RATIO ANALYSIS OF ASHOK LEYLAND

FINANCIAL REPORT:

A financial report or a financial statement is the formal record of financial

activities of an organization, business, person or an entity. Each year the
organization will create a financial report in order to show their financial
performance of an organization. Generally, Finance statements include Balance
sheet, Profit and loss and Cash flow.

Balance Sheet - a statement of assests, liabilities, capital of an organization for a

period of time, detailing the balance of income and expenditure over the
preceding period.

Profit and loss - measures the company’s performance in terms of Sales and
Productivity.

Cash Flow - shows how an organization generates cash flow and how it
spends its cash.

RATIO ANALYSIS:

Ratio analysis is important tool used for analyzing the company’s financial
performance. The roles of ratio analysis are very significant to increase the
efficiency of the management, to reduce the expenditure arid to increase the rate of
profit etc. We are analyzing the statement in 5 ways. They are

1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
 I.TIME SERIES ANALYSIS

Financial Statement of Ashok Leyland: (Rs. in lakhs)

PARTICULARS 2017-18 2016-17 2015-16 2014-15 2013-14
SALES VOLUME
Vehicles (in num) 174873 145066 140457 104902 89337
Engines (in num) 18751 16491 15551 14023 17441
Spare parts 198032 169386 127336 139169 121257
Gross Sales 2652451 2145314 1999297 1448593 1056085
Profit before tax 223072 133009 82654 44220 9122
Profit after tax 156259 122308 38960 33481 2938
ASSETS
Fixed Assets 537546 517667 537546 537570 584139
Investments 274747 200168 198044 224038 240531
Long term loans 5797 18227 13491 98292 100146
Other non-current
53537 57933 60961 1950 3309
assets
NON-CURRENT
871627 793995 759280 861850 928126
ASSETS
Current investments 305516 87717 - 40845 38438
Inventories 170988 263103 162501 139853 118870
Trades Receivable 98048 106439 125095 124267 129901
Cash & bank balance 100440 91197 159313 75129 1169
Short term loans 40167 21090 19630 56367 47201
Other current assets 71822 28166 51556 32838 17095
CURRENT ASSETS 786981 597712 518095 469299 352674
Assets for sale - 12300 - - -
TOTAL 1658608 1404007 1277375 1331149 1280800
Equity Share capital 29271 28459 28459 28459 26607
Reserves and surplus 687209 584148 512256 483410 418182

EQUITY 716480 612607 540715 511869 444789

Long term
41712 119354 199509 256634 329650
borrowings
Tax liability 29839 12690 32910 51027 40677

Long term provision 45879 17182 15223 9897 7024

NON-CURRENT
117430 149226 247642 317558 377351
LIABILITIES

Short Term
174794 217237 151741 2500 58741
borrowings

Trade payables 465862 311699 256269 282832 221415

Other current
184042 113223 81008 216390 178504
liabilities

CURRENT
824698 642159 489018 501722 458660
LIABILITIES

TOTAL 1658608 1404007 1277375 1331149 1280800

EXPENSES 273870 222376 191053 124270 106331

DEPRECIATION 55461 51789 48790 41634 37704

DEBT 51569 134496 184604 259134 388391

1.LIQUIDITY RATIO:
i) CURRENT RATIO:
Current Ratio= Current Assets / Current Liabilities
 2017-18: 2016-17:

C.R= =0.954:1 C.R= =0.9307:1

2015-16: 2014-15:

C.R= = 1.059:1 C.R= = 0.935:1

2013-14:

C.R= = 0.768:1

In financial year 2015-16, the current assets is greater than current

liabilities hence the company is solvent.
But in financial year 2017-18, the current assets are slightly lesser than
the current liabilities therefore the company is in slightly risky state.
ii) QUICK RATIO:

Quick Ratio =

2017-18: 2016-17:

Q.R = = 0.7469:1 Q.R= = 0.521:1

2015-16: 2014-15:

Q.R = =0.7271:1 Q.R= = 0.656:1

 2013-14:

Q.R = = 0.5097:1

In financial year 2016-17, the quick assets of the company is very much
lesser than current liabilities therefore the company is in risky state.
But in financial year 2017-18, the quick assets is almost equal to the
current liabilities hence the company is slightly solvent.
iii) CASH RATIO:

Cash Ratio =

2017-18 2016-17

Ca.R= = 0.1217 Ca.R = = 0.1420

2015-16 2014-15

Ca.R = = 0.3257 Ca.R = = 0.1497

2013-14

Ca.R = = 0.00254

In all financial years, the cash availability of the company is lesser

than the current liabilities but need not to be worried since the company
have higher reserve borrowing power.
iv) NET WORKING CAPITAL RATIO:

NWC Ratio = =

2017-18
NWC Ratio = (786981 – 824698) / (786981+ 537546) = -0.0284
2016-17:
NWC Ratio = (597712 – 642159) / (597712 + 517667) = -0.0398
2015-16:
NWC Ratio = (518095 – 489018) / (518095 + 486784) = 0.0289
2014-15:
NWC Ratio = (469299 – 501722) / (469299 + 537570) = -0.0322
2013-14:

NWC Ratio = (352674 – 458660) / (352674 + 584139) = -0.1131

Since the ratio is lesser the company is in risk state.
v) INTERVAL MEASURE:
–
Interval ratio =

Average daily operating expense =

2017-18:
–
I.R= –
= 78.317 = 78 days (approx).
2016-17:
–
I.R = –
= 52.736 = 53 days (approx).

2015-16:
–
I.R = –
= 60.606 = 61 days (approx).

2014-15:
–
I.R = –
= 78.53 = 79 days (approx).

2013-14:
–
I.R = –
= 75.87 = 76 days (approx).

In financial year 2016-17, the company can survive only upto 53 days
(approx) without expecting the next income.
Whereas in financial year 2017-18, the company’s interval ratio is
increased and can survive up to 78 days without the next income.
2. LEVERAGE RATIO:
i) INTEREST COVER RATIO:

Interest cover ratio =

2017-2018 2016-2017

I.C.R = = 18.09 I.C.R = =11.72

 2015-2016 2014-2015

I.C.R = = 7.61 I.C.R = =1.8

2013-2014

I.C.R = = -0.32

In financial year 2017-18, the company can pay back its interest charges
18.09 times which means the company has earned sufficient profits. In
year 2013-14, the company’s profit is low hence the interest pay back
ratio is low.
ii) DEBT RATIO:

Debt ratio

Capital employed = Net Assets = Current assets + Fixed assets

2017-18 2016-17

D.R = = 0.0389 = 3.89% D.R = = 0.1205 =12.05%

2015-16 2014-15

D. R = = 0.1837 = 18.37% D.R = = 0.2573 = 25.73%

2013-14

D.R = = 0.4145 = 41.45%

In financial year 2017-18, the lenders contribute only 3.89% of

capital compared to owners hence the company is low geared.
Even though in the financial year 2013-14, the lenders contribute upto
41.45% of capital still the owners contribute the maximum therefore the
company is still low geared.
iii) DEBT – EQUITY RATIO:

Net worth = Share Capital + Reserve = Equity.

2017-18 2016-17

D/E = = 0.0719 D/E = = 0.2195

2015-16 2014-15

D/E = = 0.3414 D/E = = 0.5062

2013-14

D/E = = 0.8732

In financial year 2017-18, the debt contribution is only 0.0719

times the equity contribution hence the company is low geared.
Even though in the financial year 2013-14, the debt contribution is
0.8732 times the equity contribution still the equity contribute the
maximum therefore the company is still low geared.
3. TURNOVER RATIO:
i) INVENTORY TURNOVER RATIO:

Inventory turnover ratio = .

 2017-18 2016-17

I.T.R = = 15.512 I.T.R = = 8.153

2015-16 2014-15

I.T.R = = 12.303 I.T.R = = 10.3579

2013-14

I.T.R = = 8.8843

In financial year 2016-17, the company’s inventory is turned into

finished goods 8.153 times only.
Whereas in financial year 2017-18, the inventory of the company is
turned into finished goods 15.512 times. Hence the company’s
efficiency in producing and selling a product is increased in the year
2017-18.
ii) NET ASSETS TURNOVER RATIO:

Net assets turnover ratio =

2017-18 2016-17

N.A.T. Ratio= = 2.0025 N.A.T. Ratio = = 1.923

2015-16 2014-15

N.A.T. Ratio= = 1.989 N.A.T. Ratio = = 1.4387

 2013-14

N.A.T. Ratio = = 1.1273

In financial year 2013-14, for every one rupee of capital employed in net
asset the company is producing only 1.1273 times the sales.
Whereas in the year 2017-18, the company’s efficiency is increased and
for every one rupee of capital employed in net asset it can produce
2.0025 times the sales.
iii) FIXED ASSETS TURNOVER RATIO:

Fixed assets turnover ratio =

2017-18 2016-17

F.A.T. Ratio= = 4.934 F.A.T. Ratio = = 4.144

2015-16 2014-15

F.A.T. Ratio= = 4.1071 F.A.T.Ratio = = 2.6947

2013-14

F.A.T. Ratio = = 1.8079

In financial year 2013-14, for every one rupee of capital employed in

fixed asset the company is producing only 1.8079 times the sales.

Whereas in the year 2017-18, the company’s efficiency is increased and

for every one rupee of capital employed in fixed asset it can produce
4.934 times the sales.
iv) DEBTORS TURNOVER RATIO:
2017-2018 :

D.T.R = =25.67

2016-2017:

D.T.R = = 17.40

2015-2016:

D.T.R = = 15.10

2014-2015:

D.T.R = = 10.61

2013-2014:

D.T.R = = 7.32

In financial year 2017-18, the debtors are paying back 25.67 times a year
whereas in year 2013-14 the debtors are paying back 7.32 times a year.
4. PROFITABILITY RATIOS:
i) RETURN OF INVESTMENT:

ROI = .

Tax% =

TA= Total Assets = Fixed Assets + Current Assets

2017-18

ROI = = 0.1195 = 11.95%

2016-17

ROI = = 0.1097 = 10.97%

2015-16

ROI = = 0.0388 = 3.88%

2014-15

ROI = = 0.0332 = 3.32%

2013-14

ROI = = 0.00314 = 0.313%

In financial year 2013-14, the return on investment is very low

0.313% only but in the year 2017-18, the return on investment is
drastically increased to 11.95%.

ii) GROSS PROFIT MARGIN:

Gross Profit Margin =

2017-18

GP Margin = = 0.0841 = 8.41%

2016-17

GP Margin = = 0.0619 = 6.19%

2015-16

GP Margin = = 0.0413 = 4.13%

2014-15

GP Margin = = 0.0305 = 3.05%

2013-14

GP Margin = = 0.00863 = 0.863%

In financial year 2013-14, the gross profit margin is very low 0.863%
only but in the year 2017-18, the gross profit margin is drastically
increased to 8.41%.
iii) NET PROFIT MARGIN:

Net Profit Margin =

2017-18

NP Margin = = 0.0589 = 5.89%

2016-17

NP Margin = = 0.0570 = 5.70%

2015-16

NP Margin = = 0.0194 = 1.94%

2014-15

NP Margin = = 0.0231 = 2.31%

2013-14

NP Margin = = 0.00278 = 0.278%

In financial year 2013-14, the net profit margin is very low 0.278%
only but in the year 2017-18, the net profit margin is drastically
increased to 5.89%.
iv)RETURN ON EQUITY:
2017-2018 2016-2017

R.O.E = = 3.5 R.O.E = = 3.37

2015-2016 2014-2015

R.O.E = = 3.45 R.O.E = = 2.70

2013-2014

R.O.E = = 2.26

In financial year 2017-18, the R.O.E is 3.5 which means the company
has used the resources very well whereas in year 2013-14, the R.O.E is
2.26 which means the resource usage is not up to the mark.
 II.CROSS SECTIONAL ANALYSIS
COMPETITORS:

 TATA Motors
 Mahindra and Mahindra
 Force Motors
 Eicher Motors
 SML isuzu Motors

FINANCIAL STATEMENT OF COMPETITORS FOR 2018:

 FORCE SML EICHER MAHINDRA TATA ASHOKLEYLAND

EQUITIES AND LIABILITIES

SHAREHOLDER’S FUNDSRs.(In Lakhs)
Equity
share 1318 1448 2726 59497 67922 29271
capital
Total
share 1318 1448 2726 59497 67922 29271
capital
Reserves
178561 38358 534497 2969907 1949176 687209
and surplus
Total
reserves
178561 38358 534497 2969907 1949176 687209
and
surplus
Total
shareholde 179879 39806 537223 3029404 2017098 716480
rs funds
NON-CURRENT LIABILITIESRs.(In Lakhs)
Long term
0 11849 - 219590 1315591 41569
borrowings
Deferred
tax
443 278 14297 27724 15461 29839
liabilities
(Net)
Other long 585 1402 5572 46455 50237 20518
 term
liabilities
Long term
2698 4563 2912 86181 100948 25505
provisions
Total non-
current 3726 18091 22781 379950 1482237 117430
liabilities
CURRENT LIABITIES Rs.(In Lakhs)
Short term
0 7000 8598 66847 209987 10000
borrowings
Trade
56487 21182 117047 860340 941105 4465862
payables
Other
current 9335 10913 89097 338395 1084511 287213
liabilities
Short term
2476 1674 4721 66739 86292 61623
provisions
Total
current 68298 40770 219463 1332321 2421895 824698
liabilities
Total
capital and 251903 98666 779467 4741675 5921230 1658608
liabilities
ASSETS
NON-CURRENT ASSETS Rs.(In Lakhs)
Tangible 86877 35286 145476 650790 1819252 468764
 assets
Intangible
7366 1217 3866 135146 341123 28659
assets
Capital
work-in 17351 2705 14189 107972 137145 21293
progress
Intangible
assets
under 19566 781 19132 204899 382515 18831
developme
nt
Other
603 - 386 - - -
assets
Fixed
131763 39989 183049 1098812 2680035 537546
assets
Non-
current 1060 - 323259 1664548 1426079 274747
investments
Deferred
tax 0 - 0 0 0 -
assets[net]
Long term
loans and 1671 326 0 4301 14396 3354
advances
Other non-
5229 2724 20717 326567 303554 55980
current
 assets
Total non-
current 139723 43049 527025 3094228 4424064 871627
assets
CURRENT ASSETS Rs.(In Lakhs)
Current 63340
- - 393749 182087 305516
investment
Inventories 47710 35378 37923 270169 635204 170988
Trade
24191 11728 7802 317298 347981 98048
receivables
Cash and
cash 4093 2196 120882 289373 79542 100440
equivalents
Short term
loans and 244 106 28 97516 14027 2410
advances
Other
current 35942 5219 22467 279342 238325 109579
assets
Total
current 112180 55627 252442 1636437 1497166 786981
assets
Total
251903 98666 779467 4741675 5921230 1658608
assets
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENT Rs.(In Lakhs)
Contingent
19149 3994 45672 - 526963 78573
liabilities
CIF VALUE OF IMPORTS Rs.(In Lakhs)
Raw
0 0 0 0 0 27122
materials
Stores,
spares and 0 0 0 0 0 1001
loose tools
Capital
0 0 0 0 0 13898
goods
EXPENDITURE IN FOREIGN EXCHANGE Rs.(In Lakhs)
Expenditur
e in foreign 117118 2582 36913 82362 307976 41411
currency
REMITTANCES IN FOREIGN CURRENCIES FOR DIVIDENDS Rs.(In Lakhs)
Dividend
remittance
- - - - - -
in foreign
currency
EARNINGS IN FOREIGN EXCHANGE Rs.(In Lakhs)
FOB value
3680 2253 21354 250498 - 196719
of goods
Other
- - 0 - 542247 12551
earnings
BONUS DETAILS Rs.(In Lakhs)
Bonus 573 - - 48141 11129 13926
 equity
share
capital
NON-CURRENT INVESTMENTS
Non-
current
investments
967 - 318580 303352 - -
quoted
market
value
Non-
current
investments 93 - 9 1203450 31019 342051
unquoted
book value
CURRENT INVESTMENTS
Current
investments
quoted - - 63340 280226 30384 -
market
value
Current
investments
- - 113523 151703 305516
unquoted
book value
 PROFIT AND LOSS STATEMENT OF COMPETITORS FOR 2017-18

TATA FORCE MAHINDRA SML EICHER ASHOKLEYLAND

INCOME Rs.(In Lakhs)
Sales turnover 5962469 353101 4944499 117414 921181 2652451
Excise duty 79328 10082 75944 3909 25430 27660
Net sales 5883141 343019 4868555 113505 895751 2624791
Other income 60291 6250 147804 311 1931 15506
Stock -84205 5132 -19487 6436 3147 -127852
adjustments
Total income 354401 4996872 120252 900829 2512445
EXPENDITURE
Raw materials 4248221 268559 3411977 90684 482027 1745105
Power & fuel 54512 4823 24713 1157 5237 22874
cost
Employee cost 396673 38655 284089 14612 54786 181192
Other 47498 - - - 0 0
manufacturing
expenses
Selling and 72018 1897 66213 - 1184 0
Admin
expenses
Miscellaneous 649168 6714 439674 8961 70344 273870
expenses
Total expenses 5468090 320648 4226666 115414 613578 2223041
Operating 330846 27503 622402 4527 285320 273898
profit
PBDIT 391137 33753 770206 4838 287251 289404
Interest 174443 667 11220 1052 304 13125
PBDT 216694 33086 758986 3786 286947 276279
Depreciation 310189 12926 147942 2840 22234 55461
Profit before -93495 20160 611044 946 264713 220818
tax
PBT(Post -93495 20160 611044 946 264713 220819
extra-old
items)
Tax 8793 5328 174636 96 93536 66813
Reported net -103485 14695 435601 850 171291 156259
profit
Total value 1219869 52089 814689 24731 131551 4227936
addition
Equity 0 1318 902525 1158 27222 54948
dividend
Corporate 0 268 0 236 4490 0
dividend tax
Per share data (annualized)
Shares in issue 3395851 13176 1243193 14472 27256 2927104
Earnings per -305 11153 3504 587 62846 534
share
Equity 0 10000 15000 1500 110000 24300
dividend
Book value 5940 136517 24368 27506 197106 2448

1.LIQUIDITY RATIO:

i)CURRENT RATIO:

Current Ratio =
 TATA FORCE SML
0.60 1.65 1.25
MAHINDRA EICHER ASHOKLEYLAND
1.06 1.15 0.954
The company Force motors has current assets of 1.65 times the
current liabilities hence the company is solvent. But for the
company Ashok Leyland the current assets is lesser than the
current liabilities therefore it is in slightly risk state.

ii) QUICK RATIO:

Quick ratio =

TATA FORCE SML

0.44 0.99 0.56
MAHINDRA EICHER ASHOKLEYLAND
0.92 0.98 0.7469
For all the companies the quick assets is lesser than the current
liabilities. In that, Force motors has almost equal assets and
liabilities which makes it solvent. The company Ashok Leyland
has slighty lesser assets than the liabilities which makes it in
slightly risk state but it is better when compared to companies
like Tata Motors and SML Isuzu motors which have very low
ratio.

iii) CASH RATIO:

Cash ratio =

TATA FORCE SML

0.038 0.059 0.053
MAHINDRA EICHER ASHOKLEYLAND
0.7 0.95 0.1217
The cash availability of Eicher motors is higher when compared
to Ashok Leyland but need to be worried since the company
Ashok Leyland has higher reserve borrowing power.

iv)INTERVAL MEASURE: (in days)

Average daily operating expense =

–
Interval ratio =

TATA FORCE SML

28 31 62
 MAHINDRA EICHER ASHOKLEYLAND
106 158 78
The company Eicher Motors can survive upto 158 days without
expecting the next income which is the toppest of all 6 companies.
Ashok Leyland can survive upto 78 days which is lesser than
Mahindra and Eicher Motors but still better than the companies Tata
Motors, Force motors and SML Isuzu motors.

v)NET WORKING CAPITAL RATIO:

NWC Ratio = =

TATA FORCE SML

-0.142 0.179 0.155
MAHINDRA EICHER ASHOKLEYLAND
0.1111 0.04 -0.0284
All the companies have lesser ratio only. In that, Force Motors is
considerable. Ashok Leyland has negative ratio but better than
Tata motors.
2.LEVERAGE RATIO:

i)DEBT RATIO:

Debt ratio

TATA FORCE SML

0.44% 0 0.0045%
MAHINDRA EICHER ASHOKLEYLAND
0.1047% 0.01% 3.89%
For Ashok Leyland, the lenders contribute 3.89% of capital
compared to owners hence the company is low geared. In Eicher
the lenders and owners contribution is almost equal then also the
company is low geared.
ii)DEBT-EQUITY RATIO:

=
TATA FORCE SML
0.81 0 0.47
MAHINDRA EICHER ASHOKLEYLAND
0.01 0.02 0.0719
The company Mahindra, Eicher Motors and Ashok Leyland has
the debt contribution very less when compared to equity
contribution hence those companies are low geared. Eventhough
the Tata Motors has debt contribution 0.81 times the equity
contribution still the equity contributes the maximum therefore
this company is also low geared.
iii)INTEREST COVER:

Interest cover =

TATA FORCE SML

-0.53 31.02 1.9
MAHINDRA EICHER ASHOKLEYLAND
51.52 865.41 18.09
The company Ashok Leyland can pay back its interest charges
18.09 times which means the company has earned sufficient
profits. However it is lesser than Mahindra, Force and Eicher
Motors but better than Tata Motors and SML Isuzu Motors.

3. TURNOVER RATIO

i) INVENTORY TURNOVER RATIO:

Inventory turnover ratio =

TATA FORCE SML

9.39 7.40 3.23
 MAHINDRA EICHER ASHOKLEYLAND
18.30 13.20 15.512
The company Ashok Leyland’s inventory is turned into finished
goods 15.512 times which is lesser than Mahindra whose
inventory is turned into 18.30 times finished goods but better
than other competitor companies.

ii) FIXED ASSETS TURNOVER RATIO:

Fixed assets turnover ratio = = 1.69

TATA FORCE SML

1.65 1.69 2.83
MAHINDRA EICHER ASHOKLEYLAND
3.44 4.38 4.934
In Ashok Leyland, for every one rupee of capital employed in
fixed asset the company is producing 4.934 times the sales
which is in top to all the other competitor companies.

iii) DEBTORS TURNOVER RATIO:

Debtors turnover ratio =

 TATA FORCE SML
20.98 19.22 9.78

MAHINDRA EICHER ASHOKLEYLAND

15.93 141.11 25.67
In Ashok Leyland, the debtors are paying back 25.67 times a
year which is lesser than Eicher Motors whose debtors are
paying back 141.11 times a year but still better than other
competitor companies.

iv) NET ASSETS TURNOVER RATIO:

Net Assets turnover ratio =

TATA FORCE SML

1.54 1.87 2.20
MAHINDRA EICHER ASHOKLEYLAND
1.55 1.90 2.0025
In Ashok Leyland, for every one rupee of capital employed in
net asset the company is producing 2.0025 times the sales which
is in top to all the other competitor companies.

IV.PROFITABILITY RATIO:

i)RETURN ON INVESTMENT:

Return on Investment =

TATA FORCE SML

-4.84% 11.50% 3.40%
MAHINDRA EICHER ASHOKLEYLAND
17.43% 54.29% 11.95%
In Ashok Leyland, the return on investment is 11.95% which is
lesser than Mahindra and Eicher Motors but better than all other
competitor companies.

ii) GROSS PROFIT MARGIN:

Gross Profit Margin =

TATA FORCE SML

0.35% 4.24% 1.48%
 MAHINDRA EICHER ASHOKLEYLAND
9.74% - 8.41%
The company Ashok Leyland’s gross profit margin is 8.41%
which is lesser than Mahindra and better than other companies.

iii) NET PROFIT MARGIN:

Net profit margin =

TATA FORCE SML

-1.75% 4.28% 0.74%
MAHINDRA EICHER ASHOKLEYLAND
8.94% - 5.89%
The company Ashok Leyland’s net profit margin is 5.89%
which is lesser than Mahindra and better than other companies.

iv) RETURN ON EQUITY:

TATA FORCE SML

86.26 1.50 3.40
MAHINDRA EICHER ASHOKLEYLAND
17.43 31.88 3.5
For Ashok Leyland, the R.O.E. is 3.5 which means the company
has used the resources very well. Although it is lesser than some
of the competitors it is better than Force motors and SML Isuzu
motors.
 III. INDUSTRY ANALYSIS
1. LIQUIDITY RATIO:
i) CURRENT RATIO:

Ashok Leyland AVERAGE RATIO

C.R = 0.954:1 C.R=1.142:1

In Average Ratio the industry’s current assets is higher than

current assets which makes the industry solvent. But in Ashok
Leyland, the company’s current assets is slightly lesser than
current liabilities which make the company in slightly risk state.

ii) QUICK RATIO:

Ashok Leyland AVERAGE RATIO

Q.R = 0.7469:1 Q.R = 0.778:1

In both categories, the company’s quick assets is lesser than its

liabilities which makes the company insolvent.

iii) CASH RATIO:

Ashok Leyland AVERAGE RATIO

Ca. R = 0.1217 Ca. R = 0.36

In both categories, the company’s cash availability is low but
need not be worried since the company has higher reserve
borrowing power.

iv) NETWORKING CAPITAL RATIO:

Ashok Leyland AVERAGE RATIO

NWC Ratio = -0.0284 NWC Ratio = 0.0686

In Ashok Leyland, the NWC ratio is smaller.

v) INTERVAL MEASURE:

Ashok Leyland AVERAGE RATIO

I.R = 78 days I.R = 77 days

In Ashok Leyland, the company’s capability to survive without

expecting the next income is 78 days which is similar to the
industry average ratio.

2. LEVERAGE RATIO:

i) INTEREST COVER RATIO:

Ashok Leyland AVERAGE RATIO

I.C.R = 18.09 I.C.R = 25.146

The company Ashok Leyland can payback its interest charges
18.09 times which is lesser than industry average ratio.

ii) DEBT RATIO:

Ashok Leyland AVERAGE RATIO

D.R = 3.89% D.R = 0.1398%

In Ashok Leyland, the lenders contribute 3.89% of capital

compared to owners hence the company is low geared.

iii) DEBT-EQUITY RATIO:

Ashok Leyland AVERAGE RATIO

D/E = 0.0719 D/E = 0.3275

In both categories, the company’s equity contribution is higher

than the debt contribution. Therefore the company is low geared.

3. TURNOVER RATIO:

i) INVENTORY TURN OVER RATIO:

Ashok Leyland AVERAGE RATIO

I.T.R = 15.512 I.T.R= 10.304

For Ashok Leyland, the company’s inventory turned into
finished goods 15.512 times which is higher than the industry’s
average ratio.

ii) NET ASSETS TURNOVER RATIO:

Ashok Leyland AVERAGE RATIO

N.A.T Ratio = 2.0025 N.A.T Ratio = 1.812

In Ashok Leyland, for every one rupee of capital employed in

net assets the company is producing 2.0025 times the sales
which is higher than the industry’s average ratio.

iii) FIXED ASSETS TURNOVER RATIO:

Ashok Leyland AVERAGE RATIO

F.A.T Ratio = 4.934 F.A.T Ratio = 2.798

In Ashok Leyland, for every one rupee of capital employed in

fixed assets the company is producing 4.934 times the sales
which is higher than the industry’s average ratio.
iv) DEBTORS TURNOVER RATIO:

Ashok Leyland AVERAGE RATIO

D.T.R = 25.67 D.T.R = 16.4775

In Ashok Leyland, the debtors are paying back 25.67 times a

year which is higher than the industry’s average ratio.

4.PROFITABILITY RATIO :

i) RETURN OF INVESTMENT:

Ashok Leyland AVERAGE RATIO

ROI = 11.95% ROI = 16.356%

In Ashok Leyland, the return on investment is 11.95% which is

lesser than industry’s average ratio.

ii) GROSS PROFIT MARGIN:

Ashok Leyland AVERAGE RATIO

GP Margin = 8.41% GP Margin = 3.95%

In Ashok Leyland, the company’s Gross Profit margin is 8.41%

which is greater than industry’s average ratio.
iii) NETPROFIT MARGIN:

Ashok Leyland AVERAGE RATIO

NP Margin = 5.89% NP Margin = 3.0525%

In Ashok Leyland, the company’s Net Profit margin is 5.89%

which is greater than industry’s average ratio.

iv) RETURN ON EQUITY:

Ashok Leyland AVERAGE RATIO

ROE = 3.5 ROE = 3.056

In Ashok Leyland, the company’s R.O.E is 3.5 which is similar

to industry’s average ratio.
 IV.PROFORMA ANALYSIS
1. LIQUIDITY RATIO:

i) CURRENT RATIO:

2017-2018 FUTURE

C.R = 0.954:1 C.R=0.929:1

In future the company’s current liabilities may be higher than

current assets which may put the company in risk state.

ii) QUICK RATIO:

2017-18 FUTURE

Q.R = 0.7469:1 Q.R = 0.632:1

In future, the company’s quick assets may be lesser than its

liabilities which may make the company insolvent.

iii) CASH RATIO:

2017-18 FUTURE

Ca. R = 0.1217 Ca. R = 0.1483

In future, the company’s cash availability may be increasing
which may leads to stability of the company.

iv) NETWORKING CAPITAL RATIO:

2017-18 FUTURE

NWC Ratio = - 0.0284 NWC Ratio = 0.0484

In future, the net working capital of the company may be

increasing that reduces the risk state of the company slightly.

v) INTERVAL MEASURE:

2017-18 FUTURE

I.R = 78 days I.R = 69 days

In future, the company’s capability to survive without expecting

the next income may decrease.

2. LEVERAGE RATIO:

i) INTEREST COVER RATIO:

2017-18 FUTURE

I.C.R = 18.09 I.C.R = 7.794

In future, the company’s ability to pay back its interest charges
may decrease which means the company’s profit decreases.

ii) DEBT RATIO:

2017-18 FUTURE

D.R = 3.89% D.R = 20.298%

In future, the lenders contribution to the capital may be higher

when comparing to the owners. Hence, the company is low
geared.

iii) DEBT-EQUITY RATIO:

2017-18 FUTURE

D/E = 0.0719 D/E = 0.4024

In future, the company’s equity contribution may be higher than

the debt contribution. Therefore the company is low geared.

3. TURNOVER RATIO:

i) INVENTORY TURN OVER RATIO:

2017-18 FUTURE

I.T.R = 15.512 I.T.R= 11.042

In future, the company’s inventory turning into finished goods
may decrease.

ii) NET ASSETS TURNOVER RATIO:

2017-18 FUTURE

N.A.T Ratio = 2.0025 N.A.T Ratio = 1.6961

In future, for every one rupee of capital employed in net assets

the company’s production may decrease.

iii) FIXED ASSETS TURNOVER RATIO:

2017-18 FUTURE

F.A.T Ratio = 4.934 F.A.T Ratio = 3.537

In future, the company’s efficiency may remain the same as the

previous year there will be a slight change only.

iv) DEBTORS TURNOVER RATIO:

2017-18 FUTURE

D.T.R = 25.67 D.T.R = 15.22

In future, the debtors paying back capability may decrease.

4.PROFITABILITY RATIO :

i) RETURN OF INVESTMENT:

2017-18 FUTURE

ROI = 11.95% ROI = 6.0866%

In future the return on investment may drastically decrease since

the future prediction of ROI is very low.

ii) GROSS PROFIT MARGIN:

2017-18 FUTURE

GP Margin = 8.41% GP Margin = 4.5286%

In future, the company’s Gross Profit margin may decrease.

iii) NETPROFIT MARGIN:

2017-18 FUTURE

NP Margin = 5.89% NP Margin = 3.22%

In future, the company’s Net Profit margin may decrease.

iv) RETURN ON EQUITY:

2017-18 FUTURE

ROE = 3.5 ROE = 3.056

In future, the company’s R.O.E. may remain the same as like

previous years which means the company has used the resources
very well.