ACCOUNTS ASSIGNMENT ON

RATIO ANALYSIS

Submitted To : Prepared By :

Gaurav Bagra Gaurav Bhattacharya

Sr. Faculty MBA (G) Sec – A

Amity Business School

Bajaj Auto Ltd. Bajaj Auto Ltd a , BSE listed, World’s Third largest

Two wheeler manufacturing Company, and tried to interpret these ratios on basis of their calculations. The Ratios which I have calculated are as follows :

1. Earning Price Per Share (EPS)

2. Gross Profit Ratio

3. Net Profit Ratio

4. Current Ratio

5. Quick Ratio

6. Operating Profit Ratio

7. Return on Equity

Earning Price per Share (EPS)

Earning Price Per Share = Earnings after Tax ∕ Number of Equity Shares

Year 2008 2009 2010 2011 2012

EPS 5.039 4.37 11.35 11.13 10.01

1 2 3 4 5

20082009

20102011

2012

5.0394.37

11.3511.13

10.01

EPS Year EPS

1 2 3 4 50

2

4

6

8

10

12

Trend Line of EPS

EPS

Years

EP

S

Interpretation of Earnings Per Share

In the year 2008 the EPS Ratio was 5.03, while in the next year i.e.. in 2009 it got reduced to 4.37 but in the year 2010 it saw a big jump in the EPS rate up to 11.35 after its reducing in a slow pace i.e. 11.13 in 2011 and 10.01 in 2012 t indicates that the Company’s earning share is increased but still it is earning low.

Gross Profit Ratio

Gross Profit Ratio = Gross Profit / Net Sales * 100

Year 2008 2009 2010 2011 2012

Gross Profit 14.93 14.71 21.35 22.81 13.62

1 2 3 4 5

2008 2009 2010 2011 2012

14.9314.71

21.3522.81

13.62

Gross Profit Year Gross Profit

1 2 3 4 50

5

10

15

20

25

Trend Line of Gross Profit

Gross Profit

Years

Gro

ss P

rofi

t

Interpretation of Gross Profit Ratio

In 2008 Co. earned a Gross Profit of 14.93%, which got somewhat reduced in 2009 came up to 14.71%, in 2010 it got increased and got up to 21.35% in 2011 again showed a increment and got up to 22.81 but in the year 2012 it reduced and came up to 13.62 which indicated there is a loss compared to previous years and corrective measures has to be taken to increase the profit margin

Net Profit Ratio

Net Profit Ratio = Net Profit/ Net Sales * 100

Year 2008 2009 2010 2011 2012

Net Profit 8.72 7.34 14.14 21 15.91

2008 2009 2010 2011 2012

8.72 7.34

14.14

2115.91

Net Profit Year Net Profit

1 2 3 4 50

5

10

15

20

25

Trend Line of Net Profit

Net Profit

Years

Net

Pro

ft

Interpretation of Net Profit Ratio

In the year 2008 Bajaj Auto Ltd earned a Net Profit of 8.72% which got reduced in 2009 upto 7.34% but in the year 2010 came with up good news and a profit margin of 14.14% and in the year 2011 again showed a +7 increment in the profit margin upto 21% but in the year 2012 profit got reduced and stood upto 15.91 which shows company suffered loss this FY and corrective measures must be taken to overcome it.

Current Ratio Current Ratio = Current Assets / Current Liabilities

Year 2008 2009 2010 2011 2012

Current Ratio 0.87 0.95 0.701 0.786 1.122

1 2 3 4 5

2008

2009

2010

2011

20120.87

0.95

0.701

0.786

1.122

Current RatioYear Current Ratio

1 2 3 4 50

0.2

0.4

0.6

0.8

1

1.2

Trend Line of Current Ratio

Current Ratio

Years

Cu

reen

t R

atio

Interpretation of Current Ratio

In the years of 2008, 2009 Current Ratio of Bajaj Auto Ltd shown a increase but it 2010 it got decreased and come upto .71 and after tht its rising at a good pace at which shows that they are in the position to meet their short term liquidity it the market and are moving in a good direction which indicates they can meet their short term requirement quickly whenever there is a emergency in the company.

Quick Ratio

Quick Ratio = Current Assets – Stock / Current Liabilities

Year 2008 2009 2010 2011 2012

Quick Ratio 0.69 0.81 0.59 0.64 0.97

1 2 3 4 5

2008

2009

2010

2011

20120.69

0.81

0.59

0.64

0.97

Quick RatioYear Quick Ratio

1 2 3 4 50

0.2

0.4

0.6

0.8

1

1.2

Trend Line of Quick Ratio

Quick Ratio

Years

Qu

ick

Rat

io

Interpretation of Quick Ratio Same like Current Ratio, Bajaj Auto Ltd

Quick Ratio shows and indicates the exact short term solvency for the past 5 years Quick ratio showed a increase in 2008, 2009 and shown a downfall in 2010 and is increasing after that in 2011 it showed a rise upto .64 and in 2012 it showed rise upto .97

Operating Ratio

Operating Profit = Operating Profit / Total Operating income * 100

Year 2008 2009 2010 2011 2012

Operating Profit 14.29 13.64 21.75 19.35 19.6

1 2 3 4 5

2008 2009 2010 2011 2012

14.2913.64

21.75 19.3519.6

Operating Profit Year OP

1 2 3 4 50

5

10

15

20

25

Trend Line of Operating Ratio

OP

Years

Op

erat

ing

Pro

fit

Interpretation of Operating Ratio

Bajaj Auto Ltd Operating profit ratio showed a rise in % in 2008 and in 2009, 2010 but in 2011 it got reduced upto 19.35% again in 2012 the company made some improvement and the operating profit ratio gone upto 19.6 % which is a good sign for the company

Return on Equity

Return on Equity = Profit after Tax / Shareholder’s Fund * 100

Year 2008 2009 2010 2011 2012

ROE 47.61 35.11 58.17 61.17 55.28

1 2 3 4 5

2008 2009 2010 2011 2012

47.61

35.11

58.1761.17

55.28

Return on EquityYear ROE

1 2 3 4 50

10

20

30

40

50

60

70

Trend Line of ROE

ROE

Years

Ret

urn

on

Eq

uit

y

Interpretation of Return on Equity

Return on Equity of Bajaj Auto Ltd showed a good increase in the year 2008 but got reduced in 2009 then in 2010, 2011 it showed again a rise and then in 2012 it got again somewhat reduced and stood up to 55.28 this indicates that how much a investor is getting return on his Equity.

THANK YOU