Financial Analysis &
Accounting
-presented by:
Rashi Agarwal #118
Kartik Sabharwal #119
Siddhesh Trivedi #121
Manu Shrivas...
Infosys – At a glance
• Infosys Technologies Ltd. – started in 1981
• Today, a global leader in IT & consulting
• Infosys ...
TCS – At a glance
• Revenues of $5.7bn
• Employs 1,20,000 staff in over 50 countries
• Founded over 40 years ago
• Custome...
Ratio Analysis
• Liquidity Ratios
• Financial Leverage (Debt) Ratios
• Coverage Ratios
4
Infosys TCS
2010-2011 2009-2010 2...
Ratio Analysis
• Activity/Efficiency/Turnover Ratios
5
Infosys TCS
2010-2011 2009-2010 2010-2011 2009-2010
Receivable Turn...
Ratio Analysis
• Profitability Ratios
6
Infosys TCS
2010-2011 2009-2010 2010-2011 2009-2010
Gross Profit Margin 36.04 37.6...
Fund Flow Analysis
• Infosys
• Investments have decreased largely resulting into high liquidity.
This liquid cash is utili...
Fund Flow Analysis
• TCS
• Most of the surplus is utilized in working capital, issue of dividends, and in
purchase of fixe...
Cash Flow Analysis
• Infosys
• A large increase in cash and cash equivalent shows that a large
amount of cash is remaining...
Cash Flow Analysis
• TCS
• High dividend payments indicate that the company is looking forward for
more shareholders and f...
Accounts Receivable Management
• Deals with credits & collections policy
• Directly impacts the profitability of the firm
...
Accounts Receivable Management
• Now, as calculated
Receivable Turnover in days
• This means that Infosys has a more effec...
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Financial Analysis & Accounting Case Study - Infosys & TCS

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a case study comparing Infosys & TCS in the subject of Financial Analysis & Accounting (FAA)

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Financial Analysis & Accounting Case Study - Infosys & TCS

  1. 1. Financial Analysis & Accounting -presented by: Rashi Agarwal #118 Kartik Sabharwal #119 Siddhesh Trivedi #121 Manu Shrivastava #211 Radha Thakore #214 Ishan Parekh #315 1
  2. 2. Infosys – At a glance • Infosys Technologies Ltd. – started in 1981 • Today, a global leader in IT & consulting • Infosys defines, designs & delivers technology- enabled business solutions that help companies win in a Flat World • Infosys serves the client globally & is one of the pioneers in strategic offshore outsourcing of software services. 2
  3. 3. TCS – At a glance • Revenues of $5.7bn • Employs 1,20,000 staff in over 50 countries • Founded over 40 years ago • Customers include 7 of the Global Fortune top 10 companies • Has partnered with over 750 of the world’s leading companies • A top-10 global IT player 3
  4. 4. Ratio Analysis • Liquidity Ratios • Financial Leverage (Debt) Ratios • Coverage Ratios 4 Infosys TCS 2010-2011 2009-2010 2010-2011 2009-2010 Current Ratio 5.22 4.46 2.43 1.49 Acid Test 5.22 4.46 2.43 1.49 Infosys TCS 2010-2011 2009-2010 2010-2011 2009-2010 Debt to Equity Ratio - - - - Total Debt Ratio - - 0.00 0.00 Debt to Total Assets - - 0.00 0.00 Capital Gearing Ratio - - 1.33 1.86 Long-term Debt to Total Capitalization Ratio - - - - P-E Ratio 31.62 26.98 32.56 30.91 Infosys TCS 2010-2011 2009-2010 2010-2011 2009- 2010 Interest Coverage Ratio/Time Interval Earned/Debt Service Ratio - - - -
  5. 5. Ratio Analysis • Activity/Efficiency/Turnover Ratios 5 Infosys TCS 2010-2011 2009-2010 2010-2011 2009-2010 Receivable Turnover Ratio 6.30 6.81 6.19 6.97 Receivable Turnover Ratio in Days 57.94 53.56 58.93 52.38 Payable Turnover Ratio - - - - Payable Turnover Ratio in Days - - - - Inventory Turnover Ratio - - - - Inventory Turnover Ratio in Days - - - - Operating Cycle 57.94 53.56 58.93 52.38 Cash Cycle 57.94 53.56 58.93 52.38 Total Asset Turnover 1.08 1.00 1.52 1.53 Fixed Asset Turnover 5.82 5.28 8.70 8.41 Total Capital Turnover 1.32 1.21 2.24 2.93 Working Capital Turnover 1.44 1.68 3.28 6.55
  6. 6. Ratio Analysis • Profitability Ratios 6 Infosys TCS 2010-2011 2009-2010 2010-2011 2009-2010 Gross Profit Margin 36.04 37.67 31.03 29.46 Pre-tax Margin 33.25 34.02 29.23 27.43 Net Profit Margin 24.28 26.03 25.23 23.68 Return on Investment 26.30 26.12 38.27 36.29 Return on Equity 26.30 26.12 38.36 36.37 Return on Investment (DuPont) 26.30 26.12 38.27 36.29 Return on Equity (DuPont) 26.30 23.49 38.36 36.37
  7. 7. Fund Flow Analysis • Infosys • Investments have decreased largely resulting into high liquidity. This liquid cash is utilized in high dividend payments. 7 Sources of funds Uses of funds net profit before dividend 5910 dividend 3445 Depreciation 300 increase in sundry debtors 968 Decrease in investments 3301 increase in cash and bank balance 3868 increase in liabilities and provisions 555 increase in loans and advances 969 increase in deferred tax asset 93 Total 10066 decrease in deferred tax liabilities 56 increase in capital work in progress 90 increase in gross block 577 Total 10066
  8. 8. Fund Flow Analysis • TCS • Most of the surplus is utilized in working capital, issue of dividends, and in purchase of fixed assets. Since Working Capital of Company is very high, company is having lot of Current Assets. So we can also say that Funds are not utilized properly. 8 Sources of Funds Uses of funds Increase in net profit before dividend 7213.97 Increase in loans and advances 962.77 Depreciation and amortization 497.29 increase in cash and bank balance 2208.36 Decrease in inventories 1.41 increase in sundry debtors 1474.37 decrease in deffered tax asset 1.1 Decrease in liability and provisions 886.07 Decrease in investments 2097.9 Decrease in unsecured loans 1.24 Increase Secured loans 6.62 increase in deferred tax liability 29.22 increase in capital work in progress 404.65 Total 9847.51 Dividend 2751.1 increase in gross block 1158.95 Total 9847.51
  9. 9. Cash Flow Analysis • Infosys • A large increase in cash and cash equivalent shows that a large amount of cash is remaining unutilized and serving no purpose to the company. They are known as dead assets. 9 Top of Form (Rs in Crs) Bottom of Form Mar-11 Mar-10 Cash Flow Summary Cash and Cash Equivalents at Beginning of the year 11297 10289 Net Cash from Operating Activities 4275 5787 Net Cash Used in Investing Activities 3235 -3298 Net Cash Used in Financing Activities -3642 -1481 Net Inc/(Dec) in Cash and Cash Equivalent 3868 1008 Cash and Cash Equivalents at End of the year 15165 11297
  10. 10. Cash Flow Analysis • TCS • High dividend payments indicate that the company is looking forward for more shareholders and focusing on its future growth and performance. 10 Top of Form (Rs in Crs) Bottom of Form Mar-11 Mar-10 Cash Flow Summary Cash and Cash Equivalents at Beginning of the year 293.28 540.65 Net Cash from Operating Activities 5752.67 6278.92 Net Cash Used in Investing Activities -863.16 -4556.64 Net Cash Used in Financing Activities -4605.61 -1969.65 Net Inc/(Dec) in Cash and Cash Equivalent 283.9 -247.37 Cash and Cash Equivalents at End of the year 577.18 293.28
  11. 11. Accounts Receivable Management • Deals with credits & collections policy • Directly impacts the profitability of the firm • Credit policy – main influence on accounts receivable • Credit policy – two types: 1. Liberal / lenient credit policy 2. Stringent / light credit policy 11
  12. 12. Accounts Receivable Management • Now, as calculated Receivable Turnover in days • This means that Infosys has a more effective Receivable Collection Mechanism as compared to that of Tata Consultancy Services. • Both firms have relaxed their collection policies but Tata Consultancy Services has shown a more liberal attitude towards receivable collection as compared to Infosys. 12 2010-2011 2009-2010 Infosys 58 Days 54 Days Tata Consultancy Services 59 Days 53 Days

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