Financial performance is an important aspect which influences the long term stability, profitability and liquidity of an organization.

Usually, financial ratios are said to be the parameters of the financial performance

Financial Management is that part of management which is concerned mainly with raising funds in the most economic and suitable manner; using these funds and profitability as possible; planning future operations; and controlling current performances and future developments through financial accounting, cost accounting, budgeting, statistics and other means.

Financial Management is the operation activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations. - Joseph and Massie

To study and analysis about the financial performance of the company for the past five years from 2007 to 2011.

To study and analyze the profitability, solvency and turnover ratios position of the company. Analyzing the comparative statement of the company. To assess the factors influencing the financial performance of the organization. To understand the overall financial position of the company.

Secondary data are those data which have already been collected by someone and else and which have been passed through the statistical process. As secondary data is used the main sources of the data is companys annual report for the period from 2007 to 2011. It is collected from the company textbooks and the data are also collected from the estimated statement prepared by the Blueberry software solutions limited.

The study is confined to analyze the financial performance analysis for five years only. All the aspects involved for study of financial performance could not be analyzed in detail due to limitation of time. As the company involved in busy in closing of accounts for the current year 2011-2012.

Achieving leadership in medium or heavy duty segments of the domestic commercial vehicle market and significant presence in the world market through transport solutions that best anticipate customer needs, with highest value to cost ratio. Be among the top Indian corporations acknowledged nationally and internationally for, Excellence in quality of its products Excellence in customer focus and service

Be leader in the business of commercial vehicles, excelling in technology, quality and value to customer fully supported by customer service of the highest order and meeting national and international environmental and safety standards. Identifying with the customer being the lowest cost manufacturer Global Benchmarking our products, process, people against the best in the industry.

Ashok Leyland has seven manufacturing plants - The mother plant at Ennore near Chennai, three plants at Hosur (called Hosur I and Hosur II, along with a Press shop), the assembly plants at Alwar, and Bhandara and state-of-theart facility at Pantnagar. The total covered space at these seven plants exceeds 650,000 sq. m and together employs over 11,500 personnel.

Profitability Ratios:
Table showing Return on Investment.
Operating Profit = Capital Employed
Rs. Lakhs Years 2007 2008 2009 2010 2011 Operating Profit 43058.50 61758.20 65088.74 22193.50 54804.63 Capital Employed 479584.50 539785.90 581900.86 1136532.66 1244976.22 PERCENTAGE 8.98% 11.44% 11.19% 1.95% 4.4%

* 100

In this table profit in relation to capital employed is high 11.44% and 11.19% in 2008 and 2009, in 2007 it as 8.98% but in 2010 compare to all other years it is low only 1.95% . Chart showing Return on Investment
14 12 10 8 6 4 2 0 2007 2008 2009 2010 2011

Table showing Inventory Turnover ratio Cost of goods sold

=

Average Inventory
Rs Lakhs

Years 2007 2008 2009 2010 2011

Cost of goods sold 470758.70 646549.10 692219.66 551163.86 648187.13

Average Inventory 73532.10 98644.10 114711.77 127696.44 148412.72

TIMES 6.40 6.55 6.03 4.31 4.36

The table indicates that inventory is turned over during a particular accounting periods is not much difference between the years i.e. from 2007 to 2009 the values is lies between 6 and in 2010 & 2011 it is 4. Chart showing Inventory Turnover ratio

8 6

Times

4
Times 2 0 2006 2007 2008 2009 2010

COMPARATIVE BALANCE SHEET FOR 2010-2011 Rs. in Crores

PARTICULARS 2010-2011 2009-2010 INC/DEC In %

SOURCES OF FUNDS

SHAREHOLDER'S FUNDS
LOAN FUNDS DEFFERED TAX LIABILITY

3668.76
2203.89 76.5

3473.9
1958.14 -

5.6
12.6 100

DEFFERED TAX LIABILITY NET

384.54

263.44

46.0

FOREIGN CURRENCY MONETARY

ITEM TRASACATION DIFF-NET

(12.45)

3.84

(424.1)

TOTAL APPLICATION OF FUNDS FIXED ASSETS INVESTMENTS

6321.29

5699.32

10.9

4811.03 326.16

4397.40 263.56

9.4 23.8

NET CURRENT ASSETS

1178.93

1028.67

14.6

MISCELLANEOUS EXP.

5.17

9.69

(46.6)

TOTAL

6321.29

5699.32

10.9

COMPARATIVE INCOME STATEMENT FOR 2010-2011 Rs. in Crores

PARTICULARS INCOME Sales Other income Total EXPENDITURE Manufacturing Exp Employee Exp Other Exp Depreciation Financial Exp Total Profit Before Exceptional Item Exceptional Item-VRS Expenses Amortization PBT TAX-Current -Deferred -FBT PAT BASIC EPS DLIUTED EPS

2010-2011

2009-2010

INC/DEC in %

7244.71 70.45 7315.16

5981.07 49.63 6030.70

7.8 4.5 7.8

5217.52 665.93 598.42 204.11 81.13 6767.11 548.05

4452.25 566.18 493.21 178.41 118.71 5808.76 221.94

5.5 28.2 4.4 17.8 838.5 8.0 5.4

3.27 544.78 121.10 423.68 3.18 3.53

13.49 208.45 12.45 6 189.99 1.43 5981.07

(75.7) 161.4 872.7 (100) 123 123 5.1

Findings :

1. In 2010 operational process and managerial efficiency is low compare to past and
future years. 2. In 2010 operations of the firm is decreased compare to past years. 3. In 2010 net profit is low but the firm increased is operational efficiency in 2011. So that net profit is increased. 4. In 2011 Gross profit has increased little bit compare to previous years. 5. In 2010 and 2011 inventory is reduced to 2times compared to previous years.

6. The stock is sold or used more in the years 2007 and 2009 compare to 2010 and
2011. 7. In debtors turnover differences between the years are more especially between 2009 and 2010 it differs more.

 The company's profit over the year 2010 has been decreasing when compared to previous year i.e. less profit. The company must increase the profit in future. The company must take steps to increase the profit level. The sales of the organization can be further increased by improving the quality through optimum utilization of company's resources (i.e. assets, raw materials, credit system, etc.) and that in turn will increase the overall profits of the organization. The Management must find out the reasons for the decrease in sales in the year 2010 and must take appropriate measures. The Management must also study the market position and it also find the demand prevailing in the market for the products and thus this will guide them to enhance their sales volume.

On studying the financial performance of Ashok Leyland for a period of five years from 2007 to 2011, the study reveals that the financial performance is better. Ashok Leyland has been able to maintain optimal cost positioning. Despite price drops in various products, the company has been able to maintain and grow its market share to make strong margins in market, contributing to the strong financial position of the company.

Overall for the past five years companys financial performance better because in 2007 and 2008 annual report tell that the companys financial performance was good. In 2009 it was excellent but in 2010 it was average in 2011 financial performance was improved compared to 2010. So the company has every opportunity to get its growth to a good extent in future.

IBLIOGRAPHY Books referred: T.S. Reddy & Y. Hari Prasad Reddy - Financial and Management Accounting. I.M. Pandey Financial Management. Ambrish Gupta Financial Accounting for Management.

Websites: www.ashokleyland.com www.managementparadise.com www.indiainfoline.com www.allbusiness.com Annual Reports: 2007-2008 to 2010-2011