Tech Mahindra is an Indian IT services company with over 158,000 employees globally. The document analyzes Tech Mahindra's financial ratios for FY 2021-22. It finds that Tech Mahindra has good current, acid-test, and cash ratios, indicating strong liquidity. It also has low debt ratios and a favorable debt-to-equity ratio, suggesting manageable leverage. Additionally, Tech Mahindra has high returns on equity and acceptable earnings per share, demonstrating good profitability. Overall, the financial analysis presents Tech Mahindra as a company with strong liquidity and profitability metrics, making it a reasonable investment.

1. BUSINESS FINANCE-
TECH MAHINDRA FY’21-22
BY- AARYAN MALIK
ROLL NO- 15
GFM

2. Tech Mahindra is an Indian multinational
information technology services and consulting
company. Part of the Mahindra Group, the
company is headquartered in Pune and has its
registered office in Mumbai. Tech Mahindra is a
US$6.0 billion company with over 158,000
employees across 90 countries.
Tech Mahindra offers innovative and customer-
centric digital experiences, enabling enterprises,
associates and the society to Rise

3. The working capital ratio shows the ratio of assets to
liabilities, i.e. how many times a company can pay off its
current liabilities with its current assets. The working
capital ratio calculation is: Working capital ratio = current
assets / current liabilities.
Financial Ratios
A well-run firm manages its short-term debt and current
and future operational expenses through its
management of working capital, the components of
which are inventories, accounts receivable, accounts
payable, and cash.

4. Current assets are short-term assets, such as cash or cash
equivalents, that can be liquidated within a year or during an
accounting period.
Current liabilities are a company's short-term liabilities that are
expected to be settled within a year or during an accounting
period.
The ratio of current assets to current liabilities is important in
determining a company's ongoing ability to pay its debts as they are
due. Accounts payable is typically one of the largest current liability
accounts on a company's financial statements, and it represents
unpaid supplier invoices.

5. What are Financial Ratios?
Financial ratios are created with the use of numerical
values taken from financial statements to gain
meaningful information about a company. The
numbers found on a company’s financial statements –
balance sheet, income statement, and cash flow
statement are used to assess a company’s liquidity,
leverage, growth, margins, profitability, rates of
return, valuation, and more.

6. 1 Current ratio = Current assets / Current liabilities.
2 Acid-test ratio = Current assets – Inventories /
Current liabilities.
3 Cash ratio = Cash and Cash equivalents / Current
Liabilities.
4 Operating cash flow ratio = Operating cash flow /
Current liabilities.
5 Debt ratio = Total liabilities / Total assets.
Liquidity Ratios

7. TECH MAHINDRA FY22 june FINANCIALS
The current ratio measures a company’s ability to pay off
short-term liabilities with current assets:
Current ratio = Current assets / Current liabilities
244,557 / 125,048
CR = 1.95
In most industries, a good current ratio is between 1.5 and 2. A ratio under 1
indicates that a company's debts due in a year or less is greater than its assets.
This means that your company could run short on cash during the next year

8. The acid-test ratio measures a company’s ability to
pay off short-term liabilities with quick assets:
Acid-test ratio = Current assets – Inventories /
Current liabilities
A-T RATIO= 244,557 – 405 / 125,048
= 1.952
The higher the ratio, the better the company's
liquidity and overall financial health

9. The cash ratio measures a company’s ability to pay
off short-term liabilities with cash and cash
equivalents:
Cash ratio = Cash and Cash equivalents / Current
Liabilities
CR = 120,786 / 125,048
CR = 0.96
a cash ratio equal to or greater than 1 indicates a company has enough
cash and cash equivalents to entirely pay off all short-term debts.

10. The debt ratio measures the relative amount of a
company’s assets that are provided from debt:
Debt ratio = Total liabilities / Total assets
DR = 174,896 / 448,707
DR = 0.38
debt ratios of 0.4 or lower are considered better, while a debt
ratio of 0.6 or higher makes it more difficult to borrow money

11. The debt to equity ratio calculates the weight of total
debt and financial liabilities against shareholders’ equity:
Debt to equity ratio = Total liabilities / Shareholder’s
equity
D/E = 174,896 / 273,811
D/E = 0.63
SHAREHOLDER EQUITY= TOTAL ASSETS – TOTAL LIABILITIES
SHR EQ = 448,707 – 174,896
SHARE EQ = 273,811
a good debt-to-equity ratio is anything lower than 1.0. A ratio of 2.0 or higher is
usually considered risky. If a debt-to-equity ratio is negative, it means that the
company has more liabilities than assets

12. The asset turnover ratio measures a company’s ability to generate
sales from assets:
Asset turnover ratio = Net sales / Average total assets
- Average total assets = (total assets for current year) + (total assets for
previous year) / 2
- (44,416) + (39,602) / 2
- = 42,009
A-T = 13,129 / 42,009
A-T RATIO = 0.31

13. The return on equity ratio measures how efficiently a
company is using its equity to generate profit:
Return on equity ratio = Net income / Shareholder’s equity
ROE-R = 56,273 / 273,811
SHAREHOLDER EQUITY= TOTAL ASSETS – TOTAL LIABILITIES
SHR EQ = 448,707 – 174,896
SHARE EQ = 273,811
= 20.5%
A higher percentage indicates a company is more effective at generating profit
from its existing assets.

14. The earnings per share ratio measures the amount of net income
earned for each share outstanding:
Earnings per share ratio = Net earnings / Total shares outstanding
Net Earnings = Total revenue – total expenses
= 127,079 – 113,045
= 14,034
= 14,034 / 972,561
= 11.94
A higher EPS indicates greater value because investors will pay more for a
company's shares if they think the company has higher profits relative to its
share price.

15. Receivable Turnover Ratio or Debtor's Turnover Ratio is an
accounting measure used to measure how effective a company is in
extending credit as well as collecting debts. The receivables turnover
ratio is an activity ratio, measuring how efficiently a firm uses its
assets.
ACCOUNT RECEIVABLE TURNOVER RATIO
NET CREDIT SALES / AVG. ACC RECEIVABLES
= 44,646 / 6586
= 0.67

16. Costs of Goods Sold (COGS) represent the expenses involved into
producing your goods over a certain period of time. The COGS
formula
Costs of Goods Sold (COGS)
COGS = the starting inventory + purchases – ending inventory
= 68,951

17. Inventory Turnover
measures how fast the company turns over its inventory within a
year.
Inventory Turnover = Cost of Goods Sold / Average Total Inventories
= 68951 / 91.5
= 753.56

18. determines the ability of a company to manage their
inventory levels. It measures the percentage of Inventories
the company currently has on hand to support the current
amount of Revenue.
Inventory-to-Revenue = Average Total Inventories /
Revenue
= 91.5 / 131295
= 0.006969
Inventory-to-Revenue ratio

19.  GOOD CURRENT RATIO OF 1.95
 GOOD ACID TEST RATIO OF 1.952, The higher the ratio,
the better the company's liquidity and overall financial
health
 GOOD CASH RATIO OF 0.96, a cash ratio equal to or
greater than 1 indicates a company has enough cash and
cash equivalents to entirely pay off all short-term debts.
 AMAZING DEBT RATIO OF 0.38, debt ratios of 0.4 or
lower are considered better, while a debt ratio of 0.6 or
higher makes it more difficult to borrow money
WHY TECH MAHINDRA??

20.  DEBT TO EQUITY RATIO IS GOOD OF 0.63, a good debt-to-
equity ratio is anything lower than 1.0. A ratio of 2.0 or
higher is usually considered risky
 ROE IS MASSIVE OF 20.5%, A higher percentage indicates
a company is more effective at generating profit from its
existing assets.
 EPS IS FAIR AT 11.94-12 , A higher EPS indicates greater
value because investors will pay more for a company's
shares if they think the company has higher profits
relative to its share price.

21. Yes it is good to invest in Tech Mahindra because
Mahindra and Mahindra is a good PEER to invest in as
it’s history has been profitable.