+ 44 20 8144 3706Introduction
The JLR place is one of the fastest growing automobile company in the UK market. In the present research work ratio analysis of the firm is done and performance is evaluated. Further, investments that the company makes in its business are also evaluated deeply. At the end of the research study, reasons are identified due to which firm will be able to make long term investment in its business. Jaguar and Land Rover and their subsidiaries are collectively known as “JLR” and this company is subsidiary of Tata Motors. Under this Company, different divisions are designing, development, manufacturing and marketing of high performance luxurious saloons, four- wheel- drive off- road vehicles and specialist sports cars.
Ratio analysis:
• ROCE: ROCE ratio of JLR PLC was negative in the year 2019 -2.2% and in the year 2018 ratio value was 6.2%. The decline is observed in the ratio value due to the slowdown in the Chinese market and other major global markets (Jaguar Land Rover Automotive PLC., 2019). Moreover, material cost cover 64% of revenue, which is also responsible for low ROCE.
• Current ratio: The current ratio value decreases slightly from 1 to 0.9 in the year 2019. This reflects that JLR PLC is able to pay 90% of its current liability on time. It does not have working capital to meet day to day needs. Hence, JLR will further take a short term loan which will increase interest burden for it.
• Quick ratio: The quick ratio value decreased from 0.7 to 0.6 in the year 2019. This indicates that if inventory is not considered or it takes time to sell inventory in the market due to less demand, then in that case’s firm will be able to pay only 60% of is CL. Thus, liquidity position of the JLR PLC is not good. Poor cash management and less ability to control expenses in the business is the main reason behind low quick ratio (Devi and Maheswari, 2015).
Conclusion:
JLR PLC financial performance currently is not good, but it is expected that mentioned company will be able to make a good long term investment. In the fourth quarter of the year 2019-20 Jaguar E-Pace and Jaguar I-Pace models demand increased at a fast pace along with other models (Shyam., 2019). In North America and UK demand increase by 8% individually, which is higher than the industry growth rate. Despite poor performance surge in demand and beating industry growth rate. give a confidence that in future firm will be able to make good long term investment.
Reference:
Books and journals:
Chandra, P., 2017. Investment analysis and portfolio management. McGraw-hill education.
Demirgüneş, K., 2015. Determinants of target dividend payout ratio: A panel autoregressive distributed lag analysis. International Journal of Economics and Financial Issues. 5(2). 418-426.
Devi, K. K. and Maheswari, U., 2015. A study on financial performance of Cipla Ltd. & Aurobindo Pharma Ltd.: A comparative analysis. Journal of Progressive Research in Social Sciences. 2(1). 36-39.
Patjoshi, P. K., 2016. A study on liquidity management and financial performance of selected steel companies in India. International Journal of Advanced Information Science and Technology. 5(7). 108-117.
Rey, A. and Santelli, F., 2017. The relationship between financial ratios and sporting performance in italy’sserie A. International Journal of Business and Management. 12(12). 53-63.
Online
Jaguar Land Rover Automotive PLC., 2019. [Online]. Available through:< http://annualreport2019.jaguarlandrover.com/>.
Shyam., A.R., 2019. [Online]. Sharp gains in JLR margins may bring investors back to Tata Motors. Available through:<https://economictimes.indiatimes.com/markets/stocks/news/sharp-gains-in-jlr-margins-may-bring-investors-back-to-tata-motors/articleshow/71788659.cms?from=mdr>.
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