Company Report

on

“WIPRO Ltd.”

SUBMITTED BY:-

Nilesh Ruchwani

B.com (H) - 4th semester

Enrollment no. –A7004617073

Under Guidance of

Faculty Guide:-

Dr. Nimish Gupta

ABS, LUCKNOW

(Company Report in partial fulfillment of Award of Full Time

Degree of B.COM (HONS) BATCH 2017-2020)

AMITY UNIVERSITY UTTAR PRADESH, LUCKNOW

 FACULTY CERTIFICATE

Forwarded here with a term paper report on “An Analysis of financial Statement of
WIPRO Ltd.” submitted by Nilesh Ruchwani Enrollment NO. A7004617073
student of BCOM (Hons. ) 4th Sem (2017-20).

This project work is partial fulfillment of the requirement for the degree of Bachelor
of commerce from Amity University Lucknow Campus, Uttar Pradesh.

DR. NIMISH GUPTA

AMITY UNIVERSITY,
LUCKNOW CAMPUS
UTTAR PRADESH
 STUDENT’S CERTIFICATE

Certified that this report is prepared based on research undertaken by me “ An

analysis of financial statement of WIPRO Ltd.” in under the guidance of DR.
NIMISH GUPTA in partial fulfillment of the requirement for award of degree of
Bachelor of Commerce (BCOM 4th SEM) from Amity University, Uttar Pradesh.

Date.______________

Dr. JAYANTI SRIVASTAVA

Faculty Guide
 DECLARATION

Title of project report “An analysis of financial Statement of WIPRO Ltd.” under
guidance of DR.NIMISH GUPTA . Understand what plagiarism is and I am aware of
the University’s policy in this regard.
I declare that the work submitted by me in partial fulfillment of the requirement for
the award of degree B.com(Hons) assessment in this is my own; it has not previously
been presented for another assessment.
I declare that “Role of Wipro in financial aspects” this is my original work.
Wherever work form other source has been used, all debts (for words data, arguments
and ideas) have been appropriately acknowledged and referenced in accordance with
the requirements of NTCC Regulations and Guidelines.

(a) I have not used work previously produced by another student or any other
person to submit it as my own.

(b) I have not permitted, and will not permit, anybody to copy my work with the
purpose of passing it off as his or her own work.

(c) The work conforms to the guidelines for layout, content and style as set out in
the Regulations and Guidelines.

Date: ------------
Name of student: Nilesh Ruchwani
Enrollment no. A7004617073
B.com (H) 4th semester
 Acknowledgement

It was great for me to research on the the topic like “An analysis of financial services
provided by State bank of india”
I am hugely indebted to DR. Jayanti Srivastava , Amity University who was my
guide for the Term Paper , whose expertise, understanding , generous guidance and
support made it possible for me to work on this topic. It was pleasure working with
her.
I would like to express my gratitude to her for being so generous to provide me the
details and the finding time for me in her busy schedule. Ma’am words can never be
enough to thank your kindness.
Apart from me this term paper will certainly be immense for those who are intresting
to know about this topic. I hope they will find it comprehensible.
I have tried hard and soul to gather relevant documents regarding this project. I don’t
know how far I am able to do that. Furthermore I don’t claim all the information in
this term paper is included perfectly . There may be shortcoming, factual error,
mistaken opinion which all are mine and I alone am responsible for those. I will try to
give a better volume in future,

Thank you,
NILESH RUCHWANI (Bcom.H)
A7004617073
 Executive Summary

It is Summarize tin of all report in one or two pages so as to provide an overview of

the company. it is also called synopsis or Abstract. As a partials fulfillment of the
requirement for the Managerial Accounting Cource.We have completed a project
report on financial Analysis of Wipro Ltd.
 Sales Figure is increasing at a handsome rate. it is at Rs. 58400.23 Million. in
2003-04 and it is increased to Rs. 141395.8 Million. So Sales is increased
75.05% because of aggressive Selling Policy.
 Profit after Tax is also increasing as compare to 2003-04 it is increasing 22514
Million at Rs 3408, 8747, 4388.6, 5970.4, respectivaly last four year. This is
because company has increased it sales and doing good cost management
 Net worth of the company is increased in this year because of increase in
Reserve & Surplus
 Current Ratio of Wipro limited is showing good position. It is 1.26 Times in
2003-04 then it is increased to 2.13 Times in 2007-08 this shows Company has
achieved standard Ratio.
 The returns on the investment is some what decline in current year.
 The EPS of Share is increased Rs. 7.43 to Rs 20.62 in 2007-08 So Share
holder are benefited.
 Company’s Total Assets are increased and it trying to expand its business on
the other hand debt are also increased it shows that company trying to Trading
on Equity.
 After analyzing all aspect Company’s performance is good.
 CONTENT
Acknowledgement
Executive Summary

1. INTRODUCTION
1.1 Introduction to company
1.2 Group of companies
1.3 History
1.4 Company Profile
1.5 Registered office address
1.6 Board of director
1.7 Auditor

2. RATIO ANALYSIS
2.1 Introduction of the ratio analysis
2.2 Liquidity ratio
2.2.1 Current ratio
2.2.2 Quick ratio
2.2.3 Net working capital
2.3 Profitability ratio
2.3.1 Gross profit
2.3.2 Operating ratio
2.3.3 Net profit ratio
2.3.4 Return on investment
2.3.5 Return on equity
2.4 Assets turnover ratio
2.4.1 total asset turn over ratio
2.4.2 net fixed asset turn over
2.4.3 inventory turn over ratio
2.4.4 average age of inventories
2.4.5 debtor turn over ratio
2.5 Finance structure ratio
2.5.1 debt ratio
2.5.2 debt equity
2.5.3 interest coverage ratio

3. FINDINGS AND SUGGESIONS

BIBLIOGRAPHY
 Chapter 1.
Introduction

 Introduction to company
 Group Companies
 History
 Company Profile
 Registered Office Address
 Board of Directors
 Auditors
 1. INTRODUCTION

1.1.Introduction of company
Wipro Limited (Wipro), together with its subsidiaries and associates (collectively,
the company or the group) is a leading India based provider of IT Services and
Products, including Business Process Outsourcing (BPO) Services, globally.
Further,Wipro has other business such as India and AsiaPac IT Services and
products and Consumer Care and Lighting. Wipro is headquartered in Bangalore,
India.Wipro Technologies is a global services provider delivering technology-
driven business solutions that meet the strategic objectives clients. Wipro has 40+
‘Centers of Excellence’ that create solutions around specific needs of industries.
Wipro delivers unmatched business value to customers through a combination of
process excellence, quality frameworks and service delivery innovation. Wipro is
the World's first CMMi Level 5 certified software services company and the first
outside USA to receive the IEEE Software Process Award.
Wipro is a $3.5 billion Global company in Information Technology Services,
R&D
Services, Business process outsourcing. Team wipro is 75,000 Strong from 40
nationalities and growing. Wipro is present across 29 counries,36 Development
canters, Investors across 24 countries.

 Largest third party R&D Service provider in the world.

 Largest Indian Technology Infrastructure management service provider.
 A vendor of choice in the middle east
 Among the top 3 Indian BPO Service provider by Revenue (* Nasscom)
 Among the top 2 Domestic IT Services companies in India (*IDC India)

1.2. Group Companies

 Wipro Infrastructure Engineering Ltd.
 Wipro Inc.
 cMango Pte Ltd.
 Wipro Japan KK
 Wipro Shanghai Ltd.
 Wipro Trademarks Holding Ltd.
 Wipro Travel Services Ltd.
 Wipro Cyprus Private Ltd.
 Wipro Consumer Care Ltd.
 Wipro Health Care Ltd.
 Wipro Chandrika Ltd.(a)
 Wipro Holdings (Mauritius) Ltd.
 Wipro Australia pty Ltd.
 WMNETSERV Ltd.(a)
 Quantech Global Service Ltd.
 3D Network Pte Ltd.
 Planet PSG Pte Ltd.
 Spectramind Inc.

1.3. History
Wipro started in 1945 with the setting up of an oil factory in Amalner a small
town in Maharashtra in Jalgaon District. The product Sunflower Vanaspati and
787 laundry soap (largely made from a bi-product of Vanaspati operations) was
sold primarily in Maharashtra and MP. The company was aptly named Western
India Products Limited.
The Birth of the name Wipro - As the organization grew and diversified into
operations of Hydraulic Cylinders and Infotech, the name of the organization did
not adequately reflect its operations. Azim Premji himself in 1979 selected the
name "Wipro" largely an acronym of Western India Products. Thus was born the
Brand Wipro. The name Wipro was unique and gave the feel of an 'International"
company. So much so that some dealers even sent their cheques favouring Wipro
(India) Limited. Fortunately, the banks accepted them!!By the early 90s, Wipro
had grown into various products and services. The Wipro product basket had
soaps called Wipro Shikakai, Baby products under Wipro Baby Soft, Hydraulic
Cylinders branded Wipro, PCs under the brand name Wipro, a joint venture
company with GE named Wipro GE and software services branded Wipro. The
Wipro logo was a 'W", but it was not consistently used in the products.It was
clearly felt that the organization was not leveraging its brand name across the
various businesses. The main issue remained whether a diverse organization such
as Wipro could be branded under a uniform look and feel and could there be
consistent communication about Wipro as an organization.

1.4.Company Profile
Business-Description
Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT
Services Company globally. Wipro provides comprehensive IT solutions and
services, including systems integration, Information Systems outsourcing, package
implementation, software application development and maintenance, and research
and development services to corporations globally.
The Group's principal activity is to offer information technology services. The
services include integrated business, technology and process solutions including
systems integration, package implementation, software application development
and maintenance and transaction processing. These services also comprise of
information technology consulting, personal computing and enterprise products,
information technology infrastructure management and systems integration
services. The Group also offers products related to personal care, baby care and
wellness products. The operations of the Group are conducted in India, the United
States of America and Other countries. During fiscal 2007, the Group acquired
Wipro Cyprus Pvt Ltd, Retailbox Bv, Enabler Informatica SA, Enabler France
SAS, Enabler Uk Ltd, Enabler Brazil Ltd, Enabler and Retail Consult GmbH,
Cmango Inc, Cmango (India) Pvt Ltd, Saraware Oy, Quantech Global Services
and Hydroauto Group AB

Global IT Services and Products

The Company's Global IT Services and Products segment provides IT services to
customers in the Americas, Europe and Japan. The range of its services includes
IT consulting, custom application design, development, re-engineering and
maintenance, systems integration, package implementation, technology
infrastructure outsourcing, BPO services and research and development services
in the areas of hardware and software design. Its service offerings in BPO services
include customer interaction
services, finance and accounting services and process improvement services for
repetitive processes.

The Global IT Services and Products segment accounted for 74% of the
Company's revenues and 89% of its operating income for the year ended March
31, 2007 (fiscal 2007). Of these percentages, the IT Services and Products
segment accounted for 68% of its revenue, and the BPO Services segment
accounted for 6% of its revenue during fiscal 2007.
Customized IT solutions
Wipro provides its clients customized IT solutions in the areas of enterprise IT
services, technology infrastructure support services, and research and
development services. The Company provides a range of enterprise solutions
primarily to Fortune 1000 and Global 500 companies. Its services extend from
enterprise application services to e-Business solutions. Its enterprise solutions
have served clients from a range of industries, including energy and utilities,
finance, telecom, and media and entertainment. The enterprise solutions division
accounted for 63% of its IT Services and Products revenues for the fiscal 2007.
Technology Infrastructure Service
Wipro offers technology infrastructure support services, such as help desk
management, systems management and migration, network management and
messaging services. The Company provides its IT Services and Products clients
with around-the-clock support services. The technology infrastructure support
services division accounted for 11% of Wipro's IT Services and Products revenues
in fiscal 2007.
Research and Development Services
Wipro's research and development services are organized into three areas of focus:
telecommunications and inter-networking, embedded systems and Internet access
devices, and telecommunications and service providers.The Company provides
software and hardware design, development and implementation services in areas,
such as fiber optics communication networks, wireless networks, data networks,
voice switching networks and networking protocols. Wipro's software solution for
embedded systems and Internet access devices is programmed into the hardware
integrated circuit (IC) or application-specific integrated circuit (ASIC) to
eliminate the need for running the software through an external source. The
technology is particularly important to portable computers, hand-held devices,
consumer electronics, computer peripherals, automotive electronics and mobile
phones, as well as other machines, such as process-controlled equipment. The
Company provides software application integration, network integration and
maintenance services to telecommunications service providers, Internet service
providers, application service providers and Internet data centers.
Business Process Outsourcing Service
Wipro BPO's service offerings include customer interaction services, such as IT-
enabled customer services, marketing services, technical support services and IT
helpdesks; finance and accounting services, such as accounts payable and
accounts receivable processing, and process improvement services for repetitive
processes, such as claims processing, mortgage processing and document
management. For BPO projects, the Company has a defined framework to manage
the complete BPO process migration and transition. The Company competes with
Accenture, EDS, IBM Global Services, Cognizant, Infosys, Satyam and Tata
Consultancy Services.India and AsiaPac IT Services and Products
The Company's India and AsiaPac IT Services and Products business segment,
which is referred to as Wipro Infotech, is focused on the Indian, Asia-Pacific and
Middle-East markets, and provides enterprise clients with IT solutions. The India
and AsiaPac IT Services and Products segment accounted for 16% of Wipro's
revenue in fiscal 2007. The Company's suite of services and products consists of
technology products; technology integration, IT management and infrastructure
outsourcing services; custom application development, application integration,
package implementation and maintenance, and consulting

Wipro's system integration services

Include integration of computing platforms, networks, storage, data center and
enterprise management software. These services are typically bundled with sales
of the Company's technology products. Wipro's infrastructure management and
total outsourcing services include management and operations of customer's IT
infrastructure on a day-to-day basis. The Company's technology support services
include upgrades, system migrations, messaging, network audits and new system
implementation. Wipro designs, develops and implements enterprise applications
for corporate customers. The Company's solutions include custom application
development, package implementation, sustenance of enterprise applications,
including industry-specific applications, and enterprise application integration.
Wipro also provides consulting services in the areas of business continuity and
risk management, technology, process and strategy.
Consumer Care and Lighting
Wipro's Consumer Care and Lighting business segment accounted for 5% of its
revenue in fiscal 2007. The Company's product lines include hydrogenated
cooking oil, soaps and toiletries, wellness products, light bulbs and fluorescent
tubes, and lighting accessories. Its product lines include soaps and toiletries, as
well as baby products, using ethnic ingredients. Brands include Santoor,
Chandrika and Wipro Active. The Wipro Baby Soft line of infant and child care
products includes soap, talcum powder, oil, diapers and feeding bottles and Wipro
Sanjeevani line of wellness products.
The Company's product line includes incandescent light bulbs, compact
fluorescent lamps and luminaries. It operates both in commercial and retail
markets. The Company has also developed commercial lighting solutions for
pharmaceutical production centers, retail stores, software development centers and
other industries. Its product line consists of hydrogenated cooking oils, a cooking
medium used in homes, and bulk consumption points like bakeries and
restaurants. It sells this product under the brand name Wipro Sunflower.
1.5. Registered Office Address
WIPRO LIMITED
Doddakannelli, Sarjapur Road,
Bangalore – 560 035, India.
Tel : +91-80-28440011
Fax : +91-80-2844054
1.6. Board of Directors
 Azim H . Premji Chairman
 Dr Ashok S Ganguly Former Chief Ex.Officer Nortel
 B .C. Prabhakar Practitioner of Law
 Dr. Jagdish N. Sheth Professor Of Marketing-Emory Uni.Usa.
 N.Vagual Chairman-ICICI Bank Ltd
 Bill Owens
Former Chief Ex.Officer,Nortel
 P. M. Sinba
Former Chairman Pepsico India Holdings

Azim Premji
Chairmen & Managing Director
1.7. Auditors
 KPMG
 BSR & Co.
Audit committee
N Vaghul - Chairman
P M Sinha - Member
B C Prabhakar - Member
Board Governance and Compensation Committee
Ashok S Ganguly - Chairman
N Vaghul - Member
P M Sinha - Member
Shareholders’ Grievance and Administrative Committee
B C Prabhakar - Chairman
Azim H Premji - Member
 Chapter 2.
Analysis

 Introduction To The Ratio Analysis

 Liquidity Ratios
 Profitability Ratios
 Finance Structure Ratios
 4. RATIO ANALYSIS

5.1. Introduction Of The Ratio Analysis

Ratio analysis involves establishing a comparative relationship between the
components of financial statements. It presents the financial statements into
various functional areas, which highlight various aspects of the business like
liquidity, profitability and assets turnover, financial structure. It is a powerful tool
of financial analysis, which recognizes a company’s strengths as well as its
potential trouble spots.
It can be further classified as in different categories of Ratio.
 Liquidity Ratios
 Profitability Ratios
 Asset Turnover Ratios
 Finance Structure Ratios
 Valuation Ratios

5.2. Liquidity Ratio

Liquidity refers to the existence of the assets in the cash or near cash form. This
ratio indicates the ability of the company to discharge the liabilities as and when
they mature. The financial resources contributed by owners or supplemented by
outside debt primarily come in the cash form as under in the balance sheet form.
The following Liquidity Ratios are calculated for the company.
 Current Ratio
 Quick Ratio
 Net Working Capita

5.2.1. Current Ratio

This ratio shows the proportion of Current Assets to Current Liabilities. It is also
known as “Working Capital Ratio” as it is a measure of working capital available
at a particular time. It’s a measure of short term financial strength of the business.
 The ideal current ratio is 2:1 i.e. Current Assets should be equal to Current
Liabilities.
Current Ratio = Current Assets
Current Liabilities

Current Ratio
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Ratios 1.26 1.58 1.44 1.67 2.13

Table 5. 1 Current Ratio Analysis

Figure 5. 1 Current Ratio Analysis

Interpretation
 Current ratio is always 2:1 it means the current assets two time of current
liability.
 After observing the figure the current ratio is fluctuating.
 In the year 2008 ratio is showing good shine.
 Hear ratio is increase as a increasing rate from 2004 to 2008.
 Company is no where near the ideal ratio in every year but every company can
not achieve this ratio.
 Current ratio is increased in 2007-08 as compared to 2003-04 because of
increase in Inventories 100.96% and 123.77 % increased in Cash and Bank
balance.
  Current ratio is decreased in 2005-06 as compared to the last year because of
increase in liabilities by 45.39% and 93.19% in increasing in Provision.

5.2.2 Quick Ratio

This ratio is designed to show the amount of cash available to meet immediate
payments. It is obtained by dividing the quick assets by quick liabilities. Quick
Assets are obtained by deducting stocks from current assets. Quick liabilities are
obtained by deducting bank over draft from current liabilities.
Quick Ratio = Quick Assets
Current Liabilities
Quick Ratio
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Ratios 1.2 1.5 1.4 1.6 2.0

Table 5. 2 Quick Ratio Analysis

Quick Ratios

2007-08; 2.0

2006-07; 1.6
2004-05; 1.5
2005--06; 1.4 Ratios
2003-04; 1.2

Figure 5. 2 Quick Ratio Analysis

Interpretation
 Standard Ratio is 1:1
 Company’s Quick Assets is more than Quick Liabilities for all these 5 years.
 In 2007-08 the ratio is increasing because of increase in bank and cash balance.
 So all the years has quick ratio exceeding 1, the firm is in position to meet its
immediate obligation in all the years.
  In 2005-06 quick ratio is decreased because the increase in quick assets is less
proportionate to the increased quick liabilities.
 The Quick ratio was at its peak in 2007-08, while was lowest in the 2004-05.
5.2.3 Networking Captial

Networking capital = Current Assets – Current Liabilities

Net working capital

Year 2003-04 2004-05 2005-06 2006-07 2007-08
Trend 4534.3 10497.8 13798.0 28050.0 61577.0

Table 5.3 Networking Capital

Figure 5.3 Networking capital

Interpretation
 This ratio represents that part of the long term funds represented by the net
worth and long term debt, which are permanently blocked in the current
assets.
 It is Increasing Double than year by year because of assets increasing fast
than liabilities.

5.3 Profitability Ratios

A company should earn profits to survive and grow over a long period of time. It
would be wrong to assume that every action initiated by management of company
should be aimed at maximizing profits, irrespective of social as well as
economical consequences. It is a fact that sufficient must be earned to sustain the
operation of the business to be able to obtain funds from investors for expansion
and growth and to contribute towards the responsibility for the welfare of the
society in business environment and globalization.
The profitability ratios are calculated to measure the operating efficiency of the
company.
The following Profitability Ratios are calculated for the company.
 Gross Profit Ratio
 Operating Profit Ratio
 Net Profit Ratio
 Rate Of Return On Investment
 Rate Of Return On Equity
 5.3.1 Gross Profit Ratio
This is the ratio expressing relationship between gross profit earned to net sales. It
is a useful indication of the profitability of business. This ratio is usually
expressed as percentage. The ratio shows whether the mark-up obtained on cost of
production is sufficient however it must cover its operating expenses.
Gross Profit Ratio = Gross Profit X 100
Sales
Gross profit ratio analysis
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Trend 29.8 31.7 32.6 33.7 33.0

Table 5.4 Gross Profit Ratio Analysis

Figure 5.4 Gross Profit Ratio Analysis

Interpretation
 GP Ratio shows how much efficient company is in Production.
 GP is decreasing 2007-08 due to higher production cost.
 Gross sales and services are increasing year by year so in effect Gross profit
ratio is icreasing year by year up to 2007.

5.3.2 Operating Profit Ratio

 This ratio shows the relation between Cost of Goods Sold + Operating Expenses
and Net Sales. It shows the efficiency of the company in managing the operating
costs base with respect to Sales. The higher the ratio, the less will be the margin
available to proprietors.
Operating Profit Ratio = COGS+Operating expences X 100
Sales
Operating ratio
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Trend 83.5 80.0 79.0 77.9 81.7

Table 5.5 Operating Profit Ratio Analysis

Figure 5.5 Operating Profit Ratio Analysis

Interpretation
 Operating ratio is lowest during current 2007.
 This shows that the expenses incurred to earn profit were less compared to the
previous two years.
 Operating ratio is decreses feom 2004 to anward decreasing rate.

 From the graph conclusion is made that company is not on the right track by
efficiently cutting down manufacturing, administrative and selling distribution
expenses.
5.3.3 Net Profit Ratio
= Net profit x 100
Net sales
Net profit ratio
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Trend 16.3 19.4 19.2 19.8 17.7

Table 5.6 Net Profit Ratio Analysis

Figure 5.6 Net Profit Ratio Analysis

Interpretation
 After observing the figure the ratio is fluctuating.
 Company has rise in its net profit in 2006-07 as compared to the previous year
because the company has increased its sales 41.45% .
 Though the company’s sale is continuously rising but the net profit is not so
much increased so management should take some steps to decrease its expenses.
 Sales is decrease in 2008 compare to 2007
 The overall ratio is showing good position of the company.
 5.3.4 Return On Investment
Rate of Return on Investment indicates the profitability of business and is very
much in use among financial analysts.
ROI= EBIT X 100
Total Assets

Return On Investment
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Trend 32.7 39.7 35.7 30.6 18.6

Table 5.7 Rate of Return on Investment Ratio Analysis

Figure 5.7 Rate of Return on Investment Ratio Analysis

Interpretation
 From the above observation it can be seen that ratio is fluctuating.
 In the year 2005-06 Rate of Return on Investment is slightly increase as
compared to previous year
 Ratio is decreasing after 2005 at adecreasing rate because of asseets increase
compare to sales.
 The company’s Total Assets is increased to 86.51%, so ROI is decreased so
conclusion made that company is not utilizing its assets and investment
efficiently.
5.3.5 Rate of Return on Equity
Rate of Return on Equity shows what percentage of profit is earned on the capital
invested by ordinary share holders.
Rate of Return on Equity = Profit for the Equity
Net worth
Rate of return on
equoty
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Trend % 22.2 11.5 7.1 10.0 5.5

Table 5.8 Rate of Return on Equity Ratio Analysis

Figure 5.8 Rate of Return on Equity Analysis

Interpretation
 ROE is remaining almost same Between 2005 to 2007, but it is decrease in2008
because the the company has increase share capital but profit not getting that
much increase.
 Company is getting same return on equity.
 As a result the share holders are getting higher return every year and investment
portfolio scheme selection was a judicious decision taken by the company.
 This happens because Profit and Share Capital both increasing same way.
 5.4 Asset Turnover Ratios
Asset Turnover Ratio are basically productivity ratios which measure the output
produced from the given input deployed. This relationship is shown as under
Productivity = Output
Input
Assets are inputs which are deployed to generate production (or sales). The same
set of assets when used intensively produces more output or sales. If the asset
turnover is high, it shows efficient or productive use of input.
The following Assets Turnover Ratios are calculated for the company.
 Total Assets Turnover
 Net Fixed Assets Turnover
 Net Working Capital Turnover
 Inventory Turnover Ratio
 Debtor Turnover (in times)

5.4.1 Total Asset Turnover Ratio

The amounts invested in business are invested in all assets jointly and sales are
affected through them to earn profits. Thus it is the ratio of Sales to Total Assets.
.It is the ratio which measures the efficiency with which assets were turned over a
period.
Total Asset Turnover Ratio = Sales
Total Assets
Total assets turnover ratio
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Trend 1.5 1.5 1.6 1.5 1.2

Table 5.9 Total Asset Turnover Ratio Analysis

 Figure 5.9 Total Asset Turnover Ratio Analysis

Interpretation
 The total assets turnover ratio is almost same in all years.
 The Assets turnover Ratio is near by 1.5 in all 5 years which shows effective
utilization of assets from the company’s view point.
 In the year 2005-06 ratio is increased because of company’s total assets is
increased by 24.52%, but sales is increased by 29.92%.So the ratio is increased
but in current year it is decreased because sale increasing by 41.45% and Assets
increasing by 49.28%.

5.4.2 Net Fixed Assets Turnover

To ascertain the efficiency & profitability of business the total fixed assets are
compared to sales. The more the sales in relation to the amount invested in fixed
assets, the more efficient is the use of fixed assets. It indicates higher efficiency. If the
sales are less as compared to investment in fixed assets it means that fixed assets are
not adequately utilized in business. Of course excessive sale is an indication of over
trading and is dangerous.
Net Fixed Assets Turnover Ratio = Sales
Net Fixed Assets
Total fixed assets turnover ratio
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Time 4.0 4.2 4.9 4.0 2.4
Table 5.10 Net Fixed Asset Turnover Ratio Analysis

Figure 5.10 Net Fixed Assets Turnover Ratio Analysis

Interpretation
 Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2006
and after that it has strated decline.Because sales as wellas assets boths are
equally increase.
 Net Fixed Assets Turnover Ratio is increasing year by year because of Sale is
increasing continuously.
 It indicates that the company maximizes the use of its fixed assets to earn profit
in the business so that whatever amount is invested by company in fixed asset,
gives maximum productivity which helps to increase sales as well as profit.
5.4.3 Inventory Turnover Ratio
Inventory Turnover Ratio: The no. of times the average stock is turned over during the
year is known as stock turnover ratio.
Inventory Turnover Ratio = COGS
Average stock
Total Inventory turnover ratio
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Time 30.3 22.6 24.3 19.8 16.0

Table 5. 11 Inventory Turnover Ratio Analysis

Figure 5. 11 Inventory Turnover Ratio Analysis

Interpretation
 From the above calculation we can say that the ratio is decreasing. It mens
inventory is not spdly convert in to sales. So that it is bad for the company.
 In 2003-04 ratio is increased as compared to after that all year so management
should take care about good efficiency of stock management.
 But in 2006 onward ratio is decreasing because of increase in COGS. So
company should devise a systematic operational plan for inventory control.
5.4.4 Average age of Inventories
This ratio indicates the waiting period of the investments in inventories and is
measured in days, weeks or months. Inventory turnover and average age of
inventories are inversely related.
Average age of Inventories Ratio = 360 days
Inventory Turnover
Average age of Inventories
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Days 11.9 15.9 14.8 18.2 22.4

Table 5. 12 Average age of Inventories Ratio Analysis

Figure 5. 12 Average age of Inventories Ratio Analysis

Interpretation
 This graph shows that inventory convert into cash in short time period.
 Inventory turnover ratio is low in 2003-04 So In this year inventory is converted
in cash 11.9 days.
 The inventory conversation in to cash time duration is increases from 2004 to
every year so the management should tray to efficient inventory conversation,so
it will It shows that company effectiveness utilizing its Inventories in quickly.
 5.4.5 Debtor Turnover Ratio
Debtor turnover ratio: The debtor turnovers suggest the no. of times the amount of
credit sale is collected during the year.
Debtor’s Turnover Ratio = Sales
Average Debtors
Debtors turn over in (times)
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Time 4.9 3.8 3.7 3.7 1.5

Table 5. 13 Debtor Turnover Ratio Analysis

Figure 5.13 Debtor Turnover Ratio Analysis

Interpretation
 Debtor turnover indicates how quickly the company can collect its credit sales
revenue.
 Here the ratio is continuously decreasing, so that the company’s collection of
credit sales is efficient management is improved its collection period every year
so it shows that the management have an ability to collect its money from his
debtors. So they can invest that money on Assets, HRD and other investments.

5.5 Finance Structure Ratios

Finance Structure Ratios indicate the relative mix or blending of owner’s funds and
outsiders’ debt funds in the total capital employed in the business. It should be noted
that equity funds are the prime fund which increase progressively through
reinvestment of profits, while outside debt funds are supplementary funds and are
added at the discretion of the management.
The following Finance Ratios are calculated for the company.
 Debt Ratio
 Debt-Equity Ratio
 Interest Coverage Ratio

5.5.1 Debt Ratio

Debt ratio indicates the long term debt out of the total capital employed.
Debt Ratio = Long Term Debt
Total Capital Employed

Table 5. 14 Debt Ratio Analysis

Debt Ratio
2003-04 2004-05 2005-06 2006-07 2007-08
0.028 0.384
Trend 4 0.0165 0.0114 0.0383

Figure 5. 14 Debt Ratio Analysis

Interpretation
 From the above calculation it seems that the ratio is fluctuating.
 In 2007-08 the ratio is increased as compared to the previous year because the
total loan funds are increased by 661.56%.
 In 2005-06 Company has issued equity Share and also loan is decreased.
  Its means that now company trying to increasing Trading on equity.

5.5.2 Debt-Equity Ratio

This ratio is only another form proprietary ratio and establishes relation between the
outside long term liabilities and owner funds. It shows the proportion of long term
external equity & internal Equities.
Debt Equity Ratio = Total Long Term debt
Share holder equity
Table 5.15 Debt - Equity Ratio Analysis
Debt- Equity Ratio
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Trend 0.027 0.012 0.011 0.030 0.376

Figure 5. 15 Debt-Equity Ratio Analysis

Interpretation
 It shows companies accumulated more equity than required company has to
refocus to its strategic policies and plans and try to accumulate more debt funds
in future so as to make the balance between debt and equity.
 There is only current year ratio is some what sufficient.
 5.5.3 Interest Coverage Ratio
Interest Coverage Ratio: The ratio indicates as to how many times the profit
covers the payment of interest on debentures and other long term loans hence it is
also known as times interest earned ratio. It measures the debt service capacity of
the firm in respect of fixed interest on long term debts.
Interest Coverage Ratio = EBIT
Interest
Intrest coverage ratio
Year 2003-04 2004-05 2005--06 2006-07 2007-08
Trend 3.4 5.0 4.5 4.2 21.9

Table 5. 16 Interest Coverage Ratio Analysis

Intrest coverage ratio

Trend

Figure 5. 16 Interest Coverage Ratio Analysis

Interpretation
 After observing the figure it shows that the ratio has mix trend up to 2006.
 In the year 2007-08 company has not much debt compare to EBIT so interest
coverage ratio is high but in 2007-08 company increasing its external debt so
company have pay more interest among its earnings so interest coverage ratio
falling down compare to previous year.
 Chapter 3.
FINDINGS AND
SUGGESIONS
FINDINGS

 Though the sales has been continuously increased from past 3 years but the
proportionate expenditure is also rising so overall not making any huge effect on
net profit of this company.
 Hear the in 2005 company has reinvest profit for business expansion it is good
shine for the company.
 The total expenditure is near by 80% of total income in every year.
 Every year PBT is near by 20% of total income.
 Fixed assets are efficiently utilized by the company due to which the profit of
the company is increasing every year.
 Liabilities is incressing rate it mean company has to developed business. And
purchase raw material on credit basis.
 Company has enough cash in hand so that in any condition company can take
Any Financial decision easily.
 All the years has quick ratio exceeding 1, the firm is in position to meet its
immediate obligation in all the years.
 GP Ratio shows how much efficient company is in Production.
 SU
GGESTION

 The company’s future plans for expansion seem clear due to increased
investment in Fixed Assets .Efficient use of these Assets has enabled the
company to observe an increased profit.
 Though the company’s sale is continuously rising but the net profit is not
so much increased so management should take some steps to decrease its
expenses.
 Company should try its best to increase sales and profit.
 The profit margin ratio shows decline in current year so that company
should tray to increase profit after tax
 Current ratio is very good it is 2.13:1 so company has fully utilize cash
liquidity for business development.
 Bibliography

Books:
 Annual Report of Wipro Limited for Financial Year 2004-05, 2006-07,2007-
08.
 Narayanaswamy R., (1998): “Financial Accounting”: A Managerial
Perspective, Prentice-Hall of India Private Ltd, New Delhi., Third Edition,
Reprint 2003
 Khan M.Y. and Jain P.K., (1992):”Financial Management”, Tata McGraw-Hill
Publishing Co Ltd., New Delhi., Third Edition.
.
Websites
 http://www.wipro.com
 http://www.bseindia.com//shareholding/shareholding_new.asp
 http://www.cmie.com//indutries//gdp.asp
 http://www.wipro.com/investors/annual_reports.htm

 http://www.wipro.com/investors/pdf_files/AR07_08_first_book_final.pdf
 http://www.wipro.com/investors/pdf_files/AR07_08_second_book_final.pdf
 http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_1.pdf
 http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_2.pdf
 http://www.wipro.com/investors/pdf_files/Wipro_annual%20report_2005-
06.pdf
 http://www.wipro.com/investors/pdf_files/Wipro_Annual_Report_2004_2005.
pdf