An Analysis of Profitability Ratios of S&P BSE Auto Index Companies - An Empirical Study

Profitability is the primary goal of all business ventures. Without profitability the business will not survive in the long run. So measuring current and past profitability is very important. Profitability ratios measure the efficiency of the firm in operating the firm's assets. Many stakeholders like creditors, investor, employees, management and others are interested in profitability position of the firm. If the firm fails to post adequate rate of profits, it will reduce the company's cash and leads to liquidity problems. This paper aims to analyze the profitability of selected Automobile companies in India using profitability ratios. The study also used one Way ANOVA. The study found that Cummins India and Bajaj auto have posted highest values of GPM, OPM and NPM against its peer companies. MRF has shown highest EPS. An upward trend in Return on long term funds was found in Motherson sumi. It is also found that Tata motors and Ashok Leyland have shown downward trend performance in terms of posting net profit.