Name: Akshay A jiremali

Class: MBA (SEM 1)

Subject: Accounting For Managers
Roll No. : 08
History of Infosys

Established in 1981, Infosys is a NYSE listed global consulting and IT services

company with more than 199,000 employees. From a capital of US$ 250, we
have grown to become a US$ 9.94 billion (LTM Q2 FY17 revenues) company
with a market capitalization of approximately US$ 36.1 billion.

In our journey of over 30 years, we have catalyzed some of the major changes
that have led to India's emergence as the global destination for software
services talent. We pioneered the Global Delivery Model and became the first
IT Company from India to be listed on NASDAQ. Our employee stock options
program created some of India's first salaried millionaires.
Type : public

Industry : IT services , IT consulting

Founded : 7th July 1981

Founder :N. R. Narayana Murthy

Nandan Nilekani

N. S. Raghavan

S. Gopalakrishnan

S. D. Shibulal

K. Dinesh

Ashok Arora
Headquarters : Electronic city ,behgaluru , kaenataka , India

Area served : world wide

Key people :vishalsikka

Services :IT, business consulting and outsourcing services

Revenue : US $ 9.501billion
Operating income: US $ 2.375 billion

Profit: US $ 2.052 billion

Total assets : US $ 11.378 billion

Total equity : US $ 9.324 billion

N0. Of employees : 199829

Divisions : Infosys BPO ltd loadstone management consultants

Website :www.infosys.com
 FINANCIAL STATEMENT

To get a better idea about the current financial status of Infosys, we went through
following financial statements

BALANCE SHEET of 2012,2013, 2014, 2015,2016

PROFIT & LOSS Statements of 2012,2013, 2014, 2015,2016

2.1 BALANCE SHEET OVERVIEW

A standard company balance sheet has three parts.

Assets ( Fixed Assets, Current Assets, Investments, Profit & Loss) Liabilities
( Debts, provisions) Ownership equity (Share Capital, Reserves, Surplus)
The main categories of assets are usually listed first and typically in order of
liquidity. Assets are followed by the liabilities. The difference between the
assets and the liabilities is known as equity or the net assets or the net worth
or capital of the company and according to the accounting equation net worth
must equal assets minus liabilities

Total assets of Infosys

75,141.00
80,000.00
66,289.00 66,289.00
70,000.00 56,966.00 56,966.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Total Assets
Total liabilities :

Total Liabilities includes share capital, reserves, surplus, equity share warrants, Shareholders
fund, secured & unsecured loans. The liability has increased over 2 year.

75,141.00
80,000.00
66,289.00 66,289.00
70,000.00
56,966.00 56,966.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Total Capital And Liabilities

Profit & Loss Overview

Profit and loss statement is also known as income statement. It displays the revenues
recognized for a specific period, and the cost and expenses charged against these revenues,
including write-offs (e.g., depreciation and amortization of various assets) and taxes The
purpose of the income statement is to show managers and investors whether the company
made or lost money during the period being reported.

Total Revenue
 70,000.00 62,441.00

60,000.00 53,319.00 53,319.00

50,133.00 50,133.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
Mar 16 Mar-15 Mar-15 Mar-14 Mar-14

Total Operating Revenues

Total revenue has been decreased from 2012 to 2016.

Total Expenses:
46,587.00
50,000.00
39,465.00 39,465.00 38,069.00 38,069.00
40,000.00

30,000.00

20,000.00

10,000.00

0.00
Mar 16 Mar-15 Mar-14 Mar-13 Mar-12

Total Expenses

Total expense has been increases from 2012 to 2016

Financial Analysis:

Financial Statement Analysis is the process of reviewing and

analyzing a companys financial statement to make better economic
decisions. These statements include the income statement, balance sheet,
cash flow statement & a statement of changes in equity. FSA is a method or
process involving specific techniques for evaluating risks, performance,
financial health & future prospects of an organization.

It is used by a variety of stakeholders, such as creditors &

equity investors, the government, the public and decision makers within
the organization. These stakeholders have different techniques to meet
their needs. It may also say that the analysis of financial statements is a
study of relationship among various financial facts & figures as setout in
financial statements that is Balance Sheet & Income Statement.

Classification of FSA:

1. According to the Material Used:

External Analysis
Internal Analysis

2. According to Modus Operandi:

Horizontal Analysis
Vertical Analysis

3. According to the objective:

Short term Analysis

Long term Analysis
Ratio Analysis:
Ratio analysis is a widely used tool for financial analysis.
It is defined as the systematic use of ratio to interpret the financial statement,
so that the strength & weakness of a firm as well its historical performance and
current financial condition can be determined. The term ratio refers to the
numerical & quantitative relationship b/w two items/variables.

Ratio analysis thus, a quantitative tool enables analysis to draw quantitative

answers such as:-

Is the net profit adequate?

Are the assets being used efficiently?
Is the firm solvent?
Can the firm meet the current obligation and so on?

Liquidity Ratio

These ratio measures the short-term solvency of a

concern. These ratio measure the firms ability to pay off current dues (i.e.
repayable in a year). In other words, liquidity means the ability to meet short-
term obligation. It may further be classified as:

Current Ratio

Current ratio may be defined as the relationship of current

asset to current liabilities. This ratio is calculated at a particular DATE and NOT
on a particular PERIOD. It is believed that ratio of 2:1 is good and shows a
comfortable working capital position.
 Current Ratio = Current Assets/Current
liabilities
current ratio

4.5

3.5

2.5 current ratio

1.5

0.5

0
2016 2015 2014 2013 2012

Interpretation : The current ratio of Infosys ltd in 2011-12 was 4.8:5

and it fall to 2.96:3 In the year 2015-16 This indicates that the lack of
liquidity & shortage of working capital.

Proprietary ratio

The proprietary ratio is not amongst the commonly used ratios. Very
few analysts prescribe its usage. This is because in reality it is the
inverse of debt ratio. A higher debt ratio would imply a lower
proprietary ratio and vice versa. Hence this ratio does not reveal any
new information.
Proprietary Ratio = Total Equity / Debt + Equity
 proprietary ratio
1.05

0.95

0.9 proprietary ratio

0.85

0.8

0.75
1 2 3 4 5

Interpretation: if investors are from the old school of thought, they would
prefer to keep the proprietary ratio high. This ensures less leverage and more
stable returns to the shareholders.

Working capital turnover ratio

Working capital turnover ratio is an activity ratio that measures dollars of

revenue generated per dollar of investment in working capital is defined as the
amount by which current assets exceed current liabilities
A higher working capital turnover ratio is better. It means that the company is
utilizing its working capital more efficiently i.e. generating more revenue using
less investment.
Formula:
Working capital turnover ratio: revenue / average working capital
Working capital: current assets current liabilities
 working capital turnover ratio
2
1.8
1.6
1.4
1.2
1 working capital turnover
ratio
0.8
0.6
0.4
0.2
0
1 2 3 4 5

Interpretation :
The working capital turnover ratio is higher in 2015-16 compare to 2011-12. It
means that the company utilise its working capital efficiently. It generates
more revenue using less investment.
Net profit ratio:
It is a popular profitability ratio that shows relationship between net profit
after tax and net sales. It is computed by dividing the net profit by net sales
Formula:
Net profit: net profit after tax / net sales

net profit ratio

34

33

32

31

30 net profit ratio

29

28

27
1 2 3 4 5

Interpretation: The net profit ratio of Infosys. in 2011-12 was 33.53 % and it
falls to 30.98% in 2015-16. This indicates better efficiency of an enterprise
Fixed assets turnover: This ratio establishes relationship of sales (during
that period) and fixed assets carried (during that period).

Fixed Turnover Ratio = Net Sales/ Fixed Assets

fixed assets turnover ratio

7.2
7
6.8
6.6
6.4
fixed assets turnover ratio
6.2
6
5.8
5.6
1 2 3 4 5

Interpretation

The fixed asset turnover ratio of Infosys .in 2011-12 was

7.11 times and it falls to 6.21 times in 2015-16. This indicates that the fixed
assets are sold quickly.

Debt Equity Ratio

The ratio establishes a relationship of long-term debts

and shareholders funds. It indicates the relative proportion of debt to equity
in financing the assets of the firm.

Debt Equity Ratio = Debt/Equity

 debt equity ratio
1.6
1.4
1.2
1
0.8 debt equity ratio
0.6
0.4
0.2
0
1 2 3 4 5

Interpretation
The total assets to debt ratio of Infosys. in 2011-12 was 1.41 and it rises to 0.11
in 2015-16. This indicates that the financial position of the company is at safer
side.

Return on capital employed: ROCE is a financial ratio that measures a

companys profitability and the efficiency with which its capital is employed.

ROCE = EBIT / capital employed

return on capital employed

0.6

0.5

0.4

0.3 return on capital

employed
0.2

0.1

0
1 2 3 4 5

Interpretation: the ROCE ratio of Infosys in 2011-12 was 0.41and it raises to

0.52 in 2015-16 it indicate that more efficient use of capital.
Return on equity: ROE is a measure of overall profitability of the business and
is computed by dividing the net income after interest and tax by average
stockholders equity.

ROE=net income after interest and tax /average stockholders equity

return on equity
40
35
30
25
20 return on equity
15
10
5
0
1 2 3 4 5

Interpretation: the ROE ratio of Infosys in 2011-12 was 37.28 and it reduced to
30.89 in 2015-16 it indicate that lower ratio means lower return on
shareholders investment.