SUMMER TRAINING REPORT

“A STUDY OF FINANCIAL PERFORMANCE

ANALYSIS”
AT
VAKSONS AUTOMOBILES PVT. LTD .
Submitted in partial fulfillment of the requirement for the award of degree of
Bachelor of Business Administration

BBA 5th SEMESTER

SESSION 2018-19

UNDER THE GUIDANCE:- SUBMITTED BY:-

MR. ATUL KUMAR JAIN MOHIT
REG. NO.:-1617460032
Roll No.:-

SUBMITTED TO:
 CONTENTS OF TABLE

Sr. Particulars Page no.

No.
1. Declaration i
2. Acknowledgement ii
3. Preface iii
4. Company Profile 1-11
5. Introduction 12-19
6. Research Methodology 20-22
7. Review of Literature 23-27
8. Financial Performance 28-53
9. Limitations 54-55
10. Suggestions & Recommendation 56-58
11. Conclusion 59-60
12. Annexure 61-63
13. Bibliography 64
 DECLARATION

I MOHIT BBA 3rd YEAR ( 5th SEMESTER ) of HINDU COLLEGE , SONEPAT hereby
declare that the project report entitled „A STUDY OF FINANCIAL PERFORMANCE
ANALYSIS‟ is an original work and the same has not been submitted to any other
institute for the award of any degree/diploma.

MOHIT
BBA 3rd YEAR

REG. NO.:- 1617460032

 ACKNOWLEDGEMENTS

First of all, I would like to thank the almighty for having given me the opportunity to work under
the table supervision and constructive guidance of my mentor and guide Mr. Atul Kumar Jain.
His encouragement, inspiration and expert and valuable advice instilled in me the faith and
confidence to achieve the end result which is presented herewith.

Finally, I would like to thank the officials of the Vaksons Automobiles Pvt. Ltd. for providing
me with all the information for completing the submitted venture.

MOHIT
BBA 3rd YEAR

REG. NO.:- 1617460032

 PREFACE

The successful completion of the project was a unique experience for us because by
visiting many place and interacting various persons. I achieved a better knowledge
about this project. The experience which i gained by doing this project was essential at
this turning point of my carrier this project is being submitted which content detailed
analysis of the research under taken by me.

The research provides an opportunity to the student to devote her skills knowledge and
competencies required during the technical session.

The research is on the topic “A STUDY OF FINANCIAL PERFORMANCE ANALYSIS”.

 Research
Methodology
 RESEARCH METHODOLOGY
Research Design:
Analytical research design is chosen for the study. This research is conducted to find out facts
about a given topic and from the answer obtained develop new and useful ways of doing things.
The analytical research concerns itself with cause-effect relationship.

Data Sources:
Research is totally based on secondary data. Secondary data can be used for the reference.
Research has been done by secondary data collections. The secondary data has been collected
through various journals and websites.

Duration of study:
The study was carried out for a period of 45 days, from 22th May to 8th July 2018.

TYPE OF RESEARCH

ANALYTICAL RESEARCH

In this type of research to use facts or information already available, and analyze these to make a
critical evaluation of the material. The researcher depends on existing datafor his research work.
The analysis revolvesround the material collected or available.

Sources of Data
Secondary Data

Secondary data refers to the information or facts already collected such data are collected with
the objectives of understanding the past status of any variable or the data collected and reported
by some source is accessed and used for the objectives of the study. Normally in research, the
scholars collectedpublished data, journals, annual reports and websites.

Sampling Procedure
The sample is selected of them who are the customers/visitors of Vaksons Force, irrespective of
them being investors or not or availing the services or not. It was also collected through personal
visits to persons, by formal and informal talks and through filling up the questionnaire prepared.
The data has been analyzed by using mathematical/statistical tool.
 Tools used for analysis:
1.Ratio analysis

2.Comparative Statement Analysis

3.Common-Size Statement Analysis

4.Cash Flow Statement Analysis

5.Trend Analysis
Company
Profile
 COMPANY PROFILE

About Vaksons Force

Vaksons Automobiles Limited was incorporated in Delhi as Vaksons Automobiles Private
Limited on February 20 2003 under the companies Act 1956 with the Registrar of companies.
The status of the company was changed to a Public Limited company and the name of the
company was changed to Vaksons Automobiles Limited by a special resolution passed on
September 30 2014 and a fresh certificate of incorporation subsequent to the change of name was
granted to the company on December 24 2014 issued by registrar of companies. The company is
an authorized dealer of Light Commercial vehicles (LCV) Multi Utility Vehicles (MUV) Small
Commercial Vehicles (SCV) and spare parts for Force Motors Ltd.

Today the company operates three different showrooms of Force Motors Ltd. namely at Sonepat,

Panipat and Gohana within the state of Haryana. The company also operates an in house service
center/workshop at Sonepat for the servicing and other after sales needs of the customers. The
company has over a decade of experience in distributing all types of vehicles on behalf of Force
Motors Ltd. including but not limited to commercial transports (Traveller) MUV Vehicles (Trax
Crusier Trax School Van Trax Kargo King) small commercial Vehicles (Trump-40 and Trump-
15).

Apart from the vehicle dealership business the company has been involved in trading of vehicle
spare parts and utilities of branded as well as generic products forming part of the auto value
chain. The company has recently incorporated a subsidiary company in the name and style of
Vaksons Metaplast Private Limited in order to undertake trading in auto parts HDPE and LDPE
Polymer aluminium scrap and other metal and plastic items on a larger scale with good trading
margins. Over the years the company has developed a philosophy for quality and has also
obtained an ISO (9001:2008) certification for the quality management system. The company has
also been awarded a Certification of Appreciation in February 2015 by Force Motors Ltd. for
best dominance in the MUV market category.
 MANAGEMENT TEAM
Atul Jain

Executive Chairman of the board, Managing Director

Mahak Bajaj

Compliance Officer, Company Secretary

Satinder Jain

Whole Time Director

Vijender Singh

Head-Sales

Monika Kant

Head of Human Resources

Christopher

Sales Manager

Manoj Kumar

Supervisor

Ravi Kumar

Manager – Service
Sumeet Alakh

Non-Executive Independent Director

Pankaj Bhai

Non-Executive Independent Director

Mahesh Pandey

Non-Executive Independent Director

 Upcoming Models

Trax Cruiser

Salient Features
 Available in dual tone metallic colours with stylish front fascia and attractive decals.
 Four piston front disc brakes for improved safety.
 Most spacious vehicle in its class offering ample head room, shoulder-room and legroom.
 NVH re-engineered to deliver significant reduction of noise, vibration and harshness in
passenger area.
 4WD with 10+D seating.

 Available in 9+D, 12+D & 13+D with AC & PS ( Optional)

Traveller School Bus

Salient Features
 Monocoque body structure provides total safety.
 Low floor height for easy entry and exit.
 Provided with chin guard, grab handle.
 Also racks for school bags.

 Available in ( 13+D 3350 WB ), 17+D( 3700 WB) & 20+D( 4020WB),26+D (4020WB) with
AC & PS & ABS ( Optional)

Traveller 3700WB

Salient Features
 Powered by the robust and fuel efficient 3 cylinder TD 2000 F DI diesel engine, derived from the
renowned Mercedes Licensed OM-616 Engine.
 4 speed synchromesh gearbox derived from Mercedes Licensed G-17 gearbox for smooth and
silent transmission of power with minimal losses.
 Durable pressed sheet metal ladder type chassis, rugged construction for all roads.
 2.67m (8.75 ft) long cargo body, and high ground clearance with 14 inch wheels.

 BSIV compliant CNG version available.

Traveller Ambulance
 Salient Features
 Monocoque body structure provides total safety.
 Cathodic electrodeposition (CED) of primer coat ensures superior corrosion protection and
enhances paint gloss retention.
 High roof offers clear standing height of 6 feet.
 Low floor height for easy entry and exit.
 Fitted with fans, hooks for IV bottles and brackets for oxygen cylinder with adjustable straps.
 Provided with factory made stretcher, medicine cabinet, wailing horn and signaling equipment.

 Available in 7+D+patient and 8+D+patient seating.

Trax Kargo King

Salient Features
 Rugged, reliable and most economical multi-utility vehicle.
 3 side opening fully flat cargo hold for more load area.
 Spacious, attractive and well furnished driver cabin.
 Air conditioning
 Power steering
 4 wheel drive

 D + 1 seating configuration
 Trax Ambulance

Salient Features
 Ready to use Factory made Trax Ambulance
 Radial tyres for firm road grip
 Front disc brakes for split second emergency safe braking
 Front independent suspension with antiroll bar and solid torsion bar for excellent riding comfort
 Full synchromesh gear box for smooth and fast gear shifting
 Foldable attendant seat for convenient movement
 Wailing horn and signaling equipment
 Hooks for intra-venous bottles and brackets for oxygen cylinder with adjustable straps

 Provided with factory made stretcher and medicine cabinet

Traveller Delivery Van

Salient Features
 Monocoque body structure provides total safety.
 Low floor height for easy loading and unloading.
 Large branding area available on the body.
 Suitable for cargo and logistics, FMCG, Mobile service van, cash van, white goods etc.
 Air conditioning

 sliding door for kerb side delivery

Open hours

 Monday 9:00 am - 5:30 pm

 Tuesday 9:00 am - 5:30
 Wednesday 9:00 am - 5:30
 Thursday 9:00 am - 5:30
 Friday 9:00 am - 5:30
 Saturday 9:00 am - 5:30
 Sunday Closed

Our contacts
H.O.:
A Block, Shubham Garden Complex Murthal Road, Sonipat 131001 (INDIA)

Regd Off:
105, Barodia Tower, DDA Complex
Prashant Vihar, New Delhi 110085 ( INDIA)

Phone: +91 130 2234047/2218572

Mob: +91-9315033555

Email:info@vaksonsautomobiles.in
Vaksons Automobiles limited announces unaudited standalone financial results for the half
year ended September 30, 2017

Vaksons Automobiles limited announces unaudited standalone financial results for the half year
ended September 30, 2017. For the half year, the company‟s total income was INR 63.37 million
against INR 71.18 million for the same period last year. Profit before exceptional items and tax
was INR 0.12 million against INR 0.49 million for the same period last year. Profit from
ordinary activities before tax was INR 0.12 million against INR 0.49 million for the same period
last year. Net profit for the last year INR 0.08 million against INR 0.34 million for the same
period last year. Earnings per share, basic and diluted, were INR 0.01 against INR 0.05 for the
same period last year.

Vaksons Automobiles limited, Board meeting, May 30, 2018

Vaksons automobiles limited, Board meeting, May 30, 2018, at 16:00 Indian standard time.
Agenda: TO consider the audited standalone and consolidated financial results of the company
for the year ended March 31, 2018 and report of auditor on the same; and to consider any other
business with the permission of Chair.

Vaosons Automobiles limited to Report Fiscal year 2018 results on May 30, 2018

Vaksons Automobiles limited announced that they will report fiscal year 2018 results on May
30, 2018.
Major events in the History of the Company

2003

-Incorporation of the company as Vaksons Automobiles Private Limited.

-A dealership of M/s Bajaj Tempo, a commercial vehicle manufacturer, was started.

2006

-New dealership with Force Motors Ltd. (formed out of Bajaj Tempo), a commercial vehicle
manufacturer, was started.

2011

-A new showroom was started in 2011 at Gohana, in Sonepat District.

2012

-One more showroom ay Panipat was added in 2012.

2014

-With intent of diversification, the company started the business of trading of spare parts in 2014.

-The company was awarded the status of “No. 1 dealer” in Haryana state during 2010-2013 by
Force Motors.

-Obtained ISO 9001:2008 Certification for Sales, Services & Spare parts of vehicles.

-Conversion of the company into a Public limited company and change of name from Vaksons
Automobiles Pvt. Ltd. to Vaksons Automobiles Ltd.

2015

-Our company received “Certification of Appreciation” from Force Motors Limited for best
dominance MUV market category.
Introduction
 Introduction
The term financial performance analysis means “manage” funds very well i.e. breaking down a
complex set of facts contained financial position in to simple elements, in such a way that proper
evaluation about the past and present financial position and liquidity position can be done and
forecast about future position can be made. With liberalization and globalization in the world
today, financial management is most important matter for the every one because of its used by
various classes of people who are directly or indirectly related and interested in the concern in
order to know short-term liquidity, long-term liquidity, profitability, solvency, operational
efficiency and growth potential of activity. Such analysis is done by using different tools and
techniques of financial management such as ratio analysis like financial leverage analysis,
profitability analysis, liquidity analysis as well as activity analysis. Thus, financial management
in the automobile industry is important not only for managerial personnel but also for creditors,
investors, government, employees and researcher as well as for all those who have interest
regarding financial and liquidity in the automobile industry.

FORCE MOTORS
Late Shri N.K.Firodia, a dedicated Gandhian and Visionary Industrialist, was the Founder-
Managing Director of Force Motors. Having participated in the freedom struggle for India in
1932 and 1942 he was determined to achieve Industrial modernization for India. He established,
starting in 1950, in Collaboration with Vidal & Sohn, Hamburg, Germany the import and later
progressive manufacture in India of the Tempo 3-Wheeler.
On 15th August 1957, the 10th anniversary of Indian independence, Mr. N.K. Firodia signed a
collaboration with Vidal & Sohn Tempo Werke GmbH for phased manufacturing of TEMPO 3-
WHEELER & manufacturing was started in a small plant at Goregaon, Bombay. The initial
licensed capacity granted by the government was 1000 vehicles per year and 80 vehicles per
month.
Expanding the business in 1961, the Company acquired about 150 acres of land in Akurdi near
Pune. The production was transferred to Pune by the end of 1964. Ambitious plans for producing
Light Commercial Vehicles for the growing industrial economy of India were drawn up. The
manufacture of TEMPO VIKING 4-Wheeled Trucks & Vans commenced in November 1964.
The licensed capacity was increased to 6000 vehicles per year.
The VIKING vehicle subsequently was upgraded with a diesel engine and the MATADOR was
born. The production of Matador commenced in 1969. In 1975, the manufacturing capacity of
the company was increased to 12,000 vehicles per year, in addition to 6,000 diesel engines for
other purposes. The collaborator company in Germany, in the wave of mergers during the 70s
merged eventually with Daimler-Benz. In July 1982, the company in a new collaboration - with
the then Daimler Benz - produced the Mercedes Benz OM 616 engine under license for fitting on
its line of vehicles.
The TRAX Vehicle, specifically designed for the rough roads of rural India was developed by
the Company's Research & Development department, to cater to the growing mechanisation of
passenger transport in rural India.
To further modernise its LCV product range, the Company took up the production of the
TRAVELLER, under license from Daimler-Benz. A new Plant was set up in 1987, on a
greenfield site in Central India at Pithampur in Madhya Pradesh. This modern facility was
developed in close co-operation with Daimler-Benz. The plant is equipped with a modern
conveyorised body welding and Electrophoretic dip painting shop. The Plant has been expanded
to house a new Press Shop in 1997.
Today, Force Motors makes a full family of vehicles - the New Trump, Traveller Shaktiman,
Trax and Citiline range of Buses & the Balwan and Orchard range of Tractors. These are
products born out of Force Motor's own Research & Development activity. The Product designs
for these ranges of most modern vehicles were created in our most capable Computer
Engineering Environment.
The Force Motor's R & D centre is among the most advanced in the country with a 150 terminal
(CAD) Computer Aided Design network. Over 90% of the vehicles currently manufactured and
sold by Force Motors are the latest designs, where, introduction is less than 5 years old. Further
these are the products of most modern Computer Aided Design efforts. The company spends
over 5% of its annual turnover on new Product Development. It employs 850 people for its R &
D, tooling & project activity - 450 of which are Engineers. Latest software such as IDEAS,
CATIA, and ADAMS are used for design & validation. The engines designed by Force Motors
are fully proven for emission and for fuel efficiency. The vehicles offer Green engines meeting
BS III norms.
Force Motors Ltd., is a Company that has reinvented itself. Four decades ago, Force Motors
started production of the HANSEAT 3- Wheelers. Today, Force Motors stands on the threshold
of a new era in the automobile industry in India, with a stake in Five Product segments:
TRACTORS- OX and Balwan- Modern Tractors, sporting synchromesh transmission, Bosch
hydraulics, excellent ergobomics and fuel efficient engines. Designed for demanding farmers of
developing countries.
THREE WHEELERS- Minidor. A family of new engineered three- wheelersEconomical, rugged
and environment friendly- very efficient transport for people and goods.
LIGHT COMMERCIAL VEHICLES- Traveller and Excel range of passenger and goods
carriers. Powered by a family of DI and IDI engines including the legendary Mercedes derived
OM 616 engines. A range of high reliability axles and transmissions add value.
MULTI UTILITY VEHICLES- Complete range of multi- utility vehicles including the Trax
Judo, Trax GAMA, Trax Cruiser, Trax Kargo King, range of single cabin and double cabin
pickups; and the 4 X 4 cross country vehicle- Trax Gurkha.
HEAVY COMMERCIAL VEHICLES- In technical collaboration with MAN AG, Germany,
Force Motors will be introducing shortly, a range of heavy commercial vehicles with a payload
capacity ranging from 16 to 50 tonnes. Five areas of excellence support the five market
segments: Research and Develepment- Using a 150 terminal CAD installation and modern
testing facilities, staffed by 400 young engineers and technicians.
Power Pack Manufactuting- State of art facilities, for in house manufacturing of engines and
transmission components.
Vehicle Manufacturing - Complete, with in-house foundry, press shops, robotized body welding,
electrophoretic dip painting and high quality assembly facilities.
SPORTS UTILITY VEHICLES- Force Motors wants to make a giant leap into the passenger
vehicle segment. And for beginners, Force Motors want to manufacture sports utility vehicles.
Force Motors, which will mark its entry into the passenger vehicle segment with its sports utility
vehicle (SUV). In line with its passenger vehicle plans, the company is setting up a separate
division called personalised vehicle division to cater to its plans in the segment. It has roped in
people from various other automakers to steer the new division. "We have a new vertical formed
called the personalised vehicle division, which, on the front end, is being headed by Sanjeev
Garg, as president (SUV sales, service and marketing) of the company. He comes from General
Motors,‖ Prasan Firodia, managing director of the company told Financial Express.
Company chairman, AN Firodia, has quoted in a leading newspaper, ―We will launch a sports
utility vehicle (SUV) sometime this year. We do not have a product in this segment, but we have
developed a new platform which will allow us to launch a stylish new vehicle in a segment
which is very popular. We are in the rural market with the Trax , which is rural multi-utility
vehicle used as a rural taxi in those states that allow it. The SUV is a completely different
segment from the Trax, though‖.
So far, Force Motors has had three platforms, Trump, a small commercial vehicle, the Trax a
multi-utility vehicle for rural markets and the Traveller, a city coach, which is mainly targeted at
the rural, multi-utility or mass transport markets. Force Motors has its manufacturing plant in
Akurdi near Pune and Pithampur, Madhya Pradesh.
The company is a low profile, commercial vehicle maker, but has the capacity to make its own
engines, chassis, gear boxes, axles, etc for its entire product range. You would find it interesting
to note that Force Motors is the sole supplier of engines to Mercedes Benz India for its passenger
cars, and makes the cab and nine-speed gear boxes for its joint venture, MAN Force Trucks.
TRAINING & DEVELOPMENT POLICIES OF FORCE MOTORS LTD.
MANAGEMENT PHILOSOPHY IN TRAINING & DEVELOPMENT OF HUMAN
ASSETS
1) Management firmly believes that human assets unlike other asset cannot be depreciated and
must necessarily be appreciated over entire tenure.
2) Training is regarded as investment and not a cost. Even long-term intangible gains such as
attitude change, are to be considered as valuable returns.
3) Training is considered as vehicle for effective communication and coordination.
4) Training is catalytic in any man management matrix for cohesiveness, compatibility and
cooperation in every organizational endeavor.
5) Management proclaims training and development direction as permanent part and parcel of
operational process and not some experiment in isolation.
6) Management is fully committed to lend its total support to training tasks and is dedicated
through intense involvement in every phase of this activity.

OBJECTIVES OF THE TRAINING FUNCTIONS

1) To enhance efficiency and effectiveness of individual in their professional fields and improve
their productivity and performance in general through right and appropriate training inputs in the
areas perceived.
2) To improve interrelations and interpersonal influences in intrapersonal relations by imbibing
the due importance of team spirit; and situational leadership concepts.
3) To bridge the gap between the present level of competence, and immediate or future level of
capability requirements through, Force Motors„ systematic and structured reinforcements and
relevant updating.
4) To increase awareness and appreciation of roles responsibilities and key result requirements of
the contenders in the organizational array by broadening their overall business perspective.
5) To boost morale through provisions of deliberate yet informal forms such as seminars where
by more free and frank, exchange of ideas and experience is made feasible and mutual
understanding is enriched.
6) To provide means of motivation by opening avenues for self development and creative
expression through guidance in analytical approach; and conceptual skill.
7) To link up training endeavor to personnel inventory and career planning, making career
planning more significant.
8) Awareness and understanding of fuller potentials of personnel, at all levels.
9) To increase the organizational stability; and flexibility by creating versatility and mobility
through the knowledge and skill enhancement training.
10) To emphasize the role of training as a change agent in reorganization and restructuring.

TRAINING POLICY TO MEET THE ABOVE OBJECTIVES

1) To identify the specific training requirements in need areas revealed by short comings in role
performance vis-à-vis the expectations.
2) To reinforce in respect of acquisition of technical and operative knowledge development of
specific skills towards efficiency improvement in performance modification of attitudes towards
interpersonal effectiveness.
3) To evolved overall training and development strategy based on performance appraisal, proof
of the needs and other integral inputs received from other units and establishments as well.
4) To involve administrative and functional authorities in initiating, improving and finalizing the
modalities to include appropriate topics, techniques, teaching faculty in designing the course
contents and programme schedules.
5) To draw support and active involvement of line supervisors in the assessment of training
needs of their subordinates and also encourage active participation in programme evaluation and
progress review of the projects.
6) To cover most of the practical aspects of training through extensive training workshops with
intensive quantity of informative inputs apt in their applicability and adaptability to the actual
work situations.
7) To closely link training tasks to career plans and placements policies, so as to make the
training policies more meaningful in themselves so that such sessions are not regarded as fanciful
farce but careful consideration for all the concerned.
8) To elevate the position of the training set up in the organizational hierarchy by its own merit
and demonstrable utility.
9) To strive to excel in this specialized service so that training will be no more regarded as
necessary evil but necessarily the will of the superiors, sincerely concerned with improving the
status and professional standing of their subordinates subject to such programme.
10) To create congenial conditions whereby training specialists will be entrusted with substantial
say in HRD.

MODES & METHODOLOGIES OF IMPARTING TRAINING INPUTS

1) Operative personnel training-Intensive information on functional knowledge and skill to help
accelerate learning without undue expenditure of time and money and efforts.
2) Induction Training – To form a lasting cementing bond between the incumbent and the
organizational culture as a composite entity and not merely to the work or workplace where he is
required to perform.
3) Orientation training – tactfully administered inputs to create total awareness about the
organizational expectations, performance standards, channel of command and communications.
4) Perspective Training- Mainly for the deliberate development of management and supervisory
staff. Crystallized knowledge and comprehensive from experts can best be exchanged through
meaningful participation in development seminars, workshops and syndicate studies.
5) On the job training- guided opportunity to learn the ropes, tricks of the trade feel the pulse of
the people and appreciate the network interlinks and intricacies of the job.
6) Technology update training-In fast developing technologies and equally the external
environment in order to avoid technical and personnel obsolescence.
7) Management Training & Development Appropriate stress to be put in to make the executive
cadre as managerial material and reinforcing managerial profile characteristics. Modern concepts
from behavioral science and its effective application.

TRAINING & DEVELOPMENT NEED ASSESSMENT

In the discussions the researcher had with the company officials, the following emerged as the
areas where training needs are identified.
1) Identification of present pressing specific problems – The areas where training is needed could
be productivity, quality, turnover, absenteeism, safety, behavior etc.
2) Visualizing anticipated needs – Problems arising out of drastic change in production schedule,
product range, automation, and modernization.
3) Specific management initiative in thrust areas – Concerned superiors can identify the
deficiencies in subordinates during performance appraisal and recommend specific training
areas.
4) Personal observation – Each line manager is responsible for his subordinate in guiding and
coaching where particular performance is not upto the mark.
5) Performance appraisal – Vital clues can be provided by assessor and incumbent from his own
aspersions and aspirations based on which training needs, shorter as well as longer needs can be
ascertained.
The Company has a systematic training programme which ensures the overall
development of the employees.
The main objectives of the Force Motors„ systematic approach to training and development
programme is to keep an organization at the front of its industry maximize performance and
energize every level of the organization. It also helps in strengthening the tie between employee
development and strategic operation objectives. The other objectives of Force Motors„
systematic approach to training and development are to perform efficiency in the working
conditions; accidents, scrap and damage to machinery and equipment can be avoided or
minimized. It helps in providing the future needs of the employees giving an effective source of
recruitment. The quality of products or services will definitely increase by the better – informed
workers. The T&D programme helps in dealing with the personality development of the
employees through setting goals, motivational activities, leadership skills, etc. Force Motors„
systematic T&D programme helps to prevent the manpower obsolescence, which may be due to
age, temperament or the inability of the person to adapt to technological changes. Force Motors„
systematic training makes the employees versatile and flexible in operations of the organizational
works. Force Motors„ systematic training brings efficiency in the employees who contribute to
the growth of the organization. This growth gives the employee stability which helps the
organization. The purpose of their training and development can be explained as below.
1.Improving qualityof work force:
Training and development help company to improve the quality of work done by their
employees. Training programmes concentrate on specific area, thereby improving the quality of
work in that area.

2.Enhance employee growth:

Every employee who takes development programme becomes better at his job. Training provides
perfection and required practice; therefore employees are able to develop themselves
professionally.

3.Prevents obsolescence:
Through training and development the employee is up to date with new technology and the fear
of being thrown out of the job is reduced.

4.Assisting new employees:

Training and development programmes greatly help new employees to get accustomed to new
methods of working, new technology, the work culture of the company etc.

5. Bridging the gap between planning and implementation:

Plans made by company expect people to achieve certain targets within certain time limit with
certain quality. For this employee performance has to be accurate and perfect. Training helps in
achieving accuracy and perfection.

6. Health and safety measures:

Training and development programme clearly identifies and teaches employees about the
different risk involved in their job, the different problems that can arise and how to prevent such
problems. This helps to improve the health and safety measures in the company.
 REVIEW OF
LITERATURE
 Review of Literature
A more focused literature such was undertaken to identify the various methods and approaches
used for the study relating to the topic. It exhibits how much work has been already done in the
area under research.

(S.M. Tariq Zafar, Sep. 2012) The author made study to explored the truth that the ratios are
calculated from the financial statements‟ which are prepared as desired by the management and
policies adopted on depreciation and stock values and thus produce only a collection of facts
expressed in monetary term and cannot produce complete and authentic picture of the business
and also may not highlight other factors which affects performance. They found that to control
manager‟s management often overuse ratio and concentrate more on improving the ratios and
also known fact that ratio is simple comparison of numerator and a denominator and in
comparing ratios it become difficult to adjudicate whether differences are due to change in the
numerator or denominator or in both. It is also found that ratios are interconnected but are often
treated by management in isolation and also found that analysis of ratios lack authenticity as data
used in calculation are not accurate but manipulated presentation by the promoters.

(Manoj Kumara N V, August 2015) The author had made attempt to determine the financial
performance of selected automobile companies in India by using financial performance
parameters, It can be concluded that the anticipated inputs to this study to the firm is to assist
strategic thinkers pay attention to the appropriate actions that apply latent and strong affect on
their automobile performance. This research facilitates a comprehensive model for examining the
financial performance of automobile performance and the major findings of this research will
give a important parameters and helps to fill a similar gaps in the literature. This analytical
strong fit model that R-square results 54% indicates variation of independent variable on
dependent variable. Further research, need to focus on important parameters like Economic
Value added and Refined Economic Value Added to Reveal & evaluate the overall
organizational development performance

(Dr.K.Jothi, june 2015) The author made study on financial performance analysis of HONDA &
TOYOTA companies and made have discussed that both companies have comfortable short term
liquidity position and therefore not likely to encounter to any major difficulties in paying /
discharging their short term obligations in time. As far as cash ratio is concerned it is
encouraging to note that the Honda is having sound cash management practice. Toyota Company
had made use of more borrowed funds than the capital. From the profitability perspective it is
found that Honda Company has high earning potential. In conclusion it appears safe to
summarize that the Honda & Toyota seems to be sound financial management practice.

. (Vidya, October 2015) The Author had discussed that the standard current ratio of automobile
industry is matched with Tractor and the four sectors like gears, engine parts, lamps and
ancillaries others are matched with standard norms. It is inferred that other sectors have to
improve the repaying capacity to strengthen the financial aspects. The standard liquidity ratio is
matched with tractor in the automobile sector and all the sectors are standard in the auto
ancillary. In order to meet the financial obligation, the lcv/hcv, motor cycle, scooters have to
make arrangement to meet the standards.

(PAL, June 2015) The author had discussed that the individual ratios which are affecting the
profitability of the industry. Another objective of the study is to identify and categorized the
financial ratios into a small number of latent variable to represent a compact view of financial
performance for a specified time period. Initially the study was started with 36 ratios of 9 Indian
automobile companies for a period of 15 years classified in 7 traditional categories. Statistical
techniques like factor analysis, regression analysis are applied to the data set to facilitate the
objectives of the study. Factor analysis extracted three factors „solvency asset and cash flow
management‟, „profitability management‟ and „operating efficiency‟ which represents the most
prevailing factor during the study period. On the other hand regression analysis shows that three
individual variables WCTA, ITR and DPRCP have significant effect on the profitability of the
industry.
 Objective of the study
1. To study and analyze financial performance of Force Motors Ltd.
2. To know the earning capacity or profitability, solvency and the financial strength
by evaluating financial statement.
3. To compare the financial performance and to analyze the financial changes over a
period of five years.
4. To know about all over profitability.
5. Study the risk of operation.
6. Evaluate current operations.
7. Compare performance against other firms or industry standards.
8. To know about liquidity position.
9. To provide suggestions for improving the overall finance performance of the
company.
10. To compare and interpret financial statements of the Force Motors Ltd. with
comparative and common-size statement analysis.
 Need for the study
1. One of the most fundamental facts about business is that the financial performance of the
firm shapes its financial structure. Therefore in order to obtain a favourable financial
structure it is necessary to study the efficiency of the firm.
2. Efficiency measurements imply prior knowledge of the inputs and outputs of an
organization to increase the level output for a company it is necessary to study the
operating efficiency of the firm.
3. The main problem in business that of making correct estimates for the future which
cannot be done unless data representing changes over a period are systematically
analyzed.
4. Financial analysis is a powerful mechanism which helps in ascertain the strength and
weakness in the operation and financial position of the enterprise.
5. Financial analysis is the process of identifying the financial strength and weakness of the
firm by properly establishing relationship between the items of the balance sheet and the
profit and loss accounts.
 Financial
Performance
 Financial Performance
The performance of the firm can be measured by its financial results, i.e., by its size of earnings
Riskiness and profitability are two major factors which jointly determine the value of the
concern. Financial decisions which increase risks will decrease the value of the firm and on the
other hand, financial decisions which increase the profitability will increase value of the firm.
Risk and profitability are two essential ingredients of a business concern.

There has been a considerable debate about the ultimate objective of firm performance, whether
it is profit maximization or wealth maximization. It is observed that while considering the firm
performance, the profit and wealth maximization are linked and are effected by one-another.

Ratio Analysis:
1.Liquidity Ratio

2.Solvency Ratio

3.Turnover Ratio

4.Profitability Ratio

1.Liquidity Ratio:- To meet its commitments, business needs liquid funds. The ability of the
business to pay the amount due to stakeholders as and when it is due is known as liquidity, and
the ratios calculated to measure it are known as „Liquidity Ratios‟. These are essentially short-
term in nature.

Types of Liquidity Ratio

i.Current Ratio

ii.Quick Ratio

i.Current Ratio:- Current ratio is the proportion of current assets to current liabilities. It is
expressed as follows:

Current Ratio= Current Assets

Current Liability
Current Ratio= 1121.80
682.98
= 1.64
 Current Ratio

Years Current Assets Current Liabilities Ratio

2015-2016 1216.70 716.69 1.70
2016-2017 1384.12 901.33 1.54
2017-2018 1121.80 682.98 1.64

2500

2000

1500
Ratio
Current Liabilities
1000
Current Assets

500

0
2015-2016 2016-2017 2017-2018

Inferences:-
A high current ratio is assurance that the firm will have adequate funds to pays current liabilities
and other payment. During the year 2017-2018, the current ratio is 1.64 times and it is less when
compared with previous year 2016-2017 is 1.54 times.
Significance:- Current assets include current investments, inventories, trade receivables (debtors
and bills receivables), cash and cash equivalents, short-term loans and advances and other
current assets such as prepaid expenses, advance tax and accrued income, etc.
Current liabilities include short-term borrowings, trade payables (creditors and bills payables),
other current liabilities and short-term provisions.
ii.Quick Ratio:- It is the ratio of quick (or liquid) asset to current liabilities. It is expressed as
Quick Ratio= Quick Assets
Current Liability
where, Quick Assets-Inventory
Quick Ratio= 644.70
682.98
= 0.94

Quick Ratio

Years Quick Assets Current Liabilities Ratio

2015-2016 669.19 716.69 0.93
2016-2017 946.45 901.33 1.05
2017-2018 644.70 682.98 0.94

2000

1800

1600

1400

1200
Ratio
1000
Current Liabilities
800
Quick Assets
600

400

200

0
2015-2016 2016-2017 2017-2018

Significance:- The quick assets are defined as those assets which are quickly convertible into
cash. While calculating quick assets we exclude the inventories at the end and other current
assets such as prepaid expenses, advance tax, etc., from the current assets. Because of exclusion
of non-liquid current assets it is considered better than current ratio as a measure of liquidity
position of the business. It is calculated to serve as a supplementary check on liquidity position
of the business and is therefore, also known as „Acid-Test Ratio‟.
2.Solvency Ratio:- Solvency of business is determined by its ability to meet its contractual
obligations towards stakeholders, particularly towards external stakeholders, and the ratios
calculated to measure solvency position are known as „Solvency Ratios‟. These are essentially
long-term in nature. Solvency ratios are calculated to determine the ability of the business to
service its debt in the long run. The following ratios are normally computed for evaluating
solvency of the business.
i.Debt Equity Ratio
ii.Debt to Capital Employed Ratio
iii.Proprietary Ratio
iv.Total Assets to Debt Ratio
v.Interest Coverage Ratio
i.Debt Equity Ratio:- Debt-Equity Ratio measures the relationship between long-term debt and
equity. If debt component of the total long-term funds employed is small, outsiders feel more
secure. From security point of view, capital structure with less debt and more equity is
considered favourable as it reduces the chances of bankruptcy. Normally, it is considered to be
safe if debt equity ratio is 2 : 1. However, it may vary from industry to industry. It is computed
as follows:
Debt Equity Ratio= Long Term Debts
Shareholders Funds
where:
Shareholders‟ Funds (Equity) = Share capital + Reserves and Surplus + Money received against
share warrants
Share Capital = Equity share capital + Preference share capital
or
Shareholders‟ Funds (Equity) = Non-current sssets + Working capital – Non-current liabilities
Working Capital = Current Assets – Current Liabilities
Debt Equity Ratio= 60.52
1316.89
= 0.04

Debt Equity Ratio

Years Long Term Debts Shareholders Funds Ratio

2015-2016 60.52 1316.89 0.04
2016-2017 96.73 1480.44 0.06
2017-2018 130.91 1665.41 0.07
 2000

1800

1600

1400

1200
Ratio
1000
Shareholders Funds
800
Long Term Debts
600

400

200

0
2015-2016 2016-2017 2017-2018

Inferences:-
From the above table, during the year 2015-2016 the debt equity ratio is 0.04 times and it is
increased to 0.06 times then it shows the uptrend from the year 2017-2018 as 0.07 times. Suggest
that the debt from the company has increased over the years with increase in shareholder funds
as well.
Significance:-This ratio measures the degree of indebtedness of an enterprise and gives an idea to
the long-term lender regarding extent of security of the debt. As indicated earlier, a low debt
equity ratio reflects more security. A high ratio, on the other hand, is considered risky as it may
put the firm into difficulty in meeting its obligations to outsiders. However, from the perspective
of the owners, greater use of debt (trading on equity) may help in ensuring higher returns for
them if the rate of earnings on capital employed is higher than the rate of interest payable.
ii. Debt to Capital Employed Ratio:-The Debt to capital employed ratio refers to the ratio of
long-term debt to the total of external and internal funds (capital employed or net assets). It is
computed as follows:
Debt to Capital Employed Ratio = Long-term Debt/Capital Employed (or Net Assets)
Capital employed is equal to the long-term debt + shareholders‟ funds. Alternatively, it may be
taken as net assets which are equal to the total assets – current liabilities
Debt to Capital Employed Ratio= 60.52
1377.41
= 0.04

Debt to Capital Employed Ratio

Years Long Term Debt Net Assets Ratio

2015-2016 60.52 1377.41 0.04
2016-2017 96.73 1577.17 0.06
2017-2018 130.91 1796.32 0.07

2500

2000

1500
Ratio
Shareholders Funds
1000
Long Term Debts

500

0
2015-2016 2016-2017 2017-2018

Inferences:-
From the above table, during the year 2014-2015 the debt to capital employed ratio is 0.04 times
and it is increased to 0.06 times then it shows the uptrend from the year 2016-2017 as 0.07 times.
Suggest that the debt from the company has increased over the years with increase in shareholder
funds as well.
Significance:-Like debt-equity ratio, it shows proportion of long-term debts in capital employed.
Low ratio provides security to lenders and high ratio helps management in trading on equity. In
the above case, the debt to Capital Employed ratio is less than half which indicates reasonable
funding by debt and adequate security of debt.
It may be noted that Debt to Capital Employed Ratio can also be computed in relation to total
assets. In that case, it usually refers to the ratio of total debts (long-term debts + current
liabilities) to total assets, i.e., total of non-current and current assets (or shareholders, funds +
long-term debts + current liabilities), and is expressed as
Debt to Capital Employed Ratio = Total Debts
Total Assets
iii. Proprietary Ratio:- Proprietary ratio expresses relationship of proprietor‟s (shareholders)
funds to net assets and is calculated as follows :
Proprietary Ratio = Shareholders, Funds/Capital employed (or net assets)
Proprietary Ratio = 1316.89
1377.41
= 0.96

Proprietary Ratio

Years Shareholders Funds Net Assets Ratio

2015-2016 1316.89 1377.41 0.96
2016-2017 1480.44 1577.17 0.94
2017-2018 1665.41 1796.32 0.93

4000

3500

3000

2500
Ratio
2000
Net Assets
1500 Shareholders Funds

1000

500

0
2015-2016 2016-2017 2016-2017
Higher proportion of shareholders funds in financing the assets is a positive feature as it provides
security to creditors. This ratio can also be computed in relation to total assets instead of net
assets (capital employed). It may be noted that the total of debt to capital employed ratio and
proprietory ratio is equal to 1.
iv.Total Assets to Debt Ratio:- This ratio measures the extent of the coverage of long-term
debts by assets. It is calculated as

Total assets to Debt Ratio = Total assets/Long-term debts

Total aseets to Debt Ratio = 1377.41

60.52

= 22.76

Total Assets to Debt Ratio

Years Total assets Long term Debts Ratio

2015-2016 1377.41 60.52 22.76
2016-2017 1577.17 96.73 16.31
2017-2018 1796.32 130.91 13.72

2500

2000

1500
Ratio
Long Term Debts
1000
Total Assets

500

0
2015-2016 2016-2017 2017-2018
The higher ratio indicates that assets have been mainly financed by owners funds and the long-
term loans is adequately covered by assets. It is better to take the net assets (capital employed)
instead of total assets for computing this ratio also. It is observed that in that case, the ratio is the
reciprocal of the debt to capital employed ratio.

v. Interest Coverage Ratio:- It is a ratio which deals with the servicing of interest on loan. It is
a measure of security of interest payable on long-term debts. It expresses the relationship
between profits available for payment of interest and the amount of interest payable. It is
calculated as follows:

Interest Coverage Ratio = Net Profit before Interest and Tax

Interest on long-term debts

Interest Coverage Ratio =

It reveals the number of times interest on long-term debts is covered by the profits available for
interest. A higher ratio ensures safety of interest on debts.

3.Activity or Turnover Ratio:- These ratios indicate the speed at which, activities of the
business are being performed. The activity ratios express the number of times assets employed,
or, for that matter, any constituent of assets, is turned into sales during an accounting period.
Higher turnover ratio means better utilisation of assets and signifies improved efficiency and
profitability, and as such are known as efficiency ratios. The important activity ratios calculated
under this category are

i. Inventory Turnover

ii. Trade receivable Turnover

iii. Trade payable Turnover

iv. Investment (Net assets) Turnover

v. Fixed assets Turnover

vi. Working capital Turnover.

i. Inventory Turnover Ratio:- It determines the number of times inventory is converted into
revenue from operations during the accounting period under consideration. It expresses the
relationship between the cost of revenue from operations and average inventory. The formula for
its calculation is as follows:

Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory

Inventory Turnover Ratio = 3392.37

457.38

= 7.41

Inventory Turnover Ratio

Year Cost of Revenue Average Inventory Ratio

from Operations
2015-2016 3031.69 470.03 6.64
2016-2017 3037.95 492.59 6.16
2017-2018 3392.37 457.38 7.41

4500

4000

3500

3000
Ratio
2500
Average Inventory
2000

1500 Cost of Revenue from

Operations
1000

500

0
2015-2016 2016-2017 2017-2018

Where average inventory refers to arithmetic average of opening and closing inventory, and the
cost of revenue from operations means revenue from operations less gross profit.

It studies the frequency of conversion of inventory of finished goods into revenue from
operations. It is also a measure of liquidity. It determines how many times inventory is purchased
or replaced during a year. Low turnover of inventory may be due to bad buying, obsolete
inventory, etc., and is a danger signal. High turnover is good but it must be carefully interpreted
as it may be due to buying in small lots or selling quickly at low margin to realise cash. Thus, it
throws light on utilisation of inventory of goods.

ii. Trade Receivables Turnover Ratio:- It expresses the relationship between credit revenue
from operations and trade receivable. It is calculated as follows :

Trade Receivable Turnover Ratio = Net Credit Revenue from Operations/Average Trade
Receivable

Trade Receivable Turnover Ratio= 3392.37

236.05

= 14.37

Where Average Trade Receivable = (Opening Debtors and Bills Receivable + Closing Debtors
and Bills Receivable)/2

It needs to be noted that debtors should be taken before making any provision for doubtful debts.
The liquidity position of the firm depends upon the speed with which trade receivables are
realised. This ratio indicates the number of times the receivables are turned over and converted
into cash in an accounting period. Higher turnover means speedy collection from trade
receivable. This ratio also helps in working out the average collection period. The ratio is
calculated by dividing the days or months in a year by trade receivables turnover ratio.

i.e., Number of days or Months

Trade receivables turnover ratio

Trade Receivable Turnover Ratio

Years Net Credit Revenue Average Trade Ratio

from Operations Receivables
2015-2016 3031.69 183.88 16.49
2016-2017 3037.95 132.75 22.88
2017-2018 3392.37 236.05 14.37
 4000

3500

3000

2500 Ratio

2000 Average Trade Receivables

1500
Net Credit Revenue from
Operations
1000

500

0
2015-2016 2016-2017 2017-2018

iii. Trade Payable Turnover Ratio:- Trade payables turnover ratio indicates the pattern of
payment of trade payable. As trade payable arise on account of credit purchases, it expresses
relationship between credit purchases and trade payable. It is calculated as follows:

Trade Payables Turnover ratio = Net Credit purchases/ Average trade payable

Where Average Trade Payable = (Opening Creditors and Bills Payable + Closing Creditors and
Bills Payable)/2

Average Payment Period = No. of days/month in a year

Trade Payables Turnover Ratio

It reveals average payment period. Lower ratio means credit allowed by the supplier is for a long
period or it may reflect delayed payment to suppliers which is not a very good policy as it may
affect the reputation of the business. The average period of payment can be worked out by
days/months in a year by the Trade Payable Turnover Ratio.

iv. Net Assets or Capital Employed Turnover Ratio:- It reflects relationship between revenue
from operations and net assets (capital employed) in the business. Higher turnover means better
activity and profitability. It is calculated as follows :

Net Assets or Capital Employed Turnover ratio = Revenue from Operation

Capital Employed
Capital employed turnover ratio which studies turnover of capital employed (or Net Assets) is
analysed further by following two turnover ratios :

(a) Fixed Assets Turnover Ratio : It is computed as follows:

Fixed asset turnover Ratio = Net Revenue from Operation

Net Fixed Assets

(b) Working Capital Turnover Ratio : It is calculated as follows :

Working Capital Turnover Ratio = Net Revenue from Operation
Working Capital

High turnover of capital employed, working capital and fixed assets is a good sign and implies
efficient utilisation of resources. Utilisation of capital employed or, for that matter, any of its
components is revealed by the turnover ratios. Higher turnover reflects efficient utilisation
resulting in higher liquidity and profitability in the business.

4. Profitability Ratios:- The profitability or financial performance is mainly summarised in the

statement of profit and loss. Profitability ratios are calculated to analyse the earning capacity of
the business which is the outcome of utilisation of resources employed in the business. There is a
close relationship between the profit and the efficiency with which the resources employed in the
business are utilised. The various ratios which are commonly used to analyse the profitability of
the business are:

i. Gross profit ratio

ii. Operating ratio

iii. Operating profit ratio

iv. Net profit ratio

v. Return on Investment (ROI) or Return on Capital Employed (ROCE)

vi. Return on Net Worth (RONW)

vii. Earnings per share

viii. Book value per share

ix. Dividend payout ratio

x. Price earning ratio

i.Gross Profit Ratio:- Gross profit ratio as a percentage of revenue from operations is computed
to have an idea about gross margin. It is computed as follows:
 Gross Profit Ratio = Gross Profit/Net Revenue of Operations × 100

Gross Profit Ratio = 294.28/3031.35*100

= 9.7

Years Gross Profit Net Revenue from Ratio

Operations
2015-2016 294.28 3031.35 9.7
2016-2017 234.05 3037.95 7.70
2017-2018 200.23 3430.19 5.83

4000

3500

3000

2500
Ratio
2000
Net Revenue from Operations
1500 Gross Profit

1000

500

0
2015-2016 2016-2017 2017-2018

It indicates gross margin on products sold. It also indicates the margin available to cover
operating expenses, non-operating expenses, etc. Change in gross profit ratio may be due to
change in selling price or cost of revenue from operations or a combination of both. A low ratio
may indicate unfavourable purchase and sales policy. Higher gross profit ratio is always a good
sign.

ii. Operating Ratio:- It is computed to analyse cost of operation in relation to revenue from
operations. It is calculated as follows:

Operating Ratio = (Cost of Revenue from Operations + Operating Expenses)/ Net Revenue
from Operations × 100

Operating expenses include office expenses, administrative expenses, selling expenses,

distribution expenses, depreciation and employee benefit expenses etc.
Cost of operation is determined by excluding non-operating incomes and expenses such as loss
on sale of assets, interest paid, dividend received, loss by fire, speculation gain and so on.

iii. Operating Profit Ratio:- It is calculated to reveal operating margin. It may be computed
directly or as a residual of operating ratio.

Operating Profit Ratio = 100 – Operating Ratio

Alternatively, it is calculated as under:

Operating Profit Ratio = Operating Profit/ Revenue from Operations × 100

Where Operating Profit = Revenue from Operations – Operating Cost

Operating ratio is computed to express cost of operations excluding financial charges in relation
to revenue from operations. A corollary of it is „Operating Profit Ratio‟. It helps to analyse the
performance of business and throws light on the operational efficiency of the business. It is very
useful for inter-firm as well as intra-firm comparisons. Lower operating ratio is a very healthy
sign.

iv. Net Profit Ratio:- Net profit ratio is based on all inclusive concept of profit. It relates
revenue from operations to net profit after operational as well as non-operational expenses and
incomes. It is calculated as under:

Net Profit Ratio = Net profit/Revenue from Operations × 100

Generally, net profit refers to profit after tax (PAT).

Net Profit Ratio = 179.42/3031.35*100

= 5.92

Years Net Profit Revenue from Ratio

Operations
2015-2016 179.42 3031.35 5.92
2016-2017 179.92 3037.95 5.92
2017-2018 146.95 3430.19 4.28
 4000

3500

3000

2500
Ratio
2000
Revenue from operations
1500 Net Profit

1000

500

0
2015-2016 2016-2017 2017-2018

It is a measure of net profit margin in relation to revenue from operations. Besides revealing
profitability, it is the main variable in computation of Return on Investment. It reflects the
overall efficiency of the business, assumes great significance from the point of view of investors.

v. Return on Capital Employed or Investment:- It explains the overall utilisation of funds by

a business enterprise. Capital employed means the long-term funds employed in the business and
includes shareholders‟ funds, debentures and long-term loans. Alternatively, capital employed
may be taken as the total of non-current assets and working capital. Profit refers to the Profit
Before Interest and Tax (PBIT) for computation of this ratio. Thus, it is computed as follows:

Return on Investment (or Capital Employed) = Profit before Interest and Tax/ Capital
Employed × 100

It measures return on capital employed in the business. It reveals the efficiency of the business in
utilisation of funds entrusted to it by shareholders, debenture-holders and long-term loans. For
inter-firm comparison, return on capital employed funds is considered a good measure of
profitability. It also helps in assessing whether the firm is earning a higher return on capital
employed as compared to the interest rate paid.

vi. Return on Shareholders’ Funds:- This ratio is very important from shareholders‟ point of
view in assessing whether their investment in the firm generates a reasonable return or not. It
should be higher than the return on investment otherwise it would imply that company‟s funds
have not been employed profitably.
A better measure of profitability from shareholders point of view is obtained by determining
return on total shareholders‟ funds, it is also termed as Return on Net Worth (RONW) and is
calculated as under :

Return on Shareholders‟ Fund = Profit after Tax

Shareholders' Funds × 100

vii. Earnings per Share:- The ratio is computed as:

EPS = Profit available for equity shareholders/Number of Equity Shares

In this context, earnings refer to profit available for equity shareholders which is worked out as

Profit after Tax – Dividend on Preference Shares.

This ratio is very important from equity shareholders point of view and also for the share price in
the stock market. This also helps comparison with other to ascertain its reasonableness and
capacity to pay dividend.

vii. Book Value per Share:- This ratio is calculated as :

Book Value per share = Equity shareholders‟ funds/Number of Equity Shares

Equity shareholder fund refers to Shareholders‟ Funds – Preference Share Capital. This ratio is
again very important from equity shareholders point of view as it gives an idea about the value of
their holding and affects market price of the shares.

ix.Dividend Payout Ratio:- This refers to the proportion of earning that are distributed to the
shareholders. It is calculated as –

Dividend Payout Ratio = Dividend per share

Earnings per share

This reflects company‟s dividend policy and growth in owner‟s equity.

x. Price / Earning Ratio:- The ratio is computed as –

P/E Ratio = Market Price of a share/earnings per share

Comparative Statement Analysis

These are the statements showing the profitability and financial position of a firm for different
periods of time in a comparative form to give an idea about the position of two or more periods.
It usually applies to the two important financial statements, namely, balance sheet and statement
of profit and loss prepared in a comparative form. The financial data will be comparative only
when same accounting principles are used in preparing these statements. If this is not the case,
the deviation in the use of accounting principles should be mentioned as a footnote. Comparative
figures indicate the trend and direction of financial position and operating results. This analysis
is also known as „horizontal analysis‟.

COMPARATIVE BALANCE SHEET OF FORCE MOTORS LTD.

THE YEAR ENDED 31.03.2017

Particulars 2017 2018 Amount Percentage

(Rs. in cr.) (Rs. in cr.) Increase/Decrease Increase/Decrease
during 2017-2018 during 2017-2018
(Rs. in cr.) (In %)
Assets:
Capital work in progress 204.60 226.54 21.94 10.72
Investment 1.23 9.67 8.44 686.18
Inventory 547.51 437.67 -109.84 -20.06
Sundry Debtors 150.40 115.10 -35.30 -23.47
Cash & Bank 317.64 234.22 -83.42 -26.26
Loans & Advances 279.16 769.31 490.15 175.58
Total Current assets 1500.54 1792.51 291.97 19.46

Liabilities & Capital

Current Liability 759.82 780.13 20.31 2.67
Provision 50.95 53.65 2.70 5.30
Total Current Liability 810.77 833.78 23.01 2.84

Capital & Reserve

Share Capital 13.18 13.18 0 0
Reserve & Surplus 1467.26 1652.23 184.97 12.61
Total Shareholders Fund 1480.44 1665.41 184.97 12.49

INFERENCES:

In the year 2017-2018, the investment it shows the uptrend for the year 2018 as Rs.9,67,00,000
and it has increased by 686.18%.

Loans & Advances has been increased was Rs.769.31 (Rs. in cr.) in the year 2018 which is
comparing to the previous year and the percentage shows increased by 175.58%.

During the year 2017, the shareholders fund amount to Rs.1480.44 (Rs. in cr.) it has been
increased to the amount of Rs.1665.41(Rs. in cr.) and percentage increased was 12.49%.
Provision shows uptrend by Rs.53.65(Rs. in cr.) over the previous year of Rs.50.95(Rs. in cr.)
and increase in percentage of 5.30%.

Commom-Size Statement Analysis

A common size financial statement displays all items as percentages of a common base figure
rather than as absolute numerical figures. This type of financial statement allows for easy
analysis between companies or between time periods for the same company. The values on the
common size statement are expressed as ratios or percentages of a statement component, such as
revenue.

While most firms don't report their statements in common size format, it is beneficial for analysts
to compute it to compare two or more companies of differing size or different sectors of the
economy. Formatting financial statements in this way reduces bias that can occur and allows for
the analysis of a company over various time periods, revealing, for example, what percentage of
sales is the cost of goods sold and how that value has changed over time. Common size financial
statements commonly include the income statement, balance sheet and cash flow statement.

BREAKING DOWN 'Common Size Financial Statement'

Common Size Income Statement

The income statement, also referred to as the profit and loss (P&L) statement, provides an
overview of flows of sales, expenses and net income during the reporting period. The income
statement equation is sales minus expenses and adjustments equals net income. This is why the
common size income statement defines all items as a percentage of sales. The term "common
size" is most often used when analyzing elements of the income statement, but the balance sheet
and the cash flow statement can also be expressed as a common size statement.
 COMMON SIZE STATEMENT OF FORCE MOTORS LTD.

THE YEAR ENDED 31.03.2018

Particulars 2017 2018

Amount Percentage Amount Percentage

(Rs.) (%) (Rs.) (%)
Assets:
Capital work in progress 204.60 13.63 226.54 12.64
Investment 1.23 0.08 9.67 0.54
Inventory 547.51 36.49 437.67 24.42
Sundry Debtors 150.40 10.02 115.10 6.42
Cash & Bank 317.64 21.17 234.22 13.07
Loans & Advances 279.16 18.60 769.31 42.92
Total Current assets 1500.54 100 1792.51 100

Liabilities & Capital

Current Liability 759.82 93.71 780.13 93.56
Provision 50.95 6.28 53.65 6.44
Total Current Liability 810.77 100 833.78 100

Capital & Reserve

Share Capital 13.18 0.89 13.18 0.79
Reserve & Surplus 1467.26 99.11 1652.23 99.21
Total Shareholders Fund 1480.44 100 1665.41 100

INFERENCES:

The Capital work in progress have decreased during the financial year 2018 is 12.64% which is
comparing to 2017 was 13.63% of the Force Motors Ltd.

There was an increase in Loans & Advances of Rs. 769.31 (Rs. in Cr.) comparing to the year
2018. Higher the ratio is more than the efficiency in utilization of loans & advances.

Reserve & Surplus has been increased was in the year 2018 which is Rs.1652.23(Rs. in Cr.)
comparing to the previous year and the percentage shows increase by 99.21%.

During the year 2017-2018, the shareholders fund amount to Rs.1480.44(Rs. in Cr.), it has been
increased to the amount of Rs.1665.41(Rs. in Cr.) and the percentage increased was 100% in
2018.
Cash Flow Statement Analysis
Cash plays a very important role in the economic life of a business. A firm needs cash to make
payment to its suppliers, to incur day-to-day expenses and to pay salaries, wages, interest and
dividends etc. In fact, what blood is to a human body, cash is to a business enterprise. Thus, it is
very essential for a business to maintain an adequate balance of cash. For example, a concern
operates profitably but it does not have sufficient cash balance topay dividends, what message
does it convey to the shareholders and public in general. Thus, management of cash is very
essential. There should be focus on movement of cash and its equivalents. Cash means, cash in
hand and demand deposits with the bank. Cash equivalent consists of bank overdraft, cash credit,
short term deposits and marketable securities.

Cash Flow Statement deals with flow of cash which includes cash equivalents as well as cash.
This statement is an additional information to the users of Financial Statements. The statement
shows the incoming and outgoing of cash. The statement assesses the capability of the enterprise
to generate cash and utilize it. Thus a Cash-Flow statement may be defined as a summary of
receipts and disbursements of cash for a particular period of time. It also explains reasons for the
changes in cash position of the firm. Cash flows are cash inflows and outflows. Transactions
which increase the cash position of the entity are called as inflows of cash and those which
decrease the cash position as outflows of cash. Cash flow Statement traces the various sources
which bring in cash such as cash from operating activities, sale of current and fixed assets, issue
of share capital and debentures etc. and applications which cause outflow of cash such as loss
from operations, purchase of current and fixed assets, redemption of debentures, preference
shares and other long-term debt for cash. In short, a cash flow statement shows the cash receipts
and disbursements during a certain period.

Objectives of Cash Flow Statement

 Cash flow statement aims at highlighting the cash generated from operating activities.
 Cash flow statement helps in planning the repayment of loan schedule and replacement of
fixed assets, etc.
 Cash is the centre of all financial decisions. It is used as the basis for the projection of
future investing and financing plans of the enterprise.
 Cash flow statement helps to ascertain the liquid position of the firm in a better manner.
Banks and financial institutions mostly prefer cash flow statement to analyse liquidity of
the borrowing firm.
 Cash flow Statement helps in efficient and effective management of cash.
 The management generally looks into cash flow statements to understand the internally
generated cash which is best utilised for payment of dividends.
 Cash Flow Statement based on AS-3 (revised) presents separately cash generated and
used in operating, investing and financing activities.
 It is very useful in the evaluation of cash position of a firm.
Cash and relevant terms as per AS-3 (revised)

As per AS-3 (revised) issued by the Accounting Standards Board

1.(a) Cash fund :

Cash Fund includes

i.)Cash in hand

ii.)Demand deposits with banks, and

iii.)Cash equivalents.

(b) Cash equivalents are short-term, highly liquid investments, readily convertible into cash
and which are subject to insignificant risk of changes in values.

2.Cash Flows are inflows and outflows of cash and cash equivalents.

The statement of cash flow shows three main categories of cash inflows and cash outflows,
namely : operating, investing and financing activities.

(a) Operating activities are the principal revenue generating activities of the enterprise.

(b) Investing activities include the acquisition and disposal of longterm assets and other
investments not included in cash equivalents.

(c) Financing activities are activities that result in change in the size and composition of the
owner‟s capital (including Preference share capital in the case of a company) and borrowings of
the enterprise.

PREPARATION OF CASH FLOW STATEMENT

1.Operating Activities

Cash flow from operating activities are primarily derived from the principal revenue
generating activities of the enterprise. A few items of cash flows from operating
activities are :

(i) Cash receipt from the sale of goods and rendering services.
(ii) Cash receipts from royalties, fee, Commissions and other revenue.
(iii) Cash payments to suppliers for goods and services. (iv) Cash payment to
employees
(iv) Cash payment or refund of Income tax.

2.Investing Activities
Investing Activities refer to transactions that affect the purchase and sale of fixed or long term
assets and investments. Examples of cash flow arising from Investing activities are

1. Cash payments to acquire fixed Assets

2. Cash receipts from disposal of fixed assets

3. Cash payments to acquire shares, or debenture investment.

4. Cash receipts from the repayment of advances and loans made to third parties.

Thus, Cash inflow from investing activities are

– Cash sale of plant and machinery, land and Building, furniture, goodwill etc.

– Cash sale of investments made in the shares and debentures of other companies

– Cash receipts from collecting the Principal amount of loans made to third parties.

Cash outflow from investing activities are :

– Purchase of fixed assets i.e. land, Building, furniture, machinery etc.

– Purchase of Intangible assets i.e. goodwill, trade mark etc.

– Purchase of shares and debentures

– Purchase of Government Bonds

– Loan made to third parties

3.Financing Activities

The third section of the cash flow statement reports the cash paid and received from activities
with non-current or long term liabilities and shareholders Capital. Examples of cash flow arising
from financing activities are

– Cash proceeds from issue of shares or other similar instruments.

– Cash proceeds from issue of debentures, loans, notes, bonds, and other short-term borrowings

– Cash repayment of amount borrowed

Cash Inflow from financing activities are:

– Issue of Equity and preference share capital for cash only.

– Issue of Debentures, Bonds and long-term note for cash only

Cash outflow from financing activities are :

– Payment of dividends to shareholders

– Redemption or repayment of loans i.e. debentures and bonds

– Redemption of preference share capital

– Buy back of equity shares.

Cash Flow of Force Motors ------------------- in Rs. Cr. -------------------

Mar 18 Mar 17

12 mths 12 mths

Net Profit/Loss Before Extraordinary Items

200.23 235.00
And Tax

Net CashFlow From Operating Activities 256.48 470.63

Net Cash Used In Investing Activities -80.59 -620.78

Net Cash Used From Financing Activities -222.88 180.17

Net Inc/Dec In Cash And Cash Equivalents -46.99 30.02

Cash And Cash Equivalents Begin of Year 86.56 56.54

Cash And Cash Equivalents End Of Year 39.57 86.56

What is 'Trend Analysis'

Trend analysis is a technique used in technical analysis that attempts to predict the future stock
price movements based on recently observed trend data. Trend analysis is based on the idea that
what has happened in the past gives traders an idea of what will happen in the future. There are
three main types of trends: short-, intermediate- and long-term.

BREAKING DOWN 'Trend Analysis'

Trend analysis tries to predict a trend such as a bull market run, and ride that trend until data
suggests a trend reversal, such as a bull-to-bear market. Trend analysis is helpful because moving
with trends, and not against them, will lead to profit for an investor.

A trend is the general direction the market is taking during a specified period of time. Trends can
be both upward and downward, relating to bullish and bearish markets, respectively. While there
is no specified minimum amount of time required for a direction to be considered a trend, the
longer the direction is maintained, the more notable the trend.

Trend analysis is the process of trying to look at current trends in order to predict future ones and
is considered a form of comparative analysis. This can include attempting to determine whether a
current market trend, such as gains in a particular market sector, is likely to continue, as well as
whether a trend in one market area could result in a trend in another. Though an analysis may
involve a large amount of data, there is no guarantee that the results will be correct.

Using Trend Analysis

In order to begin analyzing applicable data, it is necessary to first determine which market
segment will be analyzed. An example of sectors can include a focus on a particular industry,
such as the automotive or pharmaceuticals sector, as well as a particular type of investment, such
as the bond market. Once the sector has been selected, it is possible to examine the general
performance of the sector. This can include how the sector was affected by internal and external
forces. For example changes in a similar industry or the creation of a new governmental
regulation would qualify as forces impacting the market. Analysts then take this data and attempt
to predict the direction the market will take moving forward.

Trend Following

Trend following is a trading system based on using trend analysis and following the
recommendation produced to determine which investments to make. Often, the analysis is
conducted via computer analysis and modeling of relevant data, and is tied to market momentum.
Limitations
 Limitations
There are certain limitations in understanding this research work. As it is understood that the
limitations are a part of the project, they have been over shadowed by the study.

1.) The statement that are studied are historical past cannot be the index for future estimation.

2.) Performance analysis of company is done only for past 2 years due to the constraint.

3.) The study is done with the help of secondary data obtained from the annual reports of the
organization.

4.) Intangible assets are not recorded.

5.) Based on specific time period.

6.) Then financial statement analysis provides only quantitative information about the company's
financial affairs.

7.) The accuracy of financial information largely depends on how accurately financial statements
are prepared.

The limitations mentioned above about financial statement analysis make it clear that the
analysis is a means to an end and not an end to itself. The users and analysts must understand the
limitations before analyzing the financial statements of the company.
 Suggestions
and
Recommendations
 Suggestions and Recommendations
1. The company should try to increase the production so as to get economies of large-scale
production. It will assist in raising the rate of return on capital employed.

2. In order to increase the profitability of the companies, it is suggested to control the cost of
goods sold and operating expenses.

3. The management should try to adopt cost reduction techniques in their companies to get over
this critical situation. At the same way, to reduce power and fuel Cost Company should find out
other alternative for this.

4. The quantum of sales generated should be improved impressively in order better to enjoy
better per of the assets and capital employed.

5. The selected automobile companies should try to match the amount of working with the sales
trends. Where there is a deficit of working capital, they should try to build on adequate amount
of working capital. Where, there is an excessive working capital, it should be invested either in
trade securities or should be used to repay borrowings.

6. The management should try to utilize their production capacity fully in order to reduce factory
overheads and to utilize their fixed assets properly.

7. The burden of interest has produced a deteriorating effect and reduced the percentage of net
profit. It is suggested that the companies should try to reduce the interest burden gradually by
increasing the owner‟s fund.

8. To strengthen the financial efficiency, long-term funds have to be used to finance core current
assets and a part of temporary current assets. It is better if the companies can reduce the over
sized short- term loans and advances eliminates the risk arranging finance regularly.

9. The policy of borrowed financing in selected automobile companies under study was not
proper. So the companies should use widely the borrowed funds and should try to reduce the
fixed charges burden gradually by decreasing borrowed funds and by enhancing the owner‟s
fund. For this purpose companies should enlarge their equity share capital by issuing new equity
shares.

10. For regular supply of raw materials and the final product infrastructure facilities are required
further improvement.

11. Cost accounting and cost audit should be made mandatory for this units and cost sheet along
with annual financing statement should be prepared.
12. The public sector enterprises set up in backward areas were not guided by commercial
considerations. They were set up to fulfil the aim of balanced regional development.

13. There has been too much of government interference in policy and day- today working and
decisions. This leads to delays in decision-making. This should be abolished.

14. Improper planning and delays in implementation of projects lead to rise in their cost. So
properly planning should be made.

15. There is overstaffing in public enterprises. The number of persons employed is more than
what is required to run the public enterprises efficiently. This increases the cost and reduces
profitability of these enterprises.

16. The automobile companies should reduce power and fuel consumption by using low as
content coal (imported coal), lignite, agro waste product especially ground nut husk, and beggars
should be used as coal substitute.

17. To regularize and optimize the use of cash balance proper techniques may be adopted for
planning and control of cash. The investments in inventories should be reduced and need to
introduce a system of prompt collection of debts.

18. Selected automobile companies should try to use properly their operating assets and should
try to minimize their non-operating expenses.
Conclusion
 Conclusions
The analysis of financial performance includes growth analysis on selected terms such as net
sales, total assets, current liabilities, current assets etc, performance of profitability, liquidity,
solvency and activity ratios, relationship among ratios, and comparison between them. The study
reveals that the financial performance of the Indian automobile sector is fairly satisfactory during
the study period.

Similarly, the analysis of profitability of the selected automobile companies shows that their
performance during the study period is satisfactory. The study of all the three company groups
(commercial vehicles, passenger car & multi utility vehicle and two & three wheelers) shows
that the performance of these companies are fairly good. The financial performance plays a
significant role in the successful functioning of a firm. Therefore, the financial stability and
operational performance of all the three sectors shows that all are at the satisfactory level.

From the present study, it is observed that there is no significant difference between the growth
of the companies and the industry except profit before tax and net profit. The profitability
performance of the selected automobile companies has significant influence by other related
factors such as return on capital employed, return on networth for all the groups (Low, Moderate
and high). The comparison of profitability and other ratios do not have significant influence.
However, further improvement in profitability by cost concentration, innovative marketing
techniques and modern advertising will lead to at the satisfactory level.
Annexure
 Questionnaire
Name:

1.Age

a) 20-30
b) 31-40
c) 41-50
d) 50& above

2.Gender

a) Male
b) Female

3.Annual Income

a) Below 1,00,000
b) 1,00,000-5,00,000
c) 5,00,000-10,00,000
d) Above 10,00,000

4.Are timesheets, a record of working hours of full-time and part-time employees, maintained for
each paid employee.

 Yes
 No

5.Do you issue an employement letter or contract which includes the employee‟s salary?

 Yes
 No

6.Do you have a written procurement policy?

 Yes
 No

7.Do you keep inventory pecords for equipment?

 Yes
 No
8.Does your organization have written accounting policy and procedures?

 Yes
 No

9. Do you keep invoices, vouchers and receipts for all payments made from grant funds?

 Yes
 No

10.Do you have a subrecipient agreement?

 Yes
 No

11.Do you have written procedures to monitor subrecipient?

 Yes
 No

12.What are the various channels of getting this feedback?

a) Formal channel like survey, reports, etc.

b) Informal channel like meetings, discussion, etc.
c) Both formal and informal channels.

13.Are you satisfied with the present performance measurement system in your company in this
competitive era?

a) Highly satisfied
b) Satisfied
c) Reasonably satisfied
d) Dissatisfied
e) Can‟t say
 Bibliography
 NEWSPAPER (BUSINESS STANDARD)

 NEWSPAPER (ECONOMIC TIMES)

 OUTLOOK MONEY

 TELEVISION CHANNEL (CNBC AAWAJ)

 WWW.GOOGLE.COM

 WWW.FORCE MOTORS.COM

 WWW.ONLINERESEARCHONLINE.COM

 STUDY OF BOOKS-
 Agarwal R.N.,„Financial Liberalization in India‟:Banking system and stock
market‟.

 Avdhani V.A., „Investment Management‟.

 Capital Market by CS deepak Gajarni


 Mahavir Publicatins Financial Management by F.C.Sharma