Estimation of Financial Strength of Escorts.
Presented by: Vivian Clement
Objective Of The Project
To evaluate current performance of the company and comparing it with its past performances To make a comparison of Escorts
performance with its competitors.
To assess the long-term and shortterm financial soundness of the company. To find out various reasons which are responsible for the differences in the performance of Escorts and its competitors.
Introduction to the Project
Title- Estimation of Financial Strength of Escorts.
The main purpose of the study is to know the financial health of the company and to make a comparison with competitors.
Study of Financial Strength of the company is totally based on Ratio Analysis
Cont.
Two methods are adopted to estimated the strength of escorts
financial position of the company on the basis of ratio analysis.
the financial position
of the company is measured by making comparison with its competitors
Introduction to Escorts
In 1960, Escorts set up the strategic Agri Machinery Group (AMG) to venture into tractors. In 1965, the company rolled out its first batch of tractors under the brand name of Escort.
In 1969, a separate company Escorts Tractors Ltd. was established
1996, Escorts Tractors Ltd. formally merged with the parent company Escorts Ltd.
Scope of the study
The ability of the firm to meet current obligation
What is the mood of investors and shareholders of company.
Firm utilizing the overall operating efficiency and performance of the firm.
The efficiency to which firm is utilizing its assets in generating sales revenue.
Research Methodology
Research Design Exploratory + Descriptive
Primary Data
Methods of Data collection Secondary Data
observations
newspaper Journals websites
Research Methodology cont.
Sample Size
4 Companies
Presentation
Bar- diagram Pie charts Graphs
Review Of Existing Literature
SOURCE 1
http:// www.escorts.com
Balance Sheet of different years
Annul
Internal data
of the company
Reports of
the escorts
Ratio Analysis
A ratio is defined as the indicated quotient of two mathematical expressions and as the relationship between two or more things Ratio analysis involves comparison for a useful interpretation of the financial statements
Types of Ratio:-
RATIO ANALYSIS OF ESCORTS
CURRENT AND QUICK RATIO:-
1.4 1.2 1 0.8 0.6 0.4 0.2 0 Curent ratio Quick ratio sep'05 1.04 0.75 sep'06 1.03 0.83 sep'07 1.15 0.89 sep'08 1.27 0.97 sep'09 0.97 0.7 sep'10 1.12 0.84 sep'11 1.13 0.85
Projected ratios for year 2010 and 2011 by using method of Least Square. Equations for regression line or trend line using time series: Current ratio : Y = 1.09 + 0.011 X (where X=3, 4 for 2010 & 2011 respectively in all cases) Quick ratio : Y = 0.83 + 0.004 X
Debtor turnover ratio : Y = 5.74 0.5 X Creditors turnover ratio : Y = 3.99 0.15 X
14 12 10 8 6 4 2 0 creditors turnover ratio debtors turnover ratio sep'05 sep'06 sep'07 sep'08 sep'09 sep'10 sep'11 4.32 5.89 4.16 7.46 3.85 6.18 3.99 4.07 3.62 5.09 3.54 4.24 3.39 3.74
COMPARATIVE ANALYSIS OF ESCORTS WITH ITS COMPETITORS
CURRENT RATIO:-
6 5 4 3 2 1 0 escorts ltd. mahindrra & mahindra HMT VST Tillers sep'05 sept'06 sept'07 sept'08 sept'09 1.04 1.51 5.29 1.83 1.03 1.48 4.77 1.5 1.15 1.48 5.1 1.54 1.27 1.23 3.59 1.56 0.97 1.02 3.65 1.71
COMPARISON OF GROSS PROFIT RATIOS OF DIFFERENT COMPANIES WITH ESCORTS
100%
50%
0%
-50% VST Tillers HMT mahindrra & mahindra escorts ltd.
sep'05 10.21 -4.73 12.8 -18.96
sept'06 sept'07 sept'08 sept'09 11.17 0.56 12.48 1.32 13.74 -2.32 14.73 3.3 11.54 -29.21 8.12 3.17 15.34 -38.3 6.1 7.42
COMPARISON OF NET PROFIT RATIOS OF DIFFERENT COMPANIES WITH ESCORTS
20 0 -20 -40 -60 escorts ltd. mahindrra & mahindra HMT VST Tillers
sep'05 3.08 7.85 1.88 4.42
sept'06 1.08 10.73 3.67 5.72
sept'07 -0.31 11.12 16.09 7.65
sept'08 0.59 10.21 -18.41 7.55
sept'09 4.16 6.62 -40.84 10.41
Limitation of the study
Escorts group is very huge so take time to analyze
Comparing competitors could be hard as they follow different policies.
Sometimes capital goods will be purchased from the funds available for working capital
Unplanned production schedules will cause excessive stocks
Tractors sales is sensitive to monsoon
Recommendations
Investments: The Company has invested in various fields which is good as it has diversed its risk.
Payment
Market share: The Companys main motive should be to increase their market share. policies: Payment policies followed by Escorts should be reviewed time to time.
Collection period: Escorts should have to reduce its credit period
Proper
training: The personnel must be given training for proper use of equipments and materials so as to avoid damages
CONCLUSION
The company has improved its performance very well as compared to its previous years ratios.
Escorts is still in backward position if compared it with Mahindra & Mahindra and VST Tillers.
continuous
improvement of Escorts is also giving them a tougher competition and will definitely acquire a better position in the future.
