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    Specific Project 1 and 2 On Heromotocorp

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    Hero MotoCorp is one of the largest two-wheeler manufacturers in India and worldwide. Its net sales and profits declined in the financial year ending March 2022 compared to the previous year, with net sales down 4.5% and profit after tax down 15.2%. Its cash flow from operating activities also decreased substantially year-over-year, indicating weaker earnings performance. Key financial ratios like return on equity and return on capital employed witnessed a drop as well, suggesting lower profitability.

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    Specific Project 1 and 2 On Heromotocorp

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    chokeplayer15
    193 views7 pages
    Hero MotoCorp is one of the largest two-wheeler manufacturers in India and worldwide. Its net sales and profits declined in the financial year ending March 2022 compared to the previous year, with net sales down 4.5% and profit after tax down 15.2%. Its cash flow from operating activities also decreased substantially year-over-year, indicating weaker earnings performance. Key financial ratios like return on equity and return on capital employed witnessed a drop as well, suggesting lower profitability.

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    SPECIFIC PROJECT 1 AND 2 ON HEROMOTOCORP

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    Hero MotoCorp is one of the largest two-wheeler manufacturers in India and worldwide. Its net sales and profits declined in the financial year ending March 2022 compared to the previous year, with net sales down 4.5% and profit after tax down 15.2%. Its cash flow from operating activities also decreased substantially year-over-year, indicating weaker earnings performance. Key financial ratios like return on equity and return on capital employed witnessed a drop as well, suggesting lower profitability.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    193 views7 pages

    Specific Project 1 and 2 On Heromotocorp

    Uploaded by

    chokeplayer15
    Hero MotoCorp is one of the largest two-wheeler manufacturers in India and worldwide. Its net sales and profits declined in the financial year ending March 2022 compared to the previous year, with net sales down 4.5% and profit after tax down 15.2%. Its cash flow from operating activities also decreased substantially year-over-year, indicating weaker earnings performance. Key financial ratios like return on equity and return on capital employed witnessed a drop as well, suggesting lower profitability.

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    of 7

    ABOUT COMPNAY

    Hero MotoCorp Limited (formerly Hero Honda) is


    Indian multinational motorcycle and scooter manufacturer
    headquartered in New Delhi. The company is one of the largest two-
    wheeler manufacturers in the world,[3][link expired] as well as in
    India, where it has a market share of about 37.1% in the two-wheeler
    industry.[3][4] As of 27 May 2021, the market capitalization of the
    company was ₹59,600 crore (US$7.5 billion).[5]
    HERO MOTOCORP Income Statement 2021-22

    No. of Mths Year Ending 12 Mar-21* 12 Mar-22* % Change

    Net Sales Rs m 309,592 295,513 -4.5%

    Other income Rs m 5,579 5,550 -0.5%

    Total Revenues Rs m 315,171 301,063 -4.5%

    Gross profit Rs m 40,995 34,448 -16.0%

    Depreciation Rs m 7,151 6,895 -3.6%

    Interest Rs m 464 531 14.4%

    Profit before tax Rs m 38,959 32,572 -16.4%

    Tax Rs m 9,133 7,291 -20.2%

    Profit after tax Rs m 29,826 25,281 -15.2%

    Gross profit margin % 13.2 11.7

    Effective tax rate % 23.4 22.4

    Net profit margin % 9.6 8.6

    HERO MOTOCORP Balance Sheet as on March 2022

    No. of Mths Year Ending 12 Mar-21* 12 Mar-22* % Change

    Networth Rs m 153,974 158,222 2.8

    Current Liabilities Rs m 65,045 55,176 -15.2

    Long-term Debt Rs m 452 362 -19.9

    Total Liabilities Rs m 240,204 233,150 -2.9

    Current assets Rs m 113,705 105,722 -7.0

    Fixed Assets Rs m 126,499 127,428 0.7

    Total Assets Rs m 240,204 233,150 -2.9

    Key Ratio Analysis


    No. of Mths Year Ending 12 Mar-21* 12 Mar-22*

    Current ratio x 1.7 1.9

    Debtors’ Days Days 3 3

    Interest coverage x 84.9 62.3

    Debt to equity ratio x 0.0 0.0

    Return on assets % 12.6 11.1

    Return on equity % 19.4 16.0

    Return on capital employed % 25.5 20.9

    Ratio Analysis for HERO MOTOCORP

    Solvency Ratios

    Current Ratio: The company's current ratio improved and stood at 1.9x during
    FY22, from 1.7x during FY21. The current ratio measures the company's ability to
    pay short-term and long-term obligations.

    Interest Coverage Ratio: The company's interest coverage ratio deteriorated and
    stood at 62.3x during FY22, from 84.9x during FY21. The interest coverage ratio of a
    company states how easily a company can pay its interest expense on outstanding
    debt. A higher ratio is preferable.

    Profitability Ratios

    Return on Equity (ROE): The ROE for the company declined and down at 16.0%
    during FY22, from 19.4% during FY22. The ROE measures the ability of a firm to
    generate profits from its shareholders capital in the company.

    Return on Capital Employed (ROCE): The ROCE for the company declined
    and down at 20.9% during FY22, from 25.5% during FY21. The ROCE measures the
    ability of a firm to generate profits from its total capital (shareholder capital plus
    debt capital) employed in the company.

    Return on Assets (ROA): The ROA of the company declined and down at 11.1%
    during FY22, from 12.6% during FY21. The ROA measures how efficiently the
    company uses its assets to generate earnings.
    HERO MOTOCORP Cash Flow Statement 2021-22

    No. of months 12 12

    Particulars Year Ending Mar-21 Mar-22 % Change

    Cash Flow from Operating Activities Rs m 41,105 21,037 -48.8%

    Cash Flow from Investing Activities Rs m -22,893 -2,220 -

    Cash Flow from Financing Activities Rs m -18,518 -19,753 -

    Net Cash Flow Rs m -307 -936 -

    HERO MOTOCORP Cash Flow Statement Analysis

    HERO MOTOCORP's cash flow from operating activities (CFO) during FY22 stood
    at Rs 21 billion on a YoY basis.
    Cash flow from investing activities (CFI) during FY22 stood at Rs -2 billion on a YoY
    basis.
    Cash flow from financial activities (CFF) during FY22 stood at Rs -20 billion on a
    YoY basis.
    Overall, net cash flows for the company during FY22 stood at Rs -936 million from
    the Rs -307 million net cash flows seen during FY21.

    What does the cash flow statement of HERO MOTOCORP reveal?

    The cash flow statement is the financial statement that presents the cash inflows and
    outflows of a company during a given period of time.

    This statement is one of the most useful tools for judging a company's liquidity position.
    The ratios and parameters in this statement helps test a company's financial health.

    The cash flow statement of HERO MOTOCORP reveals:

    Cash flow from operations decreased in FY22 and stood at Rs 21,037 m as compared
    to Rs 41,105 m in FY21.
    Cash flow from investments increased in FY22 and stood at Rs -2,220 m as
    compared to Rs -22,893 m in FY21.
    Cash flow from financial activity decreased in FY22 and stood at Rs -19,753 m as
    compared to Rs -18,518 m in FY21.

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