A

“Analysis of Financial Statement” PROJECT

SUBMITTED TO

SAVITRIBAI PHULE PUNE UNIVERSITY

IN PARTIAL FULFILLMENT FOR THIRD YEAR OF
BACHELOR OF BUSINESS ADMINISTRATION (BBA)

SUBMITTED BY
Sumit Joshi, 44

UNDER THE GUIDANCE OF

Mrs. Jayashree Venkatesh Assistant professor

THROUGH

NESS WADIA COLLEGE OF COMMERCE, PUNE.

2021-22

1
 DECLARATION

I, the undersigned, hereby declare that the “Analysis of Financial

Statement” project written and submitted by me to The Savitribai Phule

Pune University in partial fulfillment for TYBBA Third year of Bachelor
of Business Administration (BBA) for the Analysis of Financial

Statement under the supervision of Mrs. Jayashree Venkatesh. Is my

original work and the conclusions drawn therein are based on the material
collected and observation made by me.

Place: Pune Sumit Joshi

Date: 05/02/2022 SYBBA 44

2
 ACKNOLEDGEMENT

Primarily I would thank god for being able to complete this project with success.
Then I would like to thank Mrs. Jayashree Venkatesh whose valuable guidance
has been the ones that helped me patch this project and make it full proof success
his suggestion and his instruction of the project.

Sumit Joshi
TYBBA 44

3
 Modern Education Society’s
NESS WADIA COLLEGE OF COMMERCE, PUNE

Certificate

This is to certify that Sumit Joshi , student of TYBBA “ Analysis of

Financial Statement " project and submitted reports in partial

fulfillment for Third year of Bachelor of Business Administration.

He/ She has worked and completed his report under our guidance
and direction. His/ Her report is found to be satisfactory.

Mrs. Jayashree Venkatesh

Assistant professor Principal

4
 Internal Examiner External Examiner

Sr. no Index page no

1) Apollo Tyres Balance sheet 6

2) Industry and Company Profile 8
3) Board of directors 12
4) Management board 13
5) Apollo Tyres information 14
6) Ratio analysis information 16
7) Current Ratio 17
8) Quick Ratio 18
9) Cash Ratio 19
10) Debt equity ratio 21
11) Total assets to debt ratio 23
12) Proprietary Ratio 25
13) Inventory Turnover Ratio 26
14) Assets Turnover Ratio 28
15) Debtors Turnover Ratio 31
16) Earning Reataintion Ratio 32
17) Conclusion 36
18) Bibliography 37

5
 Previous Years »
Apollo Tyres

Consolidated Balance Sheet ------------------- in Rs. Cr.

-------------------
Mar-21 Mar-20 Mar-19 Mar-18 Mar-17

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 63.51 57.21 57.21 57.21 50.9
Total Share Capital 63.51 57.21 57.21 57.21 50.9
Reserves and Surplus 11,379.62 9,872.81 9,982.61 9,719.47 7,239.05
Total Reserves and Surplus 11,379.62 9,872.81 9,982.61 9,719.47 7,239.05
Total Shareholders Funds 11,443.13 9,930.01 10,039.8 9,776.67 7,289.95
2
NON-CURRENT LIABILITIES
Long Term Borrowings 4,808.18 5,147.88 4,166.33 3,700.22 2,155.90
Deferred Tax Liabilities [Net] 920.88 747.69 823.19 838.86 743.54
Other Long Term Liabilities 2,004.73 1,543.26 652.59 799.02 581.72
Long Term Provisions 155.79 167.71 147.06 76.47 67.82
Total Non-Current Liabilities 7,889.58 7,606.54 5,789.16 5,414.58 3,548.99
CURRENT LIABILITIES
Short Term Borrowings 303.34 1,432.00 554.67 745.45 1,088.63
Trade Payables 2,806.70 2,309.05 2,066.48 2,447.08 1,731.76
Other Current Liabilities 3,332.40 1,697.97 1,501.55 1,431.34 1,265.98
Short Term Provisions 288.22 274.41 251.72 338.13 370.82
Total Current Liabilities 6,730.66 5,713.43 4,374.42 4,962.00 4,457.18
Total Capital And Liabilities 26,063.38 23,249.9 20,203.4 20,153.2 15,296.1
9 0 5 2
ASSETS
NON-CURRENT ASSETS
Tangible Assets 15,434.73 14,495.6 10,883.8 9,528.68 6,038.17
7 9
Intangible Assets 764.47 739.28 670.81 668.32 475.98
Capital Work-In-Progress 1,106.51 1,621.90 1,525.79 2,268.22 2,872.34
Intangible Assets Under 0 20.08 13.51 35.85 42.75
Development
Fixed Assets 17,305.72 16,876.9 13,093.9 12,501.0 9,429.23
3 9 7
Non-Current Investments 19.55 19.42 6.02 3.45 1.75
Deferred Tax Assets [Net] 218.86 44.5 52.51 95.57 62.93
6
Long Term Loans And Advances 0 0 0 1.99 2.41
Other Non-Current Assets 610.32 614.21 962.97 446.13 604.24
Total Non-Current Assets 18,374.81 17,768.5 14,314.8 13,254.2 10,277.9
1 1 9 2
CURRENT ASSETS
Current Investments 90.07 0 0 1,339.05 394.44
7
 INDUSTRY AND COMPANY PROFILE

2.1 INDUSTRY PROFILE

2.1.1 HISTORY OF TYRE

The most important application of rubber relates to the transport sector of which
tyre industry consumers over 60% of the total rubber produced. After the invention
of wheel by Sumerians 5000 years ago it was refined over the ages. In the year
1845, R W Thompson invested the predecessor of the pneumatic tyres of the
modern age. From there, the tyre industry has grown as one of the largest
industries in the world.
A tyre is a ring shaped vehicle component that covers the wheel’s rim to protect it
and enable better vehicle performance. Most tyres, such as those for automobiles
and bicycles, provide traction between the vehicle and the road while providing a
flexible cushion that absorbs shock. The materials of modern pneumatic tyres are
synthetic and rubber, natural rubber, fabric and wire, along with carbon black and
other chemical compounds. They consist of a thread and a body. The thread
provides traction while the body provides containment for a quantity of
compressed air. Before rubber was developed, the first version of tyre were simply
bands of metal fitted around wooden wheels to prevent wear and tear. Early rubber
tyre were ssolid Today the majorities of tyre are pneumatic inflatable structures,
Comprising dough-nut shaped body of chords and wires encased in rubber and
generally filled with compressed air to form an inflatable cushion. Pneumatic tyres
are used on many types of vehicles, including cars, bicycles, motor cycles, buses,
trucks, heavy equipment and aircraft. Metal tyres are still used on locomotive and
railcars, and solid rubber tyres are still used in various non-automotive
applications, such as some casters, carts, lawn movers. The manufacturing of
automobile tyres as an ancillary for the development of automobile sector came
into being in India during 1930’s when the Dunlop India Ltd. The first tyre

8
manufacturing transactional company started its operation in1935 at Sahaganj in
West Bengal.

2.1.2 INDIAN SCENARIO

The domestic tyre industry is estimated to have grown by 10%-12% during 2015-
1016, supposed by 7%-7.5% growth in OEM and 12%-15% growth in the
replacement segment. ICRA expects the tyre industry to report a growth of 4%-8%
over the next 3 years. After recording a sequential annual decline of 5.5% during
the period 2012-2015, grew by a sharp 19% in 2015-16 led primarily by surge in
2W tyres. It is expected that he rising trend of imports to continue over the near
term. The anticipated spike in T&B imports in 2015-16 with the February-15
sunset of the erstwhile Anti-Dumping Duty on T&B imports is also expected to
dive imports. Exports on the other hand, de-grew by 3% to 4%, especially in Africa
and Parts of Asia. ICRA expected 4%-5% de-growth in tyre exports from India
during 2015-16. That said, the levy of preliminary ADD US on Chinese tyres may
provide some opportunities for Indian tyre export scenario.
The industry is currently experiencing one of the best periods recording sharp
expansion in profits driven by low input costs. Crude linked derivatives such as
synthetic rubber, carbon black and rubber chemicals too, despite rising Traded
lower in line with crude oil prices. However, it is expected that depleting NR stock
and demand driven inflation to lead to higher inputs costs over the next 12-18
months which would lead to correction in profit margins to more sustainable
levels. Over the years, MRF has been the dominant player in the country by virtue
of its strong product capabilities apart from focused branding efforts backed by a
deep distributions network panning across India and steady exports. However,
several players have challenged its market share in recent years through prudent
brand management backed by sizeable investments in product
development/capacities. For the fiscal 2015-2016, the industry recorded a 6.9%
YoY revenue growth of following 5.8% growth in the preceding fiscal. With the
decline in NR prices, the industry wide operating and net margins expanded by
9
50bs each to 14.3% and 6.4% respectively. Industry capital structure improved to
0.6X in March 2015 while on the coverage front, interest coverage improved from
5.9x to 6.9x and total debt to OPBDITA improved from 1.9x to 1.7x for the same
period under comparison.

COMPANY PROFILE
Apollo Tyres Ltd. (ATL) was incorporated on 28 th September, 1972 as a Public
Limited Company and obtained Certificate of Commencement of Business on
October 24 1972. The company was promoted by Bharat Steel Tubes LLtd Raunaq
International Pvt. Ltd., Raunaq & Co. Pvt. Ltd., Raunaq Singh, Mathew T.
Marattukalam and Jacob Tomas. Apollo Tyres Ltd. With its corporate headquarters
in Gurgaon, India, is in the business of manufacture and sale of tyre since its
inception in 1972. Over the years, the co. Has grown manifold, establishing its
footprints across the globe. The company has manufacturing units in India and
Netherlands. It is also setting up a new manufacturing facility in Hungary, with a
planned investment of $475 million. The company markets its products under its
two global brands – Apollo and Vredestein, and its products are available in over
100 countries through a vast network of branded, exclusive and multi-product
outlets. at the end of the financial year 2021, the company clocked a turnover of
US$ 2.34 billion, backed by a global workforce of approximately 19,000
employees.

Vision and Values

Vision
A significant player in the global tyre industry and a brand of choice, providing
customer delight and continuously enhancing stakeholder value.

10
Values

 Customer First
 Business Ethic
 Care for Society
 Empowerment
 Communicate Openly
 One Family

Share Holding Pattern as on 31.03.2022

11
BOARD OF DIRECTORS

12
MANAGEMENT BOARD

13
Apollo Tyres Offices Corporate Headquarter
Apollo House, 7 Institutional Area, Sector 32, Gurgaon 122001, India
Registered Office
Apollo Tyres Ltd. 3rd floor, Areekal Mansion, Panampilly Nagar, Kochi
682036, Kerala, India.
Manufacturing Locations
India
Kalamassery
Perambra
Baroda
PRODUCT PROFILE – APOLLO TYRE BRANDS
When Apollo Tyres was established in1972, it was a single brand enterprise.
Over the years, as the organization grew and expanded its footprint across
geographies, several brands either joined or were born into its fold. Today, the
company owns 5 key brands – Apollo, Kaizen, Maloya, Regal and Vredestein.
While brands Apollo and Vredestein comprise of tyres across categories - from
passenger and commercial vehicle to off highway tyres, the remaining 3 brands
are more product category specific. Regal and Kaizen focus on the truck-bus
tyre segment while Maloya continues to operate within the passenger vehicle
tyre category.
Each brand from the company is equipped with its own distinctive visual
language and targeted at a specific customer need. This approach has enabled
Apollo Tyres to provide a wide range of products for various applications,
across geographies – ending with a delighted customer.

14
Brands - Apollo
Driven by attention to safety, Apollo tyres are manufactured in India and are
available across almost all categories, including commercial and passenger
vehicles, farm and industrial.
The core idea behind brand Apollo is safety. At all times Apollo is willing to
travel that extra mile to deliver what its stakeholders need. Apollo enables
individuals to maximize their own potential, as reflected in its tagline
“gothedistance”Brand Apollo Tyres’ genesis dates back to the mid-1970s,
when the first corporate identity was unveiled. It stood for passion, aggression
and determination to achieve excellence in all spheres. Popularly known as the
unending road, the logo mirrored the long journey the company would make for
its evolution as a synamic, multi-cultural and multi-location entity. This identity
served Apollo’s dream and ambition for over 30 years.
Brands – Vredestein
With a heritage older than 100 years, brand Vredestin’s unique story is best
captured through its tagline “Designed To Protect You”, which is also its brand
promise. A Winning combination of Dutch dedication and Italian elegance,
Vredestin is best known for its premium high performance passenger vehicle
tyres, especially in the winter tyre segment.
Moreover, it offers a wide array of equally exclusive and performance driven
tyres for the agriculture, industrial and bicycle categories. Manufactured out of a
state-of-the-art facility in Enschede, in The Netherlands, its products are sold
largely in the aftermarket. Vredestin tyres can be found adorning a whole range
of luxury vehicles across the European Union, the US, the Middle East and

15
China.
ANALYSIS OF WORKING CAPITAL
Analysis is the process of critically examining in detail accounting information
given the financial statement. For this purpose individual items are studied and
their inter relationship with other related figures are established. It is treated in a
way so as to offer a full diagnostics of the profitability and financial positions of
the concerned firm.
The analysis of working capital can be conducted through a number of devices
such as:
a) RATIO ANALYSIS
b) FUNDFLOW ANALYSIS
c) TREND ANALYIS

RATIO ANALYSIS
According to J Batty “ the term accounting ratio is used to describe significant
relationships between figures shown on a balance sheet, in a profit and loss
account, in a budgetary control system or in any part of the accounting
organisation.
Ratio analysis is a quantitative procedure of obtaining a look into firm’s functional
effciency,liquidity,revenues,and profitability by analysing it’s financial records and
Statements. It helps in interpreting the financial statements in order to make a
decision. It analyse various pieces of financial information in the financial
statements of a Business. It can be used to determine whether a company’s
financial health is on upward or downward trend. However ratio analysis is not an
end to itself. It is only a means of better understanding of financial strength or
weakness of a firm.

 Liquidity ratios
16
The short term financial position of a firm is measured by analysing the liquidity
position. The term liquidity means the ability to produce cash. A firm is said to be
liquid when it is capable of meeting it’s short term obligations in time. It depends
on its ability to convert current assets into cash and maintain regular cash flows.
The important liquidity ratios are:

1. Current Ratio
2. Quick Ratio
3. Absolute Liquid Ratio

1) Current ratio
Current ratio is the ratio of a firm’s current assets to current liabilities. It shows the
relationship between current assets and current liabilities. It is also known as
working capital ratio. It is obtained by dividing total current assets by total current
liabilities.
The ideal current ratio is 2:1.
current assets
CURRENT RATIO = current liabilitie

A. Current Assets = Stock, debtor, cash and bank, receivables, loan and
advances, and other current assets.
B. Current Liability = Creditor, short-term loan, bank overdraft, outstanding
expenses, and other current liability.
Table 1.1 (Amount in Crores)

YEAR Current Current Current

Liabilitie
Assets s Ratio

2020-2021 7688.5 6730.66 1.14

17
 6

5481.4
2019-2020 8 5713.43 0.94

5888.5
2018-2019 6 4374.42 1.34

6898.9
2017-2018 6 4962 1.39

2016-2017 5018.2 4457.18 1.12

(Source: Compiled from published annual reports of the company)

Current Ratio
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Current Ratio

2) Acid test ratio/ quick ratio/ liquidity ratio

This ratio establishes a relationship between quick/liquid assets and
current liabilities. It measures the firm’s capacity to pay off current
obligations immediately. This ratio is also known as acid test ratio.
18
The standard quick ratio 1:1 is considered satisfactory.
QUICK ASSETS
QUICK RATIO = CURRENT LIABILITIES

Quick Assets = Current Assets – inventory – Prepaid expenses

Table 1.2 (Amount in Crores)

YEAR Quick Current Quick

Liabilitie
Assets s Ratio

2020- 4370.0
2021 3 6730.66 0.64

2019- 2274.5
2020 6 5713.43 0.39

2018-
2019 2404.8 4374.42 0.54

2017- 3953.6
2018 1 4962 0.79

2016- 2372.6
2017 7 4457.18 0.53

3) Cash Ratio
The cash ratio is a liquidity ratio that measures a firm’s ability to pay
19
 Quick Ratio
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Quick Ratio

off its current liabilities with only cash and cash equivalents. No other
current assets can be used to pay off current debts.
CASH∧BANK BALANCE
CASH RATIO = CURRENT LIABILITIES

Table 1.3 (Amount in Crores)

YEAR Cash and Current Cash

bank
balance Liabilities Ratio

2020-
2021 2145.79 6730.66 0.31

2019-
2020 749.6 5713.43 0.13

20
 2018-
2019 562.65 4374.42 0.12

2017-
2018 599.19 4962 0.12

2016-
2017 336.92 4457.18 0.075

Cash Ratio
0.35

0.3

0.25

0.2

0.15

0.1

0.05

0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Cash Ratio

2) Solvency ratio
A solvency ratio is a key metric used to measure an enterprise’s ability to meet its
long-term debt obligations and is used often by prospective business lenders. A
solvency ratio indicates whether a company’s cash flow is sufficient to meet
its long-term liabilities and thus is a measure of its financial health.
21
Solvency ratio includes 4 Ratios:
1. Debt equity ratio
2. Total assets to debt ratio
3. Proprietary ratio
4. Interest coverage ratio

4). Debt equity ratio

Used in corporate and personal finance, the debt-to-equity (D/E) ratio is a metric
that evaluates your company’s financial leverage. In other words, it lets you
determine how much a company finances its operations via debt as opposed to
owned funds. It’s referred to as the personal debt-to-equity ratio when used with
personal financial statements.
The debt-to-equity ratio helps you determine if there’s enough shareholder equity
to pay off debts if your company were to face a decrease in profits. Investors tend
to modify the ratio to center on long-term debt since risks vary when you look
beyond the short-term, or they use other formulas to determine a company’s short-
term leverage.
Keep in mind that the debt-to-equity ratio calculation risks changes incurred from
earnings, losses and other adjustments. A company’s debt-to-equity ratio also
varies across industries, as amounts of debt change by sector.

Debt Long Term Debt

Formula: equity ∨ Share holders funds

A higher debt-to-equity ratio often signifies that a company poses a higher risk to
its shareholders, increasing the possibility of bankruptcy if business slows.
Essentially, it means the company has heavily relied on debt for its growth. While
this has the potential to create more earnings and therefore benefits for
shareholders, share values may fall if the cost of debt exceeds incoming earnings.

22
In contrast, a low debt-to-equity ratio signifies a lower amount of debt financing
through lenders as opposed to equity funding from shareholders. Typically, a debt-
to-equity ratio below 1.0 is considered healthy, but it depends on the industry.
However, aiming for one below 2.0 is ideal.
A ) long term debts : these includes ‘ long term borrowings ‘ and ‘long term
provision ‘ which mature after one year for example , debenture , mortgage loan ,
bank loan , loan from financial institutions and public deposits etc.
B) Shareholder’s funds: includes share capital, reserves and surplus.

Table 1.4 (Amount in Crores)

Shareholder Debt
YEAR Long term s equity
Debt funds ratio

2020-2021 2004.73 11443.13 0.17

2019-2020 1543.26 9930.01 0.15

2018-2019 652.59 10039.82 0.065

2017-2018 799.02 9776.67 0.081

2016-2017 581.72 7289.95 0.079

23
 Debt equity ratio
0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Debt equity ratio

5) Total assets to debt ratio

A company’s balance sheet will show its total assets as well as its total debt at the
present moment. These metrics can be pitted against each other in a debt-to-assets
ratio. A debt-to-assets ratio is a type of leverage ratio that compares a company’s
debt obligations (both short-term debt and long-term debt) to the company’s total
assets. It is calculated using the following formula:

Total debt
Debt-to-Assets Ratio = Total Assets

If the debt-to-assets ratio is greater than one, a business has more debt than assets.
If the ratio is less than one, the business has more assets than debt. A company
with a high ratio of total debt to total assets has a relatively high degree of leverage
(DoL) and may lack the financial flexibility of a business where assets outweigh
debts.
A company’s debt-to-assets ratio can reveal information about its capital structure
and offer a window into the company’s leverage. The more leveraged a business is,
the more it relies on its lenders for continued solvency. A company with high debt
can suffer when interest rates rise, forcing the company to channel its revenue
toward loan repayments instead of paying salaries or buying new equipment.
24
Table 1.5 (Amount in Crores)

YEAR Totat Total Debt to

Assets
Debt Assets ratio

2020-2021 8735.39 26023.38 0.33

2019-2020 7256.69 23249.99 0.31

2018-2019 5027.01 20203.4 0.25

2017-2018 5761.02 20153.25 0.28

2016-2017 5038.84 15296.12 0.33

Debt to Assets ratio

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Debt to Assets ratio

25
When a company’s assets exceed its total amount of debt, the company enjoys
more financial flexibility. A small business with lower debt can pay higher salaries
and expand more aggressively since it does not need to spend a lot of money
paying down debt. On the other hand, a reasonable amount of debt can benefit a
company. Loans provide immediate cash flow, and cash can be spent on expanding
a business.

4. Proprietary Ratio
It is primarily the ratio between the proprietor’s funds and total assets. This ratio is
calculated with the help of the following formula:

Proprietors funds
Proprietary Ratio = total assets

Interpretation
This ratio indicates the proportion of proprietor’s funds used for financing the total
assets. As a very rough measure, it is suggested that 2/3 rd to 3/4th of the total assets
should be financed through the proprietor’s funds, while the balance may be
financed through borrowings. A high ratio will indicate high financial strength but
a very high ratio will indicate that the firm is not using external funds adequately.

Table 1.6 (Amount in Crores)

YEAR Proprietor Total Proprietary

26
 s
Funds Assets Ratio

2020-2021 11443.13 26023.38 0.44

2019-2020 9930.01 23249.99 0.42

2018-2019 10039.82 20203.4 0.49

2017-2018 9776.67 20153.25 0.48

2016-2017 7289.95 15296.12 0.47

Proprietary Ratio
0.5

0.48

0.46

0.44

0.42

0.4

0.38
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Proprietary Ratio

6)Inventory Turnover Ratio

Inventory turnover is a financial ratio showing how many times a company has
sold and replaced inventory during a given period. A company can then divide the

27
days in the period by the inventory turnover formula to calculate the days it takes
to sell the inventory on hand.
Calculating inventory turnover can help businesses make better decisions on
pricing, manufacturing, marketing, and purchasing new inventory.
Inventory Turnover Formula and Calculation

COGS
Inventory Turnover= AverageValueOfInventory

Where:
COGS=Cost of goods sold

Inventory turnover measures how fast a company sells inventory. A low

turnover implies weak sales and possibly excess inventory, also known as
overstocking. It may indicate a problem with the goods being offered for sale or be
a result of too little marketing.

A high ratio, on the other hand, implies either strong sales or insufficient
inventory. The former is desirable while the latter could lead to lost business.

Table 1.6 (Amount in Crores)

YEAR Inventory

28
 tunrnover
ratio

2020-2021 5.65

2019-2020 6.12

2018-2019 6.02

2017-2018 6.13

2016-2017 5.74

Inventory tunrnover ratio

6.2
6.1
6
5.9
5.8
5.7
5.6
5.5
5.4
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Inventory tunrnover ratio

7) Assets Turnover Ratio

29
The asset turnover ratio measures the value of a company’s sales or revenues
relative to the value of its assets. The asset turnover ratio can be used as an
indicator of the efficiency with which a company is using its assets to generate
revenue.
The higher the asset turnover ratio, the more efficient a company is at generating
revenue from its assets. Conversely, if a company has a low asset turnover ratio, it
indicates it is not efficiently using its assets to generate sales.
Formula and Calculation of the Asset Turnover Ratio

Where:
Total Sales=Annual sales total
Beginning Assets=Assets at start of year
Ending Assets=Assets at end of year

The asset turnover ratio uses the value of a company’s assets in the denominator of
the formula. To determine the value of a company’s assets, the average value of
the assets for the year needs to first be calculated.
 Locate the value of the company’s assets on the balance sheet as of the start
of the year.
 Locate the ending balance or value of the company’s assets at the end of the
year.
 Add the beginning asset value to the ending value and divide the sum by
two, which will provide an average value of the assets for the year.
 Locate total sales—it could be listed as revenue—on the income statement.
30
  Divide total sales or revenue by the average value of the assets for the year.

Typically, the asset turnover ratio is calculated on an annual basis. The higher the
asset turnover ratio, the better the company is performing, since higher ratios imply
that the company is generating more revenue per dollar of assets.
The asset turnover ratio tends to be higher for companies in certain sectors than in
others. Retail and consumer staples, for example, have relatively small asset bases
but have high sales volume—thus, they have the highest average asset turnover
ratio. Conversely, firms in sectors such as utilities and real estate have large asset
bases and low asset turnover.
Since this ratio can vary widely from one industry to the next, comparing the asset
turnover ratios of a retail company and a telecommunications company would not
be very productive. Comparisons are only meaningful when they are made for
different companies within the same sector.

Table 1.7
(Amount in Crores)

YEAR Assets
tunrnov
er ratio

2020-
0.93
2021

2019-
0.99
2020

2018-
1.23
2019

31
 2017-
1.23
2018

2016-
1.46
2017

Assets tunrnover ratio

1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Assets tunrnover ratio

8) Debtors Turnover Ratio = The Debtors Turnover Ratio also called as

Receivables Turnover Ratio shows how quickly the credit sales are converted into
the cash. This ratio measures the efficiency of a firm in managing and collecting
the credit issued to the customers.
One important thing that needs to be taken care of is, generally the companies use
total sales in the place of net sales, which gives an inflated turnover ratio. Thus,
32
while calculating this ratio, only the net credit sales is to be taken into
consideration.

Ideally, a company compares its debtors turnover ratio with the companies that
have similar business operations and revenue and lie within the same industry The
formula to compute Debtors Turnover Ratio is:
Net Credit Sales
Debtors Turnover Ratio = Average Account Receivable .

Table 1.8 (Amount

in Crores)

YEAR Debtors
tunrnov
er ratio

2020-
19.94
2021

2019-
18.07
2020

2018-
18.58
2019

2017-
21.99
2018

2016-
26.3
2017

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 Debtors tunrnover ratio
30

25

20

15

10

0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Debtors tunrnover ratio

9) Earning Reataintion Ratio

The retention ratio is the proportion of earnings kept back in the business as
retained earnings. The retention ratio refers to the percentage of net income that is
retained to grow the business, rather than being paid out as dividends. It is the
opposite of the payout ratio, which measures the percentage of profit paid out to
shareholders as dividends. The retention ratio is also called the plowback ratio.
Companies that make a profit at the end of a fiscal period can use the funds for a
number of purposes. The company’s management can pay the profit to
shareholders as dividends, they can retain it to reinvest in the business for growth,
or they can do some combination of both. The portion of the profit that a company
chooses to retain or save for later use is called retained earnings.
Retained earnings is the amount of net income left over for the business after it has
paid out dividends to its shareholders. A business generates earnings that can be
positive (profits) or negative (losses).
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Retained earnings are similar to a savings account because it’s the cumulative
collection of profit that’s retained or not paid out to shareholders. Profit can also be
reinvested back into the company for growth purposes.

The retention ratio helps investors determine how much money a company is
keeping to reinvest in the company’s operation. If a company pays all of its
retained earnings out as dividends or does not reinvest back into the business,
earnings growth might suffer. Also, a company that is not using its retained
earnings effectively has an increased likelihood of taking on additional debt or
issuing new equity shares to finance growth.

As a result, the retention ratio helps investors determine a company’s reinvestment

rate. However, companies that hoard too much profit might not be using their cash
effectively and might be better off had the money been invested in new equipment,
technology, or expanding product lines.
New companies typically don’t pay dividends since they’re still growing and need
the capital to finance growth. However, established companies usually pay a
portion of their retained earnings out as dividends while also reinvesting a portion
back into the company.
How to Calculate the Retention Ratio
The formulas for the retention ratio are
Retained Earning
Retention Ratio= Net Income

The retention ratio is typically higher for growth companies that are experiencing
rapid increases in revenues and profits. A growth company would prefer to plow
earnings back into its business if it believes that it can reward its shareholders by
increasing revenues and profits at a faster pace than shareholders could achieve by
investing their dividend receipts.
Investors may be willing to forego dividends if a company has high growth
prospects, which is typically the case with companies in sectors such as technology
and biotechnology.
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The retention rate for technology companies in a relatively early stage of
development is generally 100%, as they seldom pay dividends. But in mature
sectors such as utilities and telecommunications, where investors expect a
reasonable dividend, the retention ratio is typically quite low because of the high
dividend payout ratio.
The retention ratio may change from one year to the next, depending on the
company’s earnings volatility and dividend payment policy. Many blue chip
companies have a policy of paying steadily increasing or, at least, stable dividends.
Companies in defensive sectors such as pharmaceuticals and consumer staples are
likely to have more stable payout and retention ratios than energy and commodity
companies, whose earnings are more cyclical.

Table 1.9 (Amount in Crores)

YEAR Earning
Retaintion
Ratio

2020-2021 19.94

2019-2020 18.07

2018-2019 18.58

2017-2018 21.99

2016-2017 26.3

36
 Earning Retaintion Ratio
30

25

20

15

10

0
2020-2021 2019-2020 2018-2019 2017-2018 2016-2017

Earning Retaintion Ratio

37
 CONCLUSION
The study was conducted to evaluate the working capital management of Apollo
Tyres Ltd. On the basis of secondary data collected from the annual reports of the
company For five years starting from 2016-2017 to 2020-2021 data was analysed
using ratio Analysis and cash flow statement. Through analysing this data it is
found out that the Company has enough cash and cash equivalents to meet it’s
current obligations. Here All the ratios are not up to the ideal ratio , and also most
of the ratios are showing a Downward trend. Hence the company needs to improve
it’s working capital position. To conclude optimum capital is necessary for the
smooth running of the Business. The working capital management is a very
important aspect. The Management need to adopt efficient working capital policies
to overcome this position.
The observe concludes that there may be sizeable distinction within side the
overall performance assessment of Apollo Tyres in phrases of liquidity,
profitability and hobby ratios managerial performance role. Financial overall
performance is fundamental instrument, which affords all records approximately
the economic role and operational performance of the business enterprise. It finish
that The business enterprise has to take suitable steps to manipulate the price,
boom the extent of income, earningswithin side the destiny years.

38
 BIBLIOGRAPHY

Books
 Annual Reports of Apollo Tyres Ltd.
 Analysis of Financial Statement Nirali Prakashan July 2021

WEBSITES
➢ www.apollotyres.com

➢ www.moneycontrol.com

➢ www.wikipedia.org

➢ www.bseindia.co

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