A Study On Financial Performance of Maruti Suzuki Motors

SJIF Impact Factor: 7.001| ISI I.F.Value:1.241| Journal DOI: 10.
36713/epra2016 ISSN: 2455-7838(Online)

EPRA International Journal of Research and Development (IJRD)
Volume: 5 | Issue: 11 | November 2020 - Peer Reviewed Journal
A STUDY ON FINANCIAL PERFORMANCE OF

MARUTI SUZUKI MOTORS
V. Gokulapriya
Student of III B.Com.(PA),Department of Commerce with Professional Accounting,
Dr. N. G. P Arts and Science College, Coimbatore
Mrs. P. Dhanya
Assistant Professor, Department of Commerce with Professional Accounting,
Dr. N. G. P Arts and Science College, Coimbatore
ABSTRACT
Maruti Suzuki India Ltd. primarily manufactures cars and has been the most favorite automobile brand among
Indian people since its inception. The main objective of the study is to analyze firm’s profitability and liquidity
position by using ratio analysis and to know the changes over working capital for the period of four years (2015-
19). The company can improve its profitability position by pay off current liabilities. By managing the debtors
effectively working capital of the company can be increased.
KEY WORDS-Financial Performance, Ratio Analysis, Profitability Ratios, Liquidity Ratios, Working
Capital.
INTRODUCTION financial system and the financial information

At present we cannot imagine a world system. The basic problem faced by the financial
without finance. It can also describe as finance is the manager of an enterprise in to trade-off between the
soul of our economic activities. Effective conflicting and equally improvement goals of
management of business requires control over profitability and liquidity.
expense to reduce the cost of operation and to make
the business profitable. Assets must be properly SCOPE OF THE STUDY
maintained to increase their productivity. Liabilities The scope of study is to find the financial
of a business have to be repaid in due time. performance of the MARUTI SUZUKI MOTORS.
According to entrepreneurs “finance is concerned For the preparation of ratio analysis and working
with cash. It is so, since, every business transaction capital statement past five years balance sheet (2015
involves cash directly or indirectly”. It is the vast to 2019) has taken for study. This study is made
term. Measuring the results of a firm’s policies and mainly to know the profitability, liquidity and
operations in monetary terms. These results are financial growth of the company. These suggestions
reflected in the firms return on investments, return on would help the company for further improvements.
assets, value added, etc… Financial performance is to
calculate key financial ratios over the last three to OBJECTIVES OF THE STUDY
five years. The ratios can be compared year to year. 1. To analyze profitability position of the
Maruti Suzuki Motors.
STATEMENT OF THE PROBLEM 2. To know the liquidity position of the
Being this present status, it quiet possible company.
for the company to improve its profitability as well as 3. To know the changes over working capital
liquidity considerable without employing, further for the period of four years (2015-19).
resources and just be stream lining the existing
2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |456 |

SJIF Impact Factor: 7.001| ISI I.F.Value:1.241| Journal DOI: 10.36713/epra2016 ISSN: 2455-7838(Online)
RESEARCH METHODOLOGY Lam Weng Hoe, Lam Weng Siew, Liew Kah
Secondary data was mainly used for the Fai (2019), “a study on performance analysis on
study. The data used in this study is mainly from the Telecommunication companies in Malaysia with
audited annual reports of the company. The present TOPSIS model”. The objective of this paper is to
study covers the period of five years from 2014-2015 propose a conceptual framework to evaluate,
to 2018-2019. compare and rank the financial performance of
companies in Malaysia. They concluded that the best
Tools and Techniques ideal and worst ideal solutions for each financial ratio
The ratios are used as a tool for analyzing can serve as the benchmark to the telecommunication
the financial performance on Maruti Suzuki Motors. companies for further improvement.
Ratios are calculated from previous year and current
year. The tools are Dr. D. Pathma Priya (2019), “a study on financial
1. Ratio analysis. performance analysis of HDFC limited”. The study
 Profitability ratio was made to analyze the financial performance of
 Liquidity ratio HDFC limited for the period of five years and to
2. Working capital. offer suggestions based on their findings of the study.
She concluded that the financial performance of the
LIMITATIONS OF THE STUDY HDFC Limited is at satisfactory level and suggested
 The period of the study limited only to five to concentrate to get back the funds from debt to
years. equity funds and also reduce and long term financial
 The end result of the study is relevant best obligations
for Maruti Suzuki Limited and it cannot use
in another company. DATA ANALYSIS AND
 The data are secondary by nature and any INTERPRETATION
bias in them reflects in the analysis and the PROFITABILITY RATIO
conclusion of the study. Efficiency of a business is measured by
profitability. It measures the profit earning capacity
REVIEW OF LITERATURE
of the business concern. The important profitability
Mr. V. Elayabharathi, Mrs. D. Praveena, Mrs.
ratios are discussed below:
S. Rathika (2019), “a study on financial
1. Gross profit ratio
performance analysis with reference to TNSC Bank, 2. Net profit ratio
Chennai”. They analyzed the financial performance 3. Operating profit ratio
of the TNSC APEX CO-OPERATIVE BANK. They 4. Operating ratio
suggested the bank needs to maintain proper 1. Gross Profit Ratio
receivables. The performance should be continued This ratio indicates the efficiency of trading
and improvement to be made in order to attain the activities. The relationship of gross profit to sales is
objectives of the concern which pave the way to have known as gross profit ratio. It is also known as gross
the result in attaining the competitive advantage. margin or trading margin ratio. The ratio is calculated
as:
Gross Profit Ratio = Gross Profit / Sales × 100
Table No. 1
Table Showing Gross Profit Ratio
(Rupees in Cores)
Year Gross Profit Sales Ratio
2014-2015 7338.50 49970.60 14.68
2015-2016 10263.90 57538.10 17.83
2016-2017 12562.40 68034.80 18.46
2017-2018 13761.30 79762.70 17.25
2018-2019 13484.50 86020.30 15.67
(Source: 5 years annual report of Maruti Suzuki )
INTERPRETATION percentage. During the study period 2014-2015 the

The above table 1 shows the relationship gross profit ratio is 14.68. On 2015-2016 the ratio
between the gross profit and net sales in the increased to 17.83 and further it moves upward to

18.46 in 2016-2017. During 2017-2018 it decreased This ratio determines the overall efficiency
to 17.25. In the year 2018-2019 it decreased to 15.67. of the business. The relationship of net profit to
The average gross profit position was 16.7%. sales is known as net profit ratio. It is determined
However the company maintains a good gross profit by dividing the net income after tax to the net
ratio. sales for the period and measure the profit per
rupee of sales. The ratio is calculated as:
2. Net Profit Ratio
Net Profit Ratio = Net Profit / Sales × 100
Table No. 2
Table Showing Net Profit Ratio
(Rupees in Cores)
Year Net Profit Sales Ratio
2014-2015 3243.37 49970.60 6.49
2015-2016 4525.46 57538.10 7.86
2016-2017 5754.21 68034.80 8.45
2017-2018 6400.85 79762.70 8.02
2018-2019 5831.25 86020.30 6.77
INTERPRETATION average net profit position was 7.5% and is in

The above table 2 shows the relationship between decreasing trend.
the net profit and net sales in percentage. During the 3. OPERATING PROFIT RATIO
study period 2014-2015 the ratio was 6.49 then it This ratio is an indicator of the operational
moves upward to 7.86 and 8.45 in the year 2015- efficiency of the management. It establishes the
2016 and 2016-2017 respectively. The ratio relationship between operating profit and sales. The
decreased to 8.02 in 2017-2018 and it also moves ratio is calculated as:
downward to 6.77 in the year 2018-2019. The
Operating Profit Ratio = Operating Profit / Sales × 100
Table No. 3
Table Showing Operating Profit Ratio
(Rupees in Cores)
Year Operating Profit Sales Ratio
2014-2015 7544.50 49970.60 15.09
2015-2016 10345.40 57538.10 17.98
2016-2017 12651.80 68034.80 18.59
2017-2018 14107.00 79762.70 17.68
2018-2019 13560.30 86020.30 15.76
INTERPRETATION downward to 17.68 and further it decreased to 15.76

The above table 3 shows that the operating profit in the year 2018-2019. So the company should
ratio is 15.09 in year 2014-15 and keeps fluctuating decrease their expense to increase their profit.
for upcoming years. But in 2017-2018 it goes
4. OPERATING RATIO production, sales and distribution of output. The

This ratio determines the operating relationship between operating cost to sales is known
efficiency of the business concern. Operating ratio as operating ratio the ratio calculated as:
measures the amount of expenditure incurred in

Operating Ratio = Cost of Goods Sold + Operating Expenses / Sales × 100
Table No. 4
Table Showing Operating Ratio
(Rupees in Cores)
Year Operating Profit Ratio Ratio
2014-2015 15.09 84.91
2015-2016 17.98 82.02
2016-2017 18.59 81.41
2017-2018 17.68 82.32
2018-2019 15.76 84.24
INTERPRETATION Liquidity ratios are otherwise called as short term

From the above table 4 shows that operating solvency ratios. The important liquidity ratios are
profit for the year 2014-2015 was 84.91 and it is 1. Current Ratio
decreased to 82.02 in 2015-2016. Again the ratio 2. Liquid Ratio
decreased to 81.41 in 2016-2017. On 2017-2018 the 3. Absolute Liquid Ratio
ratio is increased to 82.32 and it moves upward to 1. CURRENT RATIO
84.24 in 2018-2019. It is clear that operating profit of This ratio is used to assess the firm’s ability
Maruti Suzuki motors consistently good in all the to meet its current liabilities. The relationship of
years. current assets to current liabilities is known as current
ratio. The ratio is calculated as:
LIQUIDITY RATIO
Liquidity ratio measure the firm’s ability to pay
off current dues i.e., repayable within a year.
Current Ratio = Current Asset / Current Liabilities

Table No. 5
Table Showing Current Ratio
(Rupees in Cores)
Year Current Asset Current Liabilities Ratio
2014-2015 5199.80 8450.50 0.61
2015-2016 6789.20 10808.30 0.62
2016-2017 6597.40 12742.80 0.51
2017-2018 6704.10 15331.30 0.43
2018-2019 7316.10 14000.70 0.52
INTERPRETATION all financial year. This shows that the company is not
The above table 5 shows that the current ratio in enjoying credit worthiness.
the year 2014-15 was 0.61 and then it is moves
upward to 0.62 in the year 2015-16, next year 2. LIQUID RATIO
onwards it move downward to 0.51 in the year 2016- This ratio is used to assess the firm’s short
17 and it again moves downwards to 0.43 in 2017- term liquidity. The relationship of liquid assets to
2018 and finally in the year 2018-19 it went current liabilities is known as liquid ratio. It is
downwards to 0.52. The normal current ratio is 2:1. otherwise called as quick ratio or acid test ratio. The
The above table shows current ratio lower than 2% in ratio is calculated as:

Liquid Ratio = Liquid Assets / Current Liabilities
Table No. 6
Table Showing Liquid Ratio
(Rupees in Cores)
Year Liquid Asset Current Liabilities Ratio
2014-2015 2513.9 8450.50 0.29
2015-2016 3657.1 10808.30 0.33
2016-2017 3335.2 12742.80 0.26
2017-2018 3543.3 15331.30 0.23
2018-2019 3990.4 14000.70 0.28
INTERPRETATION 3. ABSOLUTE LIQUID RATIO

The above table 6 shows that the liquid ratio It is a modified form of liquid ratio. The
in 2014-2015 was 0.29 then it increased to 0.33 in relationship of absolute liquid assets to liquid
2015-2016. In the year 2016-2017 the ratio was liabilities is known as absolute liquid ratio. This ratio
decreased to 0.26 in 2016-2017 and it is further is also called as super quick ratio. The ratio is
decreased to 0.23 in 2017-2018. In the year 2018- calculated as:
2019 the ratio is 0.28. The company is not having
adequate cash to meet its expenses.
Absolute Liquid Ratio = Absolute Liquid Assets / Liquid Liabilities
Table No. 7
Table Showing Absolute Liquid Ratio
(Rupees in Cores)
Year Absolute Liquid Profit Current Liabilities Ratio
2014-2015 18.30 8450.50 2.16
2015-2016 39.10 10808.30 3.61
2016-2017 13.80 12742.80 1.08
2017-2018 71.10 15331.30 4.63
2018-2019 178.90 14000.70 0.01
INTERPRETATION WORKING CAPITAL
In the above table 7 shows the absolute liquid Working capital is a financial metric which
ratio in 2014-2015 was 2.16 and it moves upward to represents operating liquidity available to a business,
3.61 in 2015-2016. The ratio was decreased to 1.08 in organization, or other entity, including governmental
2016-2017 then it increased gradually to 4.63 in entities. Along with fixed assets such as plant and
2017-2018. The ratio in the year 2018-2019 is 0.01 equipment, working capital is considered a part of
which was least. The ratio is below 1 in 2018-2019 operating capital. Working capital is a financial
and hence the company needs more than its cash measure which calculates whether a company has
reserve to pay-off its current debt. enough liquid assets to pay its bills that will be due in
a year. Working capital can be calculated by
deducting the current liabilities from the current
assets.

Working Capital = Current Assets – Current Liabilities
Table No. 8
Table Showing The Schedule Of Changes In Working Capital For The Year Ended 2015-2016
(Rs. in Crores)
PARTICULARS 2015 2016 INCREASE DECREASE
Current Assets
Inventories 2685.90 3132.10 446.2
Sundry Debtors 1069.80 1322.20 252.4
Cash and Bank 18.30 39.10 20.8
Loans and Advances 1425.80 2295.80 870
Total (A) 5199.80 6789.20
Current Liabilities
Current liabilities 7090.10 9613.80 2523.7
Provisions 1360.40 1194.50 165.9
Total (B) 8450.50 10808.30
Working capital (A-B) -3250.7 -4019.1
Net decrease in working capital 768.4 768.4
Total -3250.7 -3250.7 2523.7 2523.7
(Source: Secondary Data)
INTERPRETATION respectively. The current liability increases to Rs.

Current asset during 2015, 2016 is Rs. 2357.8.
5199.80 and Rs. 6789.20 respectively. The current
asset increases to Rs. 1589.4. A current liability INFERENCE
during 2015, 2016 is Rs. 8450.50 and Rs.10808.30 Net decrease in working capital is Rs. 768.4
Table No. 9
(Rs. in Crores)
Current Assets
Inventories 3132.10 3262.20 130.1
Sundry Debtors 1322.20 1199.20 123
Cash and Bank 39.10 13.80 25.3
Loans and Advances 2295.80 2122.20 173.6
Total (A) 6789.20 6597.40
Current Liabilities
Provisions 1194.50 1247.70 53.2
Total (B) 10808.30 12742.80

Total -4019.1 -4019.1 2256.4 2256.4

Current asset during 2016, 2017 is Rs. 1934.5.
6789.20 and Rs. 6597.40 respectively. The current
asset decreases to Rs. 191.8. A current liability INFERENCE
during 2016, 2017 is Rs.10808.30 and 12742.80 Net decrease in working capital is Rs. 2126.3.

Table No. 10
(Rs. in Crores)
Current Assets
Inventories 3262.20 3160.80 101.4
Sundry Debtors 1199.20 1461.80 262.6
Cash and Bank 13.80 71.10 57.3
Total (A) 6597.40 6704.10
Current Liabilities
Provisions 1247.70 1414.10 166.4
Total (B) 12742.80 15331.30
Total -6145.40 -6145.40 2801.7 2801.7

Current asset during 2017, 2018 is Rs. 6597.40 2588.5
and Rs. 6704.10 respectively. The current asset
increases to Rs. 106.7. A current liability during INFERENCE
2017, 2018 is Rs. 12742.80 and Rs. 15331.30 Net decrease in working capital is Rs. 2481.80.
Table No. 11
(Rs. in Crores)
Current Assets
Inventories 3160.80 3325.70 164.9
Sundry Debtors 1461.80 2310.40 848.6
Cash and Bank 71.10 178.90 107.8
Total (A) 6704.10 7316.10
Current Liabilities
Provisions 1414.10 1297.30 116.8
Total (B) 15331.30 14000.70
Net increase in working capital 1942.6 1942.6
Total -8627.2 -8627.2 2451.9 2451.9
INTERPRETATION
Current asset during 2018, 2019 is Rs. FINDINGS, SUGGESTION AND
6704.10 and Rs. 7316.10 respectively. The current CONCLUSION
asset increases to Rs. 612. A current liability during FINDINGS
2018, 2019 is Rs. 15331.30 and Rs. 14000.70  Gross profit of the company was highest in
respectively. The current liability decreases to Rs. the year 2016-2017 and lowest in the year
1330.6. 2014-2015.
 Net profit of the company was highest in the
INFERENCE year 2016-2017 and lowest in the year 2014-
Net increase in working capital is Rs. 1942.6. 2015.

 Operating profit ratio of the company was REFERENCE

highest in the year 2016-2017 and lowest in 1. Mr. V. Elayabharathi, Mrs. D. Praveena, Mrs. S.
the year 2018-2019. Rathika (2019), “A study on financial
 Operating Ratio of Maruthi Suzuki Motors performance analysis with reference to TNSC
bank, Chennai”, Vol-5 Issue-2 2019, IJARIIE-
is maximum during the year 2014-2015 and
ISSN(0)-2395-4396, pp: 2949-2955.
lowest in the year 2018-2019. 2. Lam Weng Hoe, Lam Weng Siew, Liew Kah Fai
 Current ratio of the company was highest in (2019), “Performance analysis on
the year 2015-2016 and lowest in the year telecommunication companies in Malaysia with
2017-2018. TOPSIS model”, Indonesian journal of electrical
 Quick ratio, highest in the year 2015-2016 engineering and computer science, February
and in the lowest in the year 2017-2018. 2019, Volume 13, No.2, ISSN: 2502-4752, pp:
744-751.
 Absolute liquid ratio of the company was
3. Dr. D. Pathma priya (2019), “A study on
highest in the year 2017-2018 and lowest in financial performance analysis of HDFC
the year 2018-2019. limited”, the research journal of social sciences,
 Working capital was decreased in the year April 2019, Volume 10 No.4, ISSN 0025-1348,
2015 and 2016. pp: 301-311.
 Working capital was decreased in the year
2016 and 2017.
 Working capital was decreased in the year
2017 and 2018.
 Working capital was increased in the year
2018 and 2019.
SUGGESTIONS
 The company can improve its profitability
position by pay off current liabilities.
 In order to improve the stable financial
position of the company current liability can
be reduced by selling of unnecessary assets.
 Net profit of the company can be increased
by reducing operational expenses.
 The company’s profits are huge in the
current year, it is better to declare dividend
to shareholders.
 The working capital of the company in the
year 2018-2019 was increased it has to
maintain the position to increase more profit
by managing debtors effectively.
CONCLUSION
The study undertaken with objective of
profitability of Maruti Suzuki motors. Even though
the profitability condition in the satisfactory level, in
upcoming years the firm should focus on getting of
more profits by considering internal as well as
external factors. There is a fluctuation in the liquidity
position of the company so they have to invest more
amount in current assets in order to improve their
liquidity position hence, if the given suggestion are
implement then the overall efficiency and
profitability of Maruti Suzuki can be improved. The
working capital of the company can be increased by
managing debtors effectively.

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SJIF Impact Factor: 7.001| ISI I.F.Value:1.241| Journal DOI: 10.

36713/epra2016 ISSN: 2455-7838(Online)

A STUDY ON FINANCIAL PERFORMANCE OF

INTRODUCTION financial system and the financial information

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |456 |

INTERPRETATION percentage. During the study period 2014-2015 the

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |457 |

INTERPRETATION average net profit position was 7.5% and is in

Operating Profit Ratio = Operating Profit / Sales × 100

INTERPRETATION downward to 17.68 and further it decreased to 15.76

4. OPERATING RATIO production, sales and distribution of output. The

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |458 |

Operating Ratio = Cost of Goods Sold + Operating Expenses / Sales × 100

INTERPRETATION Liquidity ratios are otherwise called as short term

Current Ratio = Current Asset / Current Liabilities

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |459 |

Liquid Ratio = Liquid Assets / Current Liabilities

INTERPRETATION 3. ABSOLUTE LIQUID RATIO

Absolute Liquid Ratio = Absolute Liquid Assets / Liquid Liabilities

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |460 |

Working Capital = Current Assets – Current Liabilities

INTERPRETATION respectively. The current liability increases to Rs.

Working capital (A-B) -4019.1 -6145.40

INTERPRETATION respectively. The current liability increases to Rs.

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |461 |

INTERPRETATION respectively. The current liability increases to Rs.

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |462 |

 Operating profit ratio of the company was REFERENCE

2020 EPRA IJRD | Journal DOI: https://doi.org/10.36713/epra2016 | www.eprajournals.com |463 |

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