ACTIVITY RATIOS

Used to evaluate the efficiency with which the firm manages and utilizes its assets. Indicate the speed with which assets are being converted to sales. Types of Activity Ratios calculated for Hero Motocorp and Bajaj Auto are:
o Inventory Turnover o Debtor Turnover Ratio o Asset Turnover Ratio

180.00
162.08

160.00

140.00
122.63

120.00

117.09

100.00

94.51

Inventory Turnover 80.00 Debtor Turnover Assets Turnover

60.00

55.10 47.33 42.80

50.72
43.88 40.84 37.33 37.41

51.77

49.66

40.00

32.80

28.64 27.45

28.27

30.97

31.43

20.00
3.52 4.28

4.85

4.85

4.49 0 0

2.74

3.07

3.46

3.43

2.59

0.00 2009 2010 2011 2012 2013 2009 2010 2011 BAJAJ AUTO 2012 2013 HERO MOTOCORP

S.NO RATIO

OBSERVATION
Analysis signifies that in each financial year's ratio, Hero Motocorp is stronger in comparision to Bajaj Auto.

Inventory Turnover Ratio

The decrease or increase in the trends is directly proportional to the sales of the company hence Hero Motocorp needs to strengthen the sales activity to maintain strong position in market otherwise in long run Bajaj Auto may supersede Hero Motocorp Hero Motocorp potrays high figures, however, it shows a significant decline 2011 onward. Whereas the trend for Bajaj Auto is more stable with a significant increase in the ratio. Hence, Hero Motocorp needs to make good strategic plan to improve the trends of its ratio

Debtor Turnover Ratio

Assets Turnover Ratio

As per yearly comparison, Hero Motocorp is ahead of Bajaj. However, over last three years (2010- 2013) both the company's are showing a dip in the ratio, Bajaj Auto being more critical

VALUATION RATIOS
The following Valuation Ratios have been calculated for Hero Motocorp and Bajaj Auto
o Earning Per Share Ratio o Dividend Per Share Ratio o Price Earning Ratio

120
111.77 110 105

119.09

117.69

115.42

106.07

103.81

105.18

100

96.55

80

64.19 60

60

EPS Ratio DPS Ratio

45 43.37 40 40 45 45

40

20

22

20

0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

HERO MOTOCORP

BAJAJ AUTO

Profitability Ratio

A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

The following Valuation Ratios have been calculated for Hero Motocorp and Bajaj Auto Gross Profit Margin Net Profit Margin Return on Equity

BAJAJ AUTO
70
70

HERO MOTOCORP

60

60

50

50

MARGIN

40
MARGIN

40

30

30

20

20

10

10

0 2009 2010 2011 YEAR 2012 2013

0 2009 2010 2011 YEAR 2012 2013

Gross Profit Margin

Net Profit Margin

ROE

Gross Profit Margin

Net Profit Margin

ROE

LEVERAGE RATIOS
Leverage relates to how much debt it has on its balance sheet The more debt a company has, the riskier its stock is.

Ways to measure are : Debt equity ratio Interest coverage ratio

Bajaj Auto
0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2009 2010 2011 2012 2013 debt equity ratio 0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0

Hero moto corp.

2010

2011

2012

2013

debt equity ratio

8000 7000 6000 5000 4000 3000 2000

1400 1200 1000 800 600 400 200 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 interest coverage interest coverage

1000
0

Liquidity ratios

1.4 1.2 1 0.8 0.6 0.4 0.2 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

Bajaj auto
Current Ratio Quick Ratio

Hero moto corp.

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