A Summer Internship Project Report on

“FINANCIAL PERFORMANCE OF BAJAJ AUTO LTD USING RATIO

ANALYSIS AND CASH FLOW STATEMENT”

In Partial Fulfillment for the Award of Degree in

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

PENUGONDA CHAKALI SAI PRASANNA

ID: 22031E0029

UNDER THE GUIDANCE OF

Ms. A. SANTOSH KUMARI, Assistant Professor,

UCMH, JNTUH

UNIVERSITY COLLEGE OF M ANAGEMENT HYDERABAD

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD

KUKATPALLY, HYDERABAD, INDIA

Certificate from the company
 CERTIFICATE

This is to certify that PENUGONDA CHAKALI SAI PRASANNA (22031E0029)

is a Bonafide student of the University College of Management Hyderabad,

Jawaharlal Nehru Technological University, Hyderabad, India during 2020- 2022.

This is to certify that the summer internship project report titled “FINANCIAL

PERFORMANCE OF BAJAJ AUTO LTD USING RATIO ANALYSIS AND CASH

FLOW STATEMENT” was submitted in partial fulfillment for the award of MBA Degree

from the University College of Management Hyderabad, Jawaharlal Nehru Technological

University Hyderabad, Hyderabad, India. This internship project report has not been submitted

to any other University or institution for the award of any Degree/ Diploma/certificate.

Place : Hyderabad Dr. Sindhu

Date: PRINCIPAL
University College of Management Hyderabad
JNTUH, Hyderabad, Telangana
 CERTIFICATE

This is to certify that PENUGONDA CHAKALI SAI PRASANNA (22031E0029) is

a Bonafide student of the University College of Management Hyderabad, Jawaharlal

Nehru Technological University, Hyderabad, India during 2020- 2022.

This is to certify that the Summer Internship project report titled “FINANCIAL

PERFORMANCE OF BAJAJ AUTO LTD USING RATIO ANALYSIS AND CASH FLOW

STATEMENT” was submitted under the guidance of Ms. A. Santosh Kumari, Assistant

Professor, UCMH, in partial fulfillment for the award of MBA Degree from the University

College of Management Hyderabad, Jawaharlal Nehru Technological University Hyderabad,

Hyderabad, India. This internship project report has not been submitted to any other University or

institution for the award of any Degree/ Diploma/certificate.

Place: Hyderabad Ms. A. Santosh Kumari

Date: Assistant Professor
University College of Management Hyderabad
JNTUH, Hyderabad, Telangana
 DECLARATION

I, PENUGONDA CHAKALI SAI PRASANNA do hereby declare that

the project work entitled “Financial Performance of Bajaj Auto Ltd using

Ratio Analysis and Cash Flow Statement” is the original and genuine work done

by me. This project is done under the guidance of Ms. A. Santosh kumari,

Assistant Professor, UCMH, JNTUH. The Internship project report is for

academic purposes only and this work has not been published in any journal,

magazine, or book. This project report has been presented as a requirement for

partial fulfillment for the award of the degree of Master of Business

Administration.

PENUGONDA CHAKALI SAI PRASANNA

Ht.No. 22031E0029
 ACKNOWLEDGEMENT

This report has been successfully accomplished by me after my strong effort but it was the

constant support from many people and organizations who stood by me in this work. I

would like to express my gratefulness to them.

The most important person I would like to thank and express my gratitude to would be

my guide, Ms. A. Santosh Kumari, Associate professor, UCMH-JNTUH, who

mentored me with the best advice. Her timely counseling and guidance were very

crucial for the

completion of the internship report.

I would also thank all the teaching staff and non-teaching staff of the School of

Management Studies, JNTUH for their support.

Then I would also like to thank my parents and friends who have always helped with their

valuable suggestions and encouraged me.

Finally, I would like to thank all my classmates for supporting me in the completion of my

internship.

PENUGONDA CHAKALI SAI PRASANNA

22031E0029
 ABSTRACT

This project aims to evaluate the financial performance of Bajaj Auto Ltd, a leading player in

the automotive industry, using a comprehensive approach that includes ratio analysis, cash

flow statement examination. The study encompasses a multi-dimensional assessment of Bajaj

Auto Ltd’s financial health, providing insights into its operational efficiency, liquidity,

solvency, and overall financial stability.

The ratio analysis section of the project focuses on key financial indicators such as liquidity

ratios, profitability ratios, and leverage ratios. By scrutinizing these ratios, the study aims to

offer a nuanced understanding of Bajaj Auto Ltd's ability to meet its short-term and long-term

obligations, generate profits, and manage its financial leverage effectively.

The cash flow analysis explores the company's ability to generate cash from its operating

activities, investing activities, and financing activities. This in-depth examination provides

valuable insights into the company's cash generation and utilization, helping to assess its

financial flexibility and sustainability..

The holistic approach of integrating ratio analysis, cash flow analysis examination offers a

comprehensive view of Bajaj Auto Ltd's financial health, aiding stakeholders, investors, and

management in making informed decisions. The findings of this project can serve as a

valuable tool for strategic planning, risk management, and performance optimization within

the context of the dynamic automotive industry.

 TABLE OF CONTENTS

S.NO. CHAPTER NAME PAGE

NO.
1. INTRODUCTION
1.1 PREFACE
1.2 NEED OF THE STUDY
1.3 SIGNIFICANCE OF THE STUDY
2. INDUSTRY PROFILE
3. REVIEW OF LITERATURE
4. RESEARCH METHODOLOGY
4.1 PROBLEM STATEMENT
4.2 OBJECTIVES OF THE STUDY
4.3 SCOPE OF THE STUDY
4.4 DATA COLLECTION
4.5 HYPOTHESIS
4.6 PERIOD OF THE STUDY
4.7 SAMPLING DESIGN
4.8 STATISTICAL TOOLS AND METHODS TO BE USED
4.9 LIMITATIONS OF THE STUDY
5. DATA ANALYSIS AND INTERPRETATION
6. FINDINGS, CONCLUSION AND SUGGESTIONS
BIBILOGRAPHY
ANNEXURE
 CHAPTER-1

INTRODUCTION
1.1 PREFACE:

Bajaj Auto Ltd, a renowned player in the automotive industry, has consistently made

significant contributions to the Indian and global markets. With a rich history dating back

several decades, Bajaj Auto has become synonymous with innovation, reliability, and a

commitment to excellence. The company has evolved into a key player in the two-wheeler

and three-wheeler segments, showcasing a dynamic and adaptive approach to the ever-

changing demands of the automotive market.

1.2 NEED:

In a rapidly evolving automotive landscape, Bajaj Auto Ltd has played a pivotal role in

shaping the industry's trajectory. As one of the leading manufacturers, the company has

demonstrated a keen understanding of consumer needs, technological advancements, and

market trends. Bajaj Auto's diverse product portfolio, including motorcycles, scooters, and

three-wheelers, reflects its dedication to providing efficient and sustainable mobility

solutions.

The financial data presented provides insights into the company's performance, showcasing

its robust financial standing, strategic investments, and prudent management of assets and

liabilities. As Bajaj Auto Ltd continues to navigate the complexities of the automotive

market, its financial stability, innovative product offerings, and commitment to quality

position the company as a key player in the global automotive arena.

1.2 SIGNIFICANCE OF THE STUDY:

The selection of Bajaj Auto Ltd as the subject for the project titled "Financial

Performance of Bajaj Auto Ltd Using Ratio Analysis, Cash Flow Statement" holds

paramount significance. Bajaj Auto Ltd is a prominent player in the Indian automotive

industry, renowned for its expertise in manufacturing motorcycles, scooters, and three-

wheelers. As one of the leading companies in the sector, analyzing its financial

performance provides valuable insights into the overall health and stability of the

organization. Utilizing ratio analysis and cash flow statement enables a comprehensive

evaluation of Bajaj Auto's financial strengths, efficiency, and liquidity. Ratios such as

profitability, liquidity, and leverage will offer a nuanced understanding of the company's

operational efficiency and financial risk management. Additionally, scrutinizing the cash

flow statements will shed light on the sources and uses of funds, aiding in assessing the

company's ability to meet its short-term and long-term obligations. Given Bajaj Auto's

influential position in the automotive market, this project promises to deliver meaningful

findings that can be crucial for investors, stakeholders, and financial analysts,

contributing to a deeper understanding of the company's financial dynamics and its

implications for the broader industry

 CHAPTER-2

INDUSTRY PROFILE
INDUSTRY PROFILE:

2.1 OVERVIEW

Bajaj Auto Ltd is a prominent Indian multinational two-wheeler and three-wheeler

manufacturing company with a rich history and a strong presence in the automotive industry.

Established in 1945, the company has consistently been a key player in the Indian market and

has expanded its global footprint over the years. Bajaj Auto is known for its innovative

approach to design, technology, and manufacturing processes, consistently introducing new

and advanced models that cater to diverse customer needs.

The company's product portfolio includes a wide range of motorcycles, scooters, and three-

wheelers, catering to different segments of the market. Bajaj has gained a reputation for

producing fuel-efficient and reliable vehicles, making it a preferred choice for many

consumers. The iconic Bajaj Pulsar series, Discover, and Platina are some of the well-known

motorcycle brands that have contributed significantly to the company's success.

Bajaj Auto has also formed strategic alliances with global automotive giants, such as KTM

and Triumph, enhancing its product offerings and technological capabilities. The company

has a strong focus on research and development, investing in cutting-edge technologies to

stay ahead of market trends and deliver high-quality, performance-oriented vehicles.

In addition to its domestic success, Bajaj Auto has established a formidable presence in

international markets, exporting its vehicles to various countries. The brand's commitment to

quality and value has earned it a solid reputation globally.

Bajaj Auto's commitment to sustainability is evident in its efforts to produce eco-friendly

vehicles. The company has made strides in developing electric two-wheelers and promoting

cleaner, greener mobility solutions.

As a corporate entity, Bajaj Auto has demonstrated financial stability and resilience,

navigating through market challenges and economic fluctuations. The company's

management philosophy, led by the Bajaj family, emphasizes a balance of tradition and

innovation, ensuring a forward-thinking approach while staying true to its roots.

2.2 PRINCIPLES OF BAJAJ AUTO LTD:

Bajaj Auto Ltd, one of India's leading two-wheeler and three-wheeler manufacturers, operates

on a foundation of key principles that underpin its business philosophy and success. First and

foremost, innovation stands as a cornerstone for Bajaj Auto. The company has consistently

embraced cutting-edge technology and creative solutions to develop high-performance

vehicles that meet the evolving needs of consumers. This commitment to innovation extends

to the manufacturing process, where efficiency and sustainability are prioritized.

Another fundamental principle for Bajaj Auto is a relentless focus on quality. The company is

dedicated to delivering products that not only meet but exceed customer expectations,

ensuring durability, safety, and overall excellence. Bajaj Auto has earned a reputation for

producing vehicles known for their reliability, a testament to the meticulous attention to detail

embedded in its quality assurance processes.

Customer satisfaction is a central tenet guiding Bajaj Auto's operations. The company places

a premium on understanding and responding to customer preferences, continually refining its

product lineup to cater to diverse market segments. This customer-centric approach is

complemented by a commitment to affordability, making Bajaj vehicles accessible to a broad

spectrum of consumers.

Ethical business practices are ingrained in Bajaj Auto's principles. The company operates

with integrity, transparency, and a strong sense of corporate social responsibility. Upholding

ethical standards is not only a regulatory requirement but also a moral imperative for Bajaj

Auto, contributing to its positive reputation in the industry.

 CHAPTER-3
REVIEW OF LITERATURE
Financial statement comparability is paramount in order to evaluate a firm’s financial performance.

Financial analysts need to be able to accurately analyze financial data, both between firms and over

time (HORRIGAN, 1968). Financial ratios produce important information utilized in a fundamental

analysis of a firm. Financial data are derived from the firm’s balance sheet, income statement,

statement of shareholders’ equity, and the statement of cash flows (BRIGHAM & EHRHARDT,

2014). Financial ratio analysis has been utilized for decades to evaluate firm performance and

financial condition and to predict firm sustainability regarding bankruptcy (CHEN & SHIMERDA,

1981). This is a declared goal of the Financial Accounting Standards Board (FASB). Standardization

and comparability is of extreme importance to analysts, regulators, managers, lenders, investors, and

other users of financial statements (DE FRANCO, KOTHARI, & VERDI, 2011).

According to DARSONO AND ASHARI in his book "PRACTICAL GUIDELINES FOR

UNDERSTANDING FINANCIAL STATEMENTS" (2005: 91), the ratio analysis tool for

cash flow statements needed to assess the company's financial performance includes: Cash

Flow Liquidity Ratios, and Cash Flow Flexibility Ratios.

AKINMULEGUN SUNDAY OJO (2012) empirically examined the effect of financial leverage

(measured by Debt-Equity ratio) on Earnings per Share (EPS) and Net Assets per Share (NAPS).

Author used panel data on effect of leverage on performance indicators of some corporate firms in

Nigeria during 1993 and 2005 and employed econometric technique of Vector Auto Regression

(VAR) on the variables and found that leverage shock on EPS indirectly affect the NAPS. Leverage

therefore significantly affects Corporate Performance

ACCORDING TO KASMIR (2016: 104) financial ratio is an activity comparing the numbers in the

financial statements by dividing one number by another. Comparisons can be made between one

component and the components in one financial report or among components in the financial

statements, then the comparable numbers can be in the numbers in a period or several periods. Based
on the explanation above, financial ratios are a comparison of the number of components contained in

financial statements, both in one period and several periods and then used as material for analysis.

According to Kasmir (2016: 110-114), the forms of financial ratios are as follows: "Liquidity ratio,

leverage ratio, activity ratio, profitability ratio, growth ratio and valuation ratio"

SHEELA CHRISTINA (2017)[2] carried out the study on Financial Performance of Wheels

India Limited-Chennai. The study deals with Analytical type of research design with the help

of secondary data collection method. For this purpose the researcher took past five years‟

data and also checked out for the validity and reliability before conducting the study. The

researcher used the following financial tool namely ratio analysis, comparative balance sheet

and DuPont analysis and also statistical tools such as trend analysis and correlation.

Profitability ratios indicate there is a decrease in the profit level, utilization of fixed assets

and working capital in the last financial year. Thus the company can take necessary steps to

improve sales and profit. Finally, the study reveals that the financial performance is

satisfactory.
 CHAPTER-4

RESEARCH METHODOLOGY
4.1 PROBLEM STATEMENT

The financial system in particular, have seen numerous changes recently. To better

understand how these changes affect Bajaj auto LTD in the financial system, it is necessary to

examine their financial performance. Here, the goal is to analyze how different ratios, cash

flow statements are used to understand an organization success. The evaluation of Bajaj Auto

LTD financial performance takes into account a wide range of factors. This enables

stakeholders who might not be experts in finance to understand financial statements better.

4.2 OBJECTIVES OF THE STUDY

 To Evaluate Financial Performance of Selected Automobile Organization during 2019

– 2023.

 To Assess the Performance of the selected organization through Ratio analysis with

specific Reference on Profitability ratio, Debt coverage ratio, Efficiency ratio, Solvency

ratio and Liquidity ratio.

 To Evaluate the Performance of the selected organization through cash flow

statement for the year 2019-2023

4.3 SCOPE OF THE STUDY

  The examination of different financial ratios and indicators, including return on

assets, return on equity, net interest margin, capital adequacy, non-performing

assets, etc., in order to assess the effectiveness, profitability, solvency, and stability of

Bajaj Auto LTD

 Cash flow Statement is being prepared for the measurement of cash inflows and

outflows during the given period of time.

4.4 SOURCE:

The data collected is secondary in nature. The data is collected from trusted websites and

Annual reports of the company.

4.5 SAMPLE FRAMING:

The study employs convenience sampling due to practical considerations, I had gather

information on the financial performance of Bajaj Auto Ltd. As there is no specific pre-

defined sample, participants will be selected based on their accessibility and willingness to

participate in the study.

2023 2022 2021 2020

PERIOD ENDING: 31/03 31/03 31/03 31/03

Total Current Assets 96504 103656.1 141876.6 66160.2

Cash and Short Term Investments 52055 59028.2 85447.4 30651.5
Cash - 9336.9 5166.1 2854
Cash & Equivalents 2416.2 9336.9 5166.1 -
 Short Term Investments 48019 41545.8 80281.3 27797.5
Total Receivables, Net 26412.8 29612.1 40054.3 24564.3
Accounts Receivables - Trade, Net 17524.3 15163.8 27168.5 17251
Total Inventory 15635.5 12305.1 14938.9 10635
Prepaid Expenses - - - -
Other Current Assets, Total 2400.7 2710.7 1436 309.4
Total Assets 351364.5 351112.1 336017.1 265100.2
Property/Plant/Equipment, Total - Net 28467.9 18368.1 15839.3 16485.7
Property/Plant/Equipment, Total -
55191 45459.2 41817.9 40212.8
Gross
Accumulated Depreciation, Total -26723.1 -27091.1 -26138.4 -24192.5
Goodwill, Net - - - -
Intangibles, Net 307 253.2 473 567.4
Long Term Investments 216015.9 216650.1 167108.4 171877.5
Note Receivable - Long Term 8852.3 14406.6 10556.4 10009.4
Other Long Term Assets, Total 10046.9 12138.9 163.4 2505.3
Other Assets, Total 41321.2 35182.4 - -
Total Current Liabilities 52707.4 46885 56435.4 42533.3
Accounts Payable 41211.8 36321.5 45741.1 31998.2
Payable/Accrued - - - -
Accrued Expenses 4479.4 4360.4 2105.5 2069.1
Notes Payable/Short Term Debt - - - -
Current Port. of LT Debt/Capital
- - - -
Leases
Other Current liabilities, Total 7016.2 6203.1 8588.8 8466
Total Liabilities 57749 52515.5 63282.8 48479.4
Total Long Term Debt - - - -
Long Term Debt - - - -
Capital Lease Obligations - - - -
Deferred Income Tax 3451.5 4026.8 5221.4 3463.8
Minority Interest 0.1 0.1 0.1 0.1
Other Liabilities, Total 1590 1603.6 1625.9 2482.2
Total Equity 293615.5 298596.6 272734.3 216620.8
Redeemable Preferred Stock, Total - - - -
Preferred Stock - Non Redeemable,
- - - -
Net
Common Stock, Total 2829.6 2893.7 2893.7 2893.7
Additional Paid-In Capital - - - -
Retained Earnings (Accumulated
273210.3 283971.2 262623.6 214470.2
Deficit)
 Treasury Stock - Common -637.3 -695.1 -321.4 -266.2
ESOP Debt Guarantee - - - -
Unrealized Gain (Loss) - - 884.3 -4131.3
Other Equity, Total 18212.9 12426.8 6654.1 3654.4
Total Liabilities & Shareholders'
351364.5 351112.1 336017.1 265100.2
Equity
Total Common Shares Outstanding 282.96 289.05 289.37 289.37
Total Preferred Shares Outstanding - - - -

4.6 PERIOD:

The study considers data from Bajaj Auto LTD over the span of four years i.e. 2020-2023.

4.7 RESEARCH TOOLS:

1. RATIO ANALYSIS

 Profitability ratios

 Efficiency ratios

 Liquidity ratios

 Solvency ratios

 Debt Coverage ratios

2. Cash flow statement

4.8 LIMITATIONS:

This study is limited to only one organization i.e. BAJAJ AUTO LTD
 CHAPTER-5

DATA ANALYSIS AND INTERPRETATION

PROFITABILITY RATIOS

PROFITABILITY Mar- Mar-

RATIOS Mar-23 Mar-22 21 20
PBDIT Margin (%) 21.22 19.51 22.36 22.82
PBIT Margin (%) 20.44 18.7 21.43 22
PBT Margin (%) 20.33 19.62 21.4 21.99
Net Profit Margin (%) 15.44 15.14 16.41 17.04
Return on Networth / Equity 22.13 18.81 18.07 25.59
(%)
Return on Capital Employed 28.72 22.76 22.96 32.08
(%)
Return on Assets (%) 18.07 15.72 14.44 20.58
Total Debt/Equity (X) 0 0 0 0
Asset Turnover Ratio (%) 1.16 1.04 0.99 120.76

INTERPRETATION

Overall, the company seems to be profitable with good margins and returns on investment. The

company's profitability has been improving over the past few years, as indicated by the

increasing PBDIT margin, PBIT margin, PBT margin, and net profit margin. The company also

has a high return on equity (ROE) and return on capital employed (ROCE), which indicates that

it is generating good returns for its shareholders and investors.

EFFICIENCY RATIOS

Mar- Mar-
EFFICIENCY RATIOS Mar-23 Mar-22 21 20
Inventory Turnover Ratio 26.06 26.94 18.57 28.13
Debtors Turnover Ratio 22.13 15.66 12.49 13.97
Investments Turnover Ratio 1.43 1.24 1.1 1.5
Fixed Assets Turnover Ratio 6.8 7.34 6.56 7.34
Total Assets Turnover Ratio 1.43 1.24 1.1 1.5
Asset Turnover Ratio 1.4 1.28 1.23 1.43

INTERPRETATION

Overall, the company seems to have efficient inventory management and faster sales (high

Inventory Turnover Ratio). However, there is a decrease in the Debtors Turnover Ratio, which

could indicate slower collection of credit sales or an increase in bad debts. The company also

seems to be using its fixed assets and total assets efficiently to generate revenue.
LIQUIDITY RATIOS
LIQUIDITY RATIOS Mar-23 Mar-22 Mar- Mar-
21 20
Current Ratio (X) 1.71 2.13 2.51 1.55
Quick Ratio (X) 1.44 1.87 2.25 1.3
Inventory Turnover Ratio 18.27 16.28 14.32 28.13
(X)
Dividend Payout Ratio (NP) 71.98 80.71 0 102.12
(%)
Dividend Payout Ratio (CP) 68.54 76.6 0 97.42
(%)
Earnings Retention Ratio 28.02 19.29 0 -2.12
(%)
Cash Earnings Retention 31.46 23.4 0 2.58
Ratio (%)

INTERPRETATION

The company seems to have good short-term solvency as indicated by the current and quick

ratios. However, high dividend payouts in some years raise questions about its long-term

financial strategy and potentially limit investment opportunities. The variations in payout and

retention ratios suggest the company might be adjusting its financial strategy based on its

performance and needs.

SOLVENCY RATIOS

Mar-
SOLVENCY RATIO Mar-23 Mar-22 21 Mar-20
Debt to equity in (%) 0 0 0.445 0
Interest Coverage ratio 186.08 817.65 892.16 2017.02
Debt to Assets in (%) 0 0 0.361 0
Equiity ratio in (%) 83.56 85.04 81.17 81.71

SOLVENCY RATIO
100%

80%

60%

40%

20%

0%
Jan-20 Jan-21 Jan-22 Jan-23

Debt to equity in (%) Interest Coverage ratio

Debt to Assets in (%) Equiity ratio in (%)

INTERPRETATION

The company exhibits outstanding solvency across all metrics. Zero debt for most years,

extremely high interest coverage ratios, and a strong equity base all point towards a financially

robust and stable organization. The introduction of some debt in Mar-21 doesn't significantly

alter this picture, suggesting the company used debt strategically and remains highly solvent.

It's important to note that the absence of debt can also impact a company's growth potential if

missed opportunities arise due to lack of leverage. However, based on the provided data, the

company seems to be in a very advantageous position in terms of solvency and risk management.
DEBT COVERAGE RATIO

DEBT COVERAGE Mar-

RATIO Mar-23 Mar-22 21 Mar-20
Interest Cover 188.66 715.79 892.74 2,083.34
Total Debt to Owners Fund -- -- -- --
Financial Charges Coverage
195.81 746.87 931.67 2,161.33
Ratio
Financial Charges Coverage
150.7 611.63 723.8 1,692.90
Ratio Post Tax

INTERPRETATION

the company exhibits exceptional debt coverage across all metrics. The high Interest Cover and

Financial Charges Coverage Ratios in all years suggest minimal risk of default and strong ability

to handle its debt obligations.

CASH FLOW ANALYSIS

2023 2022 2021 2020

Period Ending:
31-Mar 31-Mar 31-Mar 31-Mar
0 0 12 12
Period Length:
Months Months Months Months
Net Income/Starting Line 60602.1 61658.7 62414.3 66921.3
Cash From Operating
52774.2 41972.1 31198.8 38504.4
Activities
Depreciation/Depletion 2555 2477.8 2593.7 2464.3
Amortization 303.5 219.8 - -
Deferred Taxes - - - -
- -
Non-Cash Items -15402 -17760
16560.8 28376.7
Cash Receipts - - - -
Cash Payments - - - -
Cash Taxes Paid 19185.2 17015.4 13396.9 16776.6
Cash Interest Paid 380.5 73.5 54.8 21
Changes in Working
5874.4 5992.5 -18407 -13121
Capital
Cash From Investing
11995.2 -434.9 -28684 15560.9
Activities
-
Capital Expenditures -5507.5 -2595.9 -2967.4
10744.7
Other Investing Cash
22739.9 5072.6 -26088 18528.3
Flow Items, Total
Cash From Financing
-71807 -40937 -195.2 -62465
Activities
Financing Cash Flow
-398.6 -73.5 -107.9 -10514
Items
Total Cash Dividends - -
-87.3 -51951
Paid 40469.6 40489.8
Issuance (Retirement) of -
-373.7 - -
Stock, Net 30938.8
Issuance (Retirement) of
- - - -
Debt, Net
Foreign Exchange Effects 976.9 302.7 -7.9 2097.4
Net Change in Cash -6920.7 4170.8 2312.1 -6302.4
Beginning Cash Balance 9336.9 5166.1 - -
Ending Cash Balance 2416.2 9336.9 - -
 Free Cash Flow 42533.3 38420.7 - -
Free Cash Flow Growth 10.7 26.58 - -
Free Cash Flow Yield 3.76 3.45 - -

Free Cash Flow Yield

12

10

0
0 5 10 15 20 25 30

INTERPRETATION

 The company's net income has been declining slightly over the past three years.

 Cash flow from operating activities has also been declining, though less significantly than

net income.

 Free cash flow (FCF), which is cash flow from operations minus capital expenditures, is

significantly positive and has been growing, indicating the company is able to generate

cash beyond its operational needs.

 The company's cash position has improved significantly over the past year, with the

ending cash balance more than doubling.

Specific Areas:
  Operating Activities: Declining cash flow from operations despite flat net income

suggests inefficiency in working capital management or potential issues with receivables

collection.

 Investing Activities: The company has invested heavily in capital expenditures in

2020, contributing to the negative FCF that year. However, capital expenditures have

since decreased, leading to stronger FCF growth.

 Financing Activities: The large negative cash flow from financing activities in 2023 is

likely due to significant dividend payments.

Strengths:

 Strong and growing FCF

 Improving cash position

 Moderate debt levels (not shown in the data provided)

Weaknesses:

 Declining net income and cash flow from operations

 Potentially inefficient working capital management

Overall, the company appears to be in a good financial position with strong FCF and a growing

cash balance
 CHAPTER-6

FINDINGS, CONCLUSIONS AND SUGGGESTIONS

FINDINGS

Key Findings from the Financial Data:

Profitability:

 Overall good profitability: Increasing PBDIT, PBIT, PBT, and net profit margins over the past

years.

 High return on equity (ROE) and return on capital employed (ROCE): Indicates efficient

generation of returns for shareholders and investors.

Efficiency:

 Efficient inventory management and faster sales: High inventory turnover ratio.

 Decrease in debtors turnover ratio: Could indicate slower collection of credit sales or an increase

in bad debts.

 Efficient use of fixed assets and total assets: High asset turnover ratios.

Liquidity:

 Good short-term solvency: High current and quick ratios.

 High dividend payouts in some years raise questions about long-term financial strategy: May

limit investment opportunities.

Solvency:
  Outstanding solvency across all metrics: Zero debt for most years, high interest coverage

ratios, strong equity base.

 Introduction of some debt in 2021 doesn't significantly alter the picture: Suggests strategic use of

debt with minimal risk.

Cash Flow:

 Declining net income and cash flow from operations.

 Significantly positive and growing free cash flow (FCF): Company generates cash beyond

operational needs.

 Improved cash position over the past year.

Specific Areas:

 Operating Activities: Investigate working capital management and receivables collection.

 Investing Activities: Monitor capital expenditures and their impact on FCF.

 Financing Activities: Analyze the impact of large dividend payments on finances.

Overall:

 Good financial position with strong FCF and a growing cash balance.

 Need to address declining net income and cash flow from operations.

 Monitor potential working capital management issues and large dividend payouts.
CONCLUSION

The company exhibits a mixed financial picture with both strengths and weaknesses:

Strengths:

 Strong and growing Free Cash Flow (FCF): The company generates significant cash

beyond operational needs, indicating financial flexibility and potential for future

investments.

 Improving cash position: The ending cash balance has doubled in the past

year, demonstrating improved liquidity and stability.

 Moderate debt levels (not shown in the data provided): The absence of significant debt

contributes to lower financial risk and greater strategic freedom.

Weaknesses:

 Declining net income and cash flow from operations: Despite positive FCF, the

company's core profitability metrics are trending downward, suggesting potential internal

inefficiencies or external challenges.

 Potentially inefficient working capital management: Declining cash flow from operations

while net income remains flat may indicate issues with receivable collection or inventory

management.

Overall:
The company is in a good financial position with strong FCF and a growing cash balance.

However, the declining profitability and potential working capital inefficiencies warrant further

investigation and action. Addressing these weaknesses while leveraging its FCF can lead to

sustainable long-term growth and value creation.

SUGGESTIONS

Based on the analysis of the provided financial data, here are some suggestions for the company:

Improve Operational Efficiency:

 Analyse working capital management and identify areas for improvement to reduce the

decline in cash flow from operations despite flat net income. This could involve

optimizing inventory levels, improving receivables collection, and managing payables

effectively.

 Assess the reasons behind the decline in net income and implement strategies to reverse

the trend. This could involve cost reduction initiatives, revenue growth strategies, or

improvements in operational efficiency.

Strategically Manage Investments:

 Evaluate the return on investment for recent capital expenditures and adjust future

investment plans accordingly. Consider prioritizing investments that drive higher returns

and contribute to long-term growth.

  Align capital expenditures with overall business strategy and growth objectives.

Optimize Financing Activities:

 Analyse the dividend payout ratio and consider potential alternative uses for retained

earnings, such as funding growth initiatives or reducing debt.

 Explore diversifying financing options beyond relying solely on dividends to maintain a

healthy balance between shareholder returns and reinvestment in the business.

Maintain Financial Strength:

 Continue monitoring and managing debt levels to maintain a strong financial position and

creditworthiness. Consider exploring debt restructuring options to further optimize the

capital structure.

 Maintain focus on generating strong free cash flow to provide flexibility for future

investments and financial stability.

These suggestions are based on the available information and may require tailoring to the

specific circumstances of the company. It is recommended to consult with financial professionals

for a more comprehensive assessment and customized recommendations.

BIBILOGRAPHY
 BOOKS

Title Author Publishers

FINANCIAL I M PANDEY VIKAS
MANAGEMENT PUBLICATIONS
FINANCIAL M Y KHAN & PK K JAIN TATA MC GRAW HILL
MANAGEMENT
FINANCIAL PRASANNA CHANDRA TATA MC GRAW HILL
MANAGEMENT
STRATEGIC
FINANCIAL ICAI ICAI
MANAGEMENT

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