Continue with the case of Maruti Suzuki Ltd. You had carried out the Multi-step income statement analysis, Horizontal analysis and Common-sized analysis of the company in Chapter 16.
Now extend your analysis to cover ratios analysis also to have a wholesome view of the company’s financial position and performance.
Refer to the information available in the financial statements provided to you earlier in the chapter as stated above and the following further information:
Further information:
1. Share capital comprises equity shares of ₹5 each fully paid-up.
2. Share capital as on 31-03-2010 was the same as in succeeding years.
3. Reserves and surplus as on 31-03-2010 were ₹1,16,906 millions.
4. Long term borrowings ₹1,390 million were redeemed during 2011–12 and ₹1,418 million during 2010–11.
5. All short-term borrowings, as at the end of both the years, represent working capital limits.
6. Closing inventory of materials: ₹10,361 million (31-03-2012), ₹8,076 million (31-03-2011) and ₹7,674 million (31-03-2010).
7. Dividend details (Final, Proposed):
n 2011–12……₹7.50 per share n 2010–11…….₹7.50 per share n 2009–10…….₹6 per share 8. Closing market prices of the share and the movements in Sensex/Nifty on the lines of Grasim’s illustration: Find out yourself through a database or stock exchange website.
9. Tax rate: 30% (plus surcharge/education cess). Ignore the surcharge/cess in your computations.
Now execute the following requirements.

Requirements

1. Examine and analyse the following aspects of the state of affairs of the company. Compute only core ratios:

∎ Return on Investment

∎ Solvency 

∎ Liquidity 

∎ Resources’ Efficiency 

∎ Profitability 

∎ Du Pont Analysis 

∎ Capital Market Valuation

2. Relate your findings with the earlier analysis. Do you find that your overall analysis is now based on stronger foundations? Do you feel that you have a reasonably good understanding of the company’s financials now? Hope the answer is in the affirmative.
If not, you need to work harder.
3. Now step into the shoes of the following stakeholders:
∎ Equity holder 

∎ Prospective investor 

∎ Promoters and Management 

∎ Employee 

∎ Supplier 

∎ Lender, existing as well as a new one

∎ Customers 

∎ Tax collector How would you react in each capacity knowing well what are the interests of various stakeholders in a company.

4. Draft a brief report.