Tata Motors Report

TATA Motors Report
Liquidity
Ratio 2023 2022 2021 2020 2019
1) Current
Ratio 0.45 0.58 0.60 0.53 0.58
2) Quick
Ratio 0.33 0.44 0.43 0.38 0.37
3) Cash Ratio 0.05 0.10 0.16 0.14 0.06
LIQUIDITY RATIOS INTERPRETATION:

The liquidity ratios for Tata Motors indicate its ability to meet short-term obligations.
Current Ratio:
The ratio has decreased from 0.58 in 2022 to 0.45 in 2023. This suggests a potential
reduction in the company's short-term liquidity, as it now has fewer current assets to
cover current liabilities.
Quick Ratio:
The decrease from 0.44 in 2022 to 0.33 in 2023 indicates a decline in the company's
ability to cover immediate obligations with its most liquid assets. This might signal a
decrease in short-term financial health.
Cash Ratio:
The drop from 0.10 in 2022 to 0.05 in 2023 implies a reduced capacity to cover
short-term liabilities with cash alone. This may indicate a need for improved cash
management or a potential liquidity challenge.
The decreasing trend in these ratios suggests a possible liquidity strain for Tata Motors
in the recent period, which might warrant further investigation into the company's
financial health and management strategies.
Solvency
Ratio 2023 2022 2021 2020 2019
1) Debt To
Equity Ratio 0.84 1.17 1.14 1.14 0.79
2) Debt Ratio 0.31 0.36 0.33 0.33 0.29

3) Equity
Ratio 0.36 0.31 0.29 0.29 0.36
4) Interest
Coverage
Ratio 1.61 0.23 -0.08 -2.61 2.34
SOLVENCY RATIOS INTERPRETATION:

The solvency ratios for Tata Motors assess its long-term financial stability and ability to
meet long-term obligations.
Debt to Equity Ratio:

The decrease from 1.17 in 2022 to 0.84 in 2023 indicates a reduction in the company's
reliance on debt relative to equity. This suggests a healthier financial structure with a
lower level of debt financing.
Debt Ratio:
The decrease from 0.36 in 2022 to 0.31 in 2023 implies a lower proportion of total assets
financed by debt. This indicates a positive trend towards a more conservative use of
debt in the capital structure.
Equity Ratio:
The increase from 0.31 in 2022 to 0.36 in 2023 suggests a higher proportion of total
assets financed by equity. This can be viewed positively as it signifies a stronger equity
position, which can enhance the company's financial stability.
Interest Coverage Ratio:

The improvement from 0.23 in 2022 to 1.61 in 2023 indicates a better ability to cover
interest expenses with operating income. However, it's important to note that the ratio
was negative in 2021 and 2020, suggesting that in those years, the company faced
challenges in covering interest costs with its earnings.
The solvency ratios for Tata Motors show positive signs, including a decreasing debt
burden and improving interest coverage. However, close attention should be paid to the
fluctuations in the interest coverage ratio and the reasons behind the negative values in
previous years.
Profitability 2023 2022 2021 2020 2019

Ratio
1) Net Profit
Margin 4.15% -2.94% -7.94% -16.59% 2.92%
2) Return on
Investment 9.97% 1.08% 0.37% -7.19% 11.58%
3) Return on
Equity 12.14% -6.98% -12.57% -39.64% 9.12%
4) Return on
Asset 4.42% -2.18% -3.68% -11.65% 3.32%
PROFITABILITY RATIOS INTERPRETATION:

The profitability ratios for Tata Motors measure its ability to generate profit relative to
various financial metrics.
Net Profit Margin:

The positive net profit margin of 4.15% in 2023, compared to negative margins in the
previous two years, signals an improvement in the company's ability to convert sales into
profits. However, it's essential to monitor whether this trend continues and the reasons
behind the negative margins in 2022 and 2021.
Return on Investment (ROI):

The increase from 1.08% in 2022 to 9.97% in 2023 indicates a better return on the
company's overall investments. This suggests improved efficiency in capital utilization,
potentially driven by increased profitability or better cost management.
Return on Equity (ROE): The positive ROE of 12.14% in 2023, compared to negative
values in the previous years, indicates a positive return for shareholders. However,
caution is needed due to the negative ROE in 2022 and 2021, which implies potential
challenges in generating returns for equity holders.
Return on Assets (ROA):

The positive ROA of 4.42% in 2023, compared to negative values in the previous years,
suggests an improvement in the company's ability to generate profit from its assets. This
can be a positive sign for operational efficiency.
Tata Motors has shown positive trends in profitability ratios in 2023, but it's crucial to
investigate the reasons behind the negative values in the previous years to ensure
sustained improvement in financial performance.
Investor
Ratio 2023 2022 2021 2020 2019
1) Earning
Per Share 7.12 -3.63 -6.26 -20.26 5.95
2) Price /
Earning Ratio 57.89 -14.52 -8.16 -2.04 -2.05
3) Percentage
of Retained
Earning 100% 100% 100% 100% 100%
4) Dividend
Payout Ratio 0 0 0 0 0
5) Book Value
Per Share 58.66 52.07 49.77 51.11 65.26
INVESTOR RATIOS INTERPRETATION:

The investor ratios for Tata Motors provide insights into the company's financial
performance and its attractiveness to investors.
Earnings Per Share (EPS):

The positive EPS of 7.12 in 2023, compared to negative values in the previous years,
indicates improved profitability on a per-share basis. Investors may view this positively
as it represents the portion of the company's profit allocated to each outstanding share.
Price/Earnings Ratio (P/E Ratio):

The P/E ratio of 57.89 in 2023 suggests that investors are willing to pay a higher multiple
for each dollar of earnings. However, the negative P/E ratios in 2022, 2021, and 2020
might be indicative of losses, making the company less attractive to investors during
those periods.
Percentage of Retained Earnings:

The consistent 100% retention of earnings implies that the company has chosen to
reinvest all profits back into the business rather than distributing them as dividends. This
strategy can be seen as a long-term investment in company growth.
Dividend Payout Ratio: The zero dividend payout ratio across all years indicates that
the company has not distributed any earnings as dividends. This aligns with the 100%
retention of earnings mentioned earlier.
Book Value Per Share:

The increase in book value per share from 52.07 in 2022 to 58.66 in 2023 suggests an
improvement in the company's net asset value per share. This can be seen as a positive
indicator for investors.
While the positive EPS, book value per share, and consistent retention of earnings are
positive signals, the negative P/E ratios in previous years might raise concerns for some
investors. Further analysis is recommended to understand the underlying factors
contributing to these ratios and the overall investment proposition of Tata Motors.

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TATA Motors Report

3) Cash Ratio 0.05 0.10 0.16 0.14 0.06

LIQUIDITY RATIOS INTERPRETATION:

2) Debt Ratio 0.31 0.36 0.33 0.33 0.29

SOLVENCY RATIOS INTERPRETATION:

Debt to Equity Ratio:

Interest Coverage Ratio:

Profitability 2023 2022 2021 2020 2019

PROFITABILITY RATIOS INTERPRETATION:

Net Profit Margin:

Return on Investment (ROI):

Return on Assets (ROA):

INVESTOR RATIOS INTERPRETATION:

Earnings Per Share (EPS):

Price/Earnings Ratio (P/E Ratio):

Percentage of Retained Earnings:

Book Value Per Share:

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