CITY PREMIER COLLEGE

1. INTRODUCTION
Finance is a study of how investors allocated their assets over time under condition of
certainty and uncertainty. A key point in finance which affects decisions is the time value
of money, which states that a unit of currency today is worth more than the same unit of
currency tomorrow. Finance aims at to price assets based on their risks level and expected
rate of returns.
A financial statement (or financial report) is a formal record of the financial activities
of a business, person, or other entity. The term financial statement refers to two basis
statement which an accountant prepares at the end of accounting period enterprise. These
are:
Balance sheet (or statement of financial position) which reflects the assets, liabilities and
capitals as on a certain date. The Balance Sheet is the minor of the financial position of
the business, and
Profit and Loss Accounts (or income statements) which shows the results of operation
i.e., profit or loss during a certain period. The profit and loss account shows the result of
the business activities or operations during a certain period of time, usually a year.
In the words of John N. Myers, financial statement analysis is largely a study of the
relationships among the various financial factors in the business as disclosed by single
sets of statement and study of trends of these factors as shown in series of the
statements.
Thus, financial statement analysis converts the mass of the data into useful information
which is always in scare supply. It pinpoints the strengths and weakness of the business
undertaking by the use of various techniques such as Ratio Analysis, Comparative Study
etc. Such analyzed information is used by management, bankers, creditors, investors and
others to form opinions about the operating performance and financial position of the
business. Thus, the financial statement analysis helps in evaluating a business
performance according to some specific objectives.
The financial statement provides a summarized view of operations of a firm.
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CITY PREMIER COLLEGE

Financial statements are formally prepared documents communicating an entity's

financial activities to parties including investors, management and tax officials.

An entity's financial statement typically includes four basic components: a balance

sheet, income statement, cash flow statement, and statement of changes in equity.

The balance sheet reports a point-in-time snapshot of the assets, liabilities and equity
of the entity.

An income statement reports on a company's expenses and profits to show whether

the company made or lost money.

The cash flow statement reports the flow of cash in and out of the business, dividing
cash into operating, investing and financing activities.

A statement of changes in equity explains the changes of the company's equity

throughout the reporting period, including profits or losses, dividends paid and issue
or redemption of stock.
o Equity:

The residual claim or interest to investors in assets after all liabilities are paid. If liability
exceeds assets, negative equity exists and can be purchased through stock.
o Assets:
Economic resources that represent value of ownership that can be converted into cash
(although cash itself is also considered an asset)
o Liabilities:
An obligation of an entity arising from past transactions or events, including any type of
borrowing

CITY PREMIER COLLEGE

DEFINATION OF RATIO ANANLYSIS

Single most important technique of financial analysis in which quantities are converted
into ratios for meaningful comparisons, with past ratios and ratios of other firms in the
same or different industries. Ratio analysis determines trends and exposes strengths or
weakness of a firm.
The term Ratio refers to the numerical and quantitative relationship between two items
or variables. This relationship can be exposed as

Percentages

Fractions

Proportion of numbers ratio analysis is defined as the systematic use of the ratio to
interpret the financial statement. So that the strengths and weakness of a firm, as well
as its historical performance and current financial condition can be determined. Ratio
reflects a quantitative relationship helps to form a quantitative judgment.

INTRODUCTION OF RATIO ANALYSIS

Fundamental analysis has a very broad scope. One aspect looks at the general
(qualitative) factors of a company. The other side considers tangible and measurable
factors (quantitative). This means crunching and analyzing numbers from the financial
statements. If used in conjunction with other methods, quantitative analysis can produce
excellent results.
Ratio analysis isn't just comparing different numbers from the balance sheet, income
statement and cash flow statement. It's comparing the number against previous years,
other companies, the industry or even the economy in general. Ratios look at the
relationships between individual values and relate them to how a company has performed
in the past, and how it might perform in the future.

CITY PREMIER COLLEGE

For example, current assets alone don't tell us a whole lot, but when we divide them by
current liabilities we are able to determine whether the company has enough money to
cover short-term debts.
In this tutorial, we'll show you how to use ratio analysis to analyze financial reports.
Comparing these ratios against numbers from previous years, other companies, industry
averages and the economy in general can tell you a lot about where a company might be
headed. Valuing a company is no easy task. This tutorial will shed some light on how it
can be done and, ultimately, help you to make more informed choices as an investor.

STEPS INVOLVED IN RATIO ANALYSIS

1

Selection of the relevant data from the financial statements.

Calculation of appropriate ratios from the above data.

Comparison of the calculated ratios with the ratios of the past period of the firm.

Interpretation of the ratios.

CITY PREMIER COLLEGE

IMPORTANCE AND SIGNIFICANCE OF THE STUDY

The study has great significance and provides benefits to various parties whom
directly or indirectly interact with the company.
It is beneficial to management of the company by providing crystal clear picture
regarding important aspects like liquidity, leverage, activity and profitability.
The study is also beneficial to employees and offers motivation by showing how
actively they are contributing for companys growth.
The investors who are interested in the companys shares will also get benefited by
going through the study and can easily take a decision whether to invest or not to
invest in the companys shares.
The study is very useful in analyzing the progress of automobile industry of India.
The industry is no doubt gaining more response from market.

CITY PREMIER COLLEGE

2. COPMPANY PROFILE
Bajaj Auto Limited is an Indian two and three wheeler manufacturing company. Bajaj
Auto manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto is part
of Bajaj Group.

It was founded by Jamnalal Bajaj in Rajasthan in the 1930s. It is based in the Pune,
Mumbai, with plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in
Uttarakhand. The oldest plant at Akurdi (Pune) now houses the R&D centre Ahead.

Bajaj Auto is the worlds third largest manufacturer of motorcycles and the second largest
in India. It is the worlds largest three-wheeler manufacturer.

On 31st March 2013, its Market Capitalization was INR 520 billion (US$9.57 billion),
making it Indias 23rd largest publicly traded company by market value. The Forbes
Global 2000 list for the year 2012 ranked Bajaj Auto at 1,416.

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The

Bajaj

Group is amongst the top 10 business houses in India. Its footprint stretches over a wide
range of industries, spanning automobiles (two-wheelers and three-wheelers), home
appliances, lighting, iron and steel, insurance, travel and finance. The group's flagship
company, Bajaj Auto, is ranked as the world's fourth largest two- and three- wheeler
manufacturer and the Bajaj brand is well-known across several countries in Latin
America, Africa, Middle East, South and South East Asia. Founded in 1926, at the height
of India's movement for independence from the British, the group has an illustrious
history. The integrity, dedication, resourcefulness and determination to succeed which are
characteristic of the group today, are often traced back to its birth during those days of
relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close
confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son.
This close relationship and his deep involvement in the independence movement did not
leave Jamnalal Bajaj with much time to spend on his newly launched business venture.
His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942. He too was
close to Gandhiji and it was only after Independence in 1947, that he was able to give his
full attention to the business. Kamalnayan Bajaj not only consolidated the group, but also
diversified into various manufacturing activities. The present Chairman of the group,
Rahul Bajaj, took charge of the business in 1965. Under his leadership, the turnover of
the Bajaj Auto the flagship company has gone up from INR.72 million to INR. 120
billion, its product portfolio has expanded and the brand has found a global market. He is
one of Indias most distinguished business leaders and internationally respected for his
business acumen and entrepreneurial spirit.
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COMPANYS HISTORY

Bajaj Auto came into existence on 29th of November 1945 as M/s Bachraj Trading
Corporation Private Limited. It started off by selling imported two and three wheelers in
India. In 1959, it obtained a license from the Government of India to manufacture two
and three wheelers and it become a public limited company in 1960.

In 1970, it rolled out its 1,00,000th vehicles in a financial year. In 1985, it started
producing at Waluj near Aurangabad. In 1986, it sold 5,00,000th vehicles in a financial
year. In 1995, it rolled out its ten millionth vehicles and produced and sold one million
vehicles in a year. With the lunch of motorcycles in 1986, the company has changed its
image from a scooter manufacturer to a two wheeler manufacture.

Competing with Everyone from Everywhere for Everything, Bajaj has grown operation
in 50 countries by creating a line of value-for-money bikes targeted to the different
preferences of entry level buyers with quality such that Kawasaki buys Bajaj products for
some of its market.

CITY PREMIER COLLEGE

BAJAJ GROUP OF COMPANIES

Bajaj Auto is the flagship of the Bajaj Group of Companies. The group comprises of 36
companies and was founded in the year 1926. The companies in the group are:

Bajaj Auto Ltd. Manufacturers of Scooters, Motorcycles and Three-wheeler vehicles

and spare parts.

Bajaj Finance Ltd. Deals in financial services including hire purchase, financing &
leasing.

Bajaj Finserv Ltd Financial Services.

Bajaj Holdings & Investment Ltd. Investment company focusing on new business
opportunities.

Mukand Ltd. Manufacturers of stainless, alloy and special steels including carbon and
alloy steels.

Bajaj Electricals Ltd. - Manufacturers of electric fans, highmasts, lattice closed towers
and poles.

Bajaj Ventures Ltd. involved in manufacturing and trading of power tools and
manufacturing of houseware and parts.

Maharashtra Scooters Ltd. k- Manufacturers of Scooters.

Bajaj Allianz General Insurance Company Ltd. General insurance business.

Bajaj Allianz Life Insurance Co Ltd. Life insurance business.

Bajaj Financial Solutions Ltd. Distribution of financial products and services.

Bajaj Allianz Financial Distributors Ltd. Distribution of financial products.

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Bajaj Auto Holdings Ltd. Investment Company.

PT Bajaj Auto Indonesia (PTBAI) - Bajaj Auto venture in Indonesia.

Bajaj Auto International Holdings BV Bajaj Auto venture in Netherlands.

Hind Lamps Ltd. Manufactures GLS, fluorescent, miniature lamps and major
components, such as glass shells, miniature and alluminium caps, lead glass.

Mukand Engineers Ltd. Construction, fabrication and erection of industrial and

infrastructural projects and infotech business.

Mukand International Ltd. Trading in metals, steel and ferro alloys.

Bajaj Sevashram Pvt. Ltd. Investment activities.

Jamnalal Sons Pvt. Ltd. Investment and finance company.

Rahul Securities Pvt. Ltd.

Shekhar Holdings Pvt. Ltd.

Madhur Securities Pvt. Ltd.

Niraj Holdings Pvt. Ltd.

Rupa Equities Pvt. Ltd.

Kamalnayan Investments & Trading Pvt. Ltd.

SanrajNayan Investments Pvt. Ltd.

Hercules Hoists Ltd. Manufactures INDEF brand materials handling equipment such
as triple spur gear chain pulley blocks, chain electric hoists and wire rope.
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Hind Musafir Agency Ltd. Travel agency.

Bajaj International Pvt. Ltd. Export electric fans, GLS lamps, fluorescent tubes, light
fittings, etc.

Bachhraj Factories Pvt. Ltd. Ginning and pressing of cotton bales.

Baroda Industries Pvt. Ltd. Investment company.

Jeewan Ltd. Investment company.

Bachhraj& Co. Pvt. Ltd. Investment company.

The Hindusthan Housing Co. Ltd. Services company.

Hospet Steels Ltd. Steel plant consisting of Iron Making Division, Steel Making
Division and Rolling Mill Division.

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LEADERSHIP
Jamnalal Bajaj (18841942)
The Bajaj Group of Companies was founded by Jamnalal Bajaj and enjoyed phenomenal
growth. However, Bajaj's business interests were the means to a larger and holistic end.

Kamalnayan Bajaj (19151972)

Kamalnayan the eldest son of Jamanalal Bajaj started shouldering family responsibilities
from an early age. After completing his education from University of Cambridge,
England, Kamalnayan returned to India to assist his father Jamanalal, both in business
and in social service. Kamalnayan was a man of strict principles, which he never swerved
from. He had earmarked a large portion of the income from his family business for public
causes and social service programmes, the mantle of all of which he had inherited from
his father. He always had a sense of a larger social mission, transcending the dictates of
business and the bottom line.
Every new business venture that Kamalnayan got into, eloquently testified to his
legendary business acumen. With tremendous foresight and a spirit of zestful enterprise,
Kamalnayan acquired ailing industrial units and then miraculously turned them around.
He went on to expand the business by branching into manufacture of scooter, threewheeler, cement, alloy casting and electricals. In 1954, Kamalnayan took over active
management of the Bajaj Group companies.

Ramkrishna Bajaj (19241994)

Ramkrishna Bajaj, the younger son of Jamanalal, took over after the demise of his elder
brother Kamalnayan Bajaj in 1972. In addition to shouldering business responsibilities,
Ramkrishnas energies were largely directed towards the social service and social welfare

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programmes of the Bajaj Group. He was of the firm conviction that he could make an
impactful and meaningful contribution to the community through social work.
Ramkrishna had a flair and panache for working with youth. He was elected as the
Chairman of World Assembly for Youth (India) in 1961. He also held the office of the
Managing Trustee of the Indian Youth Centres Trust, which conceived and created the
VishwaYuvak Kendra in 1968, a trail-blazing organisation in youth development.

Rahul Bajaj present)

Rahul Bajaj, the chairman and managing director of the Bajaj group, is one of India's
renowned industrialists and is internationally respected for his business expertise and
entrepreneurial character. Rahul Bajaj is the grandson of Jamnalal Bajaj, who founded the
Bajaj Group. He completed his schooling from Cathedral, a school in Bombay. Then he
further pursued his studies from St Stephen's College, Delhi and Harvard University,
USA. He took over control of the Bajaj Group in 1965 and successfully established one
of India's best companies.

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SOURCES OF FUND OF BAJAJ AUTO

At the very first phase, the study analyzed the sources of funds which comprised share
capital, reserves, and loans. On the basis of various share capitals and reserves, the Net
worth of the company may be analyzed. The net worth and total debts comprised the total
liabilities of the sample organization.
Sources Of Fund Of Bajaj Auto (in Rs. Crores)
P

2009-10

2010-11

2011-12

2012-13

144.68

289.37

289.37

289.37

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C
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144.68

289.37

289.37

289.37

0.00

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A
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16

0.00

CITY PREMIER COLLEGE

r
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2,783.66

4,620.85

5,751.70

7,612.58

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s
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N

2,928.34

4,910.22

6,041.07

7,901.95

12.98

23.53

0.00

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1,325.60

301.62

97.48

71.27

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u
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1,338.58

325.15

97.48

71.27

4,266.92

5,235.37

6,138.55

7,973.22

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CITY PREMIER COLLEGE

i
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s

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PRODUCTS
Bajaj manufactures and sells motorcycles, scooters, auto-rickshaws and most recently,
cars. Bajaj Auto is Indias largest exporter of motorcycles and three-wheelers. Bajaj
Autos exports accounted for approx. 35% of its total sales. 47% of its exports are made
to Africa. Boxer motorcycle is the largest selling single brand in Africa.
Motorcycles
Motorcycles in production are the XCD, Platina, Discover, Pulsar and Avenger. Bajaj
also distributes motorcycles in India for other manufacturers, such as the Kawasaki Ninja
250R,

the

Ninja

650R

and

new

for

2012,

the

KTM

Duke

200.

In FY 2012-13, it sold approx. 3.76 million motorcycles which accounted for 31% of the
market share in India. Of these, approx. 2.46 million motorcycles (66%) were sold in
India and remaining 34% were exported.
Three wheelers
It is the world's largest manufacturer of 3-wheelers and accounts for almost 84% of
Indias three-wheeler exports. During the FY 2012-13, it sold approx. 480,000 threewheelers which was 57% of the total market share in India. Out of these 480,000 threewheelers, 53% were exported and remaining 47% were sold in India.
Cars
Low cost cars:In 2010, Bajaj Auto announced cooperation with Renault and Nissan Motor to develop a
US$2,500 car, aiming at a fuel efficiency of 30 kilometers per litre, or twice an average
small car, and carbon dioxide emission of 100 g/km. on 3 January 2012, Bajaj auto
unveiled the Bajaj RE60, a mini car for intra-city urban transportation. The target
customers group will be Bajajs three wheeler customers. According to its Managing
Director Rajiv Bajaj, the RE60 powered by a new 200cc rear mounted petrol engine will

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CITY PREMIER COLLEGE

have a top speed of 70 kilometres per hour (43 mph), a mileage of 35 kilometres per litre
and carbon dioxide emission of 60 g/km.
EMPLOYEES
Bajaj Auto had a total of 8,036 employees as of 31 March 2013, of which 51 were
women and 25 were differently-abled. It spent INR 6.5 billions on employee benefit
expenses during the FY 2012-13. The company is headed by Rahul Bajaj whose net
worth was around US$2 billion in March 2013.

AWARDS AND RECOGNITIONS

Bajaj Pulsar 135 LS received Bike of the Year 2010 award from BBC - Top Gear and
Bike India.

Pulsar 220 DTS-Fi received the Bike of the Year 2008 award by all major Indian
automobile magazines like Overdrive, Auto Car, Business Standard Motoring and Bike
Top Gear.

In 2006, Bajaj Auto won the Frost & Sullivan Super Platinum Award for manufacturing
excellence in its Chakan Plant.

It received award for The Most Customer Responsive Company in Automobiles category
in a survey conducted by Economic Times for the years 2004, 2006 and 2008.

Bajaj Auto received the Bike Maker of the Year award in ICICI Bank Overdrive Awards
2004.

Bajaj Pulsar 180 DTS-i won the BBC World Wheels Viewers Choice Two Wheeler of the
Year 2003 award.

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CITY PREMIER COLLEGE

3. RESEARCH STUDY
To understand the use of statistics, one needs to know a little bit about experimental
design or how a researcher conducts investigations. A little knowledge about
methodology will provide us with a place to hang our statistics.
In other words, statistics are not numbers that just appear out of nowhere. Rather, the
numbers (data) are generated out of research.
Statistics are merely a tool to help us answer research questions. As such, an
understanding of methodology will facilitate our understanding of basic statistics

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CITY PREMIER COLLEGE

PROBLEM DEFINITION
The main purpose of the survey is to find out the RATIO ANALYSIS OF Bajaj Auto Ltd.
for the 2009-13 Period.
Financial management is one of the most important & integral part of any company.
Understanding the financial of the company is necessary for the stake holders financial
position deals with knowing the liquidity, profitability, solvency, & leverage that is risk
involved in the company. The terms & financial jargons are least understood by layman.
The project would try to solve the problem of understanding the financial problem in easy
& presentable form in better way to help the stakeholders for their decision making
process.

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CITY PREMIER COLLEGE

OBJECTIVE OF THE STUDY

The basic objective of studying the ratios of the company is to know financial
position of the company.
To know the borrowings of the company as well as the liquidity position of the
company.
To study the current assets and current liabilities so as know weather the
shareholders could invest in company or not.
To study the balance of cash and credit in the organization.

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CITY PREMIER COLLEGE

HYPOTHESIS OF THE STUDY

The company has maintained the current ratio 2:1 consistently for 4 years, because of
which current asset are sufficient to meet the current liabilities.

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CITY PREMIER COLLEGE

SCOPE OF THE STUDY

1. Selection of project:
When the project report is prepared, it includes all the aspect of project like introduction,
company profile, operational viability and various ratios. This helps the management to
understand weather the project is practically possible or not. Ratio analysis will give the
idea about the profitability of the project.
The project report gives projected reports and on the basis of that ratios are calculated.
Ratio analysis helps including the operational efficiency of the managements ability to
reply its liabilities. The ratio analysis is done before investing or providing credit to the
company.
2. Time Limit:
The project report is prepared for 4 years i.e. from 2009-2013.
3. Geographical Limit:
The study of Bajaj Auto Ltd. is restricted to India.

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CITY PREMIER COLLEGE

THEORETICAL PERSPECTIVE

CLASSIFICATION OF RATIOS:- The use of ratio analysis is not confined to financial

manager only. There are different parties interested in the ratio analysis for knowing the
financial position of the company
for different purposes.
The Accounting Ratios can be classified in various categories.
A.
B.
C.
D.

Liquidity Ratio
Leverage Ratio
Activity Ratio
Profitability Ratio

A. LIQUIDITY RATIOS:
Liquidity ratios measure the short term solvency i.e. the firms ability to pay its current
dues. Liquidity is a pre-requisite for the very survival of a business unit. Liquidity
represent the ability of the business concern to meet its short-term obligations when fall
due for payment. Short-term creditors are primarily interested in liquidity or short-term
solvencies of the enterprise since their claims are too met in short-run. They comprise of:
I. Current Ratio:
Current ratio is known as Working capital Ratio. Current ratio establishes a relationship
between current asset and current liabilities. This ratio is computed to assess the shortterm financial position of the enterprise. It means current ratio is an indicator of the firms
ability to meet its short-term obligations.
The current ratio is calculated as follows:
Current Ratio =

Current Assets
Current Liability

Current Assets are those assets which are in the form of cash equivalent or can be
converted into cash within a short period of time, normally not exceeding one year.
Current Assets include cash and bank balance, marketable securities, stock-in-trade, trade
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CITY PREMIER COLLEGE

debtors, bills receivable and expenses. Current liabilities means liabilities repayable
within a year and consist of trade creditors, bills payable, bank credit and outstanding
expenses.
II. Quick Ratio:
Quick Ratio is also known as Liquid or Acid Test Ratio . Quick Ratio is a relationship
of liquid assets with current liability. Liability ratio is computed to assess the short term
liquidity of the firm in its correct form. This ratio is also an indicator of short-term dept
paying capacity of the business enterprise.

Liquid Asset are those assets which are either in the form of cash or equivalents or can
be converted into cash within one year. Liquid assets are computed by deducting stock
and prepaid expenses from total current assets. Liquid liabilities are those which are
payable within one year excluding bank draft.
III. Absolute Liquidity Ratio:
Absolute liquidity Ratio is also known as Super Quick Ratio or Cash Reserve Ratio.
This ratio measures the liquidity position of the enterprise. This ratio is calculated by
dividing the super quick assets by the quick liabilities of the business concern. This ratio
considers only the absolute liquidity available within the firm. The absolute liquidity ratio
calculated as follows.

The super current assets refer to cash and bank balance and marketable securities.
Debtors are excluded from super quick assets because they are less liquid than cash and
marketable securities.

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B. LEVERAGE RATIO
Leverage Ratios are also known as Capital Structure Ratio. Leverage Ratio calculates
the proportionate contribution of owner and creditor to the business firm. The short-term
creditors use leverage ratios for ascertaining the current financial position of the business
unit. The long-term creditor use leverage ratios to examine the long term solvency of the
business unit. Leverage ratio reflects the capacity of the firm to assure long term creditors
as regards periodic payment of interest during the loan period as well as repayment of
principal amount on maturity. Leverage Ratio consists of the following ratios:
I. Debt Equity Ratio:
Debt Equity Ratio is also known as External-Internal Equity Ratio. Debt-equity ratio
indicates the proportion between shareholder fund and long term borrowed funds. This
ratio portrays the proportion of total funds acquired by the firm by way of loan .i.e. this
ratio indicate the extent to which the firm depends upon outsider for its existence.
This Ratio measure the long-term financial solvency of the firm. Debt ratio is calculated
as follows:

Long-term Debt includes debentures. Long-term loan form financial institutions

Shareholders fund include equity share capital. Preference share capital, reserve less
losses.
II. Interest Cover Ratio:
Interest cover ratio is also known as Debt-service Ratio. This ratio establishes a
relationship between net profits before interest and tax on long-term debt. Interest
coverage are measure the debt serving capacity of a firm so far as fixed interest charge
are covered by EBIT out of which they will be paid this ratio is calculated as follows:

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CITY PREMIER COLLEGE

Where,
EBIT = Earnings before Interest and Tax.
Fixed Interest = Fixed Interest Liability of the firm.
III. Dividend Coverage Ratio:
Dividend Coverage Ratio measures the ability of a firm to pay divided on preference
shares, which carry a fixed rate of dividend. It is determined by dividing the net profit
after tax by the amount of preference dividend coverage ratios indicate as to how secure
the preference is in relation to the power of the firm. It is calculated as follows:

Where,
NPT= Net Profit after Tax and Interest
Dividend Coverage Ratio indicates the safety margin available to the preference
shareholders. This ratio is a matter only to preference shareholders. The higher the ratio,
the better it is for the preference shareholders.
IV. Proprietary Ratio:
Proprietary Ratio establishes a relation between shareholders fund and total assets. This
ratio is of particular important to the creditors who can ascertain the proportion of
shareholders fund in the total asset employed in the business. This ratio is calculated as
follows:

Shareholders funds means share capital plus capital reserves and surplus, both of capital
and reserve nature. Loss if any should be deducted. Funds payable to others should not be
added. A high ratio shows that there is largely safety for creditors of all types. A low ratio
indicates greater risk for the creditors.
C. ACTIVITY RATIOS
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CITY PREMIER COLLEGE

Activity Ratio is also known as Performance or Turnover Ratio Activity ratio measure
the effectiveness with which a firm uses its available resources. This ratio helps in
commenting on the efficiency of the enterprise in managing its assets. These ratios
measure the effectiveness with which a concern uses resources at its disposal. Activity
ratio indicates the speed with which the resources are being turned into sales. These ratios
are calculated on the basis of sales or cost of sales and are expressed I term of rate or
times. Some of the important activity ratios are:
I. Inventory Turnover Ratio:
Inventory Turnover Ratio is also known as Stock Turnover Ratio. It establishes
relationship between the cost of goods sold during a given period of time and the average
amount of inventory carried during that period. Inventory Turnover Ratio indicates
whether the investment in stock has efficiently used or not i.e. the minimum required
amount is invested in stock. It is calculated as follows:
Inventory Turnover Ratio =
Where,

Opening stock + Closing Stock

Average Stock =--2

Cost of Goods Sold = Opening stock + purchases Closing Stock

= Net Sales Gross profit
There is no ideal ratio for evaluating the inventory turnover ratio of a firm. To judge
whether it is satisfactory or not, it should be compared with its own past ratios or with the
ratios of similar firms in the same industry or with industry average, a high ratio indicates
that more sale art being produced by a rupee of investment in stock. A low ratio indicates
excessive inventory levels, slow-moving or absolute inventory thus the firm may incur
high carrying cost.
II. Debtors Turnover Ratio:
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CITY PREMIER COLLEGE

There is no turnover ratio establishes the relationship between credit sales and average
debtors (or receivables) of the year. This ratio indicates the number of times the
receivable are turned over in a year in relation to sales. This ratio shows how quickly the
debtors are converted into cash. It indicates the efficiency of staff entrusted with
collection of amount due from debtors. It is calculated as follows:
Credit Sales
Debtors Turnover Ratio =

Average Debtors + Average Bills Receivable

A high Ratio indicate shorter collection period which implies prompt payments by
debtors and a low ratio indicates a longer collection period which implies delayed
payments by the creditors.
III. Fixed Asset Turnover Ratio:
Fixed Assets Turnover Ratio establishes a relation between net sales and fixed assets.
This ratio is computed to determine the efficiency with which the fixed assets are utilized.
This ratio indicates the extent to which the investments in fixed assets contribute towards
sales. If compared with the previous year, it indicates whether the investment has been
judicious or not.
It is calculated as follows:
Fixed Asset Turnover Ratio=

Net Sales
Fixed Assets

An Increase in Fixed asset figure may result from the replacement of an asset at an
increased price or the purchase of an additional asset intended to increase production
capacity. In general, higher the ratio, the more efficient the management and utilization of
fixed assets
D. PROFITABILITY RATIOS:
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CITY PREMIER COLLEGE

Profitability Ratio measures the profitability or the operational efficiency of the firm.
These ratios indicate the effectiveness of the decision taken by the management from
time to time. Profitability ratio can be determined on the basis of sales or investments.
The main object behind the calculation of profitability ratio is to assess the efficiency of
the business. The external parties like banker, creditor, suppliers, financial institution etc.
look at the profitability ratio of the company to safeguard their interest on lending. Equity
shareholders look at the profitability ratio are:
I. Gross Profit Ratio:
Gross Profit Ratio is also known as the Average Mark-up Ratio. This ratio establishes
relationship of gross profit on sale to net sales of the firm which is calculated in
percentage. This gross profit ratio represents the gross margin. The main objective of
computing this ratio is to determine the efficiency with which production and / or
purchase operation and selling operation and selling operation are carried on. This ratio
represents the excess of sale proceeds during the period under observation over their cost.
It calculated as follows:
Gross Profit
Gross Profit Ratio =

X 100
Net Sales

Gross profit is the difference between the sales revenue and the cost of generating those
sales. The term cost of goods sold represents the purchase price of goods and all expenses
directly connected with purchase of goods in the case of a trading concern and the
purchase price of raw material and all manufacturing expenses in the case of a
manufacturing concern. High the ratio, the more efficient the production and / or
purchase management. A lower gross profit ratio indicates unfavorable conditions such as
lower selling price without proportionate reduction in cost of production.

II. Net Profit Ratio:

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CITY PREMIER COLLEGE

Net Profit Ratio is also known as profit Margin Ratio this ratio measure the relationship
between net profit and net sales. The main objective of computing this ratio is to
determine the overall profitability due to various factors such as operational efficiency,
trading on equity etc. This measures the efficiency of the management in generating
additional revenue over and above the total cost of operations. It is calculated as follows:
Net Pofit
Net Profit Ratio=

X 100

Net Sales
The net profit ratio is designed to focus attention on the net profit margin arising from
business operation before interest and tax is deducted. A high ratio means adequate
returns to the owners.
III. Operation Expenses Ratio:
Operating expenses ratio is computed to ascertain the relationship between operating
expense and volume of sales. This ratio is very important for analyzing the profitability of
a firm and is a measure of cost control. This is calculated as follows:
Operating Expenses Ratio=

Operating Expenses

X 100

Net Sales

The operating expenses include manufacturing expenses, selling and distribution

expenses and administrative expenses. The expenses ratio is a reciprocal to profit margin.
A low expenses ratio is always welcome from the business standpoint. A high expenses
ratio would only mean that a small percentage of sales are available for meeting all fixed
expenses.
IV. Operating Ratio:
The operating ratio measures the relationship between operating cost and net sales. This
ratio indicates the proportion that the cost of sale or operating cost bear to sales,
Operating Ratio is the test of the operational efficiency of the business. It shows the

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percentage of sales that is absorbed by the cost of sales and operating expenses. It is
calculated as follows:
Operating Ratio =

Cost of Goods sold + Operating Expenses

Net Sales

X 100

Operating expenses include administration, manufacturing, selling and distribution

expenses. It includes non-operating income and expenses which have no bearing on
production and sale. Lower the operating ratio, better it is, because it would leave higher
margin to meet interest, dividend etc. A higher operation ratio means smaller margin of
operating profit.
V. Return on Assets (ROA):
Return on assets also known as Profit-to-assets Ratio Return on assets means the
relationship between net profit before because interest and tax and total assets. This is
computed to find out how efficiently the total assets have been utilized by the firm. This
ratio measures the profitability of the total funds invested in a firm. This ratio is
calculated as follows:
Return on Assets =

Net Profit

X 100

Total Assets

The net profit of the firm is measure in term of profit after tax or net profit after tax plus
interest or net profit after tax plus interest minus tax saving. The assets are measured in
terms of total assets or total tangible assets or total fixed assets. The ROA shows as to
how much is the profit earned by the firm per rupee of assets used. Higher the ratio, the
more efficient the management and utilization of total assets.
VI. Return on Shareholders Equity (ROE):
Return on shareholders equity measure the relationship between net profit after interest
and tax and shareholders funds. The objective of computing this ratio is to find out how
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efficiently the fund supplied by shareholders has been used. This ratio is calculated as
follows:
Net Profit after Tax

X 100

Return on Shareholders Equity =

Total shareholder Equity

The term total shareholder equity includes equity share plus preference share capital.
Reserve and surplus minus fictions assets, this ratio indicates whether the firm has been
able to earn satisfactory return for the owner or not. Higher the ratio, the more efficient
the management and utilization of shareholders funds.
VII. Return on Capital Employed (RCE):
Return on capital employed is known as the Overall Profitability Ratio This ratio
measures the relationship between net profit and capital employed. The objective of
computing this ratio is to find how efficiently the long-term funds supplied by the
creditor and the shareholders have been used. This ratio shows the earning capacity of the
capital employed in the business. It is calculated as follows:
Net Profit
X 100

Return on Capital Employed =

Capital Employed

RCE indicate the firms ability to generate profit per rupee of capital employed. Higher
the ratio, the more efficient the management and utilization of capital employed.
VIII. Earnings per Share (EPS):
Earnings per Share measure the earnings available to equity shareholders on per share
basis. This ratio is computed to measure the profitability of the firm on per equity share
basis. This helps in determining the market price of equity share of the company and its
capability to pay dividend to shareholders. It is calculated as follows:

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CITY PREMIER COLLEGE

Net Profit
Earning Per Share =

Number of Equity Shares

EPS is one of the most important measures of economic performance of a corporate

entity. The flow of capital market conditions would be made on the evaluation of EPS. A
higher EPS means better capital productivity. A steady growth in EPS indicates a good
track of profitability. In general, higher the EPS, better it is and vice-versa.

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4. RESEARCH METHODOLOGY
The research methodology is historical. It has collected data from Bajaj Auto Limited for
a period of four years. The primary source was Nagpur Office of Bajaj Auto Limited.
Other sources also comprised books on automobile companies, internet etc.
Research is the process of collecting, analyzing and interpreting information to answer
question. Research is the process of systematic and in depth study or search of any
particular topic, subject by the collection, presentation and interpretation of relevant data
or details. It is carefully search into any subject or would be useful for further application
of utilization.
The study of Analytical Study of Financial Statement through ratio analysis of Bajaj
Automobile Limited for the period of 2009-2013 will be done through various sources.
METHOD OF DATA COLLECTION:

Primary data Collection: Primary Research enlivens the use of the immediate data in
determining the survival of the market. The popular ways to collect primary data consist of
the following:
Interviews
Survey
Questionnaires
Schedule
This shows the relationship between customer and company.

Secondary Data Collection: Secondary Data is the data that have been already collected
by and readily available from other sources. Such as are more quickly obtainable. It is time
saving.
Newspaper
Published books
Magazines etc.

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IN THIS STUDY ONLY SECONDARY DATA IS USED.

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5. DATA COLLECTION
The information is collected through secondary sources during the project. That
information was utilized for calculating performance evaluation and based on that,
interpretations were made.
Sources of secondary data:
1. Most of the calculations are made on the financial statements of the company provided
statements.
2. Referring standard texts and referred books collected some of the information
regarding theoretical aspects.
3. Method- to assess the performance of the company method of observation of the work
in finance department in followed.
The study also uses following sources of data for the study:

Information gathered through surfing the internet.

Information available on sites on knowledge management.
Different study materials.

6. DATA ANALYSIS & INTERPRETATION

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Ratio Analysis is a powerful tool o financial analysis. Alexander Hall first presented it in
1991 in Federal Reserve Bulletin. Ratio Analysis is a process of comparison of one figure
against other, which makes a ratio and the appraisal of the ratios of the ratios to make
proper analysis about the strengths and weakness of the firms operations. The term ratio
refers to the numerical or quantitative relationship between two accounting figures. Ratio
analysis of financial statements stands for the process of determining and presenting the
relationship of items and group of items in the statements.
Ratio analysis can be used both in trend analysis and static analysis. A creditor would like
to know the ability of the company, to meet its current obligation and therefore would
think of current and liquidity ratio and trend of receivable.
Major tool of financial are thus ratio analysis and Funds Flow analysis. Financial analysis
is the process of identifying the financial strength and weakness of the firm by properly
establishing relationship between the items of the balance sheet and the profit account
The financial analyst may use ratio in two ways. First he may compare a present ratio
with the ratio of the past few years and project ratio of the next year or so. This will
indicate the trend in relation that particular financial aspect of the enterprise. Another
method of using ratios for financial analysis is to compare a financial ratio for the
company with for industry as a whole, or for other, the firms ability to meet its current
obligation. It measures the firms liquidity.
Meaning and Importance:
Ratio analysis is concerned to be one of the important financial tools for appraisal of
financial condition, efficiency and profitability of business. Here ratio analysis is useful
from following objects.
1.
2.
3.
4.
5.
6.

Short term and long term planning.

Measurement and evaluation of financial performance.
Study of financial trends.
Decision making for investment and operations.
Diagnosis of financial ills.
Providing valuable insight into firms financial position or picture

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ADVANTAGES & DISADVANTAGES OF RATIO ANALYSIS

Advantages:
The following are the main advantages derived of ratio analysis, which are obtained from
the financial statement via Profit & Loss Account and Balance Sheet.
a) The analysis helps to grasp the relationship between various items in the financial
statements.
b) They are useful in pointing out the trends in important items and thus help the
management to forecast
c) With the help of ratios, inter firm comparison made to evolve future market strategies.
d) Out of ratio analysis standard ratios are computed and comparison of actual with
standards reveals the variances. This helps the management to take corrective action.
e) The communication of that has happened between two accounting the dates are
revealed effective Action.
f) Simple assessments of liquidity, solvency profitability efficiency of the firm are
indicted by ratio analysis. Ratios meet comparisons much more valid.
Disadvantages:
Ratio analysis is to calculate and easy to understand and such statistical calculation
stimulation thinking and develop understanding. But there are certain drawbacks and
dangers they are.
1. In case of inter firm comparison no two firm are similar in size, age and product unit.
(for example) one firm may purchase the asset at lower price with a higher return and
another firm with purchase the asset at higher price will have a lower return.
2. Both the period and inter firm comparison are affected by price level changes. A
change in price level can affect the validity of ratios calculated for different time
period.
3. Unless varies terms like group profit, operating profit, net profit, current asset, current
liability etc., are properly define, comparison between two variables become
meaningless.

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4. Ratios are simple to understand and easy to calculate. The analyst should not take
decision should not take decision on a single ratio. He has to take several ratios into
consideration.
STANDARDS OF COMPARISION:
1. Ratios calculated from the past financial statements of the same firm.
2. Ratio developed using the projected or perform financial statement of the same firm
3. Ratios of some selected firm especially the most progressive and successful, at the same
point of time.
4. Ratios of the industry to which the firm belongs.
IMPORTANCE OF RATIO ANALYSIS
In the preceding discussion in the form, we have illustrated the compulsion and
implication of important ratios that can be calculated from the Balance Sheet and Profit &
Loss account of a firm. As a tool of financial management, they are of crucial
significance. The importance of ratio analysis lies in the fact and enables the drawing of
inferences regarding the performance of a firm. Ration analysis is a relevant in assessing
the performance of a firm in respect of the following aspect.

CAUTION IN USING RATIOS:

1. It is difficult to decide on the proper bases of comparison.

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2. The comparison rendered difficult because of difference in situation of two

companies or of one-company for different years.
3. The price level change makes the interpretation of ratios invalid.
4. The difference in the definition of items in the balance sheet and Profit & Loss
statement make the interpretation of ratios difficult.
The ratios calculated at a point of time are less informative and defective as they suffer
from sort term changes.

CALCULATIONS OF RATIOS:LIQUIDITY & SOLVENCY RATIOS

P
2009-10
2010-11
A
R
T
I
C
U
L
A
R
S
C
0.69
0.80
u
r
r
e
n
t
R
a
t
i
o
Q
u

0.55

0.71
45

2011-12

2012-13

0.88

1.32

0.72

1.06

CITY PREMIER COLLEGE

i
c
k
R
a
t
i
o
D
e
b
t

0.46

0.07

0.02

0.01

0.45

0.03

0.02

0.01

E
q
u
i
t
y
R
a
t
i
o
L
o
n
g
T
e
r
m
D
e
b
t
E
q
u
i
t
y
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R
a
t
i
o
I
n
v
e
n
t
o
r
y

28.87

32.80

30.97

31.43

37.41

51.77

49.66

33.59

T
u
r
n
o
v
e
r
R
a
t
i
o
D
e
b
t
o
r
T
u
r
n
o
v
e
r
R
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a
t
i
o

I) CURRENT RATIO

Current Ratio
1.4
1.2
1
Current Ratio

0.8
0.6
0.4
0.2
0
2009-10

2010-11

2011-12

2012-13

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INTERPRETATION:The current ratio is a test of the short term solvency of the business enterprise since this
ratio assumes current assets could be converted into cash to meet current liabilities.
Current ratio during the year 2009-10 was 0.69 and its come up to 0.80 in 2010-11 and
its again increased 2011-12 i.e.0.88 and its again increased in 2012-13 to 1.32. The
standard norm for this ratio is 2:1 required. Bajaj Auto should maintain sufficient amount
of current assets in order to maintain the standard form of current ratio.

II) QUICK RATIO

Quick Ratio
1.2
1
0.8
Quick Ratio
0.6
0.4
0.2
0
2009-10

2010-11

2011-12

2012-13

INTERPRETATION:-

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CITY PREMIER COLLEGE

The quick ratio in the year 2009-10 was 0.55 and its increased to 0.71 at 2010-11 and
again it up in 2011-12 at 0.72. At 2012-13 it was at 1.06. The standard norm for this ratio
is 1:1, means for every 1 rupee of current liability, company must have 1 rupee of quick
assets.

III)

DEBT EQUITY RATIO

Debt Equity Ratio

5
4.5
4
3.5
3

Debt Equity Ratio

2.5
2
1.5
1
0.5
0
2009-10

2010-11

2011-12

2012-13

INTERPRETATION:50

CITY PREMIER COLLEGE

According to study the Debt equity ratio of Bajaj Auto Ltd. In the year 2009-10 was 0.46
and its decreased to 0.07 at 2010-11 and again it fall in 2011-12 at 0.02. At 2012-13 it
was at 4.5.

IV) LONG TERM DEBT EQUITY RATIO:-

Long Term Debt Equity Ratio

0.5
0.45
0.4
0.35
Long Term Debt Equity
Ratio

0.3
0.25
0.2
0.15
0.1
0.05
0
2009-10

2010-11

2011-12

2012-13

INTERPRETATION:51

CITY PREMIER COLLEGE

The long term debt equity ratio in the year 2009-10 was 0.45 and its decreased to 0.03 at
2010-11 and again it fall in 2011-12 at 0.02. At 2012-13 it was at 0.01.

V) INVENTORY TURNOVER RATIO:-

Inventory Turnover Ratio

34
33
32
31

Inventory Turnover Ratio

30
29
28
27
26
2009-10

2010-11

2011-12

2012-13

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CITY PREMIER COLLEGE

INTERPRETATION:The inventory turnover ratio in the year 2009-10 was 28.87 and its increased to 32.80 at
2010-11 and it fall in 2011-12 at 30.97. At 2012-13 it was at 31.43.

VI)

DEBTORS TURNOVER RATIO:-

Debtors Turnover Ratio

60
50
40
Debtors Turnover Ratio
30
20
10
0
2009-10

2010-11

2011-12

2012-13

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CITY PREMIER COLLEGE

INTERPRETATION:The debtors turnover ratio in the year 2009-10 was 37.41 and its highest at 51.77 in 201011 and it fall in 2011-12 at 49.66. At 2012-13 it was at 33.59.

7. CONCLUSION
1) Standard of current ratio is 2:1.The current ratio for 2010-11 is 0.80:0.88, so it can be
said that ratio is satisfactory.
2) Quick ratio is more than one (1.06) for 2012-13 but it does not mean that company
has insufficient liquidity.
3) Long term debt equity ratio expresses the relationship between long term debts and
shareholders fund.
4) The debt to equity ratio identifies companies that are highly leveraged and therefore a
higher risk for investors.
5) Inventory turnover ratio is improving from 2009-10, it was highest in 2010-11 i.e.
32.80. The increase in ratio is beneficial for the company because as ratio increases
the number of days of collection for debtors decreases.
6) The receivables turnover ratio is a measure used to quantify a firm's effectiveness in
extending credit as well as collecting debts.
7) "As per the study it was found that, the company did not maintain the current ratio 2:1
consistently. Therefore, the hypothesis is being rejected."

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8. RECOMMENDATIONS & SUGGESTION

1. It can be said that overall financial position of the company is normal but it is
required to be improved from the point of view of profitability.
2. Net operating cycle is increasing that means there is a need to make Improvements in
receivables/debtors management.
3. Company should stretch the credit period given by the suppliers.
4. Company should try to increase Volume based sales so as to stand in the competition.
5. Company needs to control the working capital requirements for the future
prospective.

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9. BILBLOGRAPHY

1.

BOOKS
Annu

al

Repor

ts

a
j
A
u
t
o
L
i
m
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CITY PREMIER COLLEGE

i
t
e
2.

Resea

d
K

rch

Meth

odolo

gy

a
r

3.

Resea

i
S

rch

Meth
odolo

gy

i
n
h
a
&
A
K
D
h
i
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CITY PREMIER COLLEGE

m
a
4.

Finan

n
I

cial

Mana
geme

nt

a
n
d
e

5.

y
M

India
n

6.

Finan

cial

Syste

Basic

a
M

Finan

cial
Mana

geme

nt

a
n
&
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CITY PREMIER COLLEGE

P
K
J
a
i
n
WEBSITES
o
o
o
o
o
o
o

www.bajajauto.com
www.zigwheels.corn
ww.google.in
www.rediffmail.com
http://www.scribd.corn/doc/5434275/
www.Managementparadise.com
http://en.wikipedia.orgiwild/BajajAuto.

SYNOPSIS
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On

ANALYTICAL STUDY OF FINANCIAL STATEMENT THROUGH

RATIO ANALYSIS OF BAJAJ AUTOMOBILE FOR THE FINANCIAL
YEAR (2009-2013)
Submitted to the Department of Business Management,
City Premier College, Nagpur
For
BBA III
(2014-15)
Submitted by

MR. SANCHIT S. TRIVEDI

Under the Guidance of

PROF. UMASHANKAR GUPTA

CITY PREMIER COLLEGE

Hindustan Colony, Wardha Road, Nagpur.

INTRODUCTION
Finance is a study of how investors allocated their assets over time under condition of
certainty and uncertainty. A key point in finance which affects decisions is the time value
of money, which states that a unit of currency today is worth more than the same unit of
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CITY PREMIER COLLEGE

currency tomorrow. Finance aims at to price assets based on their risks level and expected
rate of returns.
A financial statement (or financial report) is a formal record of the financial activities
of a business, person, or other entity. The term financial statement refers to two basis
statement which an accountant prepares at the end of accounting period enterprise. These
are:
Balance sheet (or statement of financial position) which reflects the assets, liabilities and
capitals as on a certain date. The Balance Sheet is the minor of the financial position of
the business, and
Profit and Loss Accounts (or income statements) which shows the results of operation
i.e., profit or loss during a certain period. The profit and loss account shows the result of
the business activities or operations during a certain period of time, usually a year
In the words of John N. Myers, financial statement analysis is largely a study of the
relationships among the various financial factors in the business as disclosed by single
sets of statement and study of trends of these factors as shown in series of the
statements.
Thus, financial statement analysis converts the mass of the data into useful information
which is always in scare supply. It pinpoints the strengths and weakness of the business
undertaking by the use of various techniques such as Ratio Analysis, Comparative Study
etc. Such analyzed information is used by management, bankers, creditors, investors and
others to form opinions about the operating performance and financial position of the
business. Thus, the financial statement analysis helps tin evaluating a business
performance according to some specific objectives.
MEANING OF RATIO ANALYSIS
The term Ratio refers to the numerical and quantitative relationship between two items

or variables. This relationship can be exposed as

Percentages
Fractions
Proportion of numbers ratio analysis is defined as the systematic use of the ratio to
interpret the financial statement.so that the strengths and weakness of a firm, as well as its

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historical performance and current financial condition can be determined. Ratio reflects a
quantitative relationship helps to form a quantitative judgment.

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IMPORTANCE AND SIGNIFICANCE OF THE STUDY

The study has great significance and provides benefits to various parties whom directly or

indirectly interact with the company.

It is beneficial to management of the company by providing crystal clear picture

regarding important aspects like liquidity, leverage, activity and profitability.

The study is also beneficial to employees and offers motivation by showing how actively

they are contributing for companys growth.

The investors who are interested in the companys shares will also get benefited by going
through the study and can easily take a decision whether to invest or not to invest in the

companys shares.
The study is very useful in analyzing the progress of automobile industry of India. The
industry is no doubt gaining more response from market.

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INTRODUCTION OF THE COPMPANY

Bajaj Auto Limited is an Indian two and three wheeler manufacturing company. Bajaj
Auto manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto is part
of Bajaj Group.
It was founded by Jamnalal Bajaj in Rajasthan in the 1930s. It is based in the
Pune, Mumbai, with plants in Chakan (Pune), Waluj (near Aurangabad) and
Pantnagar in Uttarakhand. The oldest plant at Akurdi (Pune) now houses the
R&D centre Ahead.
Bajaj Auto is the worlds third largest manufacturer of motorcycles and the second
largest in India. It is the worlds largest three-wheeler manufacturer.
On 31st March 2013, its Market Capitalization was INR 520 billion (US$9.57
billion), making it Indias 23rd largest publicly traded company by market value.
The Forbes Global 2000 list for the year 2012 ranked Bajaj Auto at 1,416.

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COMPANYS
HISTORY
Bajaj Auto came into existence on 29 th of November 1945 as M/s Bachraj
Trading Corporation Private Limited. It started off by selling imported two and
three wheelers in India. In 1959, it obtained a license from the Government of
India to manufacture two and three wheelers and it become a public limited
company in 1960.
In 1970, it rolled out its 1,00,000th vehicles in a financial year. In 1985, it started
producing at Waluj near Aurangabad. In 1986, it sold 5,00,000th vehicles in a
financial year. In 1995, it rolled out its ten millionth vehicles and produced and
sold one million vehicles in a year. With the lunch of motorcycles in 1986, the
company has changed its image from a scooter manufacturer to a two wheeler
manufacture.
Competing with Everyone from Everywhere for Everything, Bajaj has grown
operation in 50 countries by creating a line of value-for-money bikes targeted to
the different preferences of entry level buyers with quality such that Kawasaki
buys Bajaj products for some of its market.

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OBJECTIVE

The basic objective of studying the ratios of the company is to know financial position of

the company.
To know the borrowings of the company as well as the liquidty position of the company.
To study the current assets and current liabilities so as know weather the shareholders

could invest in company or not.

To study the balance of cash and credit in the organization.

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HYPOTHESIS
The company has maintained the current ratio 2:1 consistently for 4 years, because of
which current asset are sufficient to meet the current liabilities.

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RESEARCH METHODOLOGY
The research methodology is historical. It has collected data from Bajaj Auto Limited for
a period of four years. The primary source was Nagpur Office of Bajaj Auto Limited.
Other sources also comprised books on automobile companies, internet etc.
Research is the process of collecting, analyzing and interpreting information to answer
question. Research is the process of systematic and in depth study or search of any
particular topic, subject by the collection, presentation and interpretation of relevant data
or details. It is carefully search into any subject or would be useful for further application
of utilization.
The study of Analytical Study of Financial Statement through ratio analysis of Bajaj
Automobile Limited for the period of 2009-2013 will be done through various sources.
Primary data Collection: Primary Research enlivens the use of the immediate
data in determining the survival of the market. The popular ways to collect

primary data consist of the following:

Interviews
Survey
Questionnaires
Schedule

This shows the relationship between customer and company.

Secondary Data Collection: Secondary Data is the data that have been already
collected by and readily available from other sources. Such as are more quickly
obtainable. It is time saving.
Newspaper
Published books
Magazines etc.
IN THIS STUDY ONLY SECONDARY DATA IS USED.

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EXPECTED CONTRIBUTION
The study will help to know the company about the company the detailed information of
the negative and positive aspect and even about the suggestions related to the financial
well being of the company to overcome the necessary change.
This project would contribute to know management about their policies and procedure,
and even to maintain the financial statement of the company.

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CITY PREMIER COLLEGE

CHAPTERIZATION
Introduction
Company Profile
Research Study

Problem Definition
Theoretical prospective
Objective of the Study
Limitation of the Study. (Research boundaries)
Research Methodology
Data Collection
Data Analysis and Interpretation
Conclusion
Recommendation & Suggestions
Limitation of the Study
References
Bibliography
Annexure.

Balance Sheet
PARTICULARS
Sources Of Funds
Total Share Capital

------------------- in Rs. Cr. ------------------2012-13 2011-12

2010-11
2009-10

289.37

289.37

289.37

144.68
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CITY PREMIER COLLEGE

Equity Share Capital

Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities

289.37
0.00
0.00
7,612.58
0.00
7,901.95
0.00
71.27
71.27
7,973.22

289.37
0.00
0.00
5,751.70
0.00
6,041.07
0.00
97.48
97.48
6,138.55

289.37
0.00
0.00
4,620.85
0.00
4,910.22
23.53
301.62
325.15
5,235.37

144.68
0.00
0.00
2,783.66
0.00
2,928.34
12.98
1,325.60
1,338.58
4,266.92

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Deffered Credit
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets
Contingent Liabilities
Book Value (Rs)

3,828.85
2,024.42
1,804.43
293.55
6,430.48
636.28
767.58
558.86
1,962.72
1,987.44
0.00
3,950.16
0.00
2,762.93
1,742.47
4,505.40
-555.24
0.00
7,973.22
1,252.99
273.08

3,425.94
1,914.33
1,511.61
343.15
4,882.81
678.53
423.20
446.49
1,548.22
1,744.82
1,208.36
4,501.40
0.00
2,925.53
2,174.89
5,100.42
-599.02
0.00
6,138.55
1,445.67
208.77

3,395.16
1,912.45
1,482.71
149.34
4,795.20
547.28
362.76
155.45
1,065.49
3,891.66
401.04
5,358.19
0.00
2,624.35
3,925.72
6,550.07
-1,191.88
0.00
5,235.37
959.66
169.69

3,379.25
1,899.66
1,479.59
120.84
4,021.52
446.21
272.84
100.20
819.25
2,291.29
1.21
3,111.75
0.00
2,218.06
2,248.72
4,466.78
-1,355.03
0.00
4,266.92
818.25
202.40

71