A

SYNOPSIS REPORT
ON
A STUDY ON FINANCIAL ANALYSIS
AT
HONDA MOTORS

Submitted
By
TURAGA SAIKRISHNA REDDY
H.T.NO: 1325-20-672-293
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE
RAMANTHAPUR
(Affiliated to Osmania University)
2020-2022
 Aurora’s PG College , Ramanthapur
Department of Management

SYNOPSIS

Title of the Project : A STUDY ON THE VARIOUS

EMPLOYEE WELFARE SCHEMES

Student Name : B.KEERTHANA

Hall Ticket Number : 1325-20-672-293

Signature of the Student :

Signature of the Guide :

 INDEX
. No. CONTENTS Page No

1 INTRODUCTION

2 NEED FOR THE STUDY

3 OBJECTIVES OF THE STUDY

4 SCOPE OF THE STUDY

5 RESEARCH METHODOLOGY

6 REVIEW OF LITERATURE

7 INDUSTRY PROFILE

8 COMPANY PROFILE

9 PROPOSED OUTCOMES

10 LIMITATIONS OF THE STUDY

11 CHAPTERISATION

12 BIBLIOGRAPHY
INTRODUCTION

Financial analysis (also referred to as financial statement analysis or accounting

analysis or Analysis of finance) refers to an assessment of the viability, stability and
profitability of a business, sub-business or project.

It is performed by professionals who prepare reports using ratios that make use of
information taken from financial statements and other reports. These reports are usually
presented to top management as one of their bases in making business decisions. Financial
analysis may determine if a business will:

 Continue or discontinue its main operation or part of its business;

 Make or purchase certain materials in the manufacture of its product;
 Acquire or rent/lease certain machineries and equipment in the production of its
goods;
 Issue stocks or negotiate for a bank loan to increase its working capital;
 Make decisions regarding investing or lending capital;
 Make other decisions that allow management to make an informed selection on
various alternatives in the conduct of its business.

Goals

Financial analysts often assess the following elements of a firm:

1. Profitability - its ability to earn income and sustain growth in both the short- and long-
term. A company's degree of profitability is usually based on the income statement, which
reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-
term;
3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate
obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial
condition of a business as of a given point in time.

4. Stability - the firm's ability to remain in business in the long run, without having to sustain
significant losses in the conduct of its business. Assessing a company's stability requires the
use of the income statement and the balance sheet, as well as other financial and non-
financial indicators. Etc.

In this project calculating the past financial statements of the same firm does ratio analysis.

Method

Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):

 Past Performance - Across historical time periods for the same firm (the last 5 years
for example),
 Future Performance - Using historical figures and certain mathematical and
statistical techniques, including present and future values, This extrapolation method is the
main source of errors in financial analysis as past statistics can be poor predictors of future
prospects.
 Comparative Performance - Comparison between similar firms.

These ratios are calculated by dividing a (group of) account balance(s), taken from
the balance sheet and / or the income statement, by another, for example:

Net income / equity = return on equity (ROE)

Net income / total assets = return on assets (ROA)
Stock price / earnings per share = P/E ratio

Comparing financial ratios is merely one way of conducting financial analysis. Financial

ratios face several theoretical challenges:

 They say little about the firm's prospects in an absolute sense. Their insights about
relative performance require a reference point from other time periods or similar firms.
 One ratio holds little meaning. As indicators, ratios can be logically interpreted in at
least two ways. One can partially overcome this problem by combining several related ratios
to paint a more comprehensive picture of the firm's performance.
 Seasonal factors may prevent year-end values from being representative. A ratio's
values may be distorted as account balances change from the beginning to the end of an
accounting period. Use average values for such accounts whenever possible.
 Financial ratios are no more objective than the accounting methods employed.
Changes in accounting policies or choices can yield drastically different ratio values.
 Fundamental analysis.
Financial analysts can also use percentage analysis which involves reducing a series of
figures as a percentage of some base amounts. For example, a group of items can be
expressed as a percentage of net income. When proportionate changes in the same figure over
a given time period expressed as a percentage is known as horizontal analysis.[3] Vertical or
common-size analysis reduces all items on a statement to a “common size” as a percentage of
some base value which assists in comparability with other companies of different sizes. As a
result, all Income Statement items are divided by Sales, and all Balance Sheet items are
divided by Total Assets.

Another method is comparative analysis. This provides a better way to determine trends.
Comparative analysis presents the same information for two or more time periods and is
presented side-by-side to allow for easy analysis.
NEED OF THE STUDY:
Financial statements have two major uses in financial analysis .first, they are used to present
a historical recover of the firm’s financial development. Second, they are used for a course of
action for the firm.

A performance financial statement is prepared for a future period. It is the financial

manager’s estimate of the firm’s future performance.

The operation and performance of a business depends on many individuals are collective
decisions that are continually made by its management team. Every one of these decisions
ultimately causes a financial impact, for better or works on the condition and the periodic
results of the business. In essence, the process of managing involves a series of economic
choices that activates moments of financial resources connected with the business.

Some of the decisions made by management one will be the major, such as investment in a
new facility, raising large amounts of debts or adding a new line of products or services. Most
other decisions are part of the day to day process in which every functional area of the
business is managed. The combine of effect of all decisions can be observed periodically
when the performance of the business is judged through various financial statements and
special analysis.

These changes have profoundly affected all our lives and it is important for corporate
managers, share holders, tenders, customers and suppliers to investment and the performance
of the corporations on which then relay. All who depend on a corporation for products,
services, or a job must be med about their company’s ability to meet their demands time and
in this changing world. The growth and development of the corporate enterprises is reflected
in their financial statement.
OBJECTIVES OF THE STUDY:
Broadly the objective of the Analysis of Financial statement is to
understand the information contained in the financial statement with a view to the
weakness and strengths of the firm and to make forecast about the future prospects of
the firm and their by enabling the financial analyst to take different decision
regarding the operation of the firm. The objectives of the analysis can be identified as:

a. To assess the present profitability and operating efficiency of the firm as a whole as well
as for its different departments

b. To find out the relative importance of different components of the financial position of
the firm.

c. To identify the reasons for change in the profitability\financial position of the firm.

d. To assess the short-term as well as the long-term liquidity position of the firm.

e. To examine the solvency of the firm.

f. To find out the ability of the firm to meet its current obligations.

SCOPE OF THE STUDY

Analysis of financial statement can be undertaken by different persons and for different
purposes, therefore, the scope of the AFS may be varying from one situation to
another.

However, the following are some the techniques of the AFS:

a) Comparative financial statements.

b) Common-size financial statements.
c) Trend percentage analysis.
d) Statement of changes in financial position.
e) Cost-volume-profit relations, and
f) Ratio analysis and others.
RESEARCHMETHODOLOGY
This is a systematic way to solve the research problem and it is important component for the
study without which researches may not be able to obtain the format. A research design is the
arrangement of conditions for collection and analysis of data in a manager that aims to
combine for collection and analysis of data relevance to the research purpose with economy
in procedure.

MEANING OF RESEARCH DESIGN

The formidable problem that follows the task of defining the research problem is the
preparation of design of the research project, popularly known as the research design,
decision regarding what, where, when, how much, by what means concerning an inquiry of a
research study constitute a research design. A research design is the arrangement of
conditions for collection and analysis of data in a manager that aims to combine for collection
and analysis of data relevance to the research purpose with economy in procedure.

SOURCES OF DATA

Data we collected based on two sources.

 Primary data.
 Secondary data.
Primary data

The Primary data are those information’s, which are collected afresh and for the first time,
and thus happen to be original in character.

Secondary Data:

The Secondary data are those which have already been collected by some other agency and
which have already been processed. The sources of Secondary data are Annual Reports,
browsing Internet, through magazines.

1. It includes data gathered from the annual reports of HONDA MOTORS

2. Articles are collected from official website of HONDA MOTORS
2.1THEORETICAL BACKGROUND
Financial Statement Analysis
Introduction:-
The term ‘financial analysis also known as analysis and interpretation of financial statements’
, refers to the process of determining financial strength and weaknesses of the firm by
establishing strategic relationship between the items of the balance sheet , profit and loss
account and other operative data.
“Analyzing financial statements” by Metcalf and Titard
“Financial analysis is a process of evaluating the relationship between component
parts of a financial statement to obtain a better understanding of a firms position and
performance” by Myers

The purpose of financial analysis is to diagnose the information contained in

financial statements so as to Jude the profitability and financial soundness of the firm. Just
like a doctor examines his patient by recording his body temperature, blood pressure , ect.
Before making his conclusion regarding the illness and before giving his treatment, a
financial analyst analysis the financial statements with various tools of analysis before
commenting upon the financial health or weaknesses of an enterprise.
The analysis and interpretation of financial statements is essential to bring out the mystery
behind the figures in financial statements. Financial statements analysis is an attempt to
determine the significance and meaning of the financial statement data so that forecast may
be made of the future earnings, ability to pay interest and debt maturities (both current and
long term) and profitability of a sound divided policy.

Types of financial analysis:-

Financial analysis into different categories depending upon

(1) The material used and
(2) The method of operation followed in the analysis or the modus operandi of
analysis
2.2 ARTICLE/JOURNALS

2.2 Articles
1.TITLE : Financial statement analysis and beta and size effect
Author : Lianzan xu
ABSTRACT

This study examines the ability of fundamental summary measure Pr to predict earnings
change for the subsequent year, the association of Pr and stock returns, and the relationship
between Pr and risk factors beta and size. Pr is a probability index generated by logistic
model and financial statement data. Beta effect is minimized by grouping firms into beta
portfolios while size is controlled through incorporating size as an independent variable in the
regression models. Evidence from the study indicates that Pr has a strong ability to predict
future earnings change and has a positive and significant association with adjusted market
returns, after controlling for beta. Pr's association with adjusted market returns is mitigated
when beta and size are controlled simultaneously.
2.TITLE : A Study on Financial Statement Analysis
Author: Sassikala
ABSTRACT
This project report entitled as “A Study on Financial Statement Analysis. In
Tamil Nadu Newsprint and Papers Limited, Kagithapuram” , is done as a part of
MBA curriculum. The objective of the study is to analysis the financial statement
of Tamil Nadu Newsprint and Papers Limited, Kagithapuram. The study is carried
for a period of five years from 2017-2018 to 2020-2021 . Data were collected from the
secondary sources. To identify the financial statements of the company and also
understand the liquidity position. The tools used for analysis, Comparative
Balance Sheet, Common Size Balance Sheet, Ratio Analysis.
3.TITLE: Dog Concierges, LLC: Transaction Analysis and Statement of Cash Flows
Preparation
Author: Mark E. Haskins
ABSTRACT
This case is appropriate in a MBA module for the accounting process and is also an excellent
exam case. It provides a diagram of the three basic financial statements (balance sheet,
income statement, and statement of cash flows) used to capture, codify, and communicate the
effects of a series of typical business events. The case also gives students the opportunity to
prepare a simple statement of cash flows using two sequential balance sheets and to work
backward from a balance sheet and statement of cash flows to craft the beginning of the
year's balance sheet.
4.TITLE: WORKING CAPITAL MANAGEMENT THROUGH FINANCIAL
STATEMENTS
Author: Sukamal Datta
ABSTRACT

In his study entitled “Working Capital Management through Financial Statements: Analysis of Paper
Industry in West Bengal” found that most of the firms were suffering from shortage of working
capital. One of the primary causes of such shortage of working capital was that most of the
firms under study were not capable of earning adequate profit and were also suffering from
losses. The expansion of fixed assets also caused the working capital crisis. The utilization of
fund had not been covered by sufficient amount of fund by way of long-term investment
INDUSTRY PROFILE
Honda Motor Company restricted is probably pleasantly referred to as Associate in Nursing
manufacturer--it's miles the 1/3 biggest automaker in Japan--however, the corporation has its
roots in bikes, and is that the international's pinnacle motorcycle producer. Its pleasant
marketplace is withinside us, whereby the majority of its financial gain ar generated. Honda's
vehicle line debts for ninety proportion of its financial gain, and consists of renowned U.S.
pinnacle dealers beside the Accord, Legend, Civic, Prelude, and also the classy Acura. The
Accord is that the other most bought vehicle withinside us, even supposing it for sure ranks
1st at the country's listing of most taken (and so, "in the decision for") vehicles. Honda to
boot produces bikes beside the Super Cub, Foresight, and Shadow 750. what is more, the
corporation's electricity merchandise department makes completely different objects that
bolster annual financial gain, besides agricultural and industrial-use machinery, mobile
generators, outboard motors, and all-terrain vehicles?
The Early Years
Any description of Honda Motor Company's records and accomplishments got to remember
the contrastive tendencies of its founders--Soichiro Honda and his partner, Takeo Fujisawa.
Soichiro Honda's achievements as a technologist are explicit to own matched those of
industrialists. operating in his Japanese device detain 1938, Honda centred his early efforts on
casting a very good seal. He quickly succeeded in casting a hoop that met his standards and
tried to market it to the Toyota Corporation.
Toyota rejected Honda's 1st batch of piston earrings, but years later the corporation within the
finish positioned a vast order. At that point, however, Honda satirically situated himself
prying a chief impediment that returned owing to the order's large size--an inadequacy of
cement. as a result of Japan became preparing for war, Honda could not stable the cement and
substances had to assemble a producing unit to fabricate piston earrings. what is more, he
could not turn out the number of piston earrings essential to the usage of his facility at that
point. Undaunted, Honda discovered the thanks to building his terribly own cement and
shortly engineered the novel facility.
Honda's new factories survived the bombing assaults at some stage in warfare II, but are
unfortunately later destroyed via the method of means that of Associate in Nursing
earthquake. At that point, Honda offered his seal operation to Toyota and went on to fabricate
motorbikes instead.
COMPANY PROFILE
Honda Motor Company, Ltd. may be a Japanese public international conglomerate
organization unremarkably known as a producer of cars, planes, bikes, and strength
instrumentation.
Honda has been the international's biggest bike producer insight that 1959, additionally to the
international's biggest producer of inner combustion engines measured with the help of
victimization extent, generating larger than fourteen million inner combustion engines each
period.[4] Honda became the second-biggest Japanese vehicle producer in 2001.[5][6] Honda
became the eighth biggest vehicle producer withinside the international at the rear of Toyota,
Volkswagen cluster, Hyundai Motor cluster, General Motors, Ford, Nissan, and enactment
Chrysler cars in 2015.
Honda became the first Japanese vehicle producer to launch a loyal luxurious emblem,
Acura, in 1986. except for their middle vehicle and bike businesses, Honda in addition
manufactures field instrumentation, marine engines, private watercraft and strength
generators, and totally different product. Since 1986, Honda has been involved with artificial
intelligence/robotics studies and launched their ASIMO robotic in 2000. they need in addition
ventured into the region with the established order of GE Honda Aero Engines in 2004 and
also the Honda HA-420 HondaJet, which started producing in 2012. Honda has three joint
ventures in China (Honda China, Dongfeng Honda, and Guangqi Honda).
In 2013, Honda invested with roughly five.7% (US$6.eight billion) of its sales in studies and
improvement.[8] conjointly in 2013, Honda became the first Japanese automaker to be a web
bourgeois from us, exportation 108,705 Honda and Acura fashions, while uploading simplest
eighty-eight,357.
History
Throughout his life, Honda's founder, Soichiro Honda, had an Associate in Nursing hobby in
cars. He laboured as a mechanic on the Art Shokai garage, during which he tuned vehicles
and entered them in races. In 1937, with finance from his acquaintance Kato Shichirō, Honda
primarily based Seiki (Eastern ocean exactness Machine Company) to form piston
jewelleryrunning out of the Art Shokai garage. once preliminary failures, Tōkai Seiki
received an agreement to deliver piston jewellery to Toyota but misplaced the agreement
attributable to the dangerous high-satisfactory in their product.[10]After attending
engineering school without graduating, and moving factories spherical Japan to higher
acknowledge Toyota's high-satisfactory manipulate processes, with the help of victimization
1941
LIMITATIONS OF THE STUDY:
 It is only a study of interim reports.
 Financial analysis is based upon only monetary information and non monetary factors
are ignored.
 Different people may interpret the same analysis in different ways.
 It does not consider the changes in prices level.
 Changes in accounting procedure by firm may often make financial analysis
misleading.
PROPOSED OUT COMES
1. Company may look into increasing various forms of currents assets and decreasing
current liabilities to effective manage working capital requirement.
2. Company may maintain gross profit in and around 98% as seen in 2017-21 in the
coming financial years.
3. The company has to lookout new joint ventures and assignments.
4. To meet the short term requirements the company has to raise short term as well as
long term loans.
5. To attract to the new customers the company has to adapt new procedures and new
technology.
CHAPTERISATION
CHAPTER -1 - INTRODUCTION

This chapter includes the introduction of the topic, need, scope, objectives of the study,
Project limitations and methodology of the study.

CHAPTER - 2 REVIEW OF LITERATURE

This chapter includes the theoretical background and articles written by different authors and
brief explanation of the topic.

CHAPTER - 3 - INDUSTRY PROFILE & COMPANY PROFILE

CHAPTER - 4 - DATA ANALYSIS AND INTERPRETATION

This chapter includes the comparative analysis of the financial statements of the five years
data and it also includes the interpretation based on the study.

CHAPTER - 5 – SUMMARY AND CONCLUSION

This chapter includes the overall summary of the project and the conclusion based on the
study during the period.
BIBLIOGRAPHY
1. Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill
Publishing Co., New Delhi, 2007.
2. I M Pandey, Essentials of Financial Management, Vikas Publishing House Pvt
Ltd, New Delhi, 2095.
3. Ramesh, S and A Gupta, Venture Capital and the Indian Financial Sector,
Oxford university press, New Delhi, 2095.
www.googlefinance.com

www.hondamotors.com

www.workingcapitalmanagement.com

www.icicibank.com

www.autoindia.com