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International Academy of Management & Entrepreneurship
R. Priya PGPM/0911/002 2009-2011
Nature of Business
Accenture, Ltd. provides management consulting, technology services, and outsourcing services. The company operates in five segments: Communications and High Tech, Financial Services, Products and Services, Resources, and Government. Communications and High Tech segment provides business intelligence, billing transformation, customer contact transformation, sales force transformation, service fulfillment, and network solutions; provides electronic commerce and strategy, enterprise resource, customer relationship, and supply chain management services; and offers digital content solutions. Financial Services segment offers outsourcing strategies and customer relationship management initiative services. Products and services segment includes automotive, health services, industrial equipment, pharmaceuticals and medical products, retail and consumer, and transportation and travel service groups; and offers operating and supply chain, mergers and acquisitions, channel management, product design, remote field maintenance, enterprise application integration, outsourcing, value creation, customer relationship management, procurement, electronic business, maintenance, and repair services. Resources segment serves the energy, chemicals, utilities, metals, mining, and forest products companies. Its Government segment serves human services, justice, postal, education and electoral authorities, and cities and other municipalities. The company was founded in 1989 and is headquartered in Hamilton, Bermuda.
History & Milestones
History of the Company • Accenture is a global management consulting, technology consulting and technology outsourcing company. • It was previously incorporated in Bermuda but since 1 September 2009 has been incorporated in Ireland. • It is said to be the largest consulting firm in the world. • Accenture is a Fortune Global 500 company with more than 186,000 people in 52 countries. • Accenture's clients include 96 of the Fortune Global 100 and more than three quarters of the Fortune Global 500.
Founded Key people Headquarters Area served Industry Revenue Net income Total assets Total equity Employees Website
: 1989 : William D. Green (Chairman) & (CEO) : Ireland : Worldwide : Management consulting, Technology service, Outsourcing : US$ 23.170 billion (2009) : US$ 1.589 billion (2009) : US$ 12.255 billion (2009) : US$ 2.886 billion (2009) : 177,000 (2009) : Accenture.com
The firm's free cash flow guidance demonstrates that its service business model throws off plenty of excess capital. So much that management felt comfortable enough to raise its annual dividend 50% to 75 cents per share. Going forward the company will pay a semi-annual dividend, instead of on an annual basis. This will place the dividend yield close to 2%. The weaker sales and profit trends served to send the stock down slightly after Thursday's after market financial results release. This could be a buying opportunity and the shares are already reasonably valued at under 13-times forward free cash flow estimates. Despite the more tepid outlook, Accenture's business model remains fully intact and will only benefit during the next uptick in global activity. Recent buyouts of smaller rivals serve to demonstrate the appeal and lucrative nature of Accenture's operations.
Customer Relationship Management Accenture Customer Relationship Management (CRM) consulting services help clients achieve high performance by efficiently anticipating, meeting and exceeding their customers' expectations. Marketing Transformation Accenture helps chief marketing officers achieve their objectives for organic growth, by prioritizing strategic investments and addressing the most critical gaps in marketing capability gaps. Sales Transformation Accenture helps organizations improve sales performance by realigning strategic resources, managing sales force behavior and enhancing operating capabilities.
Service Transformation Accenture helps organizations evaluate current service operations, segment and analyze the customer base and devise a customer contact blueprint that balances the cost of service with the current and potential value of customer relationships—what we term the "perfect" customer experience. Accenture maintains alliances with key technology providers to extend our capabilities. These providers include Microsoft, Oracle, SAP and others.
Nature of Competition
Financial Analysis Balance Sheet
All numbers in thousands PERIOD ENDING
31-May-09 28-Feb-09 30-Nov-08
Assets Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets
4,002,459 40,363 4,127,657 454,347
2,978,000 13,450 4,059,946 475,552 7,526,948 40,430 708,643 771,899 355,739 1,153,700
2,782,961 13,117 4,571,356 463,178 7,830,612 46,289 734,597 786,847 368,408 1,165,302
3,602,760 20,282 4,941,254 594,832 9,159,128 62,661 800,164 839,957 382,816 1,153,799
Total Current Assets 8,624,826 Long Term Investments 112,501 Property Plant and 717,422 Equipment Goodwill 803,748 Intangible Assets Accumulated Amortization Other Assets 368,729 Deferred Long Term Asset 1,200,438 Charges Total Assets Liabilities Current Liabilities Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges 6|Page
11,827,664 10,557,359 10,932,055 12,398,525
4,199,882 17,687 1,690,867 5,908,436 6,626 1,706,178 598,877
3,909,390 1,021 1,550,207 5,460,618 529 1,632,078 557,074
4,493,077 1,249 1,529,917 6,024,243 1,198 1,745,925 555,269
5,030,647 6,570 1,810,661 6,847,878 1,087,952 681,827 588,193
Minority Interest Negative Goodwill Total Liabilities Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholder Equity Net Tangible Assets
17 3,958,429 (1,817,160) 808,135 2,949,421
17 3,593,007 (1,745,135) 46,400 491,617 2,385,906
18 3,179,837 (1,778,381) 179,830 490,903 2,072,207
18 3,120,515 (1,405,732) 825,705 2,540,506
$2,145,673 $1,614,007 $1,285,360 $1,700,549
SHORT-TERM SOLVENCY RATIOS (LIQUIDITY) Net Working Capital Ratio Current Ratio Quick Ratio (Acid Test) Liquidity Ratio (Cash) Receivables Turnover Average Collection Period Working Capital/Equity Working Capital pS Cash-Flow pS Free Cash-Flow pS FINANCIAL STRUCTURE RATIOS Altman's Z-Score Ratio Financial Leverage Ratio (Assets/Equity) Debt Ratio Total Debt/Equity (Gearing Ratio) LT Debt/Equity LT Debt/Capital Invested LT Debt/Total Liabilities Interest Cover Interest/Capital Invested
23.17 1.5 1.1 0.74 6.8 53 98.4 3.70 2.72 3.27 4.78 4.2 76.4 0.00 0.00 111.5 0.0 166.0 0.23
PROFITABILITY RATIOS Free Cash Flow Margin Free Cash Flow Margin 5YEAR AVG Net Profit Margin Net Profit Margin - 5YEAR AVRG. Equity Productivity Return on Equity (ROE) Return on Equity (ROE) - 5YEAR AVRG. Capital Invested Productivity Return on Capital Invested (ROCI) Return on Capital Invested (ROCI) - 5YEAR AVRG. Assets Productivity Return on Assets (ROA) Return on Assets (ROA) - 5YEAR AVRG. Gross Profit Margin Gross Profit Margin - 5YEAR AVRG. EBITDA Margin - LTM EBIT Margin - LTM Pre-Tax Profit Margin Pre-Tax Profit Margin - 5YEAR AVRG. Effective Tax Rate Effective Tax Rate - 5YEAR AVRG. EFFICIENCY RATIOS Cash Conversion Cycle Revenue per Employee Net Income per Employee Average Collection Period Receivables Turnover Day's Inventory Turnover Ratio Inventory Turnover Inventory/Sales Accounts Payble/Sales Assets/Revenue Net Working Capital Turnover Fixed Assets Turnover Total Assets Turnover Revenue per $ Cash Revenue per $ Plant Revenue per $ Common Equity
10.84 8.96 6.9 6.1 8.03 55.1 58.1 8.03 55.1 57.7 1.90 13.0 12.0 32.2 30.6 14.8 11.8 11.6 11.9 27.6 29.6 35 130,909 8,983 35 6.8 0 0.0 0.0 3.10 0.53 8.16 7.10 1.9 5.10 33.05 8.03
Our Core Values Since its inception, Accenture has been governed by its core values. They shape the culture and define the character of our company. They guide how we behave and make decisions. "Through the years these simple, yet powerful values have continually guided our decision making as well as our interactions with our clients and each other." —William D. Green, Chairman & CEO, Accenture Stewardship Fulfilling our obligation of building a better, stronger and more durable company for future generations, protecting the Accenture brand, meeting our commitments to stakeholders, acting with an owner mentality, developing our people and helping improve communities and the global environment. Best People Attracting, developing and retaining the best talent for our business, challenging our people, demonstrating a “can-do” attitude and fostering a collaborative and mutually supportive environment. Client Value Creation Enabling clients to become high-performance businesses and creating long-term relationships by being responsive and relevant and by consistently delivering value. One Global Network Leveraging the power of global insight, relationships, collaboration and learning to deliver exceptional service to clients wherever they do business. Respect for the Individual Valuing diversity and unique contributions, fostering a trusting, open and inclusive environment and treating each person in a manner that reflects Accenture’s values.
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Accenture expects diluted earnings between $2.64 and $2.72 for the coming year, as net revenue could either grow or decline slightly. Free cash flow should come in slightly above reported earnings, in the range of $2.1 billion to $2.3 billion.
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