INFOSYS Income Statement Analysis Net profit as percentage of the revenue is decreasing over the last three years

, the main reasons for the same are: • During FY 2011, software development expenditure has increased due to increase i n Technical subcontract of INR 7 cr. • Due to increased competition and overall bleak demand sales and marketing expend iture increased during FY 2011. • Provision for taxation has increased during FY 2011 and FY 2012, as earlier comp any followed MAT tax credits brought forward, but FY 2011 they provided for inco me tax under normal provisions of income tax. • However increase in cost is partly compensated by increase in other income, i.e. due to interest income on huge pile of cash and cash equivalent of INR 20591 cr . during FY 2012. • Company has also reduced depreciation and amortization charges for the last two years. • Overall profits fell by 9.95% during FY 2011 and 0.66 % in FY 2012 • The Company has forecasted annual revenues for FY 13 in the range of 5 -8 %, muc h lower than NASSCOM target of 12-14%. Balance Sheet Analysis • Cash and cash equivalent has consistently increased for the firm. The income gen erated after paying dividends is retained in the firm. Doubts are being raised t hat firm do not have proper strategy to deploy huge cash reserves. We may see an acquisition deal, where firm may deploy funds. • Firm can also use cash reserve for share buyback. • Exposure of the firm has significantly reduced in available for sale financial i nstruments and investment in certificate of deposits. • Due to slower growth, the trade receivables are increasing over the period. • Intangible assets have increased in FY 2012 due to increase in land use rights a nd IPR. • Employee benefit obligations have increased by 190% in FY 2012, due to employee options granted during 1998 and 1999. • Firm is zero debt firm, hence zero financial leverage.

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