Banks, insurance and financial investment firms have specific ratios, which are different from those traditionally used to analyze industrial companies. In particular, EV is not a suitable metric for financial institutions because interest is a critical component of both revenue and expenses.
The story of Hero Honda began with a simple vision — the vision of a mobile and an empowered India, powered by its bikes. The company will provide an engaging environment for its people to perform to their true potential. It will continue its focus on value creation and enduring relationships with its partners.
Hero Honda two wheelers are manufactured across three globally benchmarked manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern India.
The third and the latest manufacturing plant is based at Haridwar, in the hill state of Uttrakhand. Industry Averages are published in prowess are can be calculated by taking the average of ratios for 5 or more companies in the industry.
Disputed Taxes, Claims against the Company and Counter party guarantee given by the company are taken as Contingent Liabilities. The fifth step is measuring the Industry Risk faced by the company. The sixth step is the measurement of Management Risk faced by the company. The seventh and the final step entail the calculation of the total score for the company following the above mentioned six steps.
For calculating the total score the Financial Score, Industry Risk Score and the Management Risk scores are pooled together to get a total of Further a new model was developed and comparison was made.
Careful financial analysis usually means the extraction of meaningful ratios from the statement.
Ratios are often used to assess performance or as diagnostic tools to point up potential problem areas. Given the extremely varied entities for which financial statements are made and even the extreme variation between industries of an entity type the most productive use of these ratios is probably made either against industry standards or against ratios for previous years of the entity in question.
As mentioned in the Abstract, there are six main ratios which this project throws light on. But for the calculation of these ratios we need to weed out some of the figures from the financial reports of the company. The following table represents the data that has to be used in order to calculate to necessary ratios: These are further used to calculate the ratios.
The various ratios for the 4 years are as follows: The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point.
While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt — as there are many ways to access financing — but it is definitely not a good sign. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations.
The formula used for calculation is: A ratio greater than 1. A ratio greater than 1 indicates that the company has more than enough interest coverage to pay off its interest expenses.
PAT to Net Sales: This is nothing but the Net Profit Margin which talks about how much profit is made by the company for every Re. Return On Capital Employed: The formula used got calculation is: This ratio shows the proportion in which the inventory and receivables are realised through sales.Hero Motor’s average interest coverage ratio over the last 5 financial years has been times which indicates that the Company has been generating enough for the shareholders after servicing its debt obligations.
Net cash used in investing activity (): INR 59 cr Interpretation Hero Honda Motors has been continuously increasing its investment every year. Hence, it is benefitting its shareholder through capital gains and not through dividends.
Current Ratio Current ratio Hero Motocorp Bajaj Auto TVS Motor Mah Scooters Atul Auto Quick Ratio Quick Ratio Hero Motocorp Bajaj Auto TVS Motor Mah Scooters Atul Auto In the case of hero Honda we see a gradual increase in the inventory turnover whereas in case of bajaj auto ltd there is a sudden increase the reason cited is the better percentage increase in the sales of hero Honda and also the raw mater costs as a perentage of total sales increase from % to % i.e.
a increase of 3%. Project on financial statement analysis of hero moto corp ltd. 1.
Under the Esteemed Guidance of: Dr. Brajabandhu Padihari Department of commerce, Prananath (Autonomous) college, Khordha Submitted By: CHIRANJIBI BISOI +3 final year, commerce Accounting Hons. Exam. Roll No. U College Roll No. BC 2. A STUDY ON RATIO ANALYSIS OF HERO MOTOCORP WITH REFRENCE TO SATYOM HERO 9 RATIO ANALYSIS Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a firm's financial performance in several key areas.