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Ratio

analysis
Tata Motors « Previous Years  
Key Financial Ratios ------------------- in Rs. Cr. -------------------

  Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Investment Valuation Ratios


Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 13.00 15.00 15.00 6.00 15.00
Operating Profit Per Share
56.07 67.12 78.61 33.52 70.68
(Rs)
Net Operating Profit Per
524.73 691.91 746.24 499.23 619.98
Share (Rs)
Free Reserves Per Share
123.34 157.16 182.38 217.77 229.67
(Rs)
Bonus in Equity Capital 29.06 28.87 28.86 21.64 19.50
Profitability Ratios
Operating Profit Margin(%) 10.68 9.70 10.53 6.71 11.74
Profit Before Interest And
7.82 7.25 8.16 3.20 8.82
Tax Margin(%)
Gross Profit Margin(%) 12.21 11.19 8.26 3.30 8.84
Cash Profit Margin(%) 9.86 9.07 8.13 6.97 7.12
Adjusted Cash Margin(%) 9.41 8.55 8.13 6.97 7.26
Net Profit Margin(%) 7.35 6.94 6.96 3.77 6.26
Adjusted Net Profit
6.55 6.12 6.96 3.77 6.28
Margin(%)
Return On Capital
26.47 25.82 18.96 6.41 9.66
Employed(%)
Return On Net Worth(%) 27.74 27.96 25.98 8.09 14.96
Adjusted Return on Net
24.77 24.67 21.18 7.45 9.61
Worth(%)
Return on Assets Excluding
143.58 177.33 202.54 240.60 259.03
Revaluations
Return on Assets Including
144.26 178.00 203.20 241.09 259.46
Revaluations
Return on Long Term
28.65 31.18 22.85 8.89 12.26
Funds(%)

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Liquidity And Solvency Ratios
Current Ratio 1.07 0.86 0.64 0.44 0.44
Quick Ratio 0.97 0.92 0.66 0.58 0.44
Debt Equity Ratio 0.53 0.59 0.80 1.06 1.11
Long Term Debt Equity
0.42 0.31 0.50 0.49 1.11
Ratio
Debt Coverage Ratios
Interest Cover 7.62 7.19 6.28 2.43 2.77
Total Debt to Owners Fund 0.53 0.59 0.80 1.06 1.12
Financial Charges
8.08 7.62 7.19 3.64 3.56
Coverage Ratio
Financial Charges
7.06 6.67 6.82 3.73 3.74
Coverage Ratio Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio 10.32 11.02 14.44 13.47 13.07
Debtors Turnover Ratio 26.31 35.60 30.08 19.11 18.02
Investments Turnover Ratio 12.63 13.26 14.44 13.47 13.50
Fixed Assets Turnover
5.00 5.01 2.69 1.88 1.93
Ratio
Total Assets Turnover Ratio 2.40 2.49 2.06 1.02 1.13
Asset Turnover Ratio 2.55 3.08 2.69 1.88 1.95
 
Average Raw Material
19.88 17.53 15.08 20.90 15.66
Holding
Average Finished Goods
16.65 17.34 16.81 13.64 17.70
Held
Number of Days In Working
34.47 26.96 -15.62 -28.19 -74.73
Capital
Profit & Loss Account Ratios
Material Cost Composition 72.84 74.55 72.62 73.26 71.70
Imported Composition of
4.64 3.88 4.60 5.82 5.94
Raw Materials Consumed
Selling Distribution Cost
3.78 4.00 4.09 4.77 4.47
Composition
Expenses as Composition
11.87 10.18 9.88 9.49 8.61
of Total Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net
37.13 35.34 32.51 34.52 44.28
Profit
Dividend Payout Ratio Cash 26.73 26.16 24.02 17.94 29.02

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Profit
Earning Retention Ratio 58.31 59.90 60.13 62.49 30.22
Cash Earning Retention
70.98 71.32 72.18 81.29 61.84
Ratio
AdjustedCash Flow Times 1.50 1.70 2.65 7.13 6.40

  Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Earnings Per Share 39.94 49.65 52.63 19.48 39.26


Book Value 143.94 177.59 202.70 240.64 262.30

Source : Asian CERC

Analysis of liquidity position of Tata Motors

  Ratio Analysis of TATA MOTORS  

Liquidity Ratios 2006 2007 2008 2009 2010

           
Current Ratio 1.07 0.86 0.64 0.44 0.44
Quick Ratio 0.97 0.92 0.66 0.58 0.44
Inventory Turnover
Ratio 10.32 11.02 14.44 13.47 13.07
Debtors Turnover
Ratio 26.31 35.6 30.08 19.11 18.02

Current Ratio

The above table is showing

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The primary object
The profitability ratios are used to measure the overall efficiency of the business.
generally profitability ratios are calculate in relation to the sale or in relation to
investment .
Genrally profitability ratios arwe divided into following catagories

Operarting profit ratios

Operating ratos are used to establish the relation between cost of good
sold and other operating exp on the one hand and sales on the other .
in other words it measures the cost of operation per rupees of sales
the ratio generally calculate

Operating ratios = operatig cost χ 100


net sales
Operating cost = cost of good sold + operating expenses
Net sales

Interpitation

Operating ratios indicates the percentages of the net sales that is consumed by
operating cost .obviously higher the operating ratios , the less is fabvorable it is ,
because it would have a small margin to cover interest , income tax , dividend
and reserves . however , 75-85% is considered as to be good ratos in case
manufacturing industry. Operatinf raios shoud be used catiously because it may

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affected by a number of uncontrolables factors beyond the control of the firm .
more ever some firm , non operating expenses from the substantial part of the
total expensese.

Operating profit ratios

This ratios is calculated = operating profit


Sales

Profit before interest and tax margin

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Gross profit ratio .
l
Gross profit ratio measures the relationship of gross profit
to the net sales and is usually represent in terms of %
Gross profits ratio = Gross profit * 100
Net sales

Interpitation
Generally the gross profit ratios indicates the extent to which selling
prices of goods per unit may decline without resulting in losses on
operation of firm . there is no standards norms for gross profit ratios
and it may vary from business but the gross profit shoud adequate to
cover the operating and to provide for fixed charges dividend and
accumulations of reserves . Allow gross profit ratios generally indicate
high cost of goods sold due to unfavorable purchasing polices , lesser
sales lower selling price excessive compition over investment etc.

A comparison of goss profit ratios for different firm in the same industry is
good measures of the profitability. but any significant changes in the
ratio should be thoroughly investigated because an increases in Gp ratios
occurs not only by change in economic factors like selling in prices with
out any corresepondenting proportionate increases in cost or decrease in
costs without decrease in selling prices but also to certain misleading
factors like overvaluation of closing inventories or undervaluation of the
opening inventories .

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