Hero Honda Financial Analysis

Topics: Asset, Inventory, Balance sheet Pages: 5 (852 words) Published: September 18, 2010
Investment Decisions Analysis

Company: Hero Honda Motors Ltd.

|Balance sheet | | | | | | | | |YEAR |Mar’ 10 |Mar’ 09 |Mar’ 08 |Mar’ 07 |Mar’ 06 | | | |Fixed assets | |Gross block |2,750.98 |2,516.27 |1,938.78 |1,800.63 |1,471.97 | |Less : revaluation reserve |- |- |- |- |- | |Less : accumulated depreciation |1,092.20 |942.56 |782.52 |635.10 |522.60 | |Net block |1,658.78 |1,573.71 |1,156.26 |1,165.53 |949.37 | |Capital work-in-progress |48.14 |120.54 |408.49 |189.92 |44.19 | |Investments |3,925.71 |3,368.75 |2,566.82 |1,973.87 |2,061.89 | |Net current assets | |Current assets, loans & advances |2,890.46 |1,022.14 |942.00 |914.65 |822.56 | |Less : current liabilities & provisions |4,992.04 |2,205.90 |1,955.33 |1,608.74 |1,682.90 | |Total net current assets |-2,101.58 |-1,183.76 |-1,013.33 |-694.09 |-860.34 | |Miscellaneous expenses not written |- |- |- |- |- | |Total |3,531.05 |3,879.24 |3,118.24 |2,635.23 |2,195.11 |

Fixed / Intangible Assets and Depreciation/Amortisation
Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition is inclusive of freight , duties, taxes, and other incidental expenses. Depriciation is charged on a pro-rate basis at the straight line method prescribed in schedule XIV to the companies act, 1956. Assets covered under employee benefit scheme are amortised over a period of five years. Assets costing upto Rs. 5000 each are fully depreciated in the year of purchase. Intangible assets, comprising of expenditure on model fee etc., incurred are amortised on a straight line method over a period of five years. Lease hold land has been amortised over the period of lease.

Interpretations
The Gross block is increasing every year and there’s no revaluation as the revaluation reserve is zero. Moreover, the FAs are stated at cost. Hence, the company is investing in FA every year. Hence, we can say that the company is growing continuously.

In 2009, FA purchase = Gross block of 2009 – Gross block of 2008 = INR 234.71 cr Investments
Current investments are stated at lower of cost and fair value computed categorywise. Long-term investments are stated at cost less provision for permanent diminuition, if any. Net cash used in investing activity (2009): INR 844.59 cr

Interpretation
Hero...
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