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A REPORT ON FINACIAL ANALYSIS OF INFOSYS

A REPORT ON FINACIAL ANALYSIS OF INFOSYS Submitted To:- Dr P K Priyan Submitted By:- Kanzariya

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 5 4 3 2 1 0 2011 2012 2013 2014 2015
6
5
4
3
2
1
0
2011
2012
2013
2014
2015

Current ratio

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, it’s 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 firm’s 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 0.5 0.4 0.3 0.2 0.1 0 2011 2012 2013 2014 2015
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2011
2012
2013
2014
2015

Debt-equity ratio

Interpretation:-

o

Here we can see that the level of debt in the company is very less in

o

total capital employed in last five years. 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

o

more equity is considered favorable as it reduces the chance of bankrupts. 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 0.5 0.4 0.3 0.2 0.1 0 2011 2012 2013 2014 2015
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2011
2012
2013
2014
2015

long team debt-Equity Ratio

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 1.08 1.06 1.04 1.02 1 2011 2012 2013 2014 2015
1.16
1.14
1.12
1.1
1.08
1.06
1.04
1.02
1
2011
2012
2013
2014
2015

Fixed Asset Turnover Ratio

Interpretation:-

o

If we see the overall view of Fixed Turnover Ratio, it decreasing from

o

2011 to 2015. In 2014, the Fixed Turnover Ratio is 1.13, and after that the utilization

o

of fixed assets is being decreased. The ratio increased till 2012. In this year the Fixed Turnover Ratio is

o

1.15, which is highest among last five years. 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 2500 2000 1500 1000 500 0 2011 2012 2013 2014 2015
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2011
2012
2013
2014
2015

Interest Coverage Ratio

Interpretation:-

o

This ratio is used to test the firm’s debt servicing capacity.

o

In 2011/03, the Interest Coverage Ratio is 4663.5, while in 2015/03;

o

it decreased to 2100.00 The decrease in ratio indicates excessive use of debt or inefficient

o

operations. The firm should make efforts to improve the operating efficiency, or to retire debt to have a comfortable coverage ratio. The higher ratio ensures safety of interest payment and it also

o

indicates the availability of surplus for share holders. It is a measure of protection available to the creditors for payment of interest.

  • 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 27 26 25 24 23 2011 2012 2013 2014 2015
31
30
29
28
27
26
25
24
23
2011
2012
2013
2014
2015

gross profit margin%

Interpretation:-

o The gross profit margin reflects the efficiency with which management produces each unit of product. The ratio indicates the average spread

o

between the cost of goods sold and the sales revenue. In 2011, the ratio is 30.23% and is kept on decreasing till 2014. Ratio is

o

25.76% in 2014. A high gross profit margin relative to the industry average implies that

o

the firm is able to produce at relatively lower cost. 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 24 23 22 21 20 2011 2012 2013 2014 2015
28
27
26
25
24
23
22
21
20
2011
2012
2013
2014
2015

Net Profit Margin %

Interpretation:-

o The Net Profit Margin is widely used by the security analyst to value the firm’s performance as expected by investors. It indicates investors’ judgment or expectation about the firm’s performance. Management is also interested in this market appraisal of the firm’s performance and will like to find the causes if the Net Profit margin ratio declines. This ratio reflects investor’s expectation about the growth in the firm’s earning. Industries differ in their growth’s 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 25 24.5 24 23.5 23 22.5 2011 2012 2013 2014 2015
27.5
27
26.5
26
25.5
25
24.5
24
23.5
23
22.5
2011
2012
2013
2014
2015

Return On Capital Employed

Interpretation:-

o

The ROCE of the company in 2011 is of 26.29%, after that it

o

decreased till 2015. So this indicates that firms have not used its resources of owners

o

and debt (total capital) properly. 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 25 24 23 22 2011 2012 2013 2014 2015
29
28
27
26
25
24
23
22
2011
2012
2013
2014
2015

Return on Equity %

Interpretation:-

o

The ROE of the company in 2011 is 25.30, after that it is increasing

o

in 2014/15 which is 28.46 So this ratio indicates how well the firm has used the resources of

o

owners. Infarct, this ratio is one of the most important relationships in financial resources. The earning of a satisfactory return is the most desirable objective of a business. The ratio of net profit to owner’s 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 firm’s 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