2005) conducted analysis of financial performance of SBI for period of

1991 to2003. The study focus the key responsibility area of banking such as

deposit mobilization, deployment, non-performing assets, profitability&

productivity the ratio analysis has been used as a tool.

P.V. Vasudevan:In the researchers main objectives is to analyses the financial

performance of the company to judge the solvency of the company and to study the

trends in working capital management of the company. The researcher adoptedfinancial statement analysis funds flow and cash flow analysis, ratio analysis and

working capital analysis.

K. Srinivas:The researchers main objectives are to critically examine and high

lights the financial performance of the company to study the liquidity and

profitability of the company.

Mr.Wasswa Hannington:On of the main objectives of this project study toconduct risk return analysis or working capital position to assess the financial

liquidity position of the company to determine the structure and utilization of

working capital and its various components. And to assess the implementation of

the tendon committee norms with regard to working capital and also by doing

analysis working capital and cash management schedules of charges in working

capital include funds flow statements and funds flow cycle and working capital

advances by commercial bank, short term financial institutions.

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CHAPTER-III

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PROFILE OF THE

COMPANY

COMPANY PROFILE

COMPANY : ASHOK LEYLAND LIMITED

TYPE : PUBLIC

FOUNDED : 1948

COUNTRY : INDIA

CORPORATE OFFICE : CHENNAI

MAJOR INDUSTRY : AUTOMOTIVE

SUBSIDIARIES : ENNOREFOUNDERIES LTD

ASHELY HOLDING LTD

ASHELY INVESMENT LTD

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ASHELY LEYLAND PROJECT

SERVICE LTD

REVENUE : USN 2.1 BILLION

GROUP : HINDUJA GROUP

WEBSITE : WWW.ASHOKLEYLAND.COM

Indias first Prime Minister Nehru, persuaded Raghunandan Saran, an

industrialist, to enter automotive manufacture. The company began in 1948 as

Ashok Motors, to assemble Austin cars. The company was renamed and started

manufacturing commercial vehicles in 1955 with equity participation by Leyland

Motors. Today the company is the flagship of the Hinduja Group, a British-based

and Indian originated transnational conglomerate.

Early products included the Leyland Comet bus which was a passenger body

built on a truck chassis, sold in large numbers to many operators, including

Hyderabad Road Transport, Ahmedabad Municipality, Travancore State Transport,

Maharashtra State Transport and Delhi Road Transport Authority. By 1963, the

Comet was operated by every State Transport Undertaking in India, and over 8,000

were in service. The Comet was soon joined in production by a version of the

Leyland Tiger.

In 1968, production of the Leyland Titan ceased in Britain, but was restarted

by Ashok Leyland in India. The Titan PD3 chassis was modified, and a five speed

heavy duty constant-mesh gearbox utilized, together with the Ashok Leyland

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version of the O.680 engine. The Ashok Leyland Titan was very successful, and

continued in production for many years.

Over the years, Ashok Leyland vehicles have built a reputation for reliability

and ruggedness. This was mainly due to the product design legacy carried over

from British Leyland.

Ashok Leyland had collaboration with the Japanese company Hino Motors

from whom the technology for the H-series engines was bought. Many indigenous

versions of H-series engine were developed with 4 and 6 cylinder and also

conforming to BS2 and BS3 emission norms in India. These engines proved to beextremely popular with the customers primarily for their excellent fuel efficiency.

Most current models of Ashok Leyland come with H-series engines.

In 1987, the overseas holding by Land Rover Leyland International Holdings

Limited (LRLIH) was taken over by a joint venture between the Hinduja Group,

the Non-Resident Indian transnational group and IVECOFiat SpA, part of the Fiat

Group and Europe's leading truck manufacturer. Ashok Leylands long-term plan

to become a global player by benchmarking global standards of technology and

quality was soon firmed up. Access to international technology and a US$200

million investment programme created a state-of-the-art manufacturing base to roll

out international class products. This resulted in Ashok Leyland launching the

'Cargo' range of trucks based on European Ford Cargo trucks. These vehicles used

IVECO engines and for the first time had factory-fitted cabs. Though the Cargotrucks are no longer in production and the use of IVECO engine was discontinued,

the cab continues to be used on the 'Ecomet' range of trucks.

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Ashok Leyland Modern Truck

In the journey towards global standards of quality, Ashok Leyland reached a

major milestone in 1993 when it became the first in India's automobile history to

win the ISO 9002 certification. The more comprehensive ISO 9001 certification

came in 1994, QS 9000 in 1998 and ISO 14001 certification for all vehicle

manufacturing units in 2002. In 2006, Ashok Leyland became the first automobile

company in India to receive the TS16949 Corporate Certification. Editors note:

This is part of a series of articles peeking into clean car industries and car

manufacturers of China, India, South Korea and Germany.

Among many other goals, Ashok Leyland aims to expand its operations to

penetrate into overseas markets. Included in the companys plans is to acquire

smaller car manufacturers in China and in other developing countries. In October

2006, Ashok Leyland bought a majority stake in the Czech based- Avia. Called

Avia Ashok Leyland Motors s.r.o., this will give Ashok Leyland a channel into the

competitive European market. According to the company, in 2008 the joint venture

sold 518 LCVs in Europe despite tough economic conditions. Furthermore, the

company will expand its product offers into construction equipment, following a

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joint venture with John Deere. Newly formed in June 2009, the John Deere

partnership is a 50/50 split between the companies. The company says negotiation

is progressing on land acquisition, and the production plans are in place. The

venture is scheduled to start rolling out wheel loaders and backhoe loaders in

October 2010. Aside from the full expansion planned for the company, Ashok

Leyland is also paying close attention to the environment. In fact, they are one of

the companies showing the strongest commitment to environmental protection,

utilizing eco-friendly processes in their various plants. Even as they thrust into

different directions, Ashok Leyland maintains an R&D group that aims to uncover

ways to make their vehicles more fuel efficient and reduce emissions.

In fact, even before laws were placed on car emissions, Ashok Leyland was

already producing low-emission vehicles. Back in 1997, they have already released

buses with quiet engines and low pollutant emission based on the CNG technology.

In 2002 it developed the first hybrid electric vehicle. Ashok Leyland has also

launched a mobile emission clinic that operates on highways and at entry points to

New Delhi. The clinic checks vehicles for emission levels, recommends remedies

and offers tips on maintenance and care. This work will help generate valuable

data and garner insight that will guide further development.

When it comes to the development of environmentally friendly technologies,

Ashok Leyland has developed Hythane engines. In association with the Australian

company Eden Energy, Ashok Leyland successfully developed a 6-cylinder, 6-liter

92 kW BS-4 engine which uses Hythane (H-CNG,) which is a blend of natural gas

and around 20% of hydrogen. Hydrogen helps improve the efficiency of the engine

but the CNG aspect makes sure that emissions are at a controlled level. A 4-

cylinder 4-litre 63 KW engine is also being developed for H-CNG blend in a joint

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R&D program with MNRE (Ministry of New and Renewable Energy) and Indian

Oil Corporation.

The H-CNG concept is now in full swing, with more than 5,500 of the

technologys vehicles running around Delhi. The company is also already

discussing the wide-scale use of Hythane engines with the Indian government.

Hythane engines may be expected in the near future, but these may not be brought

to the United States as yet. Ashok Leylands partnership with Nissan is also

focusing on vehicle, powertrain, and technology development listed under three

joint ventures. With impressive investment, the joint ventures will focus on

producing trucks with diesel engines that meet Euro 3 and Euro 4 emission

standards.

In the coming years, Ashok Leyland also has some hybrid trucks and buses

in store for its market. The buses and trucks are set to feature a new electronic

shift-by-wire transmission technology as well as electronic-controlled engine

management for greater fuel efficiency. Ashok Leyland focuses on improving fuel

efficiency without affecting automotive power, and the vehicles will have a 5%

improvement on fuel efficiency. Ashok Leyland is also developing electric

batteries and bio-fuel modes.

Ashok Leyland Ltd.s March quarter results were expected to be impressive,

as its monthly vehicle output reports had indicated a 138% jump in volumes. But

what impressed was its net profit growth of 317%, to Rs223 crore, over the year-ago period, even as sales rose by 139%. Ashok Leylands operating profit margin

rose to 13% compared with 10.5%. Higher volume growth, a better product mix

due to higher sales of multi-axle vehicles and tractor trailers, and cost reduction

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were key reasons for margin expansion. Its estimate for volume growth in 2011 is

conservative, at 15% compared with over 30% in FY2010.

Around 1,200 buses under the Jawaharlal Nehru National Urban Renewal

Mission scheme are yet to be delivered of the 5,098 ordered. Besides, it has orders

on hand from state transport undertakings for another 2,000 buses. The firm is

investing to increase its capacity, with Rs1,200Crore proposed for expansion plans

over the next two years; mainly to increase output of engines and new generation

cabs. Besides, it plans to invest Rs800crore in joint ventures. Analysts believe that

its Uttarakhand plant is expected to deliver 22,000-25,000 vehicles in fiscal 2011,

in its first full year of operation. The company has also steadily gained market

share, from 21-22% in the first quarter of 2010 to 28-29% in the fourth quarter.

One concern is that it is not yet a strong player in the eastern market. Besides, the

southern market, traditionally its stronghold, has grown by only 15% in volume

terms in 2010. The rest of India (mainly north and west) grew by 40% during the

year. An Ashok Leyland-Nissan joint venture produced light commercial vehicles

(LCVs) from the former's Hosur facility near Bangalore as well as from Renault-

Nissan's car plant near Chennai. On 11 June 2012, Ashok Leyland supplied 100

Falcon buses to Ghana for $7.6 million.

Current status

An Ashok Leyland bus run by the Chennai Metropolitan Transport Corporation

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Ashok Leyland city buses in Andhra Pradesh belonging to APSTRC

Ashok Leyland is the second technology leader in the commercial vehicles

sector of India. The history of the company has been punctuated by a number of

technological innovations, which have since become industry norms. It was the

first to introduce multi-axled trucks, full air brakes and a host of innovations like

the rear engine and articulated buses in India. In 1997, the company launched the

countrys first CNG bus and in 2002, developed the first Hybrid Electric Vehicle.

The company has also maintained its profitable track record for 60 years.

The annual turnover of the company was USD 1.4 billion in 2008-09. Selling

54,431 medium and heavy vehicles in 2008-09, Ashok Leyland is India's largest

exporter of medium and heavy duty trucks. It is also one of the largest private

sector employers in India - with about 12,000 employees working in 6 factories

and offices spread over the length and breadth of India.

The company has increased its rated capacity to 105,000 vehicles per annum. Also

further investment plans including putting up two new plants - one in Uttarakhand

in North India and a bus body building unit in middle-east Asia are fast afoot. It

already has a sizable presence in African countries like Nigeria, Ghana, Egypt and

South Africa.

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Ashok Leyland has also entered into some significant partnerships, seizing

growth opportunities offered by diversification and globalization with

Continental Corporation for automotive infotronics; with Alteams in Finland for

high pressure die casting and recently, with John Deere for construction

equipment.[5]

As part of this global strategy, the company acquired Czech Republic-based

Avia's truck business. The newly acquired company has been named Avia Ashok

Leyland Motors s.r.o. This gives Ashok Leyland a foothold in the highly

competitive European truck market.

In 2010 Ashok Leyland acquired a 26% stake in the British bus

manufacturer Optare, a company based on the premises of a former British

Leyland subsidiary C.H.Roe. In December 2011 Ashok Leyland increased its stake

in Optare to 75.1%.

The Hinduja Group also bought out IVECO's indirect stake in Ashok

Leyland in 2007. The promoter shareholding now stands at 51%. Leyland has a

state of the art research and development center at Vellivoyal Chavadi which is

located near Chennai. Hinduja Group flagship company Ashok Leyland has been

awarded the first overseas order worth $6 million for its vestibule buses from

Bangladesh Road Transport Corporation (BRTC).[6]

Nissan Ashok Leyland

In 2007, the company announced a joint venture with Japanese auto giant

Nissan (Renault Nissan Group) which will share a common manufacturing facility

in Chennai, India. The shareholding structures of the three joint venture companies

are:

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Ashok Leyland Nissan Vehicles Pvt. Ltd., the vehicle manufacturing

company will be owned 51% by Ashok Leyland and 49% by Nissan

Nissan Ashok Leyland Powertrain Pvt. Ltd., the powertrain manufacturing

company will be owned 51% by Nissan and 49% by Ashok Leyland

Nissan Ashok Leyland Technologies Pvt. Ltd., the technology development

company will be owned 50:50 by the two partners.

Dr. V. Sumantran, Executive Vice Chairman of Hinduja Automotive Limited

and a Director on the Board of Ashok Leyland is the Chairman of the Powertrain

Company and he is on the Boards of the other two JV companies. The venture,

once it takes off, will be one of the largest investments made in automotive field in

the country

iBUS

Ashok Leyland announced iBUS in the beginning of 2008, as part of the

future for the country's increasingly traffic-clogged major cities. Its Rs60-lakh,iBus, a feature-filled, low-floor concept bus for the metros revealed during the

Auto Expo 2008 in India, a vehicle for a first production run of pilot models should

be ready by the end of this[?] year. The start of full production is scheduled for

2009. Developed by a team of young engineers, the low-floored iBus will have the

first of its kind features, including anti-lock braking system, electronic engine

management and passenger infotainment. The executive class has an airline like

ambience with wide LCD screens, reading lights, audio speakers and, for the first

time, Internet on the move. A GPS system enables vehicle tracking and display of

dynamic route information on LCD screens, which can also support infotainment

packages including live data and news. The bus will probably be equipped with an

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engine from the new Neptune family, which Ashok Leyland also introduced at this

exhibition, which are ready for the BS4/Euro 4 emission regulations and can be

upgraded to Euro 5.

U-Truck

Ashok Leyland, announced sale of vehicles on the new U-Truck platform

from November, 2010 with the rolling out of the first set of 10 models of tippers

and tractor trailers in the 16 49-tonne segment. Further, another 15 models are set

to enter the market in the next 12 months.

Dost

DOST is a 1.25 ton light commercial vehicle (LCV) that is the first product

to be launched by the Indian-Japanese commercial vehicle joint venture Ashok

Leyland Nissan Vehicles. Dost is powered by a 55hp high-torque, 3-cylinder,

turbo-charged Common Rail Diesel engine and has a payload capacity of

1.25Tonnes. It is available in both BS3 and BS4 versions. The LCV is being

produced in Ashok Leyland's plant in Tamil Nadu's Hosur. The LCV is available inthree versions with the top-end version featuring air-conditioning, power steering,

dual-colour of a beige-gray trim and fabric seats. With the launch of Dost Ashok

Leyland has now entered the Light Commercial Vehicle segment in India.

Ashok Leyland Defence Systems

An Indian road-mobile launcher with a ballistic missile

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Ashok Leyland Defence Systems (ALDS) is a newly floated company by the

Hinduja Group. Ashok Leyland, the flagship company of Hinduja group, holds 26

percent in the newly formed Ashok Leyland Defence Systems (ALDS). The newly

floated company has a mandate to design and develop defence logistics and tactical

vehicles, defence communication and other systems. Ashok Leyland is the largest

supplier of logistics vehicles to the Indian Army. It has supplied over 60,000 of its

Stallion vehicles which form the Army's logistics backbone.

Facilities

The company has five manufacturing locations in India:

Ennore and Hosur, Tamilnadu (Hosur-1, Hosur-2, CPPS)

Factory at Alwar, Rajasthan

Nissan Factory at Neemrana, Alwar, Rajasthan

Bhandara, Maharasthra

Pantnagar, Uttarakhand

Ashok Leylands Technical Centre, at Vellivoyalchavadi (VVC) in the

outskirts of Chennai, is a state-of-the-art product development facility,

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that apart from modern test tracks and components test labs, also houses

Indias one and only Six Poster testing equipment.

The company had an Engine Research and Development Facility in

Hosur, which was shifted to VVC, Chennai.

The company has signed an agreement with Ras Al Khaimah Investment

Authority (RAKIA) in UAE for setting up a bus body building unit in the

Middle East.

Products

(Not exhaustive)

Luxury

Viking BS-I - city bus

Viking BS-II - city bus

Viking BS-III -city bus

Cheetah BS-I

Cheetah BS-II

Panther

12M bus

Stag Mini

Stag CNG

222 CNG

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Lynx

Double Decker

Vestibule bus

Airport Tarmac Coach

Gensets

CHAPTER-IV

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RESEARCH

METHODOLOGYRESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research

problem. It may be understood as a science of study how research is done

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scientifically. In this study the various steps that are generally adopted by the

researcher in studying his research problem along with the logic behind them.

RESEARCH DESIGN

The proposed study is of descriptive in nature. Research design is needed

because it facilitates the smooth sailing of the various research operations, thereby

making research as efficient as possible.

SOURCE OF INFORMATION

Basically there are two sources of information. The researcher has collected

secondary data for his study.

DATA COLLECTION METHODS;

PRIMARY DATA COLLECTION METHOD

Primary data is the secondary the data which the researcher collects through

various methods like interviews, surveys and questionnaires etc, to support data.

SECONDARY DATA COLLECTION METHOD

(i) Company balance sheet

(ii) Profit and loss account

(iii) Annual report

PERIOD OF STUDY:

Study cover the time period of 5 years from the financial years

2007-2008 to 2011-2012.

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OBJECTIVES OF THE STUDY:

Primary objectives:

To study the financial performance of the last five years.

Secondary objectives:

To analysis and ascertain the liquidity of the company using financial

ratio.

To know present profitability and operating efficiency of the firm.

To recommended for the improvement of the company.

SCOPE OF THE STUDY:

This study helps to understand structure of the industry and financial

performance of the company. For the purpose of the financial analysis and

interpretation of the ratios for the period of from 2007-2008 to 2011-2012 were

taken for the study.By financial analysis of the Ashok Leyland would be able to

get a fair picture of the financial position of Ashok Leyland. It showing the

financial performance to various creditors and outsider with the help of financial

analysis, the company able to get easy credit terms. Financial performance is

systematic record business transaction, protecting the property of the business and

compliance with legal requirements.

TOOLS USED

The tool used for the study is

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Ratio analysis

Current ratio

Liquid ratio

Gross Profit ratio

Net Profit ratio

Fixed Assets Turnover ratio

Proprietary ratio

Solvency ratio

Inventory Turnover ratio

Debtors Turnover ratio

Return on Shareholders Funds ratio

Working Capital Turnover ratio

Cash Sales Turnover ratio

Capital Turnover ratio

Comparative Income Statement

Comparative Balance Sheet

Common Size Income Statement

Trend Percentage Analysis

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LIMITATIONS OF THE STUDY:

Due to time constraint this study has been contained to only Ashok

Leyland.

The entire study is based purely on the observation of the secondary data.

(i.e.) with reference to annual reports, journals, office reports and

interviews with employees.

The study undertaken is limited to 5 years from 2007-2012 for a short

period to evaluate the efficiency of the performance of the organization.

The project is only confined to limited data.

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CHAPTER-V

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ANALYSIS AND

INTERPRETATION

1. CURRENT RATIO

The ratio of current assets to current liabilities is called currentratio in order to measure the short-term liquidity or solvency of a concern,

comparison of current assets and current liabilities is inevitable current ratio

indicates the ability of a concern to meet its current obligations as and when

they are due for payment formula for

Current assets

Current ratio = --------------------------------

Current liabilities

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TABLE NO.5.1

CURRENT RATIO

YEAR CURRENT

ASSETS

CURRENT

LIABILITIES

CURRENT

RATIO

2007-2008 28752.56 22719.40 1.265

2008-2009 316561.57 213694.58 1.481

2009-2010 413968.43 296075.72 1.398

2010-2011 436724.53 352827.40 1.237

2011-2012 430388.63 484370.23 0.888

Source: Secondary Data

INTERPRETATION:

From the above table it is found that the current ratio is 1.26

times in the year 2007-2008. It has been found that the current ratio is 1.48

times in the year 2008-2009. The current ratio is 1.39 times in the year 2009-

2010, 1.23 times in the year 2010-2011 and 0.88 times in the year 2011-

2012. The current ratio is maximum in the year 2008-2009.

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CHART NO.1

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2. LIQUID RATIO (OR) QUICK RATIO:

This ratio is also called quick or Acid test Ratio. Quick assets

refer to assets which are quickly convertible into cash. Current assets other

than stock and prepaid expensed are considered as quick assets. The ideal

liquid ratio or the generally accepted norm for liquid ratio is 1

comparison of quick rate with current ratio indicates the inventory hold ups.

Liquid assets

Liquidity ratio = ---------------------------

Liquid liabilities

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TABLE NO.5.2

QUICK RATIO

YEAR QUICK

ASSETS

CURRENT

LIABILITIES

QUICK

RATIO

2007-2008 16513.42 22719.40 0.726

2008-2009 183560.13 213694.58 0.858

2009-2010 250144.43 296075.72 0.844

2010-2011 215834.19 352827.40 0.611

2011-2012 297326.11 484370.23 0.613


INTERPRETATION:

From the above table it is found that the quick ratio is 0.72 times in the year

2007-2008. It has been found that the quick ratio is 0.85 times in the year 2008-

2009. The quick ratio is 0.84 times in the year 2009-2010, 0.62 times in the year

2010-2011 and 0.613 times in the year 2011-2012. The quick ratio is maximum in

the year 2008-2009.

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CHART NO.2

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3. GROSS PROFIT RATIO:

This ratio is also known as Gross margins or Trading Margin

ratio Gross Profits indicates the efficiency of production or trading operation.

A gross profit ratio the different between sales and direct costs. Gross profit

ratio explains the relationship between gross profit and net sales.

Gross profit

Gross profit Ratio = ----------------------------*100

Sales

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TABLE NO.5.3

GROSS PROFIT RATIO

YEAR GROSS

PROFIT

SALES RATIO

2007-2008 65088.74 774258.01 8.4

2008-2009 22193.50 598107.37 3.7

2009-2010 54804.63 724471.05 7.5

2010-2011 80179.93 1111770.9

0

7.2

2011-2012 68837.88 1288234.3

5

5.34


INTERPRETATION:

From the above table it is found that the gross profit ratio is 8.4times in the year 2007-2008. It has been found that the gross profit ratio is

3.7 times in the year 2008-2009. The gross profit ratio is 7.5 times in the

year 2009-2010, 7.2 times in the year 2010-2011 and 5.34 times in the year

2011-2012. The gross profit ratio is maximum in the year 2007-2008.

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CHART NO.3

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4. NET PROFIT RATIO

Net profit refers to the profit after taxes which are available

shareholders. The net profit ratio brings out the relationship between the net

profit and sales. That is net profit generated for every hundred rupees of sales

revenue is expressed by the ratio, The ratio is very important in financial

analysis as is clearly puts forth how much of profit is made available to

shareholders for every hundred rupees of sales

Net Profit

NET PROFIT RATIO = -----------------------------------*100

Sales

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TABLE NO.5.4

NET PROFIT RATIO

YEAR NET

PROFIT

SALES NET PROFIT

RATIO

2007-2008 50227.38 774258.01 6.4

2008-2009 48230.19 598107.37 8.0

2009-2010 57744.98 724471.05 7.9

2010-2011 75118.52 1111770.90 6.7

2011-2012 56597.66 1288234.35 4.3


INTERPRETATION:

From the above table it is found that the net profit ratio is 6.4

times in the year 2007-2008. It has been found that the net profit ratio is 8.0

times in the year 2008-2009. The net profit ratio is 7.9 times in the year

2009-2010, 6.7 times in the year 2010-2011 and 4.3 times in the year 2011-2012. The net profit ratio is maximum in the year 2008-2009.

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CHART NO.4

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5. FIXED ASSETS TURNOVER RATIO

This ratio determines efficiency of utilization of fixed assets

and profit ability of a business concern. Higher the ratio more is the efficiency

in utilization of fixed assets. A lower ratio is the indication of under-

utilization of fixed assets turnover ratio shows the sales revenue generated for

every one rupee of investment in fixed assets.

SALES

FIXED ASSETS TURNOVER RATIO = ------------------------

FIXED ASSETS

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TABLE NO.5.5

FIXED ASSETS TURNOVER RATIO

YEAR SALES FIXED

ASSETS

FIXED ASSETS

TURNOVER RATIO

2007-2008 774258.01 294243.80 2.63

2008-2009 598107.37 495327.22 1.20

2009-2010 724471.05 601863.37 1.20

2010-2011 1111770.90 669188.87 1.66

2011-2012 1288234.35 456571.25 2.82


INTERPRETATION:

From the above table it is found that the fixed assets turnover

ratio is 2.63 times in the year 2007-2008. It has been found that the fixed

assets turnover ratio is 1.20 times in the year 2008-2009. The fixed assets

turnover ratio is 1.20 times in the year 2009-2010, 1.66 times in the year

2010-2011 and 2.82 times in the year 2011-2012. The fixed assets turnover

ratio is maximum in the year 2011-2012.

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CHART NO.5

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6. PROPREITARY RATIO

Proprietary ratio is the relationship between the shareholders

fund and tangible assets. Proprietary ratio indicates the proportion of

shareholders funds in the total assets. A high ratio indicates less danger and

risk to creditors in the event of winding up.

Share Holders Funds

PROPREITARY RATIO = --------------------------------------

Total Assets

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TABLE NO.5.6

PROPREITARY RATIO

YEAR SHARE

HOLDERS

FUND

TOTAL

ASSETS

PROPREITARY

RATIO

2007-2008 214898.25 287525.81 0.74

2008-2009 347389.90 316561.57 1.09

2009-2010 366875.81 413968.43 0.88

2010-2011 396296.21 436724.53 0.90

2011-2012 420817.35 761186.08 0.55


INTERPRETATION:

From the above table it is found that the Proprietary ratio 0.74

times in the year 2007-2008. It has been found that the Proprietary ratio is

1.09 times in the year 2008-2009. The Proprietary ratio is 0.88 times in theyear 2009-2010, 0.90 times in the year 2010-2011 and 0.55 times in the year

2011-2012. The Proprietary ratio is maximum in the year 2007-2008.

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CHART NO.6

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7. SOLVENCY RATIO

It is a ratio which relates the total liabilities to outsiders with

the total assets. In this ratio includes both short term and long- term

borrowings. A higher ratio also makes the firm vulnerable to business cycles

and its solvency becomes suspect. Further borrowing becomes difficult for

firms with a high total solvency ratio

Total Liabilities

SOLVENCY RATIO = ----------------------------------

Total Assets

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TABLE NO.5.7

SOLVENCY RATIO

YEAR TOTAL

LIABILTIES

TOTAL

ASSETS

SOLVENCY

RATIO

2007-2008 227193.83 287525.81 0.79

2008-2009 213694.58 316561.57 0.67

2009-2010 296075.72 413968.43 0.71

2010-2011 352827.40 436724.53 0.80

2011-2012 770757.36 761186.08 1.01


INTERPRETATION:

From the above table it is found that the Solvency ratio is 0.79

times in the year 2007-2008. It has been found that the Solvency ratio is 0.67

times in the year 2008-2009. The Solvency ratio is 0.71 times in the year

2009-2010, 0.80 times in the year 2010-2011 and 1.01 times in the year2011-2012. The Solvency ratio is maximum in the year 2011-2012.

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CHART NO.7

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8. INVENTORY TURNOVER RATIO

This ratio is also called velocity ratio. It is calculated to

ascertain the efficiency of inventory management in terms of capital

investment. It shows the relationship between the cost of goods sold and

amount of average inventory. Stock turnover ratio is obtained by dividing

the cost of sales by average stock this ratio is helpful in evaluating and

review of inventory policy.

Cost of Goods Sold

INVENTORY TURNOVER RATIO= ---------------------------------------

Average Inventory

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TABLE NO.5.8

INVENTORY TURNOVER RATIO

YEAR COST OF

GOODS SOLD

AVERAGE

INVENTORY

INVENTORY

TURNOVER RATIO

2007-2008 894714.72 122391.44 7.31

2008-2009 666664.01 133001.44 5.01

2009-2010 787259.74 163824 4.80

2010-2011 1209360.68 220890.34 5.47

2011-2012 1365847.17 223062.52 6.12


INTERPRETATION:

From the above table it is found that the Inventory Turnover ratio is

7.31 times in the year 2007-2008. It has been found that the Inventory Turnover

ratio is 5.01 times in the year 2008-2009. The Inventory Turnover ratio is 4.80

times in the year 2009-2010, 5.47 times in the year 2010-2011 and 6.12 times in

the year 2011-2012. The Inventory Turnover ratio is maximum in the year 2007-

2008.

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CHART NO.8

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9. DEBTORS TURNOVER RATIO

Debtors turnover ratio is also called as receivable turnover

ratio or debtors velocity. A business concern generally adopts different

methods of sales. One of them is selling on credit. Goods are sold on credit

based on credit policy adopted by the firm. The customers who purchase on

credit are called trade debtors or book debt. Debtors and bills receivable

together are called Accounts receivable some of the customers may be

prepared to accept bills for goods purchased on credit. Bills or handiest are

termed as bills receivables.Net Sales

DEBTORS TURNOVER RATIO =----------------------------

Sundry Debtors

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TABLE NO.5.9

DEBTORS TURNOVER RATIO

YEAR NET

SALES

SUNDRY

DEBTORS

DEBTORS TURNOVER

RATIO

2007-2008 774258.01 37583.51 20.6

2008-2009 598107.37 95797.42 6.24

2009-2010 724471.05 102206.15 7.08

2010-2011 1111770.90 118521.33 9.38

2011-2012 1288234.35 123024.79 10.47


INTERPRETATION:

From the above table it is found that the Debtors Turnover ratio

is 20.6 times in the year 2007-2008. It has been found that the Debtors

Turnover ratio is 6.24 times in the year 2008-2009. The Debtors Turnover

ratio is 7.08 times in the year 2009-2010, 9.38 times in the year 2010-2011and 10.47 times in the year 2011-2012. The Debtors Turnover ratio is

maximum in the year 2011-2012.

.

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CHART NO.9

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10. RETURN ON SHARE HOLDERS FUNDS

In this ratio is also called Net worth ratio. And this ratio

determines the profitability from the shareholders point of view. In

indicates the net profit here in net income after payment of interest and tax

and it includes net non-operating income also. The term shareholders funds

include equity share capital preference share capital and all reserves and

profits belonging to shareholders.

Net Profit

RETURN ON SHARE HOLDERS =--------------------------------*100

Share Holders Funds

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TABLE NO.5.10

RETURN ON SHARE HOLDERS FUNDS


INTERPRETATION:

From the above table it is found that the Return on Shareholders

Funds ratio is 0.23 times in the year 2007-2008. It has been found that the Returnon Shareholders Funds ratio is 0.13 times in the year 2008-2009. The Return on

Shareholders Funds ratio is 0.15 times in the year 2009-2010, 0.18 times in the

year 2010-2011 and 0.13 times in the year 2011-2012. The Return on

Shareholders Funds ratio is maximum in the year 2007-2008.

71

YEAR NET

PROFIT

SHARE

HOLDERS

FUNDS

NET WORTH

RATIO

2007-2008 50227.38 214898.25 0.23

2008-2009 48230.19 347389.90 0.13

2009-2010 57744.98 366875.81 0.15

2010-2011 75118.52 396296.21 0.18

2011-2012 56597.66 420817.35 0.13


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CHART NO.10

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11.WORKING CAPITAL TURNOVER RATIO

Working capital ratio measures the effective utilization on working

capital. It also measures the smooth running of business or otherwise. The

ratio establishes relationship between cost of sales and networking capital

Cost of Goods Sold

WORKING CAPITAL TURNOVER RATIO = ----------------------------------

Net Working Capital

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TABLE NO.5.11

WORKING CAPITAL TURNOVER RATIO


INTERPRETATION:

From the above table it is found that the working capital turnover ratiois 4.16 times in the year 2007-2008. It has been found that the working capital

turnover ratio is 1.91 times in the year 2008-2009. The working capital turnover

ratio is 2.14 times in the year 2009-2010, 3.05 times in the year 2010-2011 and

3.24 times in the year 2011-2012. The working capital turnover ratio is maximum

in the year 2007-2008.

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YEAR COST OF GOODS

SOLD

NET

WORKING

CAPITAL

WORKING

CAPITAL

TURNOVER RATIO

2007-2008 894714.72 214898.25 4.16

2008-2009 666664.01 347389.90 1.91

2009-2010 787259.74 366875.81 2.14

2010-2011 1209360.68 396296.21 3.05

2011-2012 1365847.17 420817.35 3.24


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CHART NO.11

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12. CASH SALES TURNOVER RATIO

In this ratio indicates the total cash and the net sales of the

concern. Higher sales of this ratio indicate the credit sales. Low sales in

comparison to this ratio cover the more profits. It is avoid the danger and

risk to creditors.

CASH

CASH SALES TURNOVER RATIO = ------------------------

NET SALES

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TABLE NO.5.12

CASH SALES TURNOVER RATIO

YEAR CASH NET SALES CASH SALES

TURNOVER RATIO

2007-

2008

45137.0

1

774258.01 0.05

2008-

2009

8808.36 598107.37 0.01

2009-

2010

51892.0

5

724471.05 0.07

2010-

2011

17952.7

2

1111770.90 0.01

2011-

2012

3255.58 1288234.35 0.002


INTERPRETATION:

From the above table it is found that the cash sales turnover ratio 0.05

times in the year 2007-2008. It has been found that the cash sales turnover

ratio is 0.01 times in the year 2008-2009. The cash sales turnover ratio is

0.07 times in the year 2009-2010, 0.01 times in the year 2010-2011 and

0.002 times in the year 2011-2012. The cash sales turnover ratio is

maximum in the year 2009-2010.

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CHART NO.12

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13. CAPITAL TURNOVER RATIO

Managerial efficiency is establishing the relationship between

cost of sales with the amount of capital invested in the business.

Cost of Goods Sold

CAPITAL TURNOVER RATIO =-----------------------------------

Capital Employed

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TABLE NO.5.13

CAPITAL TURNOVER RATIO

YEAR COST OF

GOODS SOLD

CAPITAL

EMPLOYED

CAPITAL

TURNOVER RATIO

2007-2008 894714.72 166862.05 5.36

2008-2009 666664.01 213694.58 3.11

2009-2010 787259.74 296075.72 0.26

2010-2011 1209360.68 352827.4 3.42

2011-2012 1365847.17 330797.45 4.12


INTERPRETATION:

From the above table it is found that the capital turnover ratio 5.36

times in the year 2007-2008. It has been found that the capital turnover ratio is 3.11

times in the year 2008-2009. The capital turnover ratio is 0.26 times in the year

2009-2010, 3.42 times in the year 2010-2011 and 4.12 times in the year 2011-2012. The capital turnover ratio is maximum in the year 2007-2008.

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CHART NO.13

COMPARATIVE INCOME STATEMENTS

An income statement shows the operating results (net profit or

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loss) of a business for a designated period of time. A comparative

income statement shows the operating results for a number of

accounting periods so as to facilitate comparison. It gives an idea of the

progress of a business over a period of time. It gives an idea about the

improvement (or otherwise) in sales, profits and other expenses over

the previous year(s).

A comparative income statement has two columns for the figures

of the current year and the previous year. A third column is used to

show the increase or decrease in figures. A fourth column may be

added for giving percentage of increase or decrease.

COMPARARTIVE INCOME STATEMENT(20112012)

(Rs.in.lakhs)

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INTREPRETATION:

The Net Sales has been increased by 16.67%, Cost of Goods Sold has been

increased by 18.447%, Gross Profit has been increased by 9.103%, Manufacturing

Expenses has been increased by 15.841%, Selling and Administration Expenses

has been increased by 16.834%, Operating Expenses has been increased by

16.74%, and Operating Profit has been increased by 3.18%.

COMPARATIVE BALANCE SHEET

The Single balance sheet shows assets and liabilities as on a

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PARTICULARS 2010-2011 2011-2012 INCREASE /

DECREASE

INCREASE /

DECREASE (%)

Net sales 11407.45 13309.59 +1902.44 16.678

Less : Cost ofGoods Sold

9246.55 10952.30 +1705.75 18.447

Gross Profit 2160.60 2357.29 +196.69 9.103Operating

Expenses

ManufacturingExpenses

86.04 99.67 +13.63 15.841

Selling andAdministration

Expenses

857.00 1001.27 +144.27 16.834

Total Operating

Expenses

943.04 1100.94 +157.90 16.74

Operating Profit 1217.56 1256.35 +38.79 3.186


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particular date. The comparative balance sheet shows the value of assets and

liabilities on two different dates. It helps in comparison. A comparative balance

sheet has two columns to record the figures of the current year, and the previous

year. A third column is used to show the increase or decrease in figures. A fourth

column may be added for giving percentage of increase or decrease. Thus while

in the balance sheet the emphases is on status in the comparative balance sheet it

is on change. Comparative balance sheet indicates whether the business is moving

the favorable direction. It is very useful for studying the trend in an enterprise.

COMPARATIVE BALANCE SHEET(2011-2012)(Rs.in.lakhs)

PARTICULARS 2010-2011 2011-

2012

INCREASE /

DECREASE

INCREASE/

DECREASE %

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Assets:

Current Assets:

Inventories 220890.34 223062.52 +2172.18 0.983

Trade Receivables 116449.82 123024.79 +6574.97 5.646

Cash and Cash

Equivalents

17952.72 3255.58 -14697.14 81.866

Short-term Loans andAdvances

33439.42 72709.06 +39269.64 117.435

Other Current Assets 9644.87 8336.68 -1308.19 13.564

Fixed Assets 499175.78 546171.50 +46995.72 9.415

Investments 122999.68 153447.89 +30448.21 24.755

Loans and Advances 38463.03 60828.95 +22360.92 58.136

Other non-current Assets 315.79 742.74 +426.95 135.201

Liabilities:

Share Capital 13308.42 26606.80 +13303.38 99.100

Reserves and Surplus 382992.79 394210.55 +11217.76 2.929

Non-current Liabilities 375987.37 484370.23 +108382.86 28.826Current Liabilities:

Short-term Borrowings - 10175.00 - -

Trade Payables 230850.67 277246.10 46395.43 20.098

Other Current Liabilities 103442.24 154911.69 +51469.45 49.757

Short-term Provisions 41694.46 42037.44 +342.98 0.823

375987.37 484370.23 +342.98 28.826

INTERPRETATION:

The Inventories has been increased by 0.98%, Trade

Receivables has been increased by 5.64%, Cash and Cash Equivalents has been

increased by 81.86%, Short-term Loans and Advances has been increased by

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117.43%, Other Current Assets has been increased by 13.56%, Fixed Assets has

been increased by 9.41%, Investments has been increased by 24.75%, Loans and

Advances has been increased by 58.13%, Other Non-current Assets has been

increased by 135.20%, Share Capita has been increased by 99.10%, Reserves and

Surplus has been increased by 2.92%, Non-current Liabilities has been increased

by 28.82%, Short-term Borrowings has been increased by 0%, Trade Payables has

been increased by 20.0%, Other Current Liabilities has been increased by 49.75%,

Short-term Provisions has been increased by 0.82%.

THE COMMON SIZE INCOME STATEMENT

The goal of the income statement is to determine revenue for the

period that

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It covers and then matches the corresponding expenses to the revenue. The

Income statement, sometimes referred to as the statement of earnings or

Statement of operations, presents a picture of a companys profitability over

the entire period of time covered. This is in contrast to the balance sheet,

which presents a snapshot of a companys financial condition at a specific

point in time.

The income statement cumulates revenues and expenses and presents the

results in a statement that is designed to be read from top to bottom. Like the

balance sheet, the income statement reflects managements decisions, estimates,

and accounting choices. Just looking at the bottom-line profits may

mislead investors. A careful, step-by-step review of the income statement is

useful in order to judge the quality and content of the bottom-line earnings

figure.

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Common Size Income Statement (2011-2012)

(Rs.in.lakhs)

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Particulars 2010-2011 2010-2011 % 2011-2012 2011-2012 %

Net Sales 11407.15 100 13309.59 100

Less : Cost ofGoods Sold

9246.55 81.06 10952.30 82.29

Gross Profit 2160.60 18.94 2357.29 17.71Operating

Expenses

ManufacturingExpenses

86.04 0.75 99.67 0.75

Selling andAdministration

Expenses

857.00 7.51 1001.27 7.52

Total OperatingExpenses

943.04 8.27 1100.94 8.27

Operating Profit 1217.56 10.67 1256.35 9.44


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INTREPRETATION:

The above table shows that the Net Sales was 100% for both the year 2010-

2011 and 2011-2012. The Cost of Goods Sold was 81.06% in the year of 2010-

2011 and it was 82.29% in the year 2011-2012. The Gross Profit was 18.94% in

the year of 2010-2011 and it was 17.71% in the year of 2011-2012. The

Manufacturing Expenses was 0.75% in the year 2010-2011 and it was 0.75% in

the year of 2011-2012. The Selling and Administration Expenses was 7.51% in

the year 2010-2011 and it was 7.52% in the year 2011-2012. The Operating

Expenses was 8.27% for the year 2010-2011 and it was 8.27% in the year 2011-

2012. The Operating Profit was 10.67% for the year 2010-2011 and it was 9.44%for the year of 2011-2012.

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TREND PERCENTAGE ANALYSIS

The next important tools of analysis are trend percentage which plays

significant role in analyzing the financial stature of the enterprise through base

years performance ratio computation. This not only reveals the trend movement

of the financial performance of the enterprise but also highlights the strengths and

weaknesses of the enterprise

The following ratio is being used to compute the trend percentage.

Current year= ------------------- X 100

Base year

This trend ratio is being computed for every component for many numbers of years

which not only facilitates comparison but also guides the firm to understand the

trend path of the firm.

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TABLE NO.5.17

Trend Percentage of Net Sales

YEAR NET SALES TREND %2007-2008 7972.52 100.0

2008-2009 6168.99 77.37

2009-2010 7436.18 93.26

2010-2011 11407.15 143.06

2011-2012 13309.59 166.91


INTERPRETATION:

The above table shows the trend percentage for Net Sales. It has

been 100% for the year 2007-2008, 77.37% for the year 2008-2009, it was

93.26% for the year 2009-2010, 143.06% for the year 2010-2011 and it

was 166.91% for the year 2011-2012.

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CHART NO.17

TABLE NO.5.18

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Trend Percentage of Operating Profit

YEAR OPERATING

PROFIT

TREND %

2007-2008 804.49 100.0

2008-2009 473.09 58.80

2009-2010 761.40 94.63

2010-2011 1217.56 151.32

2011-2012 1256.35 156.14


INTERPRETATION:

The above table shows the trend percentage for

Operating Profit. It has been 100% for the year 2007-2008, 58.80%

for the year of 2008-2009, it was 94.63% for the year 2009-2010,

151.32% for the year 2010-2011 and it was 156.14% for the year

2011-2012.

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CHART NO.18

TABLE NO.5.19

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Trend Percentage of Current Assets

YEAR CURRENT

ASSETS

TREND %

2007-2008 538.31 100.0

2008-2009 365.22 67.84

2009-2010 736.17 136.74

2010-2011 720.32 133.79

2011-2012 217.66 40.42


INTERPRETATION:

The above table shows the trend percentage for Current

Assets. It has been 100% for the year 2007-2008, 67.84% for the year

2008-2009, it was 136.74 for the year 2009-2010, 133.79 for the year

of 2010-2011 and it was 40.42 for the year of 2011-2012.

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CHART NO.19

TABLE NO.5.20

Trend Percentage of Current Liabilities

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YEAR CURRENT

LIABILITIES

TREND %

2007-2008 2196.49 100.00

2008-2009 2207.29 100.49

2009-2010 3002.68 136.702010-2011 3505.26 159.58

2011-2012 4837.41 220.22


INTERPRETATION:

The above table shows the trend percentage of Current

Liabilities. It was 100% for the year 2007-2008, 100.49 for the year of


2010-2011 and it was 220.22 for the year 2011-2012.

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CHART NO.20

TABLE NO.5.21

Trend Percentage of Inventories

YEAR INVENTORIES TREND %

2007-2008 1223.91 100.00

2008-2009 1330.01 108.66

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2009-2010 1638.24 133.84

2010-2011 2208.90 180.46

2011-2012 2230.63 182.23


INTREPRETATION:

The above table shows the trend percentage of

Inventories. It was 100% for the year 2007-2008, 108.66 for the year


2010-2011 and it was 182.23 for the 2011-2012.

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CHART NO.21

TABLE NO.5.22

Trend Percentage of Sundry Debtors

YEAR SUNDRY

DEBTORS

TREND %

2007-2008 375.84 100.00

2008-2009 957.97 254.88

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2009-2010 1022.06 271.93

2010-2011 1185.21 315.33

2011-2012 1230.37 327.34


INTERPRETATION:

The above table shows the trend percentage for Sundry

Debtors. It has 100% for the year 2007-2008, 254.88 for the year


2010-2011 and it was 327.34 for the year 2011-2012.

CHART NO.22

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CHAPTER-VI

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FINDINGS, SUGGESTIONS

AND CONCLUSIONS

FINDINGS:

The current ratio of the Ashok Leyland has reached the maximum of 1.48

times in the year 2008-2009.

The liquid ratio of the Ashok Leyland has reached the maximum of 0.85

times in the year 2008-2009.

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The Gross profit ratio is higher that is 8.4 percentage for the year 2007-2008

The Net profit ratio is maximum that is 8.0 percentage in the year 2008-2009.

The Fixed asset turnover ratio is maximum that is 2.82 percentage in the year

2011-2012.

The Proprietary ratio is higher that is 1.09 percentage in the year 2008-2009.

The Solvency ratio is maximum that is 1.01 times in the year 2011-2012.

The Inventory turnover ratio is higher that is 7.31days in the year 2007-2008.

The Debtors turnover ratio is higher that is 20.6 days in the year 2007-2008.

The Return on shareholder fund is maximum that is 0.23percentage in the

year 2007-2008.

The Working capital turnover ratio is maximum that is 4.16 percentage in the

year 2007-2008.

The Cash sales turnover ratio is maximum that is 0.07 percentage in the year

2009-2010.

The Capital turnover ratio is maximum that is 5.36 percentage in the year

2007-2008.

SUGGESTIONS:

Based on the inference made out of the analysis of the

secondary data, the suggestions are made:

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Despite many financial control measures being adopted in the

company, it becomes necessary to devise innovative many for

increasing the performance of the current assets empirically the

inventories.

The company shall take necessary measures to bring the expenditure

under control.

Complete monitoring over credit sales and fast recovery of credits is

very much required.

Cost control shall be seriously reviewed and stringent measures shall

be taken for cost control.

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CONCLUSION:

Finance is the life blood of every business. Without effective financial

management a company cannot survive in this competitive world. A sound

financial management should be able to monitor and manage the financial position

of the company. After an in depth analysis of financial performance of Ashok

Leyland Ltd., Chennai is found that the ratios are at satisfactory level. The gross

profit margin is also increasing, thus it can be concluded that the financial

Management in the company is efficient.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

1. M.Y.Khan P. K. Jain, financial management, third edition, Tata

McGraw- Hill Publishing Company Limited, New Delhi, 2001.

2. P.V.Kuldarni, and B.G.Sathyaprasad, Financial management Ninth edition,

Himalaya

deepu full proj. (1)hi

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