1. Ratio Analysis
There are total 5 types of ratios
•Liquidity Ratios
•Leverage Ratios
•Asset Management Ratios
•Profitability Ratios
•Operating Ratios
•Market Based Ratios

2. Liquidity Ratios
• Liquidity ratios provide information about a
firm’ s ability to meet its short-term financial
obligations.
• They are of particular interest to those
extending short-term credit to the firm.

3. Liquidity Ratios
Current Ratio = Total current assets
Total current liabilities
Tata Motors = 7,133.06 = 0.45
15,740.69
6,443.10
Maruti = = 1.48
4,331.00

4. Liquidity Ratios
Current assets - Inventory – prepaid expenses
Quick Ratio=
Current liabilities – Bank overdraft
14,775.61 - 3,891.39 - 0
Tata motors = = 0.57
18,963.40– 0
6,443.10 - 1,415.00 – nil
Maruti = = 1.16
4,331.00– nil

5. Leverage Ratios
• Leverage ratios provide an indication of the
long-term solvency of the firm.
• Leverage ratios measure the extent to which
the firm is using long term debt.

6. Leverage Ratios
Debt- Equity Ratio = Long Term Debt (sec.& unsec. Loan)
Shareholders Fund
15,898.75
0.79
Tata Motors =
19,986.05
309.3
Maruti = 0.022
13,867.50

7. Leverage Ratios
Capital Gearing Ratio F
= interest Bearing Funds
ixed
Equity shareholders Funds
15898.75
Tata Motors = 0.79
20013.30
309.30
Maruti = 0.02
13867.50

8. Leverage Ratios
P DIT
B
Interest Coverage Ratio =
Interest
5,047.25
Tata Motors = = 3.64
1,383.79
4,258.20
Maruti = =173.5
24.4

9. Asset Management Ratios
• Asset Management Ratios are the key to
analyzing how effectively & efficiency your
small business is managing its assets to
produce sales.
• Asset Management Ratios are also called
“ Turnover Ratios” or “ Efficiency Ratios” .

10. Asset Management Ratios
COGS
Inventory Turnover Ratio =
Average Inventory
5,047.25
Tata Motors = = 14.25
480.425
4,258.20
Maruti = = 31.07
274.1

11. Asset Management Ratios
Sales
Total Asset Turnover Ratio =
Total Assets
47,957.24
Tata Motors = = 1.33
35,912.1
36,561.50
Maruti = = 2.48
14,722.70

12. Profitability Ratios
• Profitability ratios measure the company's use
of its assets and control of its expenses to
generate an acceptable rate of return
• They are of great importance to investors since
they measure how effectively A firm's
management is generating profits on sales,
total assets, and stockholders' investment.

13. Profitability Ratios
Sales - COGS
Gross Profit Margin = * 100
Sales
47,957 – 43606
Tata Motors = * 100 0.089 %
47,957
36561.5- 4258.2
Maruti = *100 0.088%
36561.5

14. Profitability Ratios
E IT
B
Net Profit Margin = * 100
Sales
3686
Tata Motors = * 100 0.0769 %
47957
2419
Maruti = * 100 0.066%
36561.50

15. Operating Ratios
• The operating profit margin ratio indicates
how much profit a company makes after
paying for variable costs of production such as
wages, raw materials, etc.
• It is expressed as a percentage of sales and
shows the efficiency of a company controlling
the costs and expenses associated with
business operations.

16. Operating Ratios
Material Consumed
Material Cost Ratio = * 100
Sales
35,047.05
Tata Motors = * 100 0.73 %
47,957.24
28,880.00
Maruti = * 100 0.78%
36,561.50

17. Operating Ratios
Admin expenses
Administrative Expenses Ratio = * 100
Sales
2,790.19
Tata Motors = * 100 0.058 %
47,957.24
1,153.87
Maruti = * 100 0.0315 %
36,561.50

18. Operating Ratios
COGS + operating expenses
Operating Ratio = * 100
Sales
5047 + 36996
Tata Motors = * 100
47,957.24
= 0.87%
29,768.10 + 4258.20
Maruti = * 100
36,561.50
= 0.93 %

19. Operating Ratios
S & D expenses
Selling and Distribution Ratio = * 100
Sales
2,790.19
Tata Motors = * 100 0.05 %
47,957.24
1,153.87
Maruti = * 100 0.03%
36,561.50

20. Market Based Ratios
• A market-based ratio is a metric used to gauge
a company's viability in terms of such
variables as profitability and the market
valuation of its stock.
• Different ratios indicate a company's viability,
or financial health, where asset values,
revenue, income, and ability to pay bills are
concerned.

21. Market Based Ratios
PAT
RONetWorth = 100
*
Net worth
Tata Motors Maruti
258 3220.3
= 1 *100 = * 10
20,013.3 13867.50 0
= 0.12 * 100
= 12.89 = 2.32