Abstract

The company’s financial health is essential to its success.  When the company is financially sound it maximises the wealth of equity shareholders. This study extensively examines the financial health of Tata Motors, its impact on the stakeholders, banks and other financial institutions through an analytical approach. Leveraging research tools such as Ratio Analysis & Altman Z-Score Model which effectively utilize the financial statements of the company to derive insights pertaining to the company’s performance, profitability thereof, liquidity and solvency has been used to evaluate the financial health of Tata Motors. A firm’s financial health is indicative of numerous factors which influence the investment decisions relating to the company and overall perception of the firm & its performance as a whole. A strong financial performance & excellent financial health of a firm attracts more investments from banks and investors which influences the growth & development potential of the company thereby keeping all the stockholders of the company satisfied. The financial performance of a company thus, facilitates estimated predications regarding the company’s operations, profitability and stock outlook. Ratio analysis is an elemental quantitative technique of financial analysis as it facilitates a holistic understanding about a company’s operational efficiency, liquidity and profitability through the effective evaluation of the company’s financial statements. Altman’s Z-Score Model numerically predicts the probability of a company going bankrupt by factoring in the profitability, liquidity and solvency ratios of a company. The research analysis tools mentioned above thus, foster an effective understanding on the financial position of Tata Motors and the various factors influencing the financial health of the firm based on the financial data of the past 5 years as per the annual reports published by the company. Based on the Z-score value for various years efforts are made to predict the financial strength and probable possibility of bankruptcy of firms