AYUSHI SINGH(500090547)

NAMAN GOEL(500089840)

M JOSHUA ALFRED(500089142)

SHRADHA JINDAL(500093178)

SUBMITTED TO: HARSHIT GOYAL(500089407)

PARTH AGARWAL(500093169)

AJAY SHIBU PARACKAL(500090554)

GEETIKA BATRA
AYUSH BALIYAN(500097302)
Liquidity Ratio

Current Ratio Acid Test/Quick Ratio

The current ratio is a ratio of Current Assets to The Acid test ratio determines the absolute
Current Liabilities. liquidity of a firm.
Current ratio = Current Assets Acid test ratio = Quick asset
Current Liabilities Quick Liabilities
2020 2021
2020 2021
13568.76 = 0.53 15854.59 = 0.60
9737.76 = 0.38 11302.88 = 0.53
25810.82 26251.55 25810.82 26251.55
Current ratio of tata motors increased by 0.07. It Quick ratio of tata motors increased by 0.15.
means now it has more Assets to pay its It means it has more liquidity as compared
liabilities as compared to 2020. to 2020.
Liquidity Ratio

Cash Ratio Working Capital Ratio

The cash ratio is a ratio of cash and cash The working capital ratio depicts the association
equivalents to current liabilities. between net working capital and net sales of a firm.
Cash ratio = cash+ marketable securities Working Capital ratio = Net working capital

current liabilities Net sales

2020 2021
2020 2021
-12242 = -0.04 -10398 = -0.04
2145 = 0.08 2366 = 0.09
25811 26252 261068 249795
Cash ratio of Tata motors increased by 0.01. It Working capital ratio of Tata motors is nearly same
means company has more cash to meet its in both the years. It maintain its working capital at -
day-to-day obligations during 2021. 4% in regard to net sales.
Liquidity Ratio

Net Working Capital

Working capital is a capital which a firm needs to run its everyday operations such
as paying wages, salaries, suppliers and creditors.
Net Working Capital = Current Assets – Current Liabilities

2020 2021
= 13,569- 25,811 = -12,242 = 15,855- 26,252= -10,397
It depicts that company has more liabilities than its assets. The net working capital
of Tata Motors is negative.
Solvency Ratio
Debt ratio
Capital structure of a firm comprises of Equity (owners funds + reserves & surplus), preference
share capital and debt (loan from banks and financial institutions + bonds/ debentures).
Debt ratio= Total Debt
Total Assets

2020 2021
Debt ratio= 25444.77/ 62589.87 Debt ratio= 21748.72/65059.66
= 0.4065 or 40.65% =0.3343 or 33.43%

This shows that 33.43% of company’s assets are provided via debt. Low debt ratio suggests
greater creditworthiness.
Solvency Ratio
Debt to Equity Ratio
Financial leverage is sometimes calculated by a ratio of total debt to equity. It measures the proportion of
borrowed funds to the owner’s funds.
Debt to equity ratio=Total Debt
Equity

2020 2021
Debt to Equity Ratio= 25444.77/18387.65 Debt to Equity Ratio= 21748.72/19055.97
= 1.45 = 1.14

We have 1.14 rupees of debt for every one rupee which shows lower debt ratio for the company in year
2021.
Solvency Ratio

Long Term Debt to Equity Ratio

This ratio measures the proportion of only long term debt assuming that short debt is transitory and will not
affect the long term solvency position of a firm.
Long term debt to equity ratio = Long Term Debt
Equity

2020 2021
Long term debt ratio = 16,154/18,387.65 = 17,581/19055.97
= 0.87 = 0.92
Long term debt of Tata motors has increased in 2021. It means increased in long term debt of company in
2021.
Solvency Ratio
Interest Coverage Ratio
It determines the capacity of a firm to pay interest. This interest expense is to be paid from EBIT (earnings
before interest and taxes i.e. pre-interest and pre-text).
Interest coverage ratio= EBIT
Interest Expense

2020 2021
Interest coverage ratio = -5154.34/1973.00 Interest coverage ratio = 45.97/2358.54
= -2.61 = 0.02

This increase in ratio indicates company can meet its current interest payment obligations and therefore is
in better financial condition.
Solvency Ratio

Cashflow Coverage Ratio

This ratio depicts the capability of a firm to duly repay interest and principal repayments/instalments from
its operating cashflow.
Cashflow coverage ratio = Net Operating Cashflow/ Interest Expense+principal instalments / (1-t)

2020 2021
Cashflow Coverage Ratio = 26633 Cashflow Coverage Ratio = 29001
25444.77 21748.72
= 1.05 times = 1.35 times

The increase in ratio in 2021 shows that the company is in good financial health and can meet its financial
obligations through the cash generated by operating activities.
Profitability Ratio

Net Profit ratio (NPR)

Net profit/ net income/ profit after taxes is calculated as sales minus all the expenses (operating and
nonoperating). It depicts the overall profitability position of a firm.
Net Profit ratio = Net profit/ Net sales *100

2020 2021
NPR = -7289.63 *100 NPR = -2395.44 *100
43928.17 47031.47
= -1.66% = -5.1%

This negative net profit margin depicts that the company is making less profits in 2021 as compared to
2020.
Profitability Ratio
Return on capital employed (ROCE).
Return on capital employed/ investment determines the return earned by a firm on its capital/
investments.
ROCE = EBIT/ Capital Employed * 100

2020 2021
ROCE = -5154.34 * 100 ROCE = 45.99 * 100
282316 306560
= -1.83% = 0.01%
It is a positive impact of for the company as the return on capital get increased in 2021.
Profitability Ratio
Return on Assets (ROA)
Return on assets determines how much profit the firm is able to generate from its total assets.
ROA = Net Profit *100/ Average Total Assets

2020 2021
ROA = -7289.63 * 100 ROA = -2395.44 * 100
316663 338605
= -2.30% = -0.71%

This ratio depicts that the company is able to generate -0.71% profits from its total assets which is -
2.30% in 2020 which depicts that company got good returns in 2021
Profitability Ratio
Return on Equity (ROE)
Return on equity determines the return earned by a firm on its equity.
ROE =Net Profit - Preference Dividend *100 / Equity

2020 2021
ROE = -10975 * 100 ROE = -13016 * 100
124557 109706
= -8.81% = -11.86%

A fall in the ROE ratio indicates a less efficient usage of equity capital by the company in 2021 as
compared to 2020.
Leverage Ratio
Debt Ratio Debt to Equity Ratio

The debt ratio is a ratio of Total Debts to Total The debt-to-equity ratio is a ratio of Total Debts
Assets. to Total equity.
Debt Ratio = Total Debt Debt to equity ratio = Total Debt
Total Assets Equity
2020 2021 2020 2021
25,444.77 = 40.65% 21,748.72 = 33.43%
25,444.77 = 1.45 21,748.72 = 1.14
62,589.87 65,059.66 18,387.65 19,055.97
Debt Ratio has decreased by 7.22% which means Debt to equity ratio of tata motors
that the company’s total debt with respect to decreased by 0.31. It means debt has
assets have decreased. decreased with respect to equity in 2021
Leverage Ratio
• Long term debt to equity Ratio • Interest Coverage Ratio

The long term debt to equity ratio is a ratio of The Interest Coverage determines the capacity
long term Debts to Equity. of firm to pay interest.
Ratio = Long Term Debt Ratio = EBIT
Equity Interest Expenses
2020 2021 2020 2021
14,776.51 = 0.80 16,326.77 = 0.87 -5,154.34 = -2.61 45.97 = 0.02

18,387.65 19,055.97 1,973.00 2358.54

The Ratio has increased by 0.07 which means The Ratio has increased by 2.63 which means
that the company’s long term debt with respect that the company is in better position to pay
to equity have increased. interest