It has been noticed that the oval profit margin of the firm I satisfactory but there appears
to be a setback in the liquidity position of the firm which has prompted me to take this
project for an in-depth study.
(B) OBJECTIVES OF THE STUDY
(1)
To evaluate financial health, Profitability, liquidity and
operational efficiency of the establishment.
(2)
To have an inter-firm (Bajaj Auto, TVS Motor, Tata Motors and Maruti Udyog Limited)
comparison measure efficiency and help the management to take remedial measures.
(3)
To establish trend analysis for planning and forecasting for a 5
years period.
(4)
To help the investers in taking investment decisions and to help
the banks and financial institution in taking lending decision.
(5)
To assess the ability of the firm to meet its short-tm as well as long-term obligations to its
creditors and also to ensure a reasonable return to its owners and secure optimum
utilization of the assets of the firm.
(6)
To develop a software programmes to visually see the liquidity
status of the firm on day-to-day.
(C) RESEARCH
METHODOLOGY
TO
BE
USED
FOR
CARRYING OUT THE STUDY:
(1)
SOURCES OF DATA:
(a)
Primary data:
Primary data required for study will be collected through direct interaction with financial
executives of the establishment. Since a good rapport has been maintained the
management has assured timely guidance and assistance and availability of relevant
information through ledger and files etc.
(b)
Secondary data:
Secondary data will consist of annual reports, publications, audited financial statement
issued, day-to-day working files and budgets for different years. Which will be obtain
from following sites?
•
www.bajajauto.com
www.tvsmotors.com
•
www.tatamotors.com
•
www.marutiudyoglimited.com
•
www.automartindia.com
(c)
Interview with key Personnel:
Data will also be collected by interviewing the key personnel of the firm. The problems of
the firm relating to the liquidity will be discussed with them along with sources of
finances and future prospects.
(2)
METHODOLOGY:
The Profitability ratios and the elements of profitability ratios will be plotted to
analyze the tend over a five-year period and to have a comparison with firms of similar
nature to find areas that need improvement.
In the process of Ratio Analysis, four types of comparisons will
be made:
(1)
Trend Ratios i.e. comparison of the same firm over time
suitable graphs will be plotted.
(2)
Inter-firm comparison (Bajaj Auto, TVS Motor, Tata Motors
and Maruti Udyog Limited).
(3)
Comparison of items in the financial statement of the firm.
(4)
Comparison with standards or plans.
Classifications of the types of ratios to be calculated are:
(1)
Profitability Ratios.
(2)
Liquidity Ratios.
(3)
Leverage Ratios.
(4)
Activity Ratios.
Bar graphs will be plotted show in year-wise various elements of
current assets and current liabilities.
Pie diagram showing composition of elements of current assets to the total
current assets – comparison of the same with the earliest year and the latest year.
The study, comparisons and the calculation of the ratios will be done from the
data collected from the above mentioned methods for last five years.
(D) EXPECTED CONTRIBUTION FOM THE STUDY:
The company is facing liquidity problem due to shortage of working
capital finances.
From this study we will com to know the strengths of the company and weak
points of the company. The study can provide many solutions to overcome the
Profitability problems and increase their profits. My project analysis will go a long way in
improving the liquidity of the firm. Necessary comments and recommendations will be
included in the project report.
(E) LIMITATIONS OF THE STUDY:
Ratio Analysis is subject to certain limitations. For e.g. in the matte of inter-firm
comparison the procedure adopted by various firms may vary. The Second limitation
comes from price level variation caused by inflation. Therefore Ratio Analysis fails to
yield strictly comparable/dependable results. Thirdly, ratios are only a post mortem result
of what ha happened between two balance sheet dates. Additionally the trend analysis
fails to provide an empirical forecast about the future in view of the ever-changing social,
economic and international scenario. Fourth, financial analysis is based upon only
monetary information and non-monetary factors are ignored. Fifth, it does not consider
changes in the price level. And last one, as the financial statement are prepared on the
basis of the Going Concern Concept, it does not give exact position. Thus accounting
concept and conventions cause serious limitations to financial analysis.
(F) SCOPE FOR FUTURE WORK:
The study can be extended to other firms in the same industry.
Vinita somani
Mr. Brajesh agrawal
MBA V SEMESTER
Project Guide
Enrollment No.070530811
