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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:

oInventory Turnover

oDebtor Turnover Ratio

oAsset Turnover Ratio

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0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

HERO MOTOCORP BAJAJ AUTO

47.33

42.80 43.8840.84

37.33

0

28.64 28.27

32.8030.97 31.43

55.10

122.63

162.08

117.09

50.72

0

27.45

37.41

51.7749.66

94.51

3.52 4.28 4.85 4.85 4.490

2.74 3.07 3.46 3.43 2.59

Inventory TurnoverDebtor Turnover

Assets Turnover

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S.NO RATIO OBSERVATION

1InventoryTurnover

Ratio

Analysis signifies that in each financial year's ratio, Hero

Motocorp is stronger in comparision to Bajaj Auto.

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

2

Debtor

Turnover

Ratio

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

3

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

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VALUATION RATIOS

The following Valuation Ratios have been

calculated for Hero Motocorp and Bajaj

Auto

oEarning Per Share Ratio

oDividend Per Share Ratio

oPrice Earning Ratio

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0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

HERO MOTOCORP BAJAJ AUTO

64.19

111.77

96.55

119.09

106.07

43.37

117.69115.42

103.81105.18

20

110

105

45

60

0

22

40 40

45 45

EPS Ratio

DPS Ratio

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ProfitabilityRatio

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 sameratio from a previous period is indicative that

the company is doing well.

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The following Valuation Ratios have been

calculated for Hero Motocorp and Bajaj

Auto

Gross Profit Margin

Net Profit Margin

Return on Equity

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0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013

MARG

IN

YEAR

BAJAJ AUTO

Gross Profit Margin Net Profit Margin ROE

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013

MARGIN

YEAR

HERO MOTOCORP

Gross Profit Margin Net Profit Margin ROE

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LEVERAGE RATIOS

Leverage relates to how much debt it has on itsbalance sheet

The more debt a company has, the riskier its

stock is.

Ways to measure are :-

Debt equity ratio

Interest coverage ratio

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0

0.05

0.1

0.15

0.2

0.250.3

0.35

0.4

0.45

0.5

2009 2010 2011 2012 2013

Bajaj Auto

debt equity ratio

0

0.05

0.1

0.15

0.2

0.250.3

0.35

0.4

0.45

0.5

2010 2011 2012 2013

Hero moto corp.

debt equity ratio

0

1000

2000

3000

4000

5000

6000

7000

8000

2009 2010 2011 2012 2013

interest coverage

0

200

400

600

800

1000

1200

1400

2009 2010 2011 2012 2013

interest coverage

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Liquidity ratios

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

Current Ratio Quick Ratio

Hero moto corp.Bajaj auto

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THANK YOU