A REPORT ON FINACIAL ANALYSIS OF

INFOSYS

Submitted To:- Dr P K Priyan

Submitted By:- Kanzariya Kamlesh M
Ro. No. 15062

Name:- Kamlesh Kanzariya Roll No :- 15062

Table of Contents
Acknowledgement................................................................................................. 3
1. Current Ratio................................................................................................... 4
2. Debt- Equity Ratio:.......................................................................................... 5
3. Turnover Ratio................................................................................................. 7
5. Return on Capital Employed..........................................................................11
6. Return on Equity %:....................................................................................... 12
7. Du
Pont
.13

Name:- Kamlesh Kanzariya Roll No :- 15062

Acknowledgement

I would like to thank the G.H.Patel Post Graduate Institute of Business

Management, S.P.UNIVERSITY, for providing us with this opportunity of
enhancing our knowledge in Financial Management.

I would also like to express special thanks to Prof. P. K. Priyan who

assigned us this project to carry out financial analysis of a company and
also guided us in doing so.

Name:- Kamlesh Kanzariya Roll No :- 15062

 1. Current Ratio

2015 2014 2013 2012 2011

3.41 3.70 4.75 4.91 5.34

Current ratio
6

4
Current ratio
3

0
2011 2012 2013 2014 2015

Interpretation:-
o As we know that ideal current ratio for any firm is 2:1.
o From 2011/12 current ratio is Decreasing till 2014/15
o If we see the current ratio of the company of last five years from
2011 to 2015, its continuously decreasing but it is more than the
idle ratio.
o In last five years, the ratio is more than the idle, which is also
bad.Idle assets earn nothing. The firms fund will be unnecessarily
tied up in current assets. So, company should try to maintain the
level of investment in current assets.

Name:- Kamlesh Kanzariya Roll No :- 15062

 2. Debt- Equity Ratio:

2011 2012 2013 2014 2015

0 0 0 0 0

Debt-equity ratio
1
0.9
0.8
0.7
0.6 Debt-equity ratio
0.5
0.4
0.3
0.2
0.1
0
2011 2012 2013 2014 2015

Interpretation:-
o Here we can see that the level of debt in the company is very less in
total capital employed in last five years.
o From 2011 till 2015, the debt-equity ratio is 0.
o A low debt equity ratio reflects more security to creditors.
o From security point of view, capital structure with less debt and
more equity is considered favorable as it reduces the chance of
bankrupts.
o However, from the perspective of owners, with lesser use of debt,
firm cannot enjoy the benefits of trading on equity.

Name:- Kamlesh Kanzariya Roll No :- 15062

Long term debt-Equity Ratio:
2011 2012 2013 2014 2015
0 0 0 0 0

long team debt-Equity Ratio

1
0.9
0.8
0.7
0.6 long team debt-Equity
Ratio
0.5
0.4
0.3
0.2
0.1
0
2011 2012 2013 2014 2015

Interpretation:-
o In total debt most of the debt is employed through long term
sources. This we can say by comparing this ratio with total debt
equity ratio.
o From 2011 to 2015, the Long term debt-Equity Ratio is 0.
o A low long term debt-equity ratio reflects more security to long
term creditors.

Name:- Kamlesh Kanzariya Roll No :- 15062

 3. Turnover Ratio

Fixed Asset Turnover Ratio:

2011 2012 2013 2014 2015

1.09 1.15 1.12 1.13 1.05

Fixed Asset Turnover Ratio

1.16

1.14

1.12

1.1
Fixed Asset Turnover Ratio
1.08

1.06

1.04

1.02

1
2011 2012 2013 2014 2015

Interpretation:-
o If we see the overall view of Fixed Turnover Ratio, it decreasing from
2011 to 2015.
o In 2014, the Fixed Turnover Ratio is 1.13, and after that the utilization
of fixed assets is being decreased.
o The ratio increased till 2012. In this year the Fixed Turnover Ratio is
1.15, which is highest among last five years.
o So, by comparing this ratio from 2011 to 2015, we can say that the
utilization of fixed assets is being decreased.

Name:- Kamlesh Kanzariya Roll No :- 15062

Interest Coverage Ratio:

2011 2012 2013 2014 2015

4663.5 2925 4120 2334.07 2100

Interest Coverage Ratio

5000
4500
4000
3500
3000 Interest Coverage Ratio
2500
2000
1500
1000
500
0
2011 2012 2013 2014 2015

Interpretation:-
o This ratio is used to test the firms debt servicing capacity.
o In 2011/03, the Interest Coverage Ratio is 4663.5, while in 2015/03;
it decreased to 2100.00
o The decrease in ratio indicates excessive use of debt or inefficient
operations. The firm should make efforts to improve the operating
efficiency, or to retire debt to have a comfortable coverage ratio.
o The higher ratio ensures safety of interest payment and it also
indicates the availability of surplus for share holders. It is a measure
of protection available to the creditors for payment of interest.
o
4. Profitability Ratio

Name:- Kamlesh Kanzariya Roll No :- 15062

Gross Profit margin (%):

2011 2012 2013 2014 2015

30.23 29.65 27.36 25.76 27.58

gross profit margin%

31

30

29

28
gross profit margin%
27

26

25

24

23
2011 2012 2013 2014 2015

Interpretation:-
o The gross profit margin reflects the efficiency with which management
produces each unit of product. The ratio indicates the average spread
between the cost of goods sold and the sales revenue.
o In 2011, the ratio is 30.23% and is kept on decreasing till 2014. Ratio is
25.76% in 2014.
o A high gross profit margin relative to the industry average implies that
the firm is able to produce at relatively lower cost.
o High ratio is a sign of good management. It increases due to any of the
following factors: i) higher sales prices, cost of goods sold remaining
constant,
ii) Lower cost of goods sold, sales prices remaining constant,
iii) A combination of variations in sales prices and costs, the margin
widening and
iv) an increase in the proportionate volume of higher margin items. The
analysis of these factors will reveal to the management how a
depressed gross profit margin can be improved.

Name:- Kamlesh Kanzariya Roll No :- 15062

Net Profit Margin%:

2011 2012 2013 2014 2015

25.38 27.10 24.79 22.99 25.71

Net Profit Margin %

28

27

26

25
Net Profit Margin %
24

23

22

21

20
2011 2012 2013 2014 2015

Interpretation:-
o The Net Profit Margin is widely used by the security analyst to value
the firms performance as expected by investors. It indicates
investors judgment or expectation about the firms performance.
Management is also interested in this market appraisal of the firms
performance and will like to find the causes if the Net Profit margin
ratio declines. This ratio reflects investors expectation about the
growth in the firms earning. Industries differ in their growths
prospects accordingly NPM ratio for industry varies widely.

Name:- Kamlesh Kanzariya Roll No :- 15062

 5. Return on Capital Employed

2011 2012 2013 2014 2015

26.29 26.83 25.05 24.21 24.44

Return On Capital Employed

27.5
27
26.5
26
25.5 Return On Capital
Employed
25
24.5
24
23.5
23
22.5
2011 2012 2013 2014 2015

Interpretation:-
o The ROCE of the company in 2011 is of 26.29%, after that it
decreased till 2015.
o So this indicates that firms have not used its resources of owners
and debt (total capital) properly.
o So the firm is not earning a satisfactory return in last year, which is
one of the most important objectives of the organization.

Name:- Kamlesh Kanzariya Roll No :- 15062

 6. Return on Equity %:

2011 2012 2013 2014 2015

25.30 24.21 25.28 28.46 26..29

Return on Equity %
29

28

27

26 Return on Equity %

25

24

23

22
2011 2012 2013 2014 2015

Interpretation:-
o The ROE of the company in 2011 is 25.30, after that it is increasing
in 2014/15 which is 28.46
o So this ratio indicates how well the firm has used the resources of
owners. Infarct, this ratio is one of the most important relationships
in financial resources.
o The earning of a satisfactory return is the most desirable objective
of a business. The ratio of net profit to owners equity reflects the
extent to which this objective has been accomplished.

Name:- Kamlesh Kanzariya Roll No :- 15062

 7. DuPont Analysis:
Colum 1 2015 2014 2013 2012 2011
PBIDT/SALES 27.58 25.76 27.36 29.66 30.23
%
SALES/NET 1.05 1.13 1.12 1.15 1.09
ASSETS
PAT/PBIDT% 29.24 25.72 22.99 24.80 27.10

NETASSETS/ 1 1 1 1 1
NET WORTH
ROE% 25.30 24.21 25.28 28.46 26..29

Interpretation:-
o RONA
o RONA is the measure of the firms operating performance. It
indicates the firms earning path. It is a product of the assets
turnover, gross profit margin and operating leverage. PBDIT/Net
Assets showing the operating efficiency of the firm.

o ROE
o A firm can convert its RONA into ROE through a financial leverage
and debt equity ratio affects ROE and reflects financial efficiency.
ROE is thus a product of RONA and financial leverage ratio.

o DUPONT
o This ration shows the retentions of the company and this also ratio
shows the growth of the company. So, overall we can say that there
increase in growth of the company by 0.99% from 2011 to 2015.

Name:- Kamlesh Kanzariya Roll No :- 15062