A STUDY ON FINANCIAL ANALYSIS And RIDE AND HANDLING SUBJECTIVE ASSESSMENT IN 6X4 TIPPERS AT ASHOK LEYLAND LTD, CHENNAI

PROJECT REPORT SUBMITTED BY SUSHANT BETALA REG.NO: A31001910067

MASTER OF BUSINESS ADMINISTRATION 2010-2012 AMITY GLOBAL BUSINESS SCHOOL, CHENNAI

ACKNOWLEDGEMENT
I take immense pleasure in thanking Mr. T. Chandrasekar, DGM Finance, Ashok Leyland Limited, Chennai for giving me an opportunity to do this project. I also extend my sincere gratitude to Dr. E. Illamathiyan, Director of Amity Global Business School, Chennai and my faculty guide Mrs.Kavitha Menon, who helped me throughout the study and was a source of motivation to make our project successful. I thank each and every employee at Ashok Leyland Limited, Chennai who directly or indirectly had helped me in completing the project successfully. Finally I express my gratitude and heartiest thanks to my faculty members, parents and all my friends who gave full support throughout the tenure of my project. SUSHANT BETALA

ABSTRACT
The objective of the study is to familiarize with the business organisation and to get practical experience regarding the organizational function, to observe and understand the culture in the organization and to get industrial exposure and experience. It is also to understand the functions of the Finance Department in Ashok Leyland Limited, Chennai. My main focus was to study the effectiveness of Financial Analysis and the impact of the same and to analyse the performance of the company and a comparative study for the years 2005-2010.Analysis was done using Ratio Analysis. The various ratios were calculated to analyse the current performance of the company.

CONTENTS
CHAPTER NO I TITLE INTRODUCTION - Industry Profile - Consumption Trends - Automobile Industry History - Indian Automobile Industry - Company Profile NEED & OBJECTIVE OF THE STUDY RATIO ANALYSIS - Meaning - Types Of Ratios DATA ANALYSIS RESULT OF THE STUDY - Findings - Suggestions CONCLUSION REFERENCES - Bibliography - Annexure PAGE NO

II III

IV V

VI VII

INTRODUCTION

Finance is regarded as the life blood of a business enterprise. In the modern oriented economy, finance is one of the basic foundations of all kinds of economics activities.

Finance statements are prepared primarily for decision-making. They play a dominant role in setting the frame work and managerial conclusion and can be drawn from these statements. However, the information provided in the financial statement is of immense use in decision-making through analysis and interpretation of financial statements. As said earlier finance is said to be life blood of any business. Every business under taking needs finance for its smooth working. It has to raise funds from the cheapest and risky source to utilize this in most effective manner. So every company will be interested in knowing its financial performance. The project entitled Financial performance Analysis of Ashok Leyland Industry Ltd throw light on over all financial performance of the company.

INDUSTRY PROFILE
The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car and
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commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.

CONSUMPTION TRENDS
About 250 million vehicles are in use in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007, consuming over 260 billion gallons of gasoline and diesel fuel yearly. In the opinion of some, urban transport systems based around the car have proved unsustainable, consuming excessive energy, affecting the health of populations, and delivering a declining level of service despite increasing investments. Many of these negative impacts fall disproportionately on those social groups who are also least likely to own and drive cars. The sustainable transport movement focuses on solutions to these problems. The Detroit branch of Boston Consulting Group predicts that, by 2014, one-third of world demand will be in the four BRIC markets (Brazil, Russia, India and China). Other potentially powerful automotive markets are Iran and Indonesia

AUTOMOBILE INDUSTRY HISTORY

In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, three wheeler, military tractor that made use of steam engine. The range of the automobile, however, was very brief and at the most, it could only run at a stretch for fifteen minutes. In addition, these automobiles
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were not fit for the roads as the steam engines made them very heavy and large, and required ample starting time. Oliver Evans was the first to design a steam engine driven automobile in the U.S. The automobile industry finally came of age with Henry Ford in 1914 for the bulk production in cars. This lead to the development of the industry and it first begun in the assembly lines of his car factory. The several methods adopted by Ford, made the new invention ie., car, popular amongst the rich as well as masses. According to the history of automobile industry U.S, dominated the automobile markets around the globe with no notable competitors. However, after the end of Second World Warin 1945, the automobile industry of other technologically advanced nations such as Japan and certain European nations gained momentum and within a very short period, beginning in the early 1980s, the U.S automobile industry was flooded with foreign automobile companies, especially those of Japan and Germany. The current trends of the Global automobile industry reveal that in the developed countries the automobile industry are stagnating as a result of the drooping car markets, whereas the automobile industry in the developing nations, such as India and Brazil, have been consistently registering higher growth rates every passing year for their flourishing automobile markets.

INDIAN AUTOMOBILE INDUSTRY

India is one of the fastest growing automobile industries in the world. After 1960, the automobile industry saw rapid growth and many automotive manufacturers started production.
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The automobile industry in India is the seventh largest in the world with and annual production of over 2.6 million units in 2009. In 2009, India emerged as Asias fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nations roads. A well developed transport network indicates a well developed economy. For rapid development a well-developed and well-knit transportation system is essential. As Indias transport network is developing at a fast pace, Indian automobile industry is growing too. Also, the automobile industry has strong backward and forward linkages and hence provides employment to a large section of the population. Thus the role of automobile industry cannot be overlooked in the Indian economy. Indian automobile industry includes manufacture of trucks, buses, passenger cars, defence vehicles, two wheelers etc.., The industry can be broadly divided into the car manufacturing, twowheeler manufacturing and heavy vehicle manufacturing units. The major car manufacturers are Hindustan Motors, Maruti Udyog, Fiat India Pvt. Ltd, Ford India Ltd., General Motors Pvt. Ltd., Honda Siel Cars India Ltd., Hyundai Motors India Ltd., Skoda India Pvt. Ltd., Toyota Kirloskar Motor Ltd., to name a few. The two wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle & Scooter India Pvt. Ltd., Hero Honda, Yamaha, Bajaj etc.., The heavy motors like buses, trucks, defence vehicles, auto rickshaws and other multi utility vehicles are manufactured by Tata-Telco, Ashok Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra etc..,

KEY STATISTICS

The production of automobiles has greatly increased in the last decade. It passed the 1 million mark during 2003-2004 and has more than doubled since. Car % % Year Commercial Production Change Change 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Year 2,814,584 2,175,220 1,846,051 1,713,479 1,473,000 1,264,000 1,178,354 907,968 703,948 654,557 517,957 533,149 29.39 17.83 7.74 16.33 16.53 7.27 29.78 28.98 7.55 26.37 -2.85 722,199 466,330 486,277 540,250 546,808 362, 755 332,803 253,555 190,848 160,054 283,403 285,044 54.86 -4.10 -9.99 -1.20 50.74 9.00 31.25 32.86 19.24 -43.52 -0.58 Total Vehicles Prodn. 3,536,783 2,641,550 2,332,328 2,253,999 2,019,808 1,628,755 1,511,157 1,161,523 894796 814611 801360 818193 2008-2009 11,175,479 33,342 1,530,660 3,718 % Change 33.89 13.25 3.35 10.39 19.36 7.22 23.13 22.96 8.96 1.62 -2.10

2004-2005 2005-2006 2006-2007 2007-2008

Motor Vehicle 8,467,853 9,743,503 11,087,997 10,853,930 Production Industry Revenue Exports (Units) Exports (Revenue) 24,379 629,544 1,915 26,969 806,222 2,231 30,507 1,011,529 2,552 32,383 1,238,333 3,008

Automobile Production Type of Vehicle 20052006-2007 2007-2008 2008-2009 2009-2010

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2006 Passenger Vehicles Commercial Vehicles Three Wheelers Total 1,209,876 1,309,300 1,545,223 353,703 374,445 391,083 434,423 519,982 556,126 1,777,583 1,838,697 549,006 500,660 417,126 501,030

Two Wheelers 6,529,829 7,608,697 8,466,666

8,026,681 8,418,626

8,467,853 9,743,503 11,087,997 10,853,930 11,175,479

Automobile Sales Type of Vehicle Passenger Vehicles Commercial Vehicles 20042005 2005-2006 2006-2007 2007-2008 2008-2009 1,549,882 490,494 364,781 7,249,278 1,551,880 384,122 349,719 7,437,670 9,723,391

1,061,572 1,143,076 1,379,979 318,430 351,041 359,920 467,765 403,910

Three Wheelers 307,862 Total

Two Wheelers 6,209,765 7,052,391 7,872,334

7,897,629 8,906,428 10,123,988 9,654,435

Automobile Exports Type of Vehicle Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Total 20042005 166,402 29,940 66,795 366,407 629,544 2005-2006 2006-2007 2007-2008 2008-2009 175,572 40,600 76,881 513,169 806,222 198,452 49,537 143,896 619,644 1,011,529 218,401 58,994 141,225 819,713 1,238,333 335,739 42,673 148,074 1,004,174 1,530,660

Vehicle Registration
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India had over 100 million vehicles registered on its roads in the year 2008.This is a growth of about 100% in the past 9 years. Over 77% and about 77 million of these vehicles are two wheelers, about 14% and over 14 million are cars, jeeps and taxis. Over 5 million and over 1 million vehicles registered are goods vehicles and buses respectively. Two wheelers account a significant market share. Tata Motors with the launch of Tata Nano is trying to attract some of these two wheeler buyers to buy a small, cheap and affordable passenger car. Total Number of Vehicle Registrations in India from 2001- 2008 All Year Vehicles (in '000) 2001 2002 2003 2004 2005 2006 2007 2008 54,991 58,924 67,007 72,718 80,045 88,068 96,808 106,591 Two Wheelers (in '000) 38,556 41,581 47,519 51,922 57,417 63,487 70,141 77,588 Cars, Buses Goods Other Jeeps and (in Vehicles (in Vehicles (in Taxis (in '000) '000) '000) '000) 7,058 7,613 8,599 9,451 10,460 11,571 12,810 14,222 634 635 721 768 822 879 936 1,003 2,948 2,974 3,492 3,749 4,053 4,345 4,652 5,018 5,795 6,121 6,676 6,828 7,337 7,891 8,464 9,065

AT PRESENT INDIA IS THE WORLDS

Largest tractor and three-wheel vehicle producer. 2nd largest two-wheeled vehicle producer. 4th largest commercial vehicle producer. 11th largest passenger car producer.

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KEY COMPETITORS IN THE COMMERCIAL VEHICLE SEGMENT

1. TATA MOTORS Market Share of 63.94% 2. ASHOK LELAND - Market Share of 22%

3. MAHINDRA & MAHINDRA Market Share of 10.01%

Market Characteristics
Market Size
The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. The industry has attained a turnover of USD 35.8 billion, (INR 165,000 crores) and an investment of USD 10.9 billion. The industry has provided direct and indirect employment to 13.1 million people. Automobile industry is currently contributing about 5% of the total GDP of India. Indias current GDP is about $ 1.4 trillion and is expected to grow to $ 3.75 trillion by 2020. The projected size in 2016 of the Indian automotive industry varies between $ 122 billion and $ 159 billion including USD 35 billion in exports. This translates into a contribution of 10% to 11% towards Indias GDP by 2016, which is more than double the current contribution.

Demand Determinants
Determinants of demand for this industry include vehicle prices (which are determined largely by wage, material and equipment costs) and exchange rates, preferences, the running cost of a vehicle (mainly determined by the price of petrol), income, interest rates, scrapping rates, and product innovation.

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Exchange Rate:
Movement in the value of Rupee determines the attractiveness of Indian products overseas and the price of import for domestic consumption. Affordability: Movement in income and interest rates determine the affordability of new motor vehicles. Allowing unrestricted Foreign Direct Investment (FDI) led to increase in competition in the domestic market hence, making better vehicles available at affordable prices. Product Innovation is an important determinant as it allows better models to be available each year and also encourages manufacturing of environmental friendly cars.

Demographics:
It is evident that high population of India has been one of the major reasons for large size of automobile industry in India. Factors that may be augment demand include rising population and an increasing proportion of young persons in the population that will be more inclined to use and replace cars. Also, increase in people with lesser dependency on traditional single family income structure is likely to add value to vehicle demand.

Infrastructure:
Longer-term determinants of demand include development in Indians infrastructure. Indias banking giant State Bank of India and Australias Macquarie Group has launched an infrastructure fund to rise up to USD 3 billion for infrastructure improvements. India needs about $500 billion to repair its infrastructure such as ports, roads, and power units. These investments are been made with an aim to generate long-term cash flow from automobile, power, and telecom industries. (Source: Silicon India)

Price of Petrol:
Movement in oil prices also have an impact on demand for large cars in India. During periods of high fuel cost as experienced in 2007 and first half of 2008, demand for large
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cars declined in favour of smaller, more fuel efficient vehicles. The changing patterns in customer preferences for smaller more fuel efficient vehicles led to the launch of Tata Motors Nano one of worlds smallest and cheapest cars.

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COMPANY PROFILE

HISTORY
The origin of Ashok Leyland can be traced to the urge for self-reliance, felt by independent India. Pandit Jawaharlal Nehru, India's first Prime Minister persuaded Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. In 1948, Ashok Motors was set up in what was then Madras, for the assembly of Austin Cars. The Company's destiny and name changed soon with equity participation by British Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. Since then Ashok Leyland has been a major presence in India's commercial vehicle industry with atradition of technological leadership, achieved through tie-ups with international technology leaders and through vigorous in-house R&D.
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Access to international technology enabled the Company to set a tradition to be first with technology. Be it full air brakes, power steering or rear engine busses, Ashok Leyland pioneered all these concepts. Responding to the operating conditions and practices in the country, the Company made its vehicles strong, over-engineering them with extra metallic muscles. "Designing durable products that make economic sense to the consumer, using appropriate technology", became the design philosophy of the Company, which in turn has moulded consumer attitudes and the brand personality. Ashok Leyland vehicles have built a reputation for reliability and ruggedness. The 5,00,000 vehicles we have put on the roads have considerably eased the additional pressure placed on road transportation in independent India. In the populous Indian metros, four out of the five State Transport Undertaking (STU) buses come from Ashok Leyland. Some of them like the double-decker and vestibule buses are unique models from Ashok Leyland, tailor-made for high-density routes.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 NonResident Indian transnational group and IVECO. (Since July 2006, the Hinduja Group is 100% holder of LRLIH). The blueprint prepared for the future reflected the global ambitions of the company, captured in four words: Global Standards, Global Markets. This was at a time when liberalisation and globalisation were not yet in the air. Ashok Leyland embarked on a major product and process up gradation to match world-class standards of technology. 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. It has also become the first Indian auto company to receive the latest ISO/TS 16949 Corporate Certification (in July 2006) which is specific to the auto industry.

Ashok Leyland is the leading manufacturer of trucks, buses, special application vehicles and engines in India. The products of Ashok Leyland are at par with the best in the world. Ashok Leyland is the leaders in the Indian bus market, offering unique models
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such as CNG, Double Decker and Vestibule bus. More than 80% of the State Transport Undertaking (STU) buses come from Ashok Leyland. The company is a pioneer in multi axle trucks and tractor-trailers. Ashok Leyland is the largest provider of logistic vehicles to the Indian army. It also manufactures diesel engines for Industrial, Genset and Marine applications, in collaboration with technology leaders. The birth of Ashok Leyland can be attributed to the quest for self-reliance in the aftermath of independence. Pandit Jawaharlal Nehru persuaded Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. In 1948, Ashok Motors was set up in Madras (Chennai) for the assembly of Austin Cars. Soon, British Leyland acquired an equity stake in the company and the name of the company was changed from Ashok Motors to Ashok Leyland. In 1955, Ashok Leyland commenced of commercial vehicles. Since then Ashok Leyland has maintained its technological leadership in the India's commercial vehicle industry. Tie-ups with international technology leaders and through vigorous in-house R&D enabled Ashok Leyland to introduce latest technological breakthroughs in the Indian market. Ashok Leyland was the first to introduce full air brakes, power steering and rear engine busses in India. In 1987, the overseas holding by Land Rover Leyland International Holdings Limited (LRLIH) was taken over by a joint venture between the Hinduja Group and IVECO. Since July 2006, the Hinduja Group is 100% holder of LRLIH.

ASSOCIATE COMPANIES OF ASHOK LEYLAND

Automotive Coaches & Components Ltd (ACCL):
ACCL was promoted by Ashok Leyland and the Tamil Nadu Industrial Development Corporation (TIDCO) in the 1980s. The company has two Divisions: ACCL Division and PL Haulwel Trailers (PLHT). ACCL is the largest Tipper Body manufacturer in the organised sector in India. Apart from the tippers, it also manufactures bus bodies, frontend structures (FES), tankers, aluminium containers, OB vans, energy vans and the like. PLHT manufactures a wide variety of after-chassis products. These include Fifth Wheel
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Couplers and Hoists, Semi Trailers, Container trailers, Ladle Carriers, for foundries (Steel / Aluminium), Running gears for LPG tankers, Car / Truck / Tractor Carriers, Bottom dumpers, and all types of user-specific custom-designed trailers for niche applications.

Lanka Ashok Leyland:

The Company was established in 1982. It is a joint venture between Ashok Leyland and the Government of Sri Lanka. Ashok Leyland supplies chassis in both completely built-up and knocked down conditions to Lanka Ashok Leyland, which in turn assembles the chassis and builds bodies.

Ennore Foundries:
Ennore Foundries was established in 1959. It is India's largest automotive jobbing foundry and caters to different segment like automobiles, tractors, industrial engines and power generators.

IRIZAR-TVS:
IRIZAR-TVS is a joint venture between Ashok Leyland, TVS & Sons Ltd and IRIZAR, the internationally reputed bus body builder from Spain. The company was started in 2001 and it manufactures luxury coaches.

Ashok Leyland Project Services Limited:

Ashok Leyland Project Services Limited (ALPS) looks after the project development activities of the Hinduja Group in India. It assists the investment entities of the Group and provides professional services to help international companies interested in projects in India.

NISSAN ASHOK LEYLAND:

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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:

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 power train 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.

Ashok Leyland Defence Systems

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 seven manufacturing locations in India:

o o o o

Ennore and Hosur, Tamilnadu (Hosur - 1, Hosur - 2, CPPS) Alwar, Rajasthan Bhandara, Maharastra Pantnagar, Uttarakhand
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Ashok Leyland's Technical Centre, at Vellivoyalchavadi in the outskirts of Chennai, is a state-of-the-art product development facility, that apart from modern test tracks and component test labs, also houses India's one and only Six Poster testing equipment

The company has an Engine Research and Development facility in Hosur 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.

Major Achievements of Hinduja Group

In 1993, became first Indian Auto Company to receive ISO 9002 certification. Received ISO 9001 certification in 1994, QS 9000 in 1998, and ISO 14001 Became the first Indian auto company to receive the latest ISO/TS 16949 First company to introduce full air brakes, power steering and rear engine busses

certification for all vehicle manufacturing units in 2002.

Corporate Certification (in July 2006).

in India.

Products

Luxura Viking BS-I - city bus Viking BS-II - city bus Viking BS-III -city bus Cheetah BS-I Cheetah BS-II
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Panther 12M bus Stag Mini Stag CNG 222 CNG Lynx Double Decker Vestibule bus Airport Tarmac Coach Gensets

Goods Segment

Comet 1611 1612 H 1613 H 1613 H/2 (12m Goods) 4/51 GS 1613 Taurus 2516/2 (6x4) Tipper CT 1613 H/1 & H/2 Bison Tipper 1613 ST (4x2) Taurus HD 2516MT/1 (6x4) Taurus 2516 - 6X4 2516 H (6X2) Taurus 2516 - 6 X 2 4018 Tractor
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Artik 30.14 Tractor Tusker Turbo Tractor 3516 ecomet 912 ecomet 111i 4921 U-Truck Tippers U-3123 U-2523 U-2518 U-1616 U-1618 U-Truck Tractors U-4923 U-4023 U-3518

NEED FOR THE STUDY

Liquidity management refers to the administration of all aspects of current assets and current liabilities.

The annual report of the company constitutes the most important source of data for judging the liquidity position.

Analysing the financial statements is a process of evaluating the competent part of financial statement to obtain a better understanding of firms position and performance.

OBJECTIVE OF THE STUDY

Honouring all cash outflow commitments on an ongoing, daily basis.
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 Avoiding raising funds at market premium or through the forced sale of assets.

Satisfying statutory liquidity and statutory reserve requirements.

SCOPE OF THE STUDY

The study covers the Financial performance of the Ashok Leyland. The study is made by making comparison of five year of it operation. The study aims to reveal where the stands in respect to liquidity and an effective use of asset.

PERIOD OF THE STUDY

The study covered a period of five years from 2005-06 to 2009-10 accounting year ends 31st march every year.

RESEARCH METHODOLOGY :
The study is based on secondary data. Data pertaining behavior of liquidity solvency and profitability position were collection from the Balance Sheet and Profit & Loss account of ashokLeyland. The necessary data were obtained from published annual report.

TOOLS AND TECHNIQUE: RATIO ANALYSIS

Liquid ratio Solvency ratio Profitability ratio

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LIMITATION OF THE STUDY:

The study is based on secondary data The time span was limited only a period of five years. The study suffers all the limitation of ratio analysis, such as lack of adequate change, income, price level change etc.

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RATIO ANALYSIS

MEANING
It refers to the systematic use of ratios to interpret the financial statements in terms of the operating performance and financial position of a firm. It involves comparison for a meaningful interpretation of the financial statements. In view of the needs of various uses of ratios the ratios, which can be calculated from the accounting data are classified into the following broad categories CLASSIFICATION:

Short term solvency ratio:

I. Liquidity ratio 3.1 Current ratio. 3.2 Liquid ratio.
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3.3 Absolute liquidity ratio. II. Activity ratio 3.4 Inventory turnover ratio 3.5 Inventory conversion period 3.6 Debtor turnover ratio 3.7Average collection period 3.8 Working capital turnover ratio.

Long term solvency ratio:

3.9 Debt Equity ratio 3.10 Proprietary ratio 3.11 Fixed asset to net worth ratio 3.12 fixed asset ratio. 3.13 Current asset to proprietary fund 3.14 Fixed asset turnover ratio.

Profitability ratio 3.15 Gross profit ratio

3.16 Net profit ratio 3.17 Operating profit ratio 3.18 Selling & administration expenses

SHORT TERM SOLVENCY RATIO I.LIQUIDITY RATIO: 3.1. CURRENT RATIO

Current ratio may be defined as the relationship between current asset and current liabilities. The current ratio is the index of the concern financial stability since it shows extent of the working capital, which is the amount by which the current asset exceeds the current liabilities. The rule of the thumb is 2:1

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Current ratio=

Current Asset ______________ Current Liability

Current asset= Inventories + Sundry debtors+ Cash & Bank balance. Current liabilities= Bills payable + Bank O/D.

TABLE: I CURRENT RATIO * Rs .in . Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Current Asset* 1492.88 1681.75 1644.30 2374.91 2849.22 Current liabilities* 1344.19 1865.97 2196.40 2207.29 3002.68 Ratio 1.11 0.90 0.74 1.07 0.94
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INTERPRETATION: The rule of thumb of current ratio is 2:1 the ratio and here it shows a fluctuating trend. In the year 2005-2006 the ratio was 1.11 and it was decreased from 0.90 to 0.74 in 2006-2007 and 2007-2008. In 2008-2009 the ratio was decreased to 1.07 and 2009-2010 the ratio was again decreased to 0.94.Initially there is a high increase in the liailities when compared to the increase in assets and thats the reason the current ratio is low. There was high decrease in the stock and cash balances of the company result of which the ratio was low. So it was not satisfactory.

CHART : 1

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Current ratio

1.6 1.11 Ratio 0.9 0.8 0.74

1.07

0.94

0 200506 200607 2007- 200808 09 years 200910

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3.2. LIQUID RATIO:

This ratio also termed as acid test or quick ratio. This is ascertaining by comparing the liquid asset and current liability. It is the test of liquidity to the ability of the current ratio .the term liquidity refers to the ability of a firm to pay its short term obligation. The rule of thumb is 1:1. Liquid Asset _______________ Current Liability

Liquid ratio =

Liquid Asset = Current Asset Inventories.

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TABLE: I LIQUID RATIO *Rs .in. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Liquid asset* 590.32 611.43 420.39 1044.91 1210.98 Current liabilities* 1334.19 1865.97 2196.49 2207.29 3002.68 Ratio 0.44 0.32 0.19 0.47 0.40

INTERPRETATION:
The rule of thumb of liquid ratio is 1:1. The liquid ratio in the year 2005-2006 and it was decreased from 0.32 to 0.19 in 2006-2007 and 20072008. The ratio was again increased to 0.47 in 2008-2009 and 2009-2010. The ratio was again decreased to 0.40 in the year 2005-2006 to 20092010.The reason being current ratio is very low.In 2007-2008 the liquid asset had a major fall while the current liabilities of the company was incresing as a result of which the liqud ratio is not satisfactory. There was decrease in the stocks of the company..

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CHART :2

Liquid ratio 0.64

0.47 0.44 0.4 Ratio 0.32 0.32 0.19

0 200506 200607 2007- 200808 09 years 200910

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3.3. ABSOLUTE LIQUID RATIO OR CASH RATIO: The ratio measures the relationship between cash and near cash item on the hand and immediately maturing obligation on the other. The inventory and debtor are excluded from current asset to calculate this ratio. The rule of thumb is 0.5:1.

Absolute Liquid Asset Absolute ratio= ___________________ Current Liability

Absolute liquid asset = Cash & Bank balance

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TABLE: 3 ABSOLUTE LIQUID RATIO * Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Absolute liquid asset* 165.98 88.5 44.55 86.93 188.92 Current liabilities* 1334.19 1865.97 2196.49 22.7.29 3002.68 Ratio 0.12 0.04 0.02 0.03 0.06

INTERPRETATION: The rule of thumb of absoluter liquid ratio is 0.5:1. In the year 20052006 the ratio was 0.10 and next year onwards it was decreasing trend. In the year 2006-2007 to 2008-2009, the ratio was decreased from 0.04 to 0.02. In 2009-2010 the ratio was decreased to 0.06. The Absoloute Liquid Asset of the company had been decresing and there is a huge difference between the Absolute liquid asset and the current liabilities. This Ratio of the company is poor from the beginning from the year when the analysis is made. There has been poor cash and bank balances of the company..

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CHART :3

Absolute liquid ratio

0.16 0.12 0.12 Ratio

0.08 0.04 0.04 0.02

0.06

0.03

0 200506 200607 2007- 200808 09 years 200910

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II.ACTIVITY RATIO

3.4. INVENTORY TURNOVER RATIO:

Every firm has to maintain a certain level of inventory to finished goods. It was able to meet the requirements of the business, inventory turnover indicates the number of times stock has been turned during the period and evaluate the efficiency with which a firm is able to manage.

Inventory turnover ratio=

Net Sales ____________ Inventory

Net sales = Sales Excise duty.

37

TABLE: 4 INVENTORY TURNOVER RATIO * Rs. in . Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Inventory* 902.56 1070.32 1223.91 1330.01 1638.24 Ratio 5.93 6.87 6.51 4.63 4.53

INTERPRETATION: The inventory turnover ratio in the year 2005-2006 was 5.95 but it was increased to 6.87 in 2006-2007. In 2007-2008 to 2009-2010 the ratio was decreased from 6.51 to 4.53. This stock turnover ratio implies over investment in stock.The company has invested a lot in stock where as this is not matched with the sales for the company.

38

CHART :4

inventory turnover ratio 8 6.87 5.93 4.63 Ratio 4 6.51

4.53

0 200506 200607 2007- 200808 09 years 200910

39

3.5. INVENTORY CONVERSION PERIOD: It may be of interest to see average time taken for clearing the stock. This can be possible by calculating inventory conversion period. This period is calculated by dividing the number of days by inventory turnover ratio.

Inventory conversion period=

No. of days in a year ________________________ Inventory turnover ratio

40

TABLE: 5 INVENTORY CONVERSION PERIOD Year 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION: In the year 2005-2006 the conversion period was 61 days and it was decreased to 56 days in 2006-2007. In 2007-2008 the days slightly increased to 56 days. In 2008-09 and 2009-10 the days was increased from 78 to 80 days. It indicates more days to clear stock compared to previous year. The number of days taken for selling the stock was more, and thats the reason this ratio is very low. Days in a year* 365 365 365 365 365 Stock turn over ratio* 5.93 6.87 6.51 4.63 4.63 Ratio 61 53 56 78 80

41

CHART :5

Inventory conversion period 90

80

78

80

Ratio

70 61 60 53 50 200506 200607 2007- 200808 09 years 200910 56

42

3.6. DEBTOR TURNOVER RATIO: It established the relationship between the net credit sales and average debtor. It indicates the number of times the collection debtor has turnover during the year. The higher the ratio is better result with ratio is better result with efficient management. Net credit sales Debtor turnover ratio= ______________ Average debtor

Average debtor= Opening debtor + Closing debtor+ Opening bills receivable + Closing bills receivable.

43

TABLE: 6 DEBTOR TURNOVER RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION: In this year 2005-2006 the ratio was 12.60 times and it decreased to 14.07 in 2006-2007. In 2007-2008 the ratio again increased to 21.21 and it was decreased to 6.43 in 2008-2009. In 2009-2010 it was slightly increased to 7.27. It implies in efficient management of the company in reducing its debt and incresing the sale of the company. Net credit sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Average debtor* 424.34 522.88 375.84 957.97 1022.06 times 12.60 14.07 21.21 6.43 7.27

44

CHART :6

Debtor turnover ratio 24

21.21

18 14.07 12.6 Ratio 12 6.43 6 7.27

0 200506 200607 2007- 200808 09 years 200910

45

3.7. AVERAGE COLLECTION PERIOD: The number of days taken by a firm for collecting of its receivable or debtors during the year. It indicates the relationship between average debtor and net credit sales.

Average collection period =

No. of days in a year _____________________ Debtor turnover ratio TABLE: 7

AVERAGE COLLECTION PERIOD Year 2005-06 2006-07 2007-08 2008-09 2009-10 Days in a year 365 365 365 365 365

Rs .in cores Debtor turnover Days ratio 12.60 28 14.07 25 21.21 17 6.43 56 7.27 50

INTERPRETATION: The collection period in the year 2005-2006 the days was 28. In 200607 and 2007-2008 it was reduced from 25 days to 17 days. In 2008-2009 it was increased to 56 days and it was decreased to 50 days in 2009-2010. In the earlier years the debt was collected more quickly by the company but from 2008-2009 the debt collection period is incresed since the debtor turnover ratio has gone down.

46

CHART :7

Average collection period 60 56 50

45 Ratio

30

28 25

17 15 200506 200607 2007- 200808 09 years 200910

47

3.8. WORKING CAPITAL TURNOVER RATIO: This ratio indicates the number of time the working capital is turned over in the course of a year. . The higher ratio indicates efficient utilization of working capital. The higher may be the result of high turnover of inventories of receivable Net sales ____________________ Net working capital

Working capital turnover ratio=

Net working capital = Current Assets Current Liabilities.

48

TABLE-8 WORKING CAPITAL TURNOVER RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION: The ratio shows fluctuating trend from 2005-2006 to 2009-2010. The ratio was 9.12 in 2005-2006 and it was increased from 12.80 to 36.62 in 2007-2008. But it was decreased to 8.56 in 2008-09and in the year 20092010 it was again slightly increased to 10.10. Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Working capital* 587.32 574.72 217.66 720.32 736.17 *Rs. in. Cr Ratio 9.12 12.80 36.62 8.56 10.10

49

CHART :8

working capital turnover ratio 38 36.62

Ratio

19 12.8 9.12 8.56 10.1

0 200506 200607 2007- 200808 09 years 200910

50

LONG TERM SOLVENCY RATIO

3.9. DEBT EQUITY RATIO

This ratio is also known as internal and external equality ratio .it is mainly calculated to assess the soundness of long term financial policies and to determine the relatives stakes of outsiders and owners. It indicates the relationship between debt and equity.

Debt equity ratio=

Long term fund _________________________ Shareholders fund

Long term debt = Secure loan + Un secured loan. Shareholder fund= Share capital, Reserve & Surplus.

51

TABLE: 9 DEBT EQUITY RATIO * Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10
INTERPRETATION:

Long term debt* 691.93 640.40 887.50 1961.98 2280.45

Shareholders fund* 1412.46 1894.58 2148.98 3478.89 3656.30

Ratio 0.48 0.33 0.41 0.56 0.62

The rule of thumb is 2:1. The debt equity in the year 2005-06 was 0.48 but and 2006-2007 it was decreased to 0.33 and next three year it was slightly increased from 0.41 to 0.62 in the year 2007-2008 to 2009-2010. The ratio shows that the long term debt is very low, so the company can make use of the law cost of fund, and it was satisfactory.

52

CHART : 9

Debt equity ratio 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 200506 200607 2007- 200808 09 years 200910 0.48 0.41 Ratio 0.33 0.56

0.62

53

3.10. PROPRIETARY RATIO: This ratio is also called as equity ratio or owners fund ratio. This ratio points out relationship between the shareholders fund and total asset of the company. It indicates the proportion of total asset financed by shareholders.

Proprietary ratio=

Shareholders fund _________________ Total asset.

Total asset= Current asset +Fixed asset.

54

TABLE: 10 PROPRIETARY RATIO *Rs. in. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Shareholders fund total asset* 1412.46 1894.58 2148.98 3473.89 3656.30 Total asset* 2104.40 2534.97 3036.48 5435.87 5936.76 Ratio 0.67 0.74 0.74 0.63 0.61

INTERPRETATION: The rule of thumb is above 50% of the ratio is satisfactory. The ratio shows in the year 2005-2006 was 0.67 and it was increased to 0.74 in 20062007 and 2007-2008. In 2008-2009 the ratio was decreased to 0.63 and again decreased to 0.61 in 2009-2010. It shows the shareholders are financed to total asset so it was satisfactory.

55

CHART :10

proprietory ratio 0.8 0.67 0.63 0.6 0.61 0.74 0.74

Ratio

0.4

0.2

0 200506 200607 2007- 200808 09 years 200910

56

3.11. FIXED ASSET TO NET WORTH RATIO: This ratio indicates as to what extends the shareholders fund have been invested in fixed assets. If the ratio is high, it implied that much of shareholders are invested in fixed asset. But too high indicates what the high amount is tied up in fixed capital.

Fixed asset Fixed asset to net worth ratio= _______________ Shareholders fund

57

TABLE: 11 FIXED ASSET TO NETWORTH RATIO * Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION: There is no rule of thumb but 60 plus 0.65 is said to be satisfactory. The ratio was 0.66 in the year 2005-2006. In 2006-2007 it was increased to 0.68 but in 2007-2008 it was increased to 0.63 in 2008-2009 the ratio was increased to 0.97 and 2009-2010 again the ratio was increased to 1.16. The shareholders fund is properly utilized. Fixed asset* 943.27 1307.04 1525.55 3399.11 4249.56 Shareholders fund* 1412.46 1894.58 2148.98 3473.89 3656.30 Ratio 0.66 0.68 0.63 0.97 1.16

58

CHART :11

fixed asset to networth ratio 1.4 1.2 1 0.8 0.6 0.4 0.2 0 200506 200607 2007- 200808 09 years 200910 0.68 0.97 1.16

Ratio

0.66

0.63

59

3.12. FIXED ASSET RATIO: The ratio indicates the extend to which the total of fixed asset are financed by long term fund of the firm. Generally the total fixed asset should be equal to the total long term fund. But if fixed assets exceeds, it implies that firm has financial asset, which not good the financial policy.

Fixed asset ratio=

Fixed asset before depreciation ______________________________ Total long term

Fixed assets = Long term investment. Fixed term funds = Share capital, Reserve & Surplus

60

TABLE: 12 FIXED ASSET RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION: In the year 2005-2006 the fixed asset ratio was 1.51 and it was decreased from 1.38 to 1.36 in 2006-2007 and 2007-2008. In 2008-2009 the ratio was slightly increased from 1.42 to 1.64 in 2008-2009 and 20092010. It implies the company has financed a part of fixed out of current asset. Fixed asset* 2138.50 2620.20 2942.44 4953.27 6018.63 Long term funds* 1412.46 1894.58 2148.98 3473.89 3656.30 Ratio 1.51 1.38 1.36 1.42 1.64

61

CHART :12

fixed asset ratio

1.6

1.51 1.38 1.36 1.42

1.64

Ratio 0.8 0 200506 200607 2007- 200808 09 years 200910

62

3.13. CURRENT ASSET TO PROPRIETORS FUND: The ratio is calculated by dividing the total of current asset by the amount of shareholders fund. The ratio indicates the extent to which proprietors fund are invested in current assets.

current asset Current asset to proprietors fund= __________________ Shares holders fund

63

TABLE: 13 CURRENT ASSET TO PROPRIETORY FUND *Rs. in. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION: The ratio shows fluctuating trend. In the year 2005-2006 the ratio was 1.05 and it was reduced from 0.88 to 0.68 in 2006-2007 to 2008-2009. But it was slightly increased to 0.77. This shows more than 50% of share holders are invested in current asset. Current asset* 1492.88 1681.75 1644.30 2374.91 2849.22 Share holders fund* 1412.46 1894.58 2148.98 3478.89 3656.30 Ratio 1.05 0.88 0.76 0.68 0.77

64

CHART :13

Current asset to proprietory fund 1.2 1.05 0.96 0.88 0.79 0.72 Ratio 0.68 0.77

0.48

0.24

0 200506 200607 2007- 200808 09 years 200910

65

3.14. FIXED ASSET TURNOVER RATIO: This ratio measures the efficiency in utilization of fixed asset. A high ratio reflects overtrading on the other hand a lower ratio indicates idle capacity and excessive investment in fixed asset.

Fixed asset turnover ratio=

Net sales ________________ Net fixed asset.

66

TABLE: 14 FIXED ASSET TURNOVER RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Net fixed asset* 943.27 1307.04 1525.5 3399.11 4249.56 Ratio 5.68 5.63 5.22 1.81 1.75

INTERPRETATION: The fixed asset turnover ratio. The ratio was decreasing trend was 5.68 in the year 2005-2006. And it easy slightly reduced from 5.63 to 5.22 in 2006.2007 and 2007-2008. In 2008-2009 and 2009-2010 the ratio was again decreased from 1.81 to 1.75. The ratio implies the company utilizes the fixed asset to achieve the highest sales.

67

CHART : 14
fixed asset turnover ratio 6 5.68 5.63

5.22

4 Ratio

1.81

1.75

0 200506 200607 2007- 200808 09 years 200910

68

PROFITABILITY RATIO

3.15. GROSS PROFIT RATIO:

It indicates the margin of profit on sale. It measures the relationship of gross profit to net sales and it is represented in percentage. The high gross profit ratio is sign of good management. The relatively low profit ratio is not good for the company. There are no standard norms.

Gross profit ratio=

Gross profit ________________ Net profit

X 100

Gross profit = Sales- Cost of goods sold

69

TABLE: 15 GROSS PROFIT RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Gross profit* 556.59 768.16 828.25 400.35 752.16 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Ratio 10 10 10 6 10

INTERPRETATION: This ratio represent in percentage. The ratio shows in the year 20052006, 2006-2007and 2007-2008 was 10 % and the ratio was decreased to 6% in the year 2008-2009. In 2009-2010 the ratio again increased to 10%. The Gross profit ratio was increasing trend, so overall ratio was satisfactory.

70

CHART :15

gross profit ratio 12 10 10 10 10

8 Ratio 6

0 200506 200607 2007- 200808 09 years 200910

71

3.16. NET PROFIT RATIO: Net profit ratio indicate the relationship between net profit and sales the efficiency of the manufacturing, welling and other activities of the firm

Net profit (after tax) Net profit ratio= _______________________ X 100 Net sales

72

TABLE: 16 NET PROFIT RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION: The ratio shows in the year 2005-2006 was 6% and the ratio was decreased to 5% in 2006-2007 and 2007-2008. Again the ratio was decreased to 3% in 2008-2009 and it was increased again 5% in 2009-2010. Because the company has been increased the net sales and overall net profit was increased trend. Net profit (after tax)* 327.32 441.29 469.31 190.00 423.67 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Ratio in % 6 5 5 3 5

73

CHART :16

Net profit ratio 9

6 Ratio

6 5 5 5

3 3

0 200506 200607 2007- 200808 09 years 200910

74

3.17. OPERATING PROFIT RATIO: Operating profit ratio is calculated for analyzing profitability of a concern. Increase in operate profit indicates improvement of firm working by cost reduction or increase sales.

Operating profit Operating profit ratio = _______________ Net sales

X 100

75

TABLE: 17 OPERATING PROFIT RATIO *Rs. in. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Operating profit* 540.36 686.16 804.49 473.09 761.40 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Ratio 10 9 10 7 10

INTERPRETATION: The ratio was 10% in the year 2005-2006 and slightly decreased to 9% in 2006-2007. In 2007-2008 again reached 10% and it was decreased to 7% in 2008-2009. In 2009-2010 the ratio was increased to 10%. The overall operating profit and sales are increased and reduce the expenses.

76

CHART :17

Operating profit ratio 15

10 Ratio

10 9

10

10

0 200506 200607 2007- 200808 09 years 200910

77

3.18. SELLING AND ADMINISTRATION EXPENSES: Selling and administrative ratio indicates the relationship between the expenses and sales .the changes in the selling and administrative expenses will be impact on sales.

Selling & Administration expenses Selling and administration expenses= ___________________________ X100 Net sales

78

TABLE: 18 SELLING AND ADMINISTRATION EXPENSES *Rs. in. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Selling &Administration expenses* 199.36 259.50 263.5 495.68 445.89 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Ratio 3 3 3 8 5

INTERPRETATION: The expenses ratio was 3% in three year that is 2005-2006, 2006-2007 and 2007-2008. In the year 2008-2009 it was increased to 8% but in the year 2009-2010. It decreased to 5%. Because the expenses are slightly decreased compared to previous year.

79

CHART : 18

Selling and administration expences 10

Ratio

0 200506 200607 2007- 200808 09 years 200910

80

CHAPTER-V - FINDINGS:
The current ratio was a fluctuating trend from 2005-2006 to 2009-2010. In last year the ratio was decreased 0.94. Because this is due to increased in debtor and cash & bank balances. The liquid ratio was declining trend in 2009-2010. Because increase the debtor and cash & bank balances in last year. The absolute liquid ratio implies in last year was slightly increased because the company should keep cash to meet day to day expenses. Inventors turnover ratio implies the company has made low sales because more days are taken to clear the stock, and high investment in stocks. The debtors turnover ratio indicates the last two year decreased. Because the company marked inefficient management of debtor or sales and debts was collected in 50 days in last years. The working capital was increased trend 2008-2009 and 2009-2010. This two year the working capital implies less utilization. Debt equity ratio helps to measure the extend to which debt financing to the business. The ratio is very low expected last year, the company can make use low cost fund in future. The proprietary ratio was fluctuating trend. It indicates the shareholders are more than 50% are investment in total asset. Because increase the value of asset in future. So it was satisfactory. The fixed asset ratio are measure the utilization of fixed asset. The fixed asset is increasing trend. So the company was making high sales. The gross profit ratio was 10% in four year; the company has making the sales in proportionally. Because the cost of goods sold is slightly variation. The net profit ratio implies the profitability position of the company has increased in 2009-2010 and sales are growing up. Operating profit ratio also implies the profit has been increased compared to previous year. Because the company was make low amount of cost of goods sold. The exp4ences ratio of the company was decreasing, because to make the high sales.
81

SUGGESTIONS

The current ratio and absolute ratio was maintained lower cash than ideal ratio. So, the company cab take step to increase the cash position to meet its expenses. The company is allowed credit period for 50 days. The debt collection period can be reduced with in 30days. The company should increase the long term debt. To reduce the investor cost of the company must follow average inventory system, Otherwise, the company was making investment in current asset and reducing cost of sales at the same time increasing sales and profit was good in earlier days.

82

CONCLUSION:
The project entitled A STUDY OF FINANCIAL PERFORMANCE ANALYSIS OF ASHOK LEYAND LIMITED was undertaken with the objective of financial performance and to examine profitability performance of the company. The study at Ashok Leyland provided me an insight into the workings of the company and how a firm manages its cash inflow and outflow. Financial Analysis helps to understand how the company is managing its finance function is to manage assets and liabilities , both as to cash flow and concentration, to ensure that cash inflows have an appropriate relationship to approaching cash outflows. On the review of the performance of company ratio and other financial statements for the past five years reveals that the company maintained a good solvency position. Hence it is concluded that Ashok Leyland is found to be efficiently managing its cash inflows and outflows. It is hoped that these interpretations, findings would support the organisation in efficient way.

83

BIBLIOGRAPHY
Book References
Financial Management I.M. Pandey Financial Management - Srivastava Ashish & Mishra Amit

Websites
www.ashokleyland.com www.wikipedia.com www.investopedia.com

84

ANNEXURE

ANNEXURE I

85

ANNEXURE II
86

ANNEXURE III
87

ANNEXURE IV

88

89