HAMDARD INSTITUTE OF MANAGEMENT SCIENCES

FINANCIAL RATIO ANALYSIS OF INDUS

MOTOR AND PAK SUZUKI
PRESENTED BY
IMRAN ZULFIQAR
SYED MUHAMMAD FAZIL SHAH
RASHID FAIZ FAROOQUI
ALI HUSSAIN
PRESENTED TO:
MR. NAZIM ABDUL MUTALIB

MBA WEEKEND 2ND SEMESTER

JAN , 2016

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

ACKNOWLEDGEMENT

In the name of Allah, the most beneficent and most merciful who gave us
strength and knowledge to complete this report. This report is a part of our
course Financial Management. This has proved to be a great experience.
We would like to express our gratitude to our teacher Mr. NAZIM ABDUL
MUTALIB who gave us this opportunity to fulfill this report.

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VISION OF INDUS MOTOR COMPANY LTD.

"IMCs Vision is to be the most respected and successful enterprise,

delighting customers with a wide range of products and solutions in the
automobile industry with the best people and the best technology".
The most respected.
The most successful.
Delighting customers.
Wide range of products.
The best people.
The best technology.

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MISSION OF INDUS MOTOR COMPANY LTD.

IMCs mission is reflected in companys slogan

ACT # 1
Action, Commitment and Teamwork to become #1 in Pakistan.
Mission of Toyota is to provide safe & sound journey. Toyota is developing
various new technologies from the perspective of energy saving and
diversifying energy sources. Environment has been first and most important
issue in priorities of Toyota and working toward creating a prosperous society
and clean world.

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COMPANY PROFILE

Indus Motor Company Limited (IMC) was incorporated in 1989 as a joint

venture company between the House of Habib of Pakistan, Toyota Motor
Corporation and Toyota Tsusho Corporation of Japan. The Company
manufactures and markets Toyota brand vehicles in Pakistan. The main
product offerings include several variants of the flagship Corolla in the
passenger cars category, Hilux in the light commercial vehicles segment
and the Fortuner Sports Utility Vehicle. The manufacturing facility and
offices are located at a 105 acre site in Port Qasim, Karachi, while the

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product is delivered to end customers nationwide through a strong network
of 41 independent 3S Dealerships spread across the country. In its 25 years
history since inception, IMC has sold more than 600,000 CBU/CKD vehicles
and has demonstrated impressive growth, in terms of volumetric increase
from a modest beginning of 20 vehicles per day production in 1993 to 240
units daily at present through the development of human talent embracing
the Toyota Way of quality and lean manufacturing. Over the years, IMC has
made large scale investments in enhancing its own capacity and in meeting
customer requirements for new products. Today, Corolla is the largest selling
automotive brand model in Pakistan and it also has the distinction of being #
1 in Toyotas Asian market. The Company invests heavily in training its 2,300
plus workforce of team members & management employees and creating a
culture of high performing empowered teams working seamlessly across
processes in search of quality and continuous improvement. The core values
of the Company encourage employees to pursue high standards of business
ethics and safety; communicating candidly by giving bad news first and to
respect people. The bi-annual TMC morale surveys show that employees rate
IMC high on work environment and level of job satisfaction. The Company
has played a major role in the development of the entire value chain of the
local auto industry and is proud to have contributed in poverty alleviation at
the grass root level by nurturing localization that, in turn, has directly
created thousands of job opportunities and transferred technology to over 60

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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vendors supplying parts. IMC is also a major tax payer and significant
contributor to the GOP exchequer.

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

PAK SUZUKIS VISION

To be recognized as a leading organization that values Customers needs

and provides motoring solutions with strong customer care.

PAK SUZUKIS MISSION

Strive to market value packed products that meet customers

expectations.
Provide a platform where our stakeholders passionately contribute, invest
and excel.
Make valuable contribution to Social development of Pakistan.

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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COMPANY PROFILE

Pak Suzuki Motor Company Limited was formed as a joint venture between
Pakistan Automobile Corporation and Suzuki Motor Corporation (SMC) Japan. The Company was incorporated as a public limited company in August
1983 and started commercial operations in January 1984. The initial share
holding of SMC was 12.5% which was gradually increased to 73.09%.
Pak Suzuki is pioneer in Automobile Business having the most modern and
the largest manufacturing facilities in Pakistan with an Annual production
capacity of 150,000 vehicles. The vehicles produced include cars, small vans,
Pickups, Cargo vans and Motorcycle. Pak Suzuki holds more than 50% Market
Share.
Following the aggressive policy of Indigenization, Suzuki vehicles have a
healthy local content upto 72%. This was made possible by strong support of
our vendors.

Pak Suzuki has the largest Dealers network offering 3S (Sales, Service and Spare Parts)

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facilities across Pakistan.
Caring for the Environment Pak Suzuki was pioneer in introduction of Factory
fitted CNG vehicles.
Pak Suzuki always endeavors to go aggressively for the sound development
of the society by increasing motorization, industrialization and creating job
opportunities thus improving the peoples living standards with the combined
efforts of all the dealers, vendors and Pak Suzuki employees.
Pak Suzuki is also exporting Suzuki Ravi pickup, Liana and components to
Bangladesh and Europe thus earning precious foreign exchange for the
country.

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RATIO ANALYSIS
A statistic has little value in isolation. Hence, a profit figure of Rs.100 million
is meaningless unless it is related to either the firms turnover (sales
revenue) or the value of its assets. Accounting ratios attempt to highlight the
relationships between significant items in the accounts of a firm. Financial
ratios are the analysts microscope; they allow them to get a better view of
the firms financial health than just looking at the raw financial statements.

Ratios are used by both internal and external analysts

Internal uses
Planning
Evaluation of management
External uses
Credit granting
Performance monitoring
Investment decisions
Making of policies

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CATEGORIES OF FINANCIAL RATIOS

The accounting ratios can be grouped in to five categories:
1. Liquidity Ratios shows the extent to which the firm can meet its
financial obligations.
2. Asset Management Ratios shows that how effectively the firm is
managing its assets.
3. Debt Management Ratios shows the extent to which a firm uses
debt financing or financial leverages.
4. Profitability Ratios relates profits to sales and assets.
5. Market Value Ratios are a measure of the return on investment.

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CURRENT RATIO

Rati
o
Curr
ent
Rati
o

Formula

Rati
o
Curr
ent
Rati
o

Formula

CASE

Current
Assets/C
urrent
Liabilitie
s
(Rs. In
Million)

Current
Assets/C
urrent
Liabilitie
s
(Rs. In
Million)

Calcula
tion
170604
51/
554798
0

Value
2012
3.08

Calculati Value
on
2013
1837236 2.98
5/
6166119

Calculat Value
ion
2014
231075 2.53
73/
911747
9

Calcula
tion
240889
75/
103959
19

Value
2012
2.32

Calculati Value
on
2013
2218760 2.99
1/
7412684

Calculat Value
ion
2014
200383 3.35
12/
597603
4

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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Current Ratio
4
3.5

3.35

3.08

2.98

3
2.5

2.99
2.53

2.32

2
1.5
1
0.5
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
The current ratio helps investors and creditors understand the liquidity of a
company and how easily that company will be able to pay off its current
liabilities. This ratio expresses a firm's current debt in terms of current
assets. So a current ratio of 4 would mean that the company has 4 times
more current assets than current liabilities.
A higher current ratio is always more favorable than a lower current ratio
because it shows the company can more easily make current debt payments.
In above year wise comparison, Current ratio of Pak Suzuki is on decreasing
trend which shows The company can find difficulty to pay its debts in future.
But on the other way, Indus motor is showing a significant trend in current
ratio.
The current ratio also sheds light on the overall debt burden of the company.
If a company is weighted down with a current debt, its cash flow will suffer.

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QUICK RATIO

Rati
o
Quic
k
Rati
o

Formula

Rati
o
Quic
k

Formula

CASE

Quick
Assets/C
urrent
Liabilitie
s
(Rs. In
Million)

Quick
Assets/C

Calcula
tion
645933
9/
554798
0

Value
2012
1.16

Calculati Value
on
2013
7582973 1.23
/
6166119

Calculat Value
ion
2014
807846 0.89
2/
911747
7

Calcula
tion
165384
39/

Value
2012
1.59

Calculati Value
on
2013
1429349 1.93
3/

Calculat Value
ion
2014
155539 2.60
10/

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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Rati
o

urrent
Liabilitie
s
(Rs. In
Million)

103959
19

7412684

597603
4

Quick Ratio
3

2.6

2.5
1.93

2
1.5

1.59
1.16

1.23
0.89

1
0.5
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
The acid test ratio measures the liquidity of a company by showing its ability
to pay off its current liabilities with quick assets. If a firm has enough quick
assets to cover its total current liabilities, the firm will be able to pay off its
obligations without having to sell off any long-term or capital assets.
Higher quick ratios are more favorable for companies because it shows there
are more quick assets than current liabilities. A company with a quick ratio of
1 indicates that quick assets equal current assets. This also shows that the
company could pay off its current liabilities without selling any long-term

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assets. An acid ratio of 2 shows that the company has twice as many quick
assets than current liabilities.
Indus motor quick ratios for 3 years are with changing values with increasing
trend which is better for company performance for paying its without selling
its long term assets. While, Pak Suzuki is showing the mix trend of ratios with
slight increase in 2013 and then decrease in 2014.

DEBT-EQUITY RATIO

Rati
o
Deb
tEqui
ty
Rati
o

CASE

Formula
Total
Debts/Sh
are
holders
Equity
(Rs. In
Million)

Calcula
tion
554798
0/
158008
84

Value
2012
0.35

Calculati Value
on
2013
6166119 0.35
/
1764515
8

17

Calculat Value
ion
2014
911747 0.47
7/
192366
82

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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Rati
o
Quic
k
Rati
o

Formula
Quick
Assets/C
urrent
Liabilitie
s
(Rs. In
Million)

Calcula
tion
103959
19/
170138
58

Value
2012
0.61

Calculati Value
on
2013
7412684 0.42
/
1769270
8

Calculat Value
ion
2014
597603 0.30
4/
199156
52

Debt-Equity Ratio
0.7

0.61

0.6
0.5
0.4

0.47

0.42
0.35

0.35

0.3

0.3
0.2
0.1
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
A lower debt to equity ratio usually implies a more financially stable
business. Companies with a higher debt to equity ratio are considered more
risky to creditors and investors than companies with a lower ratio. Unlike
equity financing, debt must be repaid to the lender. Since debt financing also
requires debt servicing or regular interest payments, debt can be a far more

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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expensive form of financing than equity financing. Companies leveraging
large amounts of debt might not be able to make the payments.
So, Indus Motor have high debt-equity ratios in 2012 and 13 But It has a
good control on it in year 2014. Pak Suzuki is nicely manageable to control its
debt to equity ratio to make it within limits.

AVERAGE COLLECTION PERIOD

Rati
o
Av.
Coll
ecti

CASE

Formula
A/c
Rec./Net
Sales

Calcula
tion
757108
/
162587

Value
2012
4.65

Calculati Value
on
2013
919206/ 6.48
141837

19

Calculat Value
ion
2014
108982 7.31
3/
149069

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI
on
Peri
od

Per Day
(Rs. In
Million)

Rati
o
Av.
Coll
ecti
on
Peri
od

Formula
A/c
Rec./Net
Sales
Per Day
(Rs. In
Million)

Calcula
tion
141403
2/
213785

Value
2012
6.61

Calculati Value
on
2013
1730921 11.58
/
149525

Calculat Value
ion
2014
119664 7.55
1/
158510

Average Collection Period

14
11.58

12
10
8
6

6.61

7.31

6.48

7.55

4.65

4
2
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
The average collection period ratio measures the average number of days
clients take to pay their bills, indicating the effectiveness of the businesss
credit and collection policies. This ratio also determines if the credit terms

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are realistic. It is calculated by dividing receivables by total sales and
multiplying the product by 360 (days in the period).
A short collection period means prompt collection and better management of
receivables. A longer collection period may negatively affect the short-term
debt paying ability of the business in the eyes of analysts.
Year wise comparison shows the better average collection period for Pak
Suzuki than Indus Motor.

INVENTORY TURN OVER

Ratio

CASE

Formul
a

Calcula
tion

Value
2012

Calculati Value
on
2013

21

Calculat Value
ion
2014

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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Invent
ory
Turn
Over

COGS/
Av.
Invent
ory
(Rs. In
Million
)

561853
97/
105621
94

5.32

4781882 4.46
0/
1072645
7

494812
48/
149760
01

Rati Formula
o
Invent COGS/
ory
Av.
Turn
Invent
Over
ory
(Rs. In
Million
)

Calcula
tion
704007
88/
752957
1

Value
2012
9.35

Calculati Value
on
2013
5797203 7.35
8/
7883309

Calculat Value
ion
2014
512700 11.47
40/
446946
0

Inventory Turn Over

14
11.47

12
9.35

10

7.35

8
6

5.32

4.46
3.3

4
2
0

2012

2013
Pak Suzuki

CASE

Column1

22

2014

3.30

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI
Analysis
Inventory turnover is a measure of how efficiently a company can control its
merchandise, so it is important to have a high turn. This shows the company
does not overspend by buying too much inventory and wastes resources by
storing non-salable inventory. It also shows that the company can effectively
sell the inventory it buys.
This measurement also shows investors how liquid a company's inventory is.
Think about it. Inventory is one of the biggest assets a retailer reports on
its balance sheet. If this inventory can't be sold, it is worthless to the
company. This measurement shows how easily a company can turn its
inventory into cash.
Creditors are particularly interested in this because inventory is often put up
as collateral for loans. Banks want to know that this inventory will be easy to
sell.
The comparison shows that Indus motor has high inventory turnover than
Pak Suzuki.

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ASSETS TURN OVER

Ratio

Formul
a
Net
Sales/T
otal
Assets
(Rs. In
Million
)

Calcula
tion
585311
37/
213617
29

Value
2012
2.74

Calculati Value
on
2013
5106133 2.14
3/
2386043
6

Calculat Value
ion
2014
536649 1.89
47/
283941
52

Rati Formula
o
Asset Net
s Turn Sales/T
Over
otal
Assets
(Rs. In
Million
)

Calcula
tion
769626
00/
275851
61

Value
2012
2.79

Calculati Value
on
2013
6382907 2.54
5/
2512955
7

Calculat Value
ion
2014
570636 2.19
62/
260564
48

Asset
s Turn
Over

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Assets Turn Over
3

2.74

2.79
2.54

2.5

2.19

2.14
1.89

2
1.5
1
0.5
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
This ratio measures how efficiently a firm uses its assets to generate sales,
so a higher ratio is always more favorable. Higher turnover ratios mean the
company is using its assets more efficiently. Lower ratios mean that the
company isn't using its assets efficiently and most likely have management
or production problems.
Indus motor have high ratios than Pak Suzuki. That means It is using its
assets more efficiently than Pak Suzuki to generate sales.

OPERATING PROFIT MARGIN

Ratio
Opera
ting

CASE

Formul
a
Net
Profit/

Calcula
tion
978022
/

Value
2012
0.017

Calculati Value
on
2013
1849357 0.036
/

25

Calculat Value
ion
2014
192149 0.036
4/

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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Profit
Margi
n

Net
Sales
(Rs. In
Million
)

585311
37

Rati Formula
o
Opera Net
ting
Profit/
Profit Net
Margi Sales
n
(Rs. In
Million
)

Calcula
tion
430271
5/
769626
42

Value
2012
0.056

5106133
3

536649
47

Calculati Value
on
2013
3357445 0.053
/
6382907
5

Calculat Value
ion
2014
387354 0.068
2/
570636
22

Operating Profit Margin

0.08
0.07

0.07
0.06

0.06

0.05

0.05
0.04

0.04

0.04

0.03
0.02

0.02

0.01
0

2012

2013
Pak Suzuki

Column1

Analysis
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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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The profit margin ratio directly measures what percentage of sales is made
up of net income. In other words, it measures how much profits are produced
at a certain level of sales.
This ratio also indirectly measures how well a company manages its
expenses relative to its net sales. That is why companies strive to achieve
higher ratios. They can do this by either generating more revenues why
keeping expenses constant or keep revenues constant and lower expenses.
Indus motor has a high operating profit margin ration as compared to Pak
Suzuki.

NET PROFIT MARGIN

Ratio
Net
Profit
Margi
n

CASE

Formul
a
Gross
Profit/
Net
Sales
(Rs. In
Million
)

Calcula
tion
234574
0/
585311
37

Value
2012
0.040

Calculati Value
on
2013
3242513 0.064
/
5106133
3

27

Calculat Value
ion
2014
418369 0.078
9/
536649
47

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

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Rati Formula
o
Net
Gross
Profit Profit/
Margi Net
n
Sales
(Rs. In
Million
)

Calcula
tion
656185
4/
769626
42

Value
2012
0.085

Calculati Value
on
2013
5857037 0.092
/
6382907
5

Calculat Value
ion
2014
579358 0.102
2/
570636
22

Net Profit Margin

0.12
0.1
0.1

0.09

0.09

0.08

0.08
0.06

0.06
0.04

0.04

0.02
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
Net profit margin ratio is a profitability ratio that measures how profitable a
company can sell its inventory. It only makes sense that higher ratios are
more favorable. Higher ratios mean the company is selling their inventory at
a higher profit percentage.
High ratios can typically be achieved by two ways. One way is to buy
inventory very cheap. If retailers can get a big purchase discount when they

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buy their inventory from the manufacturer or wholesaler, their gross margin
will be higher because their costs are down.

Indus motor has high net profit margin ratio than Pak Suzuki.

EARNINGS PER SHARE

Ratio

Formu
la
Net
Incom
e/Outs
tandin
g
Share
s
(Rs. In
Million
)

Calcula
tion
978022
/
822998
51

Value
2012
11.88

Calculati Value
on
2013
1849357 22.5
/
8229985
1

Calculat Value
ion
2014
192189 23.4
4/
822998
51

Rati Formula
o
Earnin Net
gs Per Incom
Share
e/Outs
tandin
g
Share
s
(Rs. In
Million

Calcula
tion
430271
5/
78600

Value
2012
54.74

Calculati Value
on
2013
3357545 42.72
/
78600

Calculat Value
ion
2014
387345 49.28
2/
78600

Earnin
gs Per
Share

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)

Earnings Per Share

60

54.74
49.28

47.72

50
40
30
20

23.4

22.5
11.88

10
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
Earnings per share is the same as any profitability or market prospect ratio.
Higher earnings per share is always better than a lower ratio because this
means the company is more profitable and the company has more profits to
distribute to its shareholders.
Although many investors don't pay much attention to the EPS, a higher
earnings per share ratio often makes the stock price of a company rise. Since
so many things can manipulate this ratio, investors tend to look at it but
don't let it influence their decisions drastically.

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Indus motors has a high and remarkable rate of Earnings Per Share than
Suzuki year wise.

Dividend Payout Ratio

Ratio

Formula Calcula
tion
Dividen 205750
ds/
/
Net
978022
Income*
100
(Rs. In
Million)

Value
2012
21

Calculati Value
on
2013
329199/ 18
1849357

Calculat Value
ion
2014
411499/ 21
192189
4

Formula Calcula
tion
Divid Dividen 271520
endP ds/
0/
ayout Net
430271
Ratio Income* 5
100
(Rs. In
Million)

Value
2012
59.46

Calculati Value
on
2013
1965000 58.52
/
3357545

Calculat Value
ion
2014
231870 59.86
0/
387345
2

Divid
end
Payo
ut
Ratio

Ratio

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Dividend Payout Ratio
70
59

60

59

58

50
40
30
20

21

21

18

10
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
Since investors want to see a steady stream of sustainable dividends from a
company, the dividend payout ratio analysis is important. A consistent trend
in this ratio is usually more important than a high or low ratio.
Since it is for companies to declare dividends and increase their ratio for one
year, a single high ratio does not mean that much. Investors are mainly
concerned with sustainable trends. For instance, investors can assume that a
company that has a payout ratio of 20 percent for the last ten years will
continue giving 20 percent of its profit to the shareholders.
Conversely, a company that has a downward trend of payouts is alarming to
investors. For example, if a company's ratio has fallen a percentage each
year for the last five years might indicate that the company can no longer

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SUZUKI
afford to pay such high dividends. This could be an indication of poor
operating performance.
Indus Motors are giving more dividends than Pak Suzuki.

BOOK RETURNS ON EQUITY

Rati
o
Boo
k
ROE

Formula

Calcula
tion
Net
978022
Income/S /
hare
158008
holders 84
Equity
(Rs. In
Million)

Value
2012
0.619

Calculati Value
on
2013
1849357 0.105
/
1764515
8

Calculat Value
ion
2014
192189 0.10
4/
192366
82

Rati
o
Boo

Formula

Value
2012
0.253

Calculati Value
on
2013
3357545 0.190

Calculat Value
ion
2014
387345 0.194

CASE

Net

Calcula
tion
430271

33

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI
k
ROE

Income/S 5/
hare
170138
holders 58
Equity
(Rs. In
Million)

/
1769270
8

2/
199156
52

Book Returns on Equity

0.7

0.62

0.6
0.5
0.4
0.25

0.3
0.2

0.11

0.1
0

0.19

0.19

2012

0.1

2013
Pak Suzuki

2014

Column1

Analysis
Return on equity measures how efficiently a firm can use the money from
shareholders to generate profits and grow the company. Unlike other return
on investment ratios, ROE is a profitability ratio from the investor's point of
viewnot the company. In other words, this ratio calculates how much
money is made based on the investors' investment in the company, not the
company's investment in assets or something else.
That being said, investors want to see a high return on equity ratio because
this indicates that the company is using its investors' funds effectively.

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI
Higher ratios are almost always better than lower ratios, but have to be
compared to other companies' ratios in the industry. Since every industry has
different levels of investors and income, ROE can't be used to compare
companies outside of their industries very effectively.
In 2012, Pak Suzuki has high ROE than Indus, But in year 2013-14, Indus
motor performed well in utilizing their shareholders investment to grow
profits and more sales.

RETURNS ON ASSETS

Rati
o
ROA

CASE

Formula

Calcula
tion
Net
978022
Income/T /
otal
213617
Assets
29
(Rs. In
Million)

Value
2012
0.046

Calculati Value
on
2013
1849357 0.076
/
2386043
6

35

Calculat Value
ion
2014
192189 0.068
4/
283941
52

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

Rati
o
ROA

Formula

Calcula
tion
Net
430271
Income/T 5/
otal
275851
Assets
61
(Rs. In
Million)

Value
2012
0.156

Calculati Value
on
2013
3357545 0.134
/
2512955
7

Calculat Value
ion
2014
387345 0.149
2/
280564
48

Returns on Assets
0.18
0.16

0.16

0.15
0.13

0.14
0.12
0.1
0.08

0.08
0.06

0.07

0.05

0.04
0.02
0

2012

2013
Pak Suzuki

2014

Column1

Analysis
The return on assets ratio measures how effectively a company can turn earn
a return on its investment in assets. In other words, ROA shows how
efficiently a company can covert the money used to purchase assets into net
income or profits.

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI
It only makes sense that a higher ratio is more favorable to investors
because it shows that the company is more effectively managing its assets
to produce greater amounts of net income. A positive ROA ratio usually
indicates an upward profit trend as well. ROA is most useful for comparing
companies in the same industry as different industries use assets differently.
For instance, construction companies use large, expensive equipment while
software companies use computers and servers.
Year wise comparison shows the better position of Indus motors over Pak
Suzuki.

Conclusion
After all the findings, it is concluded that financial ratios are the basic and most important
part of any business. It describes the firms financial position. As the data indicates that INDUS
MOTORS is an international brand and has expanded its business on the large geographical area

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37

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI
and also offers the large range of products, but on the other side PAK SUZUKI offers the limited
range of the products.
From the financial statements it is clear that the financial position of the INDUS
MOTORS is far better than PAK SUZUKI as it is more preferred by the customers and also an
internationally distributed. It also has less risk. It gives more return because it gains more profit
than PAK SUZUKI. On the other hand PAK SUZUKI deals with the limited products in a limited
geographical area but on the basis of financial ratios Indus Motors has a better financial position
and also has an opportunity to expand its business. Both the companies have some opportunities
and threads and they need to work on it.

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

CASE

40

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

CASE

41

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

CASE

42

FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

CASE

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FINANCIAL RATIO ANALYSIS OF INDUS MOTOR AND PAK

SUZUKI

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