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Infosys - Ratio analysis


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Financial Analysis - Ratio Analysis of Infosys

Published in: Business, Economy & Finance

Infosys - Ratio analysis

  1. 1. Ratio Analysis Infosys Technologies Ltd Financial Years 2009-2008, 2008-2007 Lt Cdr K Ramakrishna , Roll No 19/AFOP4
  2. 2. Ratio Analysis
  3. 3. Liquidity
  4. 4. Current Ratio <ul><li>Excellent use of current assets </li></ul><ul><li>Moderate Ratio </li></ul><ul><li>No Short term loans hence the firm is in comfortable postion to avoid solvency </li></ul><ul><li>Majority of the liabilities are provisions for expenses followed by bonus to be paid to the employees </li></ul>Current Ratio 2009 3.29 Current Ratio 2008 2.10 Liquidity Measurement Ratios
  5. 5. Cash Ratio <ul><li>The company is highly liquid in cash </li></ul><ul><li>The ratio increased over the year due to increase in Deposits with scheduled banks </li></ul>Cash Ratio 2009 4.83 Cash Ratio 2008 4.03 Liquidity Measurement Ratios
  6. 6. Gearing
  7. 7. Gearing or Leverage <ul><li>The Company is debt free and maintains sufficient cash to meet its strategic objectives </li></ul><ul><li>In the year 2009,Internal cash flows have more than adequately covered working capital requirements, capital expenditure, investment in subsidiaries and dividend payments </li></ul><ul><li>Surplus of Rs 2600 (Crores) after expenses </li></ul><ul><li>Company maintains liquid assets of Rs 10,289 (crores) as against Rs 7689 (Crores) in 2008 </li></ul><ul><li>Surplus liquidity has been invested in deposits with banks and highly rated financial institutions </li></ul>
  8. 8. Profitability
  9. 9. Return on Total Assets <ul><li>Marginally decreased </li></ul><ul><li>Being a service company,fixed assets are in lower proportion </li></ul><ul><li>Proportion of Assets remained the same over the year </li></ul><ul><li>Losses due to Rupee depreciation – Rs 439 (Crores) in the year 2009 </li></ul><ul><li>Cash a major component of current assets – Rs 9695 Cr </li></ul>ROTA 2009 37.83% ROTA 2008 38.81% Profit and Cost Management Ratios
  10. 10. Return on Investment <ul><li>The returns to the share holders increased by 4% </li></ul><ul><li>Income increased by 29% with an increased expenditure of 23% while keeping the composition of fixed assets </li></ul><ul><li>There have been no Investments in the year 2009 </li></ul>ROI 2009 29.24% ROI 2008 25.04% Profit and Cost Management Ratios
  11. 11. Profit Margin <ul><li>Competitive pressure </li></ul><ul><li>Cost Ratios remained the same over the year </li></ul><ul><li>Aggressive selling </li></ul>Profit Margin 2009 29% Profit Margin 2008 27% Profit and Cost Management Ratios
  12. 12. Cost Ratios <ul><li>Employee costs is the major component – 66% in the company </li></ul><ul><li>The Expenses are well regulated by the company with good budgeting and forecasting methods </li></ul><ul><li>Sales and Distribution is a minor component of the costs(staff salaries – major share) as the business is generated from the existing clients and commands a strong brand name to acquire new clients </li></ul>Profit and Cost Management Ratios
  13. 13. Tax Planning Impact Impact of Tax Planning on Profitability 2009 2008 PBT 6907 5344 PBT less Current Year Tax 6116 4780 Shareholders Funds 18254 13795 ROE (PreTax) 37.83 38.73 ROE(PostTax) 32.8 33.77 ROE(PreTax) x (1-Taxrate,35%) 24.58 25.17 ROE(PostTax) - ROE(PreTax) x (1 -Taxrate,35%) 8.22 8.6
  14. 14. Financial
  15. 15. Fixed Asset Turnover Ratio <ul><li>Efficiency of Asset utilisation has increased </li></ul><ul><li>Old Assets worth Rs 792 crores retired </li></ul><ul><li>New Buildings worth Rs 955 crores added </li></ul>Fixed Assets TR 2009 4.05 Fixed Assets TR 2008 3.49 Asset Management Ratios
  16. 16. Net Current Asset Turnover Ratio <ul><li>Decreased capital WIP due to economic downturn in US </li></ul><ul><li>Increased Deposits in scheduled banks worth Rs 2638 crores </li></ul><ul><li>Goodwill arising out of acquisition of subsidiary has also been adjusted </li></ul>Net Current Assets TR 2009 1.69 Net Current Assets TR 2008 1.89 Asset Management Ratios
  17. 17. Gross Current Asset Turnover Ratio <ul><li>The ratio has remained the same indicating good use of the assets </li></ul><ul><li>Without any additional investments in 2009, there has been an increase in sales </li></ul><ul><li>Payments realised from WIP 2008 spilled over into the income </li></ul><ul><li>Sundry debtors are at the same levels </li></ul><ul><li>Increased Deposits in Scheduled banks </li></ul>Gross Current Assets TR 2009 1.62 Gross Current Assets TR 2008 1.61 Asset Management Ratios
  18. 18. Debtors Asset Turnover Ratio <ul><li>All Debtors are considered good and realizable </li></ul><ul><li>Debtors are at 5.9% of the revenue slightly higher than the Industry </li></ul><ul><li>Days Sales outstanding stands at 61 and 72 </li></ul><ul><li>Largest client constitues 10.8% of the Sundry Debtors </li></ul><ul><li>The ratio has increased largely due to the increase in the sales </li></ul>Debtors Assets TR/Days 2009 5.90/61 Debtors Assets TR 2008 5.06/72 Asset Management Ratios
  19. 19. DuPont Analyis FY 2009 and 2008