financial ratios analysis
DESCRIPTION
Ashok Leyland Ltd. Financial AnalysisTRANSCRIPT
Submitted To: Submitted By:
Dr. Meena Sharmra Ramneet Singh
FINANCIAL ACCOUNTING Financial Ratio Analysis: Ashok Leyland Ltd.
10/17/2015
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 1
Introduction
Ashok Leyland is an Indian automobile manufacturing company based in Chennai, India. Founded
in 1948, it is the 2nd largest commercial vehicle manufacturer in India, 4th largest manufacturer of
buses in the world and 16th largest manufacturer of trucks globally. Operating six plants, Ashok
Leyland also makes spare parts and engines for industrial and marine applications. It sells about
60,000 vehicles and about 7,000 engines annually. It is the second largest commercial vehicle
company in India in the medium and heavy commercial vehicle (M&HCV) segment with a market
share of 28% (2007–08). With passenger transportation options ranging from 19 seaters to 80
seaters, Ashok Leyland is a market leader in the bus segment. The company claims to carry more
than 60 million passengers a day, more people than the entire Indian rail network. In the trucks
segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks. However
Ashok Leyland has presence in the entire truck range starting from 7.5 tons to 49 tons. With a joint
venture with Nissan Motors of Japan the company made its presence in the Light Commercial
Vehicle (LCV) segment.
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 2
Financial Data of Company from 2009-2014
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Net Sales 68,269.60 80,717.50 123,927.80 141,964.1
0
139,479.8
0
109,183.10
PAT net of P&E 1,874.10 4,267.80 6,327.40 5,642.80 4,302.60 -1,708.30
Total assets 79,261.80 93,230.50 106,173.80 119,420.5
0
131,574.9
0
130,310.40
Total income/Net Income
69,184.40 81,672.40 124,372.40 143,971.4
0
143,448.8
0
115,468.10
Paid Up Capital/Equity 1,330.30 1,330.30 1,330.30 2,660.70 2,660.70 2,660.70
Current assets 24,472.80 32,228.00 37,728.40 38,997.10 36,903.00 30,612.70
Current Liabilities 18,688.70 25,920.70 31,227.90 36,182.20 33,716.20 31,070.20
Operating expenses 64,643.40 76,733.90 115,164.50 133,331.0
0
129,877.7
0
104,641.20
Net fixed assets 33,991.30 42,495.70 46,337.90 49,134.90 52,819.00 56,598.70
Earnings Per Share 1.43 3.53 4.75 2.13 1.63 0.11
Dividend Per Share 1 1.5 2 1 0.6
Inventories 13,300.10 16,382.40 22,089.00 22,306.30 18,960.10 11,887.10
PBIT 2,087.10 5,447.70 8,018.00 6,899.80 4,707.10 -912.2
Receivables 10,291.90 10,656.30 13,844.20 16,365.30 17,803.40 18,424.10
Total liabilities 79,261.80 93,230.50 106,173.80 119,420.5
0
131,574.9
0
130,310.40
Investments 2,635.60 3,261.50 12,300.00 15,844.90 23,376.50 27,896.80
Net working capital 4,616.10 7,181.40 6,975.10 7,277.80 7,839.30 4,003.60
Total capital 1,330.30 1,330.30 1,330.30 2,660.70 2,660.70 2,660.70
Total Debit 1,961.98 887.5 2,348.13 2,395.10 3,504.82 3,883.91
Operating cash Flow 4,487.90 7,455.00 12,330.60 12,754.60 8,867.90 2,161.10
Stockholders’ Equity 85227.7419
4
221977.3
81
120652.04
55
143880.12
05
118535.94
59
109504.53
78
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 3
Financial Analysis of Ratios
LIQUIDITY RATIO FORMULA 2009 2010 2011 2012 2013 2014
Current Ratio Current Assets/Current Liabilities
5.133014
4.927086
5.610385
6.364305
7.356491
9.185007
Net Working Capital
Current Assets-Current Liabilities
5,784.10
6,307.30
6,500.50
2,814.90
3,186.80
-457.50
Acid Test Quick Assets/Quick Liabilities
0.72 0.6 0.5 0.5 0.56 0.66
ACTIVITY RATIO
Inventory Turnover
Sales/Inventories 5.133014
4.927086
5.610385
6.364305
7.356491
9.185007
Receivable Turnover
Sales/Receivables 6.633333
7.574627
8.951604
8.674702
7.834447
5.926102
Asset Turnover Net Sales/Total Assest 0.861318
0.865784
1.167216
1.188775
1.060079
0.837869
Working Capital turnover
Sales/Working Capital 14.78945
11.2398
17.76717
19.50646
17.79238
27.27123
Fixed assets Turnover ratio
Net sales/Average fixed assets
2.008443
1.899427
2.674437
2.889272
2.640713
1.929074
FINANCIAL LEVERAGE RATIO
Debt ratio Total Liabilities/Total Assets 1 1 1 1 1 1
Debt to equity ratio
Debt/Equity 0.931 0.951 0.968 1.072 1.386 1.441
SOLVENCY RATIO
Proprietary Ratio Stockholders’ Equity/Total Assets
1.075269
2.380952
1.136364
1.204819
0.900901
0.840336
Fixed Assets to Equity Ratio
Fixed Assets/Stockholders’ Equity
0.398829
0.191442
0.384062
0.341499
0.445595
0.516862
Debit Equity ratio Total Liabilities/Stockholders’ Equity
0.93 0.42 0.88 0.83 1.11 1.19
PROFITABILITY RATIO
Return on asset Net Profit after tax/Average total assets
0.023644
0.045777
0.059595
0.047252
0.032701
-0.01311
Dividend Payout Ratio
Dividend per share/Earnings per share
0.699301
0.424929
0.421053
0.469484
0.368098
Gross Profit Ratio Gross Profit/Net Sales 4.77 7.86 8.46 7.03 3.97 -2.11
Return on Capital Employed
PBIT/Total capital 1.568894
4.095091
6.027212
2.593227
1.769121
-0.342
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 4
84
Operating Ratio Operating Expense/Net Sales
0.946884
0.950648
0.929287
0.939188
0.931158
0.958401
Net Profit Ratio (Net Profit/Net Sales) 0.027451
0.052873
0.051057
0.039748
0.030847
-0.01565
COVERAGE RATIO
Interest coverage PBIT/Interest expense 2.176 5.302 5.535 3.823 2.202 0.324
Return on Equity Net Income/Equity 52.00662
61.39397
93.49199
54.11035
53.91393
43.39764
Liabilities to equity Total Liabilities/Equity 59.5819
70.08231
79.81192
44.88311
49.45123
48.97598
Capital Turnover ratio
Sales/(Total Assets-Current Liabilities)
1.127061
1.199194
1.653563
1.705514
1.425318
1.10019
Sales Ratio Operating Cash Flow/Net Sales
0.065738
0.092359
0.099498
0.089844
0.063578
0.019793
Cash Flow to debt ratio
Operating Cash Flow/Total Debt
2.287434
8.4 5.251242
5.325289
2.530201
0.556424
Graphical Interpretation
0
1
2
3
4
5
6
7
8
9
10
2008 2009 2010 2011 2012 2013 2014 2015
CURRENT RATIO
CURRET RATIO
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 5
-1,000.00
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
2008 2009 2010 2011 2012 2013 2014 2015
NET WORKING CAPITAL
NET WORKING CAPITAL
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2008 2009 2010 2011 2012 2013 2014 2015
ACID TEST
ACID TEST
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 6
0
1
2
3
4
5
6
7
8
9
10
2008 2009 2010 2011 2012 2013 2014 2015
INVENTORY TURNOVER
INVENTORY TURNOVER
0
1
2
3
4
5
6
7
8
9
10
2008 2010 2012 2014 2016
Receivable Turnover
Receivable Turnover
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 7
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2008 2009 2010 2011 2012 2013 2014 2015
Asset Turnover
Asset Turnover
0
5
10
15
20
25
30
2008 2009 2010 2011 2012 2013 2014 2015
Working Capital turnover
Working Capital turnover
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 8
0
0.5
1
1.5
2
2.5
3
3.5
2008 2010 2012 2014 2016
Fixed assets Turnover ratio
Fixed assets Turnover ratio
0
0.2
0.4
0.6
0.8
1
1.2
2008 2009 2010 2011 2012 2013 2014 2015
Debt ratio
Debt ratio
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 9
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2008 2010 2012 2014 2016
Debt to equity ratio
Debt to equity ratio
0
0.5
1
1.5
2
2.5
2008 2009 2010 2011 2012 2013 2014 2015
Proprietary Ratio
Proprietary Ratio
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 10
0
0.1
0.2
0.3
0.4
0.5
0.6
2008 2010 2012 2014 2016
Fixed Assets to Equity Ratio
Fixed Assets to Equity Ratio
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2008 2009 2010 2011 2012 2013 2014 2015
Debit Equity ratio
Debit Equity ratio
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 11
-0.02
-0.01
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
2008 2009 2010 2011 2012 2013 2014 2015
Return on asset
Return on asset
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2008 2010 2012 2014 2016
Dividend Payout Ratio
Dividend Payout Ratio
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 12
-1
0
1
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013 2014 2015
Gross Profit Ratio
Gross Profit Ratio
-1
0
1
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013 2014 2015
Return on Capital Employed
Return on Capital Employed
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 13
0.925
0.93
0.935
0.94
0.945
0.95
0.955
0.96
2008 2009 2010 2011 2012 2013 2014 2015
Operating Ratio
Operating Ratio
-0.02
-0.01
0
0.01
0.02
0.03
0.04
0.05
0.06
2008 2009 2010 2011 2012 2013 2014 2015
Net Profit Ratio
Net Profit Ratio
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 14
0
1
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013 2014 2015
Interest coverage
Interest coverage
0
10
20
30
40
50
60
70
80
90
100
2008 2009 2010 2011 2012 2013 2014 2015
Return on Equity
Return on Equity
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 15
0
10
20
30
40
50
60
70
80
90
2008 2010 2012 2014 2016
Liabilities to equity
Liabilities to equity
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2008 2010 2012 2014 2016
Capital Turnover ratio
Capital Turnover ratio
F i n a n c i a l R a t i o A n a l y s i s : A s h o k L e y l a n d L t d . P a g e | 16
0
0.02
0.04
0.06
0.08
0.1
0.12
2008 2009 2010 2011 2012 2013 2014 2015
Sales Ratio
Sales Ratio
0
1
2
3
4
5
6
7
8
9
2008 2010 2012 2014 2016
Cash Flow to debt ratio
Cash Flow to debt ratio