Financial Anylysis of Gem Motors

8/13/2019 Financial Anylysis of Gem Motors

1/31

1.1 INTRODUCTION

Financial Analysis is the process of identifying the financial strengths and weaknesses of the firm by

property-establishing relationship between the items of the Balance Sheet and the Profit and Loss

account. There are arious methods or techni!ues are used in analy"ing financial schedule of change in

working capital flow# cost olume Profit Analysis and $atio Analysis.

MEANING OF FINANCIAL ANALYSIS:-

The meaning of Financial Analysis is also known as analysis refers to the process of determining

according to %eta fund tutored is a process of ealuating the relationship between components parts of

a financial statements to obtain a better understanding of a firm&s position and performance. 'n the

word of %yers( Financial statements analysis is largely a study of relationship among the arious

financial factors in a series of statements(. The purpose of financial statements so as to )udge the

profitability and financial soundness of the firm.

DEVICES OF FINANCIAL ANALYSIS:

There are seeral methods for determining the financial analysis of the company. They are as follows*-

+. ,omparatie Statement

. Trend Analysis

. ,ommon si"e Statement

/. Funds Flow Statement

0. ,ash Flow Statement

1. $atio Analysis

2. ,ost-3olume Profit analysis


2/31

Financial Analysis can be undertaken by management of the firm or by parties out side the firm

4wners# ,reditors# 'nestors and 4thers. The structure of Assets# Liabilities and 4wner&s e!uity and so

on and the Profit 5 Loss account shows the results of operation during a certain period of times in

terms of the reenue obtained during a certain period of times in terms of the reenue obtained and the

cost incurred during the year. Thus# the financial position and operational statement proides a

summari"ed iew of the financial position and operation of the firm.

The Financial Analysis statements are thus an important aid to Financial Analysis.

The first task of the Financial Analyst is to select the information releant to the decisions under

consideration from the total information contained in the financial statements. 'n the brief Financial

Analysis are the process of selection# relation and 6aluation.


3/31

OVERVIEW ABOUT THE AUTOMOBILE SECTOR IN INDIA

The automotie 'ndustry in 'ndia is now working in terms of the dynamics of an open market. %any

)oint entures hae been set up in 'ndia with foreign collaboration. 'ndia ranks )ust behind ,hina with

the world7s second largest population at oer + billion people. Less than + percent of the population

currently owns automobiles# which is a much smaller proportion than the rest of the Southeast Asia

region. 'ndia also has one of the fastest growing economies# and many 8.S. companies iew 'ndia as a

potentially lucratie market. 't is e9pected that the automotie industry will play an important role in

helping the economy to continue this growth. +:2;s. Between +:2; and +:uantitatie

$estriction ?>$@ on imports and tariff structure designed to restrict the market but starting in ;;;#

seeral landmark policy changes like >$ and +;; F' through automotie route were introduced. 'n

;;# ,ore group on Automotie $5 ?,.A.$@ was set up to identify priority areas for automotie

$5 in 'ndia. 'ndian Auto 'ndustry is nd in Two Cheelers# rd in Small ,ars and 0th in ,ommercial

3ehicles among the top +; in Corld. 'ndia is a global hub of automobile industry haing*

D +0 %anufacturers of passenger cars and multi-utility ehicles

D : %anufacturers of commercial ehicles

D +1 %anufacturers of E wheelers

D +/ %anufacturers tractors

D 0 %anufacturers of engines

The eolution of the automotie component industry predictably followed the eolution of the auto

industry itself. Cith the startup of local production of cars# trucks# and two-wheelers in the +:0;s#

many of the associated component manufacturers ?mainly from 6urope@ started operations in 'ndia.


4/31

4er a period of time# many of the ma)or manufacturers had established plants for manufacture or

assembly of parts. These included companies like Bosch ?fuel in)ection systems and spark plugs@ and

%ahle ?pistons@ from ermany= Lucas ?auto electricals@# irling ?brakes@# and Lockheed ?clutches@

from the 8nited Gingdom= and ,hampion ?spark plugs@# Armstrong ?shock absorbers@# and 8nion

,arbide-69ide ?batteries@ from the 8nited States. From the 'ndian perspectie# these units were

primarily intended to aid import substitution. 'n the process# there was gradual transfer of technology

from the parent company. The domestic two-wheeler industry has grown steadily at a ,A$ of


5/31

Following !" #$" To% Ao'o(il" Co'%ni") in In*i:

D Audi

D Ba)a) Auto

D B%C

D ,herolet

D aimler,hrysler ?%ercedes@

D Fiat

D Ford

D eneral %otors

D industan %otors

D ero onda %otors

D yundai %otors

D %ahindra 5 %ahindra

D %aruti 8dyog

D San %otors

D Skoda

D Tata %otors

D Mamaha %otors

Fo!"+)#) ,o! In*in Ao In*&)#!

+. Passenger ehicle market of 'ndia will een cross )apan by selling about 0 million ehicles by ;+2-

+

Documents

Financial Anylysis of Gem Motors