Sambodhi ISSN: 2249-6661

(UGC Care Journal) Vol-43 No.-04 (XI) October-December (2020)

A COMPARATIVE STUDY ON CASH FLOW STATEMENT OF TATA MOTORS AND
TVS MOTORS.

*VIPAL M. PATEL, ** Dr. Jigar Aggarwal,

*Ph.D Research Schooler (S.D. School Of Commerce), Gujarat University, Ahmedabad, Gujarat.
**Research Guide Associate Professor, J.G College of Commerce, Gujarat University, Ahmedabad,
Gujarat.

ABSTRACT
A cash flow statement is necessary as part of a complete set of financial statements prepared in
conventionality with Indian Accounting Standards. From the financial year 2004-05, it has become
mandatory for all the Indian companies to present Cash Flow Statement in their Annual Reports.
Institute of Chartered Accounts of India (ICAI) has issued Accounting Standard-3 (AS-3) for the
cash flow statement. According to this, all the cash transactions of the company are divided in three
activities i.e. Operating, Investing and Financing activities.
The classification of cash flows among operating, investing and financing activities is essential to the
analysis of cash flow data. Net cash flow (the change in cash and equivalents during the period) has
little informational content by itself; Although the classification of cash flows into the three main
categories is important, it should be mentioned that classification guidelines are arbitrary. In this
paper, a comparative study has been undertaken between two automobile companies i.e. tata motors
and tvs motors.

INTRODUCTION
The users of venture’s financial statements are interested in how the venture generates and uses cash
and cash equivalents. This is the case apart from of the nature of the venture’s activities and
irrespective of whether cash can be viewed as the product of the venture, as may be the case with a
financial enterprise. Enterprises need cash to conduct their operations, to pay their obligations and to
provide returns to their investors accomplishment of every business depends on its cash
management. The bring in of cash is commonly a limitation on the successful execution of many
policies and programs. So it is necessary to study the composition of cash of company to know the
impact of its cash flow decision on its liquidity, profitability and solvency. In this study, the matters
relating to the cash flow statements, which normally forms a part of the financial statements of
various enterprises to which the Accounting standard (AS) 3 “Cash Flow Statements” become
mandatory as given by ICAI, is discussed in the light of, and on the basis of, the said Accounting
Standard.
By studying cash flow statements, one can come to know about the ability of the organizations to
generate cash and cash equivalents. It helps the users in comparing the present value of the future
cash flows of the different organizations. It removes the effects of using different accounting
treatments for the frequent transactions and events. In this way, it improves the assessment of the
various enterprises. To know about the amount, timing and surety of future cash flows, historical
information about cash flow is used. It is also helpful in checking the accuracy of the past judgments
of future cash flows. cash flow statements are provided with the other financial statements in the
annual reports of the companies. The information provided in these statements helps the users
1. To discover the changes in net assets of an organization
2. To discover the changes in the financial structure of an organization
3. To discover the liquidity and solvency position of an organization
4. To know about the ability of an association to make changes in time if the situation and
opportunities are changing.

LITERATURE REVIEW
1. Shailendrasihn j. Vaghela and Dr. urvashibaN. Jhala (2016) attempted to study of
performance evaluation through cash management (with special reference to commercial vehicle
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(UGC Care Journal) Vol-43 No.-04 (XI) October-December (2020)
companies) with Ashok Leyland, Tata motors and SML ltd. After applying tools and techniques,
the researcher have found that, Ahok Leyland is at the top of the list when it comes to average
performance based on cash management, researcher have observed a mix trend in the
performance of all the sample compnies.
2. Kalpesh gelda and dr.bhavsinh m. dodiya (2014) attempted to study of cash flow statement of
TATA company and TVS company: a comparative study. After applying statistical tools and
techniques and according to the result of T test they found that there is no significant difference
between the means of all the three activities for both the companies.
3. Sanghani D. D. (2013) analysed performance evaluation through cash management of Bajaj
Auto Ltd. and Hero Motocorp Ltd. in his research paper. The findings of the study revealed that
Hero Motocorp Ltd. has used the average cash more efficiently than Bajaj Auto Ltd. Also, cash
return on assets of both the companies was quite similar and both the companies are almost same
in case of capacity to convert its sales into cash.
4. Maxwell Samuel amuzu (2010), attempted to study on cash flow ratio as a measure of
performance of listed companies in emerging economics, It was also evident that Ghana is
competitive when it comes to the Milk Products and Alcoholic Beverages industry. On the other
hand, US evidently have a stronghold on the Telecommunications Industry.

RESEARCH METHODOLOGY
 SAMPLE SELECTION
For the purpose of the study two Indian automobile companies TATA motors and TVS
motors have been selected
 PERIOD OF STUDY
The study is conducted for a period of 5 years i.e. from 2014-15 to 2018-19.
 DATA COLLECTION
In this study mainly secondary data is collected. Secondary data has been obtained from
following sources:
1. Published annual reports of the companies
2. Directory of Bombay stock exchange
3. Website of selected companies
4. Other related websites
 OBJECTIVES
1. To study the trend of various activities as operating, investing and financing of selected
Indian automobile companies
2. To analyze the variation amongst three activities of the selected Indian automobile
companies
3. To provide suggestion for improvement in cash management.
 STATISTICAL TOOLS AND TECHNIQUES
The statistical analysis technique is selected to analyze the cash flow statement of the
companies understudy. For this following techniques are being used:
1. Mean
2. Standard deviation
3. Co-efficient of variance
4. T-test

STATISTICAL ANALYSIS
MEAN, STANDARD DEVIATION AND CO-VARIANCE (IN CRORES)
OPERATING INVESTING FINANCING
Year ACTIVITIES ACTIVITIES ACTIVITIES
TATA TVS TATA TVS TATA TVS
2014-15 -2562.67 84.84 601.74 -493.27 2631.53 330.82
2015-16 2702.98 941.09 -3264.22 -608.16 -640.11 -306.05
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(UGC Care Journal) Vol-43 No.-04 (XI) October-December (2020)
2016-17 1381.47 723.93 -2737.98 -748.12 -237.30 -72.70
2017-18 4133.94 1297.32 -710.27 -1131.36 -3105.63 -74.74
2018-19 6292.63 1097.78 -3820.55 -1002.28 -2529.70 81.13
TOTAL 11948.35 4144.96 -9931.28 -3983.19 -3881.21 -41.54
AVERAGE 2389.67 828.99 -1986.26 -796.64 -776.24 -8.31
RANK 1 2 2 1 2 1
S.D. 3313.45 466.09 1863.38 266.57 2259.57 234.64
RANK 2 1 2 1 2 1
CO-VARI. 138.66 56.22 -93.81 -33.46 -291.09 -2823.59
RANK 2 1 2 1 1 2

4000

3000

2000

1000
AVERAGE
0 S.D.
TATA TVS TATA TVS TATA TVS
CO-VARIANCE
-1000 OPERATING INVESTING FINANCING

-2000

-3000

-4000
FINDINGS
1. From the table, it can be seen that the average of cash flow from operating activities of TATA is
higher than TVS. Theoretically, higher the average, higher will be the rank and vice versa. So
TATA is given 1st rank and TVS is given 2nd rank. But the situation is totally different in
investing and financing activities. Accordingly TVS is given 1st rank and TATA is given 2nd
rank.
2. In case of standard deviation, lower the value, higher will be the rank and vice versa. Considering
this aspect, it is observed that the standard deviation for all the three activities of TVS is lower
than TATA company. So, for the three activities, TVS copany obtained 1st rank and TATA
company obtained 2nd rank.
3. In case of co-variance also, lower the value, higher will be the rank and vice versa. So co-
variance for operating and investing activities of TVS company is lower than the TATA
company. So, for those two activities TVS company obtained 1st rank and TATA company
obtained 2nd rank. For the financing activity co-variance of TATA company is lower than the
TVS company so, in financing activity TATA company is given 1st rank and TVS company is
given 2nd rank.

OVERALL CONCLUSION
LEVEL OF OPERATING INVESTING FINANCING
PERFORMANCE ACTIVITIES ACTIVITIES ACTIVITIES
BEST TATA CO. TVS CO. TATA CO.
POOR TVS CO. TATA CO. TVS CO.

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 Sambodhi ISSN: 2249-6661
(UGC Care Journal) Vol-43 No.-04 (XI) October-December (2020)
PAIRED T-TEST BETWEEN TWO MEANS
T-test: paired two sample for means for operating
activities
TATA TVS
Mean 2389.67 828.99
Standard deviation 3313.45 466.08
Observation 5 5
Hypothesized mean difference 1560.68
df 4
T stat 1.208
T critical two-tailed 2.7764

T-test: paired two sample for means for investing

activities
TATA TVS
Mean -1986.25 -796.63
Standard deviation 1863.38 266.56
Observation 5 5
Hypothesized mean difference 1189.62
Df 4
T stat -1.461
T critical two-tailed 2.7764

T-test: paired two sample for means for financing activities

TATA TVS
Mean -776.24 -8.30
Standard deviation 2259.56 234.63
Observation 5 5
Hypothesized mean difference 767.94
Df 4
T stat -0.799
T critical two-tailed 2.7764

Activities Tc Tt Accepted or rejected

Operating activities 1.208 2.78 Accepted
Investing activities -1.461 2.78 Accepted
Financing activities -0.799 2.78 Accepted
HYPOTHESIS TESTING
1. From the T table, it is observed that the calculated value of T for operating activities (1.208) is
less than the table value (2.78), the hypothesis is accepted. It means that there is no significant
difference between the means of operating activities of selected companies.
2. For investing activities also, calculated value of T for investing activities (-1.461) is less than the
table value (2.78), so that the hypothesis is accepted. . It means that there is no significant
difference between the means of investing activities of selected companies.
3. For financing activities also, calculated value of T for financig activities (-0.799) is less than the
table value (2.78), so that the hypothesis is accepted. . It means that there is no significant
difference between the means of financing activities of selected companies.
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(UGC Care Journal) Vol-43 No.-04 (XI) October-December (2020)
LIMITATIONS OF THE STUDY
This study is completely based on the published financial statements of the company and other
information received from the company officials. So, all analysis is based on this data. So it can be
consistent to that extent.
(1) As the information is collected from limited sources, it is not likely to use different tools and
techniques of statistical analysis.
(2) The study is based on secondary data; the secondary data has its own restriction.
(3) The entire study is limited to two banks only. It can be approved out by including Industry.

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