A STUDY ON LIQUIDITY AND PROFITABILITY IN BAJAJ AUTO

LTD SHARANPUR

PROJECT REPORT
SUBMITTED FOR THE PARTIAL FULFILMENT
FOR THE REQUIREMENT
OF THE DEGREE
OF
BACHELOR OF BUSINESS ADMINISTRATION
IN
S.D. COLLEGE OF MANAGEMENT STUDIES
MUZAFFARNAGAR (U.P.)
(Affiliated to Maa Shakumbhari University, Sharanpur)

SESSION 2021-2024

Submitted to: Submitted by:

Rajeevpal singh Deepak
(H.O.D. BBA) Roll No:210926105045
 DECLARATION

I hereby declare that the Project Report entitled “A STUDY ON

LIQUIDITY AND PROFITABILITY IN BAJAJ AUTO LTD

SHARANPUR” is a record of independent research work submitted by

me to MAA SHAKUMBHARI UNIVERSITY SHARANPUR, for

developing the real time experience as well as award the degree of

Bachelor in Business Administration and has been carried out during the

period of my study at SD COLLEGE OF MANAGEMENT

STUDIES,

MUZAFFARNAGAR, Under the guidance of MRS. SONIKA,

Department of BBA.
 ACKNOWLEDGEMENT

I would like to express my deepest gratitude and thanks to Rajeevpal

Singh Sir, Head of the Department for his valuable support in doing this

project. He has been a source of encouragement and guidance in all our

endeavours.

I express our profound thanks to Mrs. Sonika maam project guide,

for his consistent encouragement and invaluable suggestion in

completing this project, without his effort the completion of this project

would be practically impossible.

It gives me great pleasure to acknowledge my indebtedness to

my family members for their substantial moral support and

encouragement in my studies.

I would like to extend my sincere thanks to My Dearest Friends

and also My Classmates for their unnerving support in the completion

of the work.

DEEPAK
 TABLE OF CONTENTS

S.No. Title and Topics Pg.No.

1. Title Page 1

2. Certificate of College 2

3. Declaration 3

4. Acknowledgement 4

5. Table of Content 5

6. Company Profile 6-20

● History
● Product/Services
● Awards and Recognitions
● Competitors
● SWOT Analysis

7. Introduction of Project 20-57

● Ratio Analysis
● Types of Ratios
● P/L Statement
● Balance Sheet
● Cash Flow Statement

8. Objectives of the Study 72-73

9.. Research Methodology 73-74

10.. Scope of the Study 74

11. Limitations of the Study 75

12. Data Analysis and Interpretation

13. Findings of the Study 76

14. Suggestions and Recommendations 77-78

15. Bibliography 79
 A STUDY ON LIQUIDITY AND PROFITABILITY IN
BAJAJ AUTO LTD SHARANPUR:-

COMPANY PROFILE:-

Bajaj Auto Limited is an automotive manufacturing company based in the city of

Pune, India. It manufactures motorcycles, scooters and auto rickshaws. Bajaj Auto is a
part of the Bajaj Group. It was founded by Jamnalal Bajaj in Rajasthan in the 1940s.

The company has plants in Chakan, Waluj and Pantnagar. The oldest plant at Akurdi
in Pune houses the R&D centre 'Ahead'.

Bajaj Auto is the world's third-largest manufacturer of motorcycles and the

second-largest in India. It is the world's largest three-wheeler manufacturer. In
December 2020, Bajaj Auto crossed a market capitalization of ₹1 lakh crore
(US$13.6 billion), making it the world's most valuable two-wheeler company.

HISTORY

“Naye Bharat ki nayi tasveer. Buland Bharat ki buland tasweer” – Hamara

Bajaj

The Company started its journey by selling imported vehicles. The company did that
under the name of Bachraj Trading Corporation Private Limited. In the year 1959,
they got a licence from the Government of India for establishing their own
manufacturing plant.
Initially, they started by manufacturing Vespa 150 scooters which were the first
self-manufactured product of Bajaj. The next year in 1960, it was turned into a public
limited company. It took about ten years for the company to sell 100,000 vehicles and
in the year 1970 they rolled out their 100,000th vehicle. In the financial year 1977, for
the first time, they sold 100,000 vehicles in one financial year.
In 1985, they started producing at Waluj, Aurangabad. In the year 1986, they sold
500,000 vehicles in a financial year. Their ten-millionth vehicle was brought up in the
year 1995. In the same year, they manufactured and sold one million vehicles in a
single financial year.
When motorcycles were introduced in 1986, the company turned itself from scooter
makers to two-vehicle producers.
The company has not seen many downfalls and is still growing. The market has been
extremely favourable for it and it is one of the next two-wheeler producers in the
world.
This company which is the third largest and second-largest in the country is now well
established on the international market. The company is at present operating in about
50 countries. It was the year 1971 when they first launched their three-wheeler.
The year next to that, they launched Bajaj Chetak which brought big fame to the
company. It was highly appreciated and used by the customers. It was a very
affordable and great product. This product is considered to be the thing that brought
them the slogan “HAMARA BAJAJ”.
It was 1986 when Bajaj launched M-80, the upgraded version of M-50. M-50 was not
so worshipped in the market but M-80 turned out to be a master blaster for the
company. The same year, the company launched Kawasaki Bajaj KB 100. And just
after that Kawasaki Bajaj KB125.
These products were manufactured under the agreement between the two renowned
companies, Kawasaki from Japan and Bajaj from India. this duo hit the market very
well. When the Kawasaki Bajaj Caliber came on the road with a top speed of 95km/h,
it went through market ups and downs.
It was the year 2001 when the most loved bike in India was introduced. It was a Bajaj
Pulsar. A few years later in 2004, the company changed its logo and launched Bajaj
Discover. These two much-loved bikes are still on the road with their upgraded
version and people still look at them with love in their eyes.
Another truly loved bike of Bajaj, Bajaj Platina was launched in the year 2006. It is
still considered to be a very commercial bike in Indian families as it gives great
mileage and comes out to be a great help to the pocket and the monthly budgets. It is
the year 2017 when the Bajaj and Kawasaki tie came to an end.

Products / Services:-
Dominar: Sports tourer with cutting edge technology viz. triple spark liquid cooled
DTS-i, USD forks, Slipper clutch, Bungee Straps, Split LCD display etc. Meant for
people who challenge their limits and not hold back to pursue their dream of long
distance touring.

Pulsar: India’s No.1 Sports bike for the last 18 years and is well known for its
sportiness, seamless power delivery and advanced DTS-i Technology. It gives a thrill
like no other bike.
Avenger: India’s largest selling cruiser motorcycle, and well known for its distinct
and comfortable design, which gives a feeling of liberation. Avenger is making riders
in 10 countries ‘Feel Like God’.

Platina: The most comfortable commuter bike, thanks to its ComforTec Technology
that delivers far less jerks vs. competition, as affirmed by over 14 lacs customers in
the last three years.
CT: A “Kushiyon ka Jackpot” that gives a family joy of owning first bike. Over 50
lakh happy customers for its unbeatable combination of low price, great mileage,
durability and longevity.
Discover: A “zinda dil” bike that enlivens your everyday riding experience. It will
excite you with its new LED DRLs, thrill you with its powerful engine and leave you
with a familiar old feeling of pure joy. Bano Zindadil!

RE: A leading three wheeler brand, run on petrol, CNG and LPG and well known for
low operating cost and boasts happy customers in over 38 countries.
Maxima: Powerful yet very economical three wheeler; spacious indoors for
comfortable ride;

Qute: India’s first even quadricycle offering low cost mobility solution for crowded
cities.
Chetak (electric): The future of mobility is here. Shaped by smooth, well-sculpted
lines that complement its distinctive, yet elegantly flowing curves. With seamless
precision, Bajaj Chetak’s timeless style flows sleekly through every detail of this
state-of-the-art scooter.
 Current Line Up Products:-
Motorcycles:-

· AVENGER CRUISE 220

● AVENGER STREET 160

● CT100
● CT110
● CT110X
● PLATINA 110 ES DISC/DRUM
● PLATINA 100 ES DRUM/KS
● DOMINAR 400
● DOMINAR 250
● PULSAR 150 TWIN DISC
 ● PULSAR 150 NEON
● PULSAR 150
● PULSAR 180
● PULSAR 220F
● PULSAR NS125
● PULSAR NS160
● PULSAR NS200
● PULSAR RS200
● PULSAR N250
● PULSAR F250

Three Wheelers:-

● RE Compact
● RE Compact 4S
● RE Compact+
● RE Maxima
● RE Maxima Z
● RE Maxima C

Four Wheelers:-

Qute

Scooters:-

● Bajaj Chetak Electric Scooter

 Awards and Recognition:-
These were initiated to acknowledge outstanding work done by people, institutions /
organisations in different areas of urban or rural life viz social, innovation, enterprise
or other fields.

Jamnalal Bajaj Awards was instituted by the Jamnalal Bajaj Foundation in 1977-78 to
serve the ideals of Shri Jamnalal Bajaj and promote Gandhian constructive activities
in India and abroad. There are three National awards and one International award. It is
bestowed upon people for their exemplary contribution for the holistic development
and betterment of society in fields of Gandhian constructive initiatives for rural
upliftment, application of science and technology, welfare of women and children
and promotion of Gandhian Values in India and overseas as well.

Jankidevi Bajaj Puraskar (Award) was initiated in 1992-93 in memory of Smt.

Jankidevi Bajaj, a Gandhian committed to selfless service. The objective of the
Puraskar is to discover and honour women entrepreneurs who are dedicated to rural
upliftment and rural business entrepreneurship.

Ramkrishna Bajaj National Quality Award was instituted in 1995 in the memory of
Shri Ramkrishna Bajaj whose motto was “Trust in Quality and Business Ethics”. This
award is considered to be one of India’s most prestigious quality awards as the
scrutiny and selection process is rigorous. The objectives of the award are to promote
quality awareness and practices in Indian business, recognize qualitative
achievements of Indian Companies and publicise successful strategies and
programmes.
Jamnalal Bajaj Uchit Vyavhar Puraskar for Fair Business Practices constituted in
1988 recognizes efforts made by small, medium and large businesses, industrial
enterprises and professionals staying true to the vision.

DIVERSIFIED PRESENCE:-
● Bajaj Auto Ltd.
● Bajaj Holdings & Investment Ltd.
● Bajaj Finserv Ltd.
● Bajaj Allianz General Insurance & Life Insurance Co. Ltd
● Bajaj Financial Solutions Ltd.
● Bajaj Auto Finance Ltd.
● Bajaj Allianz Financial Distributors Ltd.
● Bajaj Auto Holdings Ltd.
● Bajaj Auto International Holdings BV
● Bajaj Electricals Ltd.
● Bajaj Ventures Ltd.
● Hospet Steels Ltd.

VISION, MISSION STATEMENTS:-

Vision:-

To attain world class excellency by demonstrating value added products to customers.

Mission:-

● Focus on value based manufacturing.

● Continual Improvement.
● Total elimination of wastes.
● Pollution free and safe environment.
 COMPETITORS:-
Competitors (Two Wheelers):-

● Hero Honda
● TVS Motors
● Honda
● Yamaha
● M&M

Competitors (3 Wheelers):-

● Piaggio Vehicles India Pvt. Ltd

● Mahindra & Mahindra
● TVS

Let’s take a look at the comparison between Bajaj Auto and Hero MotorCorp in terms
of unit sold and employee ratings. In May 2021, Bajaj Auto beat Hero MotoCorp by
just 116 units, beating them and emerging as India’s largest two-wheeler maker.
But in terms of employee ratings, Hero MotorCorp takes the lead in many areas:
Overall rating career, career opportunities, compensation & benefits, work-life
balance, and many more. We can conclude that Hero Motocrop treats its employees
better than Bajaj auto does.
Now let us take a look at the total share capital held by Bajaj Auto and its
competitors.
Let’s learn more about the market impact of Bajaj Auto.
● The above Pie diagram represents the Total Share Capital earned by Bajaj Auto
and its competitors as of March 2020.
● As seen above Bajaj Auto occupies a large share in the market with
60.9%(289.27 crores)
● In second place is Scooters India with 18.4%(82 crores).
● The least amount of share capital held is Atul Auto at only 2.3%(10.97 crores)

With the above points, we can learn that Bajaj Auto has acquired a large segment of
the share capital amongst its competitors. This is due to its various marketing
campaigns as well as its wide range of products and services that have been
accustomed and suited for people of all ages.

Bajaj Auto used marketing strategies as well as their campaigns profusely which
helped boost their growth and develop their name as a household brand.
 SWOT ANALYSIS:-
STRENGTH:-

● Highly experienced management.

● Extensive R & D focus.

● High performance products across all categories.

● Number one position in exports.

● Collaboration with BAFL for financing.

● High economies of scale and scope.

WEAKNESS:-

● Strong cash base but hasn’t been invested efficiently.

● Not a strong international brand despite high export volumes.

● Distribution network is not as strong and extensive as Hero Honda.

OPPORTUNITIES:-

● Rising disposable income.

● Increase first time in motorbike buyers

● Decline in interest rate for two wheeler financing.

● Shift from entry level motorbikes to performance oriented bikes

● Inadequate public transportation infrastructure.

● Low operating cost.

 THREATS:-

● Imitation of designs and technological.

● Innovations by competitors is easy.

● Foreign players coming in India, especially.

● Low cost Chinese motorbikes manufacturers.

● Declining margins due to increasing.

● Competition.
 INTRODUCTION OF PROJECT

RATIO ANALYSIS:-
The ratio analysis is the most powerful tool of financial analysis.
Several ratios calculated from the accounting data can be grouped into
various classes according to financial activity or function to be evaluated.

• DEFINITION:

“The indicated quotient of two mathematical expressions”and

“The relationship between two or more things”. It evaluates the
financial position and performance of the firm. As started in the
beginning many diverse groups of people are interested in analysing
financial information to indicate the operating and financial efficiency
and growth of a firm. These people use ratios to determine those
financial characteristics of a firm in which they interested with the help
of ratios one can determine.

• The ability of the firm to meet its current obligations.

• The extent to which the firm has used its long-term solvency by
borrowing funds.

• The efficiency with which the firm is utilising its assets in generating
the sales revenue.
 • The overall operating efficiency and performance of the firm.

The information contained in these statements is used by

management, creditors, investors and others to form judgement
about the operating performance and financial position of the firm.
Users of financial statements can get further insight about financial
strength and weakness of the firm if they properly analyse
information reported in these statements. Management should be
particularly interested in knowing the financial strength of the firm
to make their best use and to be able to spot financial weaknesses of
the firm to take suitable corrective actions. The further plans should
be laid down in new of the firm’s financial strength and weaknesses.
Thus financial analysis is the starting point for makingplans before
using any sophisticated forecasting and planning procedures.
Understanding the past is a prerequisite for anticipating the future.

Advantages of Ratio Analysis are as follows:

1. Helps in forecasting and planning by performing trend analysis.

2. Helps in estimating budget for the firm by analysing previous trends.

3. It helps in determining how efficiently a firm or an organisation is operating.

4 .It provides significant information to users of accounting information regarding the

performance of the business.

5. It helps in comparison of two or more firms.

6. It helps in determining both liquidity and long term solvency of the firm.

Disadvantages of Ratio Analysis are as follows:

1. Financial Statements seem to be complicated.

2. Several organisations work in various enterprises each possessing different

environmental positions such as market structure, regulation, etc Such factors
are so important that a comparison of 2 organisations from varied industries
might be ambiguous.

3. Financial accounting data is influenced by views and hypotheses.

4. Accounting criteria provide different accounting methods, which reduces

comparability and thus ratio analysis is less helpful in such circumstances.

5. Ratio analysis illustrates the associations between prior data while users are more
concerned about current and future data.

TYPES OF RATIOS
Management is interested in evaluating every aspect of a firm's
performance. In view of the requirement of the various users of ratios,
we may classify them into following four important categories:

1. Liquidity Ratio
2. Leverage Ratio
3. Activity Ratio
4. Profitability Ratio
 1 Liquidity Ratio:-
It is essential for a firm to be able to meet its obligations as they
become due. Liquidity Ratios help in establishing a relationship between
cast and other current assets to current obligations to provide a quick
measure of liquidity. A firm should ensure that it does not suffer from
lack of liquidity and also that it does not have excess liquidity. A very
high degree of liquidity is also bad, idle assets earn nothing. The firm's
funds will be unnecessarily tied up in current assets. Therefore it is
necessary to strike a proper balance between high liquidity. Liquidity
ratios can be divided into three types:
1.1 Current Ratio
1.2 Quick Ratio
1.3 Cash Ratio
1.1 Current Ratio:-
Current ratio is an acceptable measure of a firm's short-term
solvency Current assets include cash within a year, such as marketable
securities, debtors and inventors. Prepaid expenses are also included in
current assets as they represent the payments that will not be made by the
firm in future. All obligations maturing within a year are included in
current liabilities. These include creditors, bills payable, accrued
expenses, short-term bank loan, income-tax liability in the current year.
The current ratio is a measure of the firm's short term solvency.
It indicated the availability of current assets in rupees for every one rupee
of current liability. A current ratio of 2:1 is considered satisfactory. The
higher the current ratio, the greater the margin of safety; the larger the
amount of current assets in relation to current
liabilities, the more the firm's ability to meet its obligations. It is a cured
-and -quick measure of the firm's liquidity.
Current ratio is calculated by dividing current assets and current liabilities.

Current Ratio = Current Assets / Current Liabilities

1.2 Quick Ratio:-

Quick Ratio establishes a relationship between quick or liquid
assets and current liabilities. An asset is liquid if it can be converted into
cash immediately or reasonably soon without a loss of value. Cash is the
most liquid asset, other assets that are considered to be relatively liquid
assets and included in quick assets are debtors and bills receivables and
marketable securities (temporary quoted investments).

Inventories are converted to be liquid. Inventories normally

require some time for realisation into cash; their value also has a
tendency to fluctuate. The quick ratio is found out by dividing quick
assets by current liabilities.

Current assets - Inventories

Quick Ratio =
Current Liabilities

Generally, a quick ratio of 1:1 is considered to represent a satisfactory

current financial condition. Quick ratio is a more penetrating test of
liquidity than the current ratio, yet it should be used cautiously. A
company with a high value of quick ratio can suffer from the shortage
of funds if it has slow- paying, doubtful and long duration outstanding
 debtors. A low quick ratio may really be prospering and paying its
current obligation in time.

1.3 Cash Ratio:-

Cash is the most liquid asset; a financial analyst may examine Cash
Ratio and its equivalent current liabilities. Cash and Bank balances and
short-term marketable securities are the most liquid assets of a firm,
financial analyst stays to look at cash ratio. Trade investment is
marketable securities equivalent to cash. If the company carries a small
amount of cash, there is nothing to be worried about the lack of cash if
the company has reserves borrowing power. Cash Ratio isperhaps the
most stringent Measure of liquidity. Indeed, one can argue that it is
overly stringent. Lack of immediate cash may not matter if the firm
stretches its payments or borrows money at short notice.

Cash and bank balances + Current Investment

Cash Ratio= --------------------------------------------------------------------
Current Liabilities

2 LEVERAGE RATIOS:-

Financial leverage refers to the use of debt finance while debt capital is a
cheaper source of finance: it is also a riskier source of finance. It helps in
assessing the risk arising from the use of debt capital. Two types of ratios
are commonly used to analyse financial leverage.

1. Structural Ratios &

 2. Coverage Ratio

Structural Ratios are based on the proportions of debt and equity in

the financial structure of a firm. Coverage Ratios shows the
relationship between Debt Servicing, Commitments and the sources
for meeting these burdens.
The short-term creditors like bankers and suppliers of raw material
are more concerned with the firm's current debt-paying ability. On the
other hand, long-term creditors like debenture holders, financial
institutions are more concerned with the firm's long-term financial
strength. To judge the long-term financial position of a firm, financial
leverage ratios are calculated. These ratios indicated a mix of funds
provided by owners and lenders.
There should be an appropriate mix of Debt and owner's equity in
financing the firm's assets. The process of magnifying the shareholder's
return through the use of Debt is called "financial leverage" or "financial
gearing" or "trading on equity". Leverage Ratios are calculated to
measure the financial risk and the firm's ability of using Debt to
shareholders advantage.

● Leverage Ratios can be divided into five types.

2.1 Debt equity ratio.

2.2 Debt ratio.

2.3 Interest coverage ratio

 2.4 Proprietary ratio.

2.5 Capital gearing ratio

2.1 Debt equity ratio:-

It indicates the relationship describing the lender's contribution
for each rupee of the owner's contribution is called debt-equity ratio.
Debt equity ratio is directly computed by dividing total debt by net
worth. Lower the debt-equity ratio, higher the degree of protection. A
debt-equity ratio of 2:1 is considered ideal. The debt consists of all short
term as well as long-term and equity consists of net worth plus
preference capital plus Deferred Tax Liability.

Long term Debts

Debt Equity Ratio =------------------------------------------------------
Shareholder funds (Equities)

2.2 Debt Ratio:-

Several debt ratios may be used to analyse the long-term solvency
of a firm. The firm may be interested in knowing the proportion of the
interest-bearing debt in the capital structure. It may, therefore, compute
debt ratio by dividing total total debt by capital employed on net assets.
Total debt will include short and long-term borrowings from financial
institutions, debentures/bonds, deferred payment arrangements for
buying equipment, bank borrowings, public
deposits and any other interest-bearing loan. Capital employed will
include total debt net worth.

Debt
Debt Ratio = ------------------
Equity

2.3 Interest Coverage Ratio:-

The interest coverage ratio or the time interest earned is used to
test the firms’ debt servicing capacity. The interest coverage ratio is
computed by dividing earnings before interest and taxes by interest
charges. The interest coverage ratio shows the number of times the
interest charges are covered by funds that are ordinarily available for
their payment. We can calculate the interest average ratio as earnings
before depreciation, interest and taxes divided by interest.

EBIT
Interest Coverage ratio = ---------------
Interest

2.4 Proprietary ratio:-

The total shareholder's fund is compared with the total tangible
assets of the company. This ratio indicates the general financial strength
of concern. It is a test of the soundness of the financial structure of the
concern. The ratio is of great significance to creditors since it enables
them to find out the proportion of shareholders funds in the total
investment of business.
 Net worth
Proprietary Ratio = ----------------------------------------- 100
Total tangible assets

2.5 Capital gearing ratio:

This ratio makes an analysis of the capital structure of a firm. The
ratio shows the relationship between equity share capital and the fixed
cost bearing i.e., preference share capital and debentures.

Equity capital
Capital gearing ratio = -----------------------------------------------
P.S capital +Debentures +Loans

3 ACTIVITY RATIOS:-

Turnover ratios, also referred to as activity ratios or asset

management ratios, measure how efficiently the assets are employed by
a firm. These ratios are based on the relationship between the level of
activity, represented by sales or cost of goods sold and levels of various
assets. The improvement turnover ratios are inventory turnover, average
collection period, receivable turnover, fixed assets turnover and total
assets turnover.

Activity ratios are employed to evaluate the efficiency with which the
firm manages and utilises its assets. These ratios are also called turnover
ratios because they indicate the speed with which assets are
 being converted or turned over into sales. Activity ratios thus involve a
relationship between sales and assets. A proper balance between sales
and assets generally reflects that asset utilisation.

Activity ratios are divided into four types:

3.1 Total capital turnover ratio
3.2 Working capital turnover ratio
3.3 Fixed assets turnover ratio
3.4 Stock turnover ratio

3.1 Total capital turnover ratio:

This ratio expresses the relationship between the amounts invested in

these assets and the resulting in terms of sales. This is calculated by
dividing the net sales by total sales. The higher ratio means better
utilisation and vice-versa.
Some analysts like to compute the total assets turnover in addition
to or instead of net assets turnover. This ratio shows the firm's ability in
generating sales from all financial resources committed tototal assets.
Sales
Total assets turnover = ----------------------------
Capital Assets.

3.2 Working capital turnover ratio:

This ratio measures the relationship between working capital and sales.
The ratio shows the number of times the working capital results in sales. Working
capital as usual is the excess of current assets over current liabilities. The following
formula is used to measure the ratio:
 Sales
Working capital turnover ratio = -------------------------------
Working capital

3.3 Fixed asset turnover ratio:

The firm may wish to know its efficiency of utilising fixed assets and
current assets separately. The use of depreciated value of fixed assets in computing
the fixed assets turnover may render comparison of firm's performance over period
or with other firms.
The ratio is supposed to measure the efficiency with which fixed assets
are employed; a high ratio indicates a high degree of efficiency in asset utilisation
and a low ratio reflects inefficient use of assets. However, in interpreting this ratio,
one caution should be borne in mind, when the fixed assets of a firm are old and
substantially depreciated, the fixed assets turnover ratio tends to be high because
the denominator of the ratio is very low.

Net sales
Fixed asset turnover ratio = -------------------------
Fixed assets

3.4 Stock turnover ratio:

Stock turnover ratio indicates the efficiency of a firm in producing and

selling its product. It is calculated by dividing the cost of goods sold by the average
stock. It measures how fast the inventory is moving through the firm and generating
sales.
 The stock turnover ratio reflects the efficiency of inventory management.
The higher the ratio, the more efficient the management of inventories and vice
versa .However, this may not always be true. A high inventory turnover may be
caused by a low level of inventory which may result from frequent stock outs and
loss of sales and customer goodwill.

Cost of goods sold

Stock turnover ratio = ------------------------------
Average stock

Opening stock + Closing stock

Average stock = --------------------------------------------
2

4. PROFITABILITY RATIOS:-

A company should earn profits to survive and grow over a long

period of time. Profits are essential but it would be wrong to assume that
every action initiated by management of a company should be aimed at
maximising profits. Profit is the difference between revenues and
expenses over a period of time.
Profit is the ultimate 'output' of a company and it will have no future if
it fails to make sufficient profits. The financial manager should
continuously evaluate the efficiency of the company in terms of profits.
The profitability ratios are calculated to measure the operating efficiency
of a company. Creditors want to get interest and repayment of principal
regularly. Owners want to get a required rate of return on their
investment.
Generally, two major types of profitability ratios are calculated:

• Profitability in relation to sales

• Profitability in relation to investment

Profitability Ratios can be divided into six types:

4.1 Gross profit ratio

4.2 Operating profit ratio
4.3 Net profit ratio
4.4 Return on investment
4.5 Earns per share
4.6 Operating expenses ratio
4.1 Gross profit ratio:-

First profitability ratio in relation to sales is the gross profit

margin the gross profit margin reflects.
The efficiency with which management produces each unit of
product. This ratio indicates the average spread between the cost of
goods sold and the sales revenue. A high gross profit margin is a sign
of good management. A gross margin ratio may increase due to any of
the following factors: higher sales prices, cost of goods sold remaining
constant, lower cost of goods sold, sales prices remaining constant. A
low gross profit margin may reflect higher cost of goods sold due to firm's
inability to purchase raw materials at favourable terms, inefficient
utilisation of plant and machinery resulting in higher cost of production
or due to fall in prices in market.
 This ratio shows the margin left after meeting manufacturing
costs. It measures the efficiency of production as well as pricing. To
analyse the factors underlying the variation in gross profit margin, the
proportion of various elements of cost (Labour, materials and
manufacturing overheads) to sale may be studied in detail.

Gross profit
Gross profit ratio = -------------------------- 100
Net Sales

4.2 Operating profit ratio:-

This ratio expresses the relationship between operating profit and
sales. It is worked out by dividing operating profit by net sales. With the
help of this ratio, one can judge the managerial efficiency which may
not be reflected in the net profit ratio.

Operating profit
Operating profit ratio = ------------------------------100
Net sales

4.3 Net profit ratio:

Net profit is obtained when operating expenses, interest and taxes are
subtracted from the gross profit. Net profit margin ratio establishes a
relationship between net profit and sales and indicates management's
efficiency in manufacturing, administering and selling products.
This ratio also indicates the firm's capacity to withstand adverse
economic conditions. A firm with a high net margin ratio would be in
an advantageous position to survive in the face of falling selling prices,
 rising costs of production or declining demand for product
This ratio shows the earnings left for shareholders as a percentage of
net sales. It measures overall efficiency of production, administration,
selling, and financing. Pricing and tax management. Jointly
considered, the gross and net profit margin ratios provide a valuable
understanding of the cost and profit structure of the firm and enable
the analyst to identify the sources of business efficiency / inefficiency.

Net Profit
Net Profit Ratio = ------------------------------ 100
Net sales

4.4 Return on investment:

This is one of the most important profitability ratios. It indicates the relation
of net profit with capital employed in business. Net profit for calculating return of
investment will mean the net profit before interest, tax, and dividend. Capital employed
means long term funds.

E.B.I.T
Return on investment = ------------------------------------------- 100
Capital employed
 4.5 Earnings per share:

This ratio is computed by earning available to equity shareholders

by the total amount of equity share outstanding. It reveals the amount of
period earnings after taxes which occur to each equity share. This ratio
is an important index because it indicates whether the wealth of each
share holder on a per share basis has changed over the period.

Net profit
Earnings per share = ---------------------------------------100
Number of equity shares

4.6 Operating Expenses Ratio:

It explains the changes in the profit margin ratio. A higher

operating expenses ratio is unfavourable since it will leave a small
amount of operating income to meet interest, dividends. Operating
expenses ratio is a yardstick of operating efficiency, but it should be used
cautiously. It is affected by a number of factors such as external
uncontrollable factors, internal factors. This ratio is computed by
dividing operating expenses by sales. Operating expenses equal cost of
goods sold plus selling expenses and general administrative expenses by

Operating expenses
Operating expenses ratio = -------------------------------- 100
Sales
PROFIT AND LOSS STATEMENT OF BAJAJ AUTO LTD:-

PROFIT & LOSS MAR MAR MAR MAR MAR

ACCOUNT OF 22 21 20 19 18
BAJAJ AUTO (in
Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

REVENUE FROM 32,135. 27,132. 29,111. 29,567. 25,098.

OPERATIONS 98 90 54 25 64
[GROSS]

Less: Excise/Sevice 0.00 0.00 0.00 0.00 398.34

Tax/Other Levies

REVENUE FROM 32,135. 27,132. 29,111. 29,567. 24,700.

OPERATIONS 98 90 54 25 30
[NET]

TOTAL 33,144. 27,741. 29,918. 30,249. 25,164.

OPERATING 71 08 65 96 92
REVENUES
Other Income 1,209.2 1,276.4 1,733.5 1,649.3 1,347.2
4 6 6 1 5

TOTAL REVENUE 34,353. 29,017. 31,652. 31,899. 26,512.

95 54 21 27 17

EXPENSES

Cost Of Materials 22,169. 18,308. 19,484. 20,301. 15,999.

Consumed 88 09 62 35 16

Purchase Of Stock-In 1,971.9 1,521.0 1,586.6 1,579.3 1,401.2

Trade 8 4 7 8 5

Operating And Direct 0.00 0.00 0.00 0.00 0.00

Expenses

Changes In 187.96 -219.48 -63.01 -56.42 9.68

Inventories Of
FG,WIP And Stock-In
Trade

Employee Benefit 1,358.8 1,285.9 1,389.2 1,255.4 1,069.0

Expenses 0 6 1 0 9

Finance Costs 8.66 6.66 3.16 4.48 1.31

Depreciation And 269.17 259.28 246.43 265.69 314.80

Amortisation
Expenses

Other Expenses 2,197.4 1,929.2 2,454.9 2,218.3 1,926.3

5 6 0 3 8
TOTAL EXPENSES 28,163. 23,078. 25,072. 25,538. 20,697.
90 54 01 11 60

PROFIT/LOSS 6,190.0 5,939.0 6,580.2 6,361.1 5,814.5

BEFORE 5 0 0 6 7
EXCEPTIONAL,
EXTRAORDINARY
ITEMS AND TAX

Exceptional Items 315.28 0.00 0.00 342.00 -32.00

PROFIT/LOSS 6,505.3 5,939.0 6,580.2 6,703.1 5,782.5

BEFORE TAX 3 0 0 6 7

TAX
EXPENSES-CONTI
NUED
OPERATIONS

Current Tax 1,486.4 1,348.1 1,547.2 1,818.5 1,646.3

6 0 6 9 6

Less: MAT Credit 0.00 0.00 0.00 0.00 0.00

Entitlement

Deferred Tax 0.00 36.31 -67.04 209.39 68.11

Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00

TOTAL TAX 1,486.4 1,384.4 1,480.2 2,027.9 1,714.4

EXPENSES 6 1 2 8 7
PROFIT/LOSS 5,018.8 4,554.5 5,099.9 4,675.1 4,068.1
AFTER TAX AND 7 9 8 8 0
BEFORE
EXTRAORDINARY
ITEMS

PROFIT/LOSS 5,018.8 4,554.5 5,099.9 4,675.1 4,068.1

FROM 7 9 8 8 0
CONTINUING
OPERATIONS

PROFIT/LOSS FOR 5,018.8 4,554.5 5,099.9 4,675.1 4,068.1

THE PERIOD 7 9 8 8 0

OTHER
ADDITIONAL
INFORMATION

EARNINGS PER
SHARE

Basic EPS (Rs.) 173.60 157.50 176.30 161.60 140.60

Diluted EPS (Rs.) 173.60 157.50 176.30 161.60 140.60

VALUE OF
IMPORTED AND
INDIGENIOUS
RAW MATERIALS
STORES, SPARES
AND LOOSE
TOOLS
Imported Raw 0.00 0.00 0.00 0.00 0.00
Materials

Indigenous Raw 0.00 0.00 0.00 0.00 0.00

Materials

STORES, SPARES
AND LOOSE
TOOLS

Imported Stores And 0.00 0.00 0.00 0.00 0.00

Spares

Indigenous Stores 0.00 0.00 0.00 0.00 0.00

And Spares

DIVIDEND AND
DIVIDEND
PERCENTAGE

Equity Share 0.00 0.00 5,208.6 1,736.2 1,591.5

Dividend 0 0 2

Tax On Dividend 0.00 0.00 1,049.3 337.49 296.50

3

Equity Dividend Rate 1,400.0 1,400.0 1,200.0 600.00 600.00

(%) 0 0 0

BALANCE SHEET OF BAJAJ AUTO LTD:-

BALANCE SHEET MAR MAR MAR MAR MAR
OF BAJAJ AUTO 22 21 20 19 18
(in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND
LIABILITIES

SHAREHOLDER'S
FUNDS

Equity Share Capital 289.37 289.37 289.37 289.37 289.37

TOTAL SHARE 289.37 289.37 289.37 289.37 289.37

CAPITAL

Reserves and Surplus 26,379. 24,912. 19,636. 21,490. 18,814.

43 89 12 53 49

TOTAL RESERVES 26,379. 24,912. 19,636. 21,490. 18,814.

AND SURPLUS 43 89 12 53 49

TOTAL 26,668. 25,202. 19,925. 21,779. 19,103.

SHAREHOLDERS 80 26 49 90 86
FUNDS

NON-CURRENT
LIABILITIES

Long Term 0.00 0.00 0.00 0.00 120.77

Borrowings
Deferred Tax 403.33 522.14 346.38 542.66 323.42
Liabilities [Net]

Other Long Term 159.07 160.61 167.72 169.59 47.96

Liabilities

Long Term Provisions 1.30 1.98 80.50 14.56 112.19

TOTAL 563.70 684.73 594.60 726.81 604.34

NON-CURRENT
LIABILITIES

CURRENT
LIABILITIES

Short Term 0.00 0.00 0.00 0.00 0.00

Borrowings

Trade Payables 3,633.1 4,573.8 3,199.7 3,786.7 3,244.3

8 1 0 3 2

Other Current 902.51 917.03 895.54 946.33 741.37

Liabilities

Short Term Provisions 153.75 152.37 157.97 140.62 125.60

TOTAL CURRENT 4,689.4 5,643.2 4,253.2 4,873.6 4,111.2

LIABILITIES 4 1 1 8 9

TOTAL CAPITAL 31,921. 31,530. 24,773. 27,380. 23,819.

AND LIABILITIES 94 20 30 39 49

ASSETS
NON-CURRENT
ASSETS

Tangible Assets 1,910.8 1,565.3 1,602.0 1,688.6 1,821.2

4 3 3 9 2

Intangible Assets 0.00 47.30 43.09 19.75 0.00

Capital 0.00 15.98 46.54 11.54 11.15

Work-In-Progress

Other Assets 0.00 52.30 53.90 55.50 57.11

FIXED ASSETS 1,910.8 1,680.9 1,759.2 1,811.9 1,934.8

4 1 1 6 0

Non-Current 18,849. 14,602. 15,416. 17,582. 11,822.

Investments 63 84 20 88 89

Deferred Tax Assets 0.00 0.00 0.00 0.00 0.00

[Net]

Long Term Loans 4.57 31.43 32.46 31.63 30.64

And Advances

Other Non-Current 1,162.4 1,039.8 968.47 891.26 795.53

Assets 3 9

TOTAL 21,927. 17,355. 18,176. 20,317. 14,583.

NON-CURRENT 47 07 34 73 86
ASSETS

CURRENT ASSETS
Current Investments 4,969.1 8,028.1 2,779.7 1,576.4 5,765.4
3 1 5 8 1

Inventories 1,230.5 1,493.8 1,063.5 961.51 742.58

1 9 0

Trade Receivables 1,516.3 2,716.8 1,725.1 2,559.6 1,491.8

8 5 0 9 7

Cash And Cash 588.34 527.36 308.27 922.81 778.00

Equivalents

Short Term Loans 4.17 5.74 6.11 6.34 6.26

And Advances

OtherCurrentAssets 1,685.9 1,403.1 714.23 1,035.8 451.51

4 8 3

TOTAL CURRENT 9,994.4 14,175. 6,596.9 7,062.6 9,235.6

ASSETS 7 13 6 6 3

TOTAL ASSETS 31,921. 31,530. 24,773. 27,380. 23,819.

94 20 30 39 49

OTHER
ADDITIONAL
INFORMATION

CONTINGENT
LIABILITIES,
COMMITMENTS
Contingent Liabilities 0.00 1,667.2 1,803.8 1,853.8 2,248.6
1 5 8 4

CIF VALUE OF
IMPORTS

Raw Materials 0.00 0.00 0.00 0.00 0.00

Stores, Spares And 0.00 0.00 0.00 0.00 0.00

Loose Tools

Trade/Other Goods 0.00 0.00 0.00 0.00 0.00

Capital Goods 0.00 0.00 0.00 0.00 0.00

EXPENDITURE IN
FOREIGN
EXCHANGE

Expenditure In 0.00 753.34 872.88 973.07 673.41

Foreign Currency

REMITTANCES IN
FOREIGN
CURRENCIES FOR
DIVIDENDS

Dividend Remittance -- -- -- -- --
In Foreign Currency

EARNINGS IN
FOREIGN
EXCHANGE
 FOB Value Of Goods -- -- -- -- --

Other Earnings -- 12,181. 11,872. 11,434. 9,281.4

88 37 23 6

BONUS DETAILS

Bonus Equity Share -- 258.85 258.85 258.85 258.85

Capital

NON-CURRENT
INVESTMENTS

Non-Current -- 10,140. 4,028.2 5,600.7 5,393.3

Investments Quoted 04 9 1 2
Market Value

Non-Current -- 4,969.4 13,993. 13,560. 12,198.

Investments Unquoted 8 62 83 87
Book Value

CURRENT
INVESTMENTS

Current Investments -- -- -- -- --
Quoted Market Value

Current Investments -- 7,468.6 174.07 -- --

Unquoted Book Value 4

Cash Flow Statement of Bajaj Auto Ltd:-

Rs (in Crores)

Mar'2 Mar'2 Mar'1 Mar'1 Mar'1

Particulars
1 0 9 8 7

5939.0 6580.2 6703.1 5782.5 5335.6

Profit Before Tax
0 0 6 7 3

3113.8 3861.7 2489.5

Net Cash Flow from Operating Activity .00 .00
6 6 3

-2865. 1754.5 -244.0

Net Cash Used in Investing Activity .00 .00
35 4 8

-6246. -2074.
Net Cash Used in Financing Activity -19.52 .00 .00
51 05

-628.0
Net Inc/Dec In Cash and Cash Equivalent 227.80 144.44 .00 .00
5

Cash and Cash Equivalent - Beginning of the

277.33 905.38 760.94 279.82 817.55
Year

Cash and Cash Equivalent - End of the Year 505.13 277.33 905.38 760.94 279.82
Rs (in Crores)

Statement of Cash Flows:-

( ₹ in Crore )
For the year ended 31 March

Particulars 2022 2021

I. Operating activities

Profit before tax 5,939. 6,580.

00 20

Adjustments to reconcile profit before tax to net

cash flows:

Add:

i) Depreciation and amortisation 259.2 2

8
46.43

ii) Loss on property, plant and equipment sold, 13.10 13.70

demolished,

discarded and scrapped

iii) Provision for doubtful debts and advances 16.15 22.01

iv) Share based payment to employees 6.90 10.01

v) Exchange loss/(gain) on cash and cash 1.19 (2.16)

equivalents
vi) Exchange loss/(gain) on trade receivables (6.01) (15.41
)

vii) Exchange loss/(gain) on import payables 0.10 (1.98)

viii) Interest adjustment on Government grant 1.18 1.06

ix) Interest expense 5.48 2.10

297.3 275.76
7

Less:

i) Investment income included in above:

Interest income on fixed income securities 65.77 17.04

Interest income on fixed deposits 17.87 28.90

Interest income on exchange traded funds 76.85

Interest income on fixed maturity plans 842.5 903.5

1 5

Profit on sale of other investments, net 15.74 19.53

 Gain on valuation and realisation of mutual 254.2 462.7
funds measured at fair value through profit or 5 0
loss

Dividend income on investments in – 208.9

subsidiaries 9

Dividend income on other strategic – 25.38

investments

Amortisation of premium/discount on (5.57) 18.24

acquisition of fixed income securities

1,267. 1,684.
42 33

ii) Provision for doubtful debts and advances written – 0.54

back (net)

iii) Government grants 2.65 2.65

iv) Surplus on sale of property, plant and equipment 1.94 5.28

(1,272 (1,692.
.01) 80)

4,964. 5,163.
36 16
 Change in assets and liabilities

i) (Increase)/decrease in inventories (430.3 (101.9

9) 9)

ii) (Increase)/decrease in trade receivables (1,001 828.5

.89) 3

iii) (Increase)/decrease in loans and other assets (561.5 409.2

0) 8

iv) Increase/(decrease) in liabilities and 1,483. (759.30

provisions 32 )

(510.4 376.52
6)

Annuity payments (net) to VRS/Welfare scheme (0.35) (0.26)

optees

Net cash flow from operating activities before 4,453. 5,539.

income-tax 55 42

Income-tax paid (1,339 (1,677.

.69) 66)
 Net cash flow from/(used in) operating activities 3,113. 3,861.
86 76

II. Investing activities

i) Investment in subsidiary – (10.54

)

ii) Sale of investments 3,555. 5,178.

72 94

iii) Purchase of investments (5,888 (3,517

.39) .96)

iv) Sale/(purchase) of liquid mutual funds, etc., net (351.2 166.9

8) 6

v) Investment in treasury shares by ESOP trust (5.52) (26.62

)

vi) (Increase)/decrease in other bank balances 8.71 (13.51

)

vii) Purchase of property, plant and equipment (241.0 (282.8

(including advances) 4) 1)
 viii) Sale proceeds of property, plant and equipment 5.70 16.74

ix) Capital expenditure on development of technical (15.53 (13.93

know-how ) )

(2,931 1,497.
.63) 27

x) Investment income

Interest income on fixed income securities 65.77 17.04

Interest income on fixed deposits 17.87 28.90

Dividend income on investments in subsidiaries – 208.9

9

Dividend income on other strategic investments – 25.38

83.64 280.3
1

(Increase)/decrease in interest receivable (17.36 (23.04

) )

66.28 257.2
7
 Net cash flow from/(used in) investing activities (2,865 1,754.
.35) 54

III. Financing activities

i) Interest expense (5.48) (2.10)

ii) Change in sales tax deferral liability due to (5.31)

assessment

iii) Dividend, including interim dividend paid (8.73) (5,195

.10)

iii) Dividend, including interim dividend paid – (1,049

.31)

Net cash flow from/(used in) financing activities (19.52 (6,246.

) 51)
 Net change in cash and cash equivalents 228.9 (630.2
9 1)

Cash and cash equivalents at the beginning of the 277.3 905.38

year 3

Add/(Less): Effects of exchange loss/(gain) on cash (1.19) 2.16

and cash equivalents

Cash and cash equivalents at the end of the year 505.1 277.33
[See note 11] 3
 OBJECTIVES OF STUDY:

1. To analyse the profitability position of the company.

2. To assess the return on investment.

3. To analyse the asset turnover ratio.

4. To determine the solvency position of the company.

5. To suggest measures for effective and efficient usage of inventory.

6. To suggest measures for improving the financial performance of an

organisation.

7. To study and analyse the financial position of the Company through ratio
analysis.

NEED OF THE STUDY:

The prevalent educational system providing the placement training at an industry

being a part of the curriculum has helped in comparison of theoretical knowledge
with practical systems. It has led to note the convergences and divergence between
theory and practice.

The study enables us to have access to various facts of the organisation. It helps in
understanding the needs for the importance and advantage of materials in the
organisation, the study also helps to expose our minds to the integrated materials
management and the various procedures, methods and techniques adopted by the
organisation. The study provides knowledge about how the theoretical aspects are put
in the organisation in terms of described below:-
 ✠ To pay wages and salaries.

✠ For the purchase of raw materials, spares and components parts.

✠ To incur day-to-day expenses.

✠ To meet selling costs such as packing, advertising.

✠ To provide credit facilities to customers.

✠ To maintain inventories and raw materials, work-in-progress and finished stock.

 Research Methodology

Research Design:
In view of the objects of the study listed above an exploratory
research design has been adopted. Exploratory research is one which largely
interprets and already available information and it lays particular emphasis on
analysis and interpretation of the existing and available information.
• To know the financial status of the company.
• To know the credit worthiness of the company.
• To offer suggestions based on research findings.

Data Collection Methods:

Primary Data:
Information collected from the internal guide and finance manager.
Primary data is first hand information.

Secondary Data:
Company balance sheet and profit and loss account. secondary data is
second hand information.

Data Collection Tools

To analyse the data acquired from the secondary sources “Ratio
Analysis”The scope of the study is defined below in terms of concepts
adopted and period under focus. First the study of Ratio Analysis is
confined only to the Bajaj Auto Ltd. Secondly the study is based on the
 annual reports of the company for a period of 5 years from 2018-2022
the reason for restricting the study to this period is due time constraint.

Scope of the Study

The scope of the study is limited to collecting financial data published in

the annual reports of the company every year. The analysis is done to suggest the
possible solutions. The study is carried out for 5 years (2018–22).

Using the ratio analysis, firms' past, present and future performance can
be analysed and this study has been divided as short term analysis and long term
analysis. The firm should generate enough profits not only to meet the expectations
of the owner, but also to expand activities.
 LIMITATIONS

• The study was limited to only five years Financial Data.

• The study is purely based on secondary data which were taken primarily from
Published annual reports of Bajaj Auto Limited.

• There is no set industry standard for comparison and hence the inference is
made on general standards.

• The ratio is calculated from past financial statements and these are not indicators
of the future.

• The study is based only on the past records.

• Non availability of required data to analyse the performance.

• The short span of the time provided also one of limitations.

 DATA ANALYSIS AND INTERPRETATION:-

1. Liquidity ratio:
The liquidity ratio is used to measure the liquidity position of any
organisation. It means whether the financial organisation is able to pay its short-term
obligations.

1.1 Current Ratio:

The current ratio is one of the important ratios to measure liquidity
position. The ideal ratio of the current ratio was 2:1. The result will come to two and
more than two means its short-term liquidity position is strong.

The formula for calculating the current ratio was = Current Assets / Current
Liabilities.

Current Assets included cash balance in hand, bank account balance, bills receivable,
inventories, and prepaid expenses.

Current liabilities included bills payable, outstanding expenses, and other short-term
obligations.
 Table-1

CURRENT RATIO

Year Current Current Ratios

Assets Liabilities (Times)
2018 9,235.63 4111.29 2.25
2019 7,062.66 4873.68 1.45
2020 6,596.96 4253.21 1.55
2021 14,175.13 5643.21 2.51
2022 9,994.47 4689.44 2.13
The Current ratio of Bajaj auto ltd. The current ratio of that firm shows a
fluctuating trend. The current ratio decreased from 2.25 times in the year
2018 to 1.45 times in the year 2019. Due to this reason, current assets
decreased from Rs.9,235.63 in the year 2018 to Rs. 7,062.66 in the year
2019. From the overall analysis, the current ratio results are more than the
standard norm of 2:1 except in the years 2019 and 2020. Due to the impacts
of Covid -19 lockdown in India.

1.2 Quick Ratio:

The quick ratio helps to measure the Company’s ability to pay its
immediate liabilities without the sale of its stocks. It is a more conservative
measure when compared to the current ratio. The ideal norm of the quick ratio
was 1:1.

The formula for calculating the quick ratio was = Quick Assets/ Quick
Liabilities.

Quick assets include all current assets except inventories and prepaid
expenses, Quick liabilities include all current liabilities except bank over draft.
Table-2

Quick Ratio
Year Quick Quick liabilities Ratio
assets (Times)
(Rs.)
(Rs.)

2018 8,493.05 4,111.29 2.06

2019 6,101.15 4,873.68 1.25

2020 5,333.46 4253.21 1.30

2021 12,681.24 5,643.21 2.25
 2022 8,763.96 4,689.44 1.87

The quick ratio of Bajaj Auto Ltd from 2018 to 2022. The ratio decreased from
2.06 times in 2018 to 1.30 times in the year 2020 after that it increased from
1.30 times in the year 2020 to 1.87 times in the year 2022. The results of
quick ratios are more than the standard norm of 1:1. So, the firm can easily
meet its current strength and its liquidity position is too strong.

2. Profitability Ratio:

Earning profit is the first and foremost objective of any business. And it
is a major source of internal funds by the way of retained earnings and
reserve and surplus. The dividend paid to the equity shareholders depends
upon the company’s profitability.
2.1 Operating Profit Ratio:

The operating profit ratio helps to measure the operating

efficiency of the business. Operating profit comes from the company’s regular
courses of business. And it is the major source of income.

The formula for calculating operating profit ratio = Operating profit/ Net Sales.

Table 3

Operating Profit Ratio

Year Operating Profit Total revenue Ratio (%)

(Rs.) (Rs.)

2018 25,218.92 26512.17 95.12

2019 30,357.57 31899.27 96.48

2020 29,918.65 31652.21 95.16

2021 27,741.08 29017.54 94.52

2022 33,144.71 34353.95 95.60

The operating profit position of the firm. The operating profit ratios show a
constant trend. The operating profit ratio increased from 95.12 percent to
95.60 in the year 2018-2022. It is an appreciable one. So, the company tries
to increase revenue from the operations of the business.

2.2 Return on Equity Ratio:

The return on equity ratio indicates the profitability of any

business in relation to the equity shareholders' funds. We can calculate the
shareholder's equity by deducting all liabilities from all assets.

The formula for calculating Return on equity = Net Income/Shareholders'

equity.
 Table 4

Return on Equity Ratio

Year Net Shareholder Ratio %
income
equity (Rs.)
(Rs.)

2018 2,646.70 16,518.29 21.29

2019 3,890.34 19,563.63 21.46

2020 5,099.98 19,925.49 25.59

2021 4,554.59 25,202.26 18.07

2022 5018.17 26,668.80 18.82
The return on equity ratio of Bajaj Auto Ltd. The highest return on equity ratio
shown in the year 2020 was 25.59 percent. The lowest ratio shown in the year
2021 was 18.07 percent. This ratio suddenly decreased from 25.59 percent in
the year 2020 to 18.82 percent in the year 2022. Because of that the firm had
increased equity shareholders' funds in their capital structure.

2.3 Return on Investment Ratio:

The return on investment is helping to measure used to assess the

efficiency or profitability of an investment. Income from investment is not a
main source of business. Investment may be invested in other companies’
equity shares, debenture, and another mode. The formula for calculating
Return on Investment ratio = Net Profit/ Investment ×100.

Table 5
Return on Investment Ratio

Year Net Profit Total Ratio %

(Rs.) Investments

(Rs.)

2018 2,646.70 17,588.30 23.13

2019 3,890.34 19,159.36 20.13

2020 5,099.98 18,195.95 28.03

2021 4,554.59 22,630.95 24.40

2022 5018.17 23,818.76 23.13

The return on investment ratio of Bajaj auto limited. This ratio increased from
23.13 percent to 28.03 percent in the year 2018 to 2020. After that, the ratio
decreased from 28.03 percent to 23.23 percent in the year 2020 to 2022. It is
not an appreciable factor. So, the firm must want to concentrate on returns
from investments by the way of selecting the best investment securities when
choosing investments.

3. Solvency Ratio:

The solvency ratio is used to measure a firm’s ability to meet its

long-term obligation of the business. It includes the debt-equity ratio and
proprietary ratio.

3.1 Debt- Equity Ratio:

Debt- equity ratio is the important ratio to measure long-term
obligations. It matches the total liabilities with the total shareholders’ equity
fund. High debt equity shows a levered firm and low debt-equity ratio low
levered firms.
 Table- 6

Debt- Equity Ratio

Year Debt Equity Ratio

(Rs.) (Rs.) (Times)

2018 120.77 16,518.29 0.007

2019 124.52 19,563.63 0.006

2020 125.59 19,925.49 0.006

2021 121.46 25,202.26 0.005

2022 159.07 26,668.80 0.006

The above table shows the Debt – Equity ratio of Bajaj Auto Ltd. As per the
standard norms, the debt equity ratio was 1:1. The above results are below
1:1. So, we Know the firm can easily pay its outsiders' funds by using its total
shareholders’ funds.

3.2 Proprietary Ratio:

The proprietary is another important ratio to evaluate the
proportion of shareholders' equity to the total assets of the firm. It is also
called a net-worth ratio or equity ratio or shareholders' equity ratio. The result
of this ratio reveals how much the equity shareholders will get if the company
goes to liquidation.

The formula for calculating proprietary ratio = Shareholders fund/ Total Asset.

Table 7

Proprietary Ratio

Year Shareholder Total Assets Ratio

(Times)
fund (Rs.) (Rs.)

2018 19,103.86 23,819.49 0.80

2019 21,779.90 27,380.39 0.80

2020 19,925.49 24,773.30 0.80

2021 25,202.26 31,530.20 0.80

2022 26,668.80 31,921.94 0.84

The Proprietary ratio of the firm and highlights the general financial strength of
the firm. The proprietary ratio was increased from 0.80 times to 0.84 times in
the year 2018 to 2022. The results of the proprietary ratios were above the
standard norm. It denotes the firm has enough assets to meet its
shareholders’ fund. So, that firm can easily compensate their equity
shareholders fund.

4. Turnover Ratio:

Turnover ratios help to calculate the business efficiency and how

the business uses its assets to generate revenue. It includes the Assets
turnover ratio, inventory turnover ratio, fixed assets turnover ratio, and current
assets turnover ratio.
4.1 Assets Turnover ratio:
The assets turnover ratio measures how the firm utilized its total
assets in that business and how it helps to generate revenue for the business.
The higher the ratio denotes the company’s better performance.

The formula for calculating assets turnover ratio = Revenue/Total assets.

Table- 8

Assets Turnover Ratios

Year Total Revenue Total assets Ratio (Times)

(Rs.) (Rs.)

2018 25,218.92 23,819.49 105.88

2019 30,357.57 27,380.39 110.87

2020 29,918.65 24,773.30 120.77

2021 27,741.08 31,530.20 87.98

2022 33,144.71 31,921.94 103.83

The assets turnover ratio of Bajaj Auto Ltd from 2017 to 2021. This ratio
increased from 105.88 times to 120.77 times in the year 2018 to 2020. After
that results suddenly decreased from 120.77 to 87.98 due to the post-impact
of Covid-19. Then the ratio slowly increased to 103.83.
 FINDINGS OF THE STUDY-

Except in the year 2018, the company is maintaining current ratio as 2 and more,
standard which indicates the ability of the firm to meet its current obligations is
more. It shows that the company is strong in working funds management.

The company is maintaining of quick assets more than quick ratio. As the company
has a high value of quick ratio. Quick assets would meet all its quick liabilities
without any difficulty.
The company is failed in keeping sufficient cash & bank balances and marketable
securities.
✶ In above all current assets and liabilities ratios are better that also it is double the
normal position. Observe the absolute & super quick ratio the company cash
performance is down position.
Debt Equity ratio is increasing every year. It indicates the company depends on the
debt fund increasing.
Total liabilities ratio is also increasing year by year.

The company is declining of its coverage ratio to serve long term debts.

Inventory turnover also increased for year by year that is company production is
also increased. Subsequently sales have also increased.
The net profit ratio of the company increasing over the study period. Hence the
organisation having good control over the operating expenses.
 SUGGESTIONS AND RECOMMENDATIONS

1. Except for 2019 & 2020, the results of the current ratios were shown above the
standard norm of 2:1. So, it is appreciable that the firm must maintain equal or above
the standard norm in their future periods.

2. The results of the operating profit ratios were no great improvement when
compared to previous years. If the firm concentrates on its operating sources means it
furthermore helps the company’s growth.

3. The debt-equity ratio of the firm was too good. The firm tries to follow that same
improvement in the future also.

4. The results of the proprietary ratios were above the standard norm. It helps to
easily meet its shareholder’s fund by its assets of the firms. So, they continue to
follow this same strategy in the future period.

5. The overall Assets turnover ratio was appreciable. In Addition, to that, the firm
tries to increase the utilisation of its resources. It creates a positive appearance among
the investors.

6. The company has to increase the profit maximisation and has to decrease the
operating expenses.

7. Return on investment fluctuates every year. The company has to make efforts in
increasing return on investments by reducing its administration, selling and other
expenses.

8. The dividend per share has been observed as a rising trend over the study period,
hence it may be suggested Bajaj Auto Limited should take key interest to maximise
the shareholder wealth by increasing dividend payout.
 Conclusion:-

Liquidity ratios, both current ratio and quick ratio are showing effectiveness in
liquidity as in all the years current ratio is greater than the standard 2:1 and quick
ratio is greater than the standard 1:1 ratio.

The firm is maintaining a low cash balance and marketable securities which means
they done cash payments.

Debt equity ratio, solvency ratio and interest coverage ratio are showing an average
increase in the long term solvency of the firm.

The proprietary ratio is showing an average increase which means, the shareholders
have contribute more funds to the total assets.

Average payment period of the firm is showing the credit worthiness of the firm to
its suppliers.

Fixed assets turnover ratio is showing that the firm needs lesser investment in fixed
assets to generate sales.

The increasing trend of current assets turnover ratio indicates that the firm needs
more investment in current assets for generating sales.

The gross profit ratio, net profit ratio is showing the increasing trends. The
profitability of the firm the increasing

Operating ratio of the company has observed decreasing trend, hence it may be
good control over the operating expenses.

The interest that has to be paid is very less when compared to the sales. The firm is
not utilising the debt conservatively.

The firm is retaining much of the earnings (based on dividend payout ratio) .

The company financial performance is very good and also they will increase their
business year by year by expanding their branches.
 BIBLIOGRAPHY

1. I.M.Pandey : Financial Management

2. M.Y.Khan & P.K.Jai : Financial Management
3. S.P. Jain & K.L. Narang : Cost & Management accounting

4. K.Rajeswara rao & G. Prasad : Accounting & Finance

5. P.Kulkarni : Financial Management

References:

1. https://www.moneycontrol.com/financials/bajajauto/balancesheetVI/BA0 2.
2. https://ijrar.org/papers/IJRAR22A1647.pdf 3.
3. http://www.shanlaxjournals.in/pdf/COM/V3N3/COM_V3_N3_008.pdf 4.
4. https://economictimes.indiatimes.com/ 5. http://www.bajajauto.com