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Saudi Journal of Economics and Finance (SJEF)
Volume-3 | Issue-05 | 188-193
Original Research Article
Ratio Analysis: A Study on Financial Performance of Eicher Motors
Bhupender Kumar Som, Himanshu Goel, Jasmeet Kaur
Published : May 30, 2019
DOI : 10.21276/sjef.2019.3.5.2
Abstract
Financial analysis is the process of reviewing the financial position of the company. Ratio analysis is extensively used by companies as a tool to predict the profitability and survival in the competitive environment. This study aims at analysing the financial soundness of Eicher Motors using ratios. The primary objective of this study is to evaluate the performance of Eicher motors over the last decade. The reference period used for the study is 11 years starting from 2008 to 2018. Ratios calculated for this purpose are Return on capital employed, net worth, Debt to Equity, Gross profit Margin, asset turnover, Interest Coverage Ratio, Earnings Per share. EBIDTA/Turnover. Secondary data was collected from Annual reports of Eicher Motors to derive relevant information. OPM has indirect relation with company’s financials. The results reveal that the company has performed reasonably well in the last decade. The company has earned high returns as return on capital employed was highest in the year 2016 to 78.64 per cent from 15.9 per cent in 2008. Increasing EPS shows that the company is earning huge profits and thereby benefitting their equity shareholders. Declining debt to equity has a positive impact on the firm’s performance as it depicts that company is using less debt to meet its financial obligations. It also reveals that they will be able to pay off all their debts in the future.
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