A Ratio analysis Report on

TATA CONSULTANCY SERVICES

By
Mohammed Hisham Jahan, Sanjana Singh, Devi Savani,
Tanamy Giri, Pooja Patel
 A Project ON
RATIO ANALYSIS
TATA CONSULTANCY SERVICES

By
Mohammed Hisham Jahan, Sanjana Singh, Devi Savani,
Tanamy Giri, Pooja Patel
MBA 1st Year

A report submitted in partial fulfillment of

the requirements of
THE MBA PROGRAM
(The Class of 2021)

For the Module

Accounting for Managers

To
Dr. Vinod Lakhwani
 TABLE OF CONTENTS

Acknowledgement
List of tables
List of Illustrations
Summary
1. Introduction
 ACKNOWLEDGEMENT

“It is not possible to prepare a project report without the assistance &
encouragement of other people. This one is certainly no exception.”
On the very outset of this report, I would like to extend my sincere & heartfelt
obligation towards all the personages who have helped me in this endeavor.
Without their active guidance, help, cooperation & encouragement, I would
not have made headway in the project.
I am extremely thankful and pay my gratitude to my faculty MR. VINOD
LAKHWANI for her/his valuable guidance and support on completion of this
project presently.
I extend my gratitude to AURO UNIVERSITY for giving me this opportunity.
I also acknowledge with a deep sense of reverence, my gratitude towards my
parents and members of my family, who have always supported me morally as
well as economically.
Last but not least gratitude goes to all of my friends who directly or indirectly
helped me to complete this project report.
Any omission in this brief acknowledgement does not mean lack of gratitude.
Thanking You
SANJANA SINGH, POOJA PATEL, MOHAMMED HISHAM JAHAN, DEVI
SAVANI, TANMAY GIRI
EXECUTIVE SUMMARY
The report analyzes the company's financial performance and performance in
November 2012. This report will provide evaluation and analysis of profit,
liquidity, performance and financial position of TCS using the financial
statements of FY 2012-2021.
In the analysis, financial estimates were used to obtain a significant review of
specific areas of the company's performance appraisal. The ratings were able
to provide a clear overview of the company's overall performance.
On average we can say that the company is on the profitable side. The Gross
Profit margin is very good which means that the direct costs are properly
monitored.
The company has a healthy credit rating which means it can rely on its
current assets to finance current debts and does not have to commit to
long-term debt.
The future looks bright, firstly due to repeated profitability and secondly
because of a healthy financial structure.
The analysis was done on the basis of ten years, giving us a good overview of
the company’s financial statement.
Given the nature of the business, it would be exciting to evaluate the
business by comparing the results of the previous year with the industry
average.
 INTRODUCTION

1.1 IT Industry
The technology industry continues to be revealed as a strong and growing
sector. The most important characteristic of technology is the extended impact
on the global economy and the job market. The lines are becoming blurred
between the direct growth of technology and the indirect influence it has on
every business and every facet of life.

Technology has led the way in global economic growth. The largest growth
comes from born tech companies, which have technology as a central part of
their identity. These firms have contributed 52% of total market value growth
since 2015. Another 20% of market value growth has come from companies
with a tech-led strategy that augments more traditional models.

CompTIA’s Cyberstates report describes the economic impacts of the

technology industry. The direct economic impact—the dollar value of goods
and services produced during a given year—amounts to 10.5% of U.S.
economic value, which translates to over $2.0 trillion. Beyond this, there are
indirect impacts, such as every job in IT services and custom software
development leading to an estimated 4.8 additional jobs created or supported
through direct, indirect or induced means.

In terms of industry specifics, IDC projects that the technology industry is on

pace to exceed $5.3 trillion in 2022. After the speed bump of 2020, the
industry is returning to its previous growth pattern of 5%-6% growth year over
year. The United States is the largest tech market in the world, representing
33% of the total, or approximately $1.8 trillion for 2022.
TCS, Infosys, HCL Technologies, Wipro Ltd. are some of the examples of the
companies of the IT industry. Amongst these, TCS, which is a subsidiary of
the TATA group, holds the top position in the industry.

1.2 TATA Group

Tata Group is an Indian multinational conglomerate covering basic business

sectors: chemicals, consumer products, energy, engineering, information
systems, building materials and services.

The Tata Group was founded as an independent trading firm in 1868 by

businessman and philanthropist Jamsetji Nusserwanji Tata and is
headquartered in Mumbai, India. It is one of the biggest and oldest industrial
groups in India. The group gained international recognition after purchasing
several global companies. Each Tata company operates independently under
the guidance and supervision of its own board of directors and shareholders.

Tata affiliates include Tata Chemicals, Tata Communications, Tata

Consultancy Services, Tata Consumer Products, Tata Elxsi, Tata Motors, Tata
Power, Tata Steel, Jamshedpur FC, Tanishq, Voltas, Tata Cliq, Tata Projects
Limited, Tata Capital, Titan, Trent, Indian Hotels Company Limited, TajAir,
Vistara, Cromā, and Tata Starbucks.
1.3. TATA CONSULTANCY SERVICES
Tata Consultancy Services Limited (TCS) is a subsidiary of Tata Group, an
Indian information technology consulting and business solutions company
operating in 46 countries worldwide.
TCS Mission Statement
“To help customers achieve their business objectives by providing innovative,
best-in-class consulting, IT solutions and services & to make it a joy for all
stakeholders to work with us.”
Tata Consultancy Services Ltd. is a public limited company incorporated on
19 January 1995 with a corporate identification number (CIN) of
L22210MH1995PLC084781.
TCS Limited was founded in 1968 by the organization Tata Sons Limited.
The registered office of the company is located at 9th Floor, Nirmal Building,
Nariman Point, Mumbai, Maharashtra.
N. Chandrasekaran is the chairman of the Tata consultancy services.
Rajesh Gopinathan is the CEO and Managing Director of Tata Consultancy
Services.
Its original contracts included credit card services to TISCO (now Tata Steel),
operating through the Inter-Branch Reconciliation System of the Central Bank
of India.
In 1975 TCS created an electronic depository and trading system called
SEMCOM of the Swiss company.
TCS also established India's first software research and development center
called Tata Research Development and Design Center in Pune, Maharashtra.
Tata Consultancy Services is listed on both, the Bombay Stock Exchange
(BSE) as well as on the National Stock Exchange (NSE). The company's shares
were first traded on the BSE and NSE on 25th August 2004.
Tata Consultancy Services ranks 1st in the computer software industry in
terms of sales revenues in the year 2020-21.
Tata Consultancy Services has been a profitable company for the past 24
years ended 31 March 2021.
 Research Methodology
The process of the study is divided into two stages. Firstely,
the selection of the company based on the market
capitalization as per the Nifty IT index from the ProwessIQ.
The top company based on the market capitalization is Tata
Consultancy Services which is selected for the research.
Secondly, the data of the last 10 years (2012-2021) is taken
from the ProwessIQ database and a ratio analysis is conducted
to observe trends.
Following ratio was used in this study:
Profitability ratio
Net profit ratio
Return on equity
Liquidity ratio
Current ratio
Quick ratio
Solvency ratio
Debt to equity ratio
Debt to capital employed ratio
Total assets to debt ratio
Interest coverage ratio
 RESULTS AND ANALYSIS
1. Profitability Ratios
Profitability ratios are calculated to analyse the earning capacity of the
business which is the outcome of utilisation of resources employed in
the business is used to evaluate the company’s ability to generate
income as compared to its expenses and other cost associated with the
generation of income during a particular period.
The ratios used to analyse the profitability of the business:
1.1. Net Profit Ratio
1.2. Return on Equity
1.2. Net Profit Ratio
Net Profit Ratio is a profitability ratio that measures the company’s
profits to the total amount of money brought into the business.
It is a measure of net profit margin in relation to revenue from
operations. It reflects the overall efficiency of the business.
It is computed as follows:

INTERPRETATION
1.2. Return on equity
Return on Equity (ROE) measures the rate of return that the owners of
common stock of a company receive on their shareholdings. It is the
measure of a company’s annual return divided by the value of its total
shareholder’s equity, expressed as a percentage. It signifies how good
the company is in generating returns on the investment it received from
its shareholders.
It is computed as follows:

INTERPRETATION

2. Liquidity Ratios
Liquidity ratios are a type of financial ratios used to measure the
short-term solvency of the business. It helps to determine the firm’s
ability to meet its current obligation. It helps to determine if a company
can use its current or liquid assets to cover its current liabilities.
The ratios used to analyse the liquidity of the business:
2.1. Current Ratio
2.2. Quick Ratio
2.1. Current Ratio
The current ratio is the proportion of current assets to current
liabilities. It measures a company's ability to pay short-term obligations
or those that have to be repaid within one year. It tells investors and
analysts how a company can increase current assets to meet its current
debt and other payables.

It is computed as follows:

INTERPRETATION

2.2. Quick Ratio

The quick assets are defined as those assets which are quickly
convertible into cash. It is used as a measure of the liquidity position of
the business.
It is calculated to serve as a supplementary check on liquidity position
of the business and is therefore, also known as ‘Acid-Test Ratio’.
It is computed as follows:
 INTERPRETATION

3. Solvency Ratios
Solvency ratios are the ratios that help to examine a company’s financial
health. It enables the company to determine whether the company can
meet its financial obligations in the long term.
The ratios used to analyse the solvency of the business:
3.1. Debt-Equity Ratio
3.2. Debt to Capital Employed ratio
3.3. Total Assets to Debt Ratio
3.4. Interest Coverage Ratio
3.1. Debt-Equity Ratio
Debt-Equity Ratio is a measure of the degree to which a company is
financing its operations through debt versus wholly owned fund. It
reflects the ability of shareholder equity to cover all outstanding debts in
the event of a business downturn.
The debt-to-equity ratio compares a company’s total liabilities to its
shareholder equity and can be used to evaluate how much leverage a
company is using.
It is computed as follows:

INTERPRETATION

3.2. Debt to Capital Employed ratio

The Debt to capital employed ratio refers to the ratio of long-term debt
to the total of external and internal funds. It is a measurement of a
company's financial leverage.
It is computed as follows:
VLE
INTERPRETATION
3.3. Total Assets to Debt Ratio
This ratio measures the extent of the coverage of long-term debts by
assets.
It is computed as follows:
INTERPRETATION

3.4. Interest Coverage Ratio

The interest coverage ratio is a solvency ratio used to determine how
easily a company can pay interest on its outstanding debt. The interest
coverage ratio is calculated by dividing a company's earnings before
interest and taxes (EBIT) by its interest expense during a given period.
It is computed as follows:

INTERPRETATION

CONCLUSION
So henceforth we conclude that financial estimates are the most
important and important part of any business. It describes the financial
status of firms.
As the data show that TCS is an international service and has expanded
its service to various product offerings but on the other hand TCS gains
customer trust and offers a wide range of products but also orders on
the customer side of various services in the software at a reasonable
price and more customers friendship and friendship.
The financial statements make it clear that TCS 'financial position is
very popular with customers and is distributed internationally and
helps to reduce the economy but sometimes fails to maintain a certain
position on the other hand the company offers high profits because you
get high profit every company has swot analysis.
A company's financial performance can be assessed by assessing its
financial viability and growth. Liquidity is the company's ability to meet
its liabilities. It helps creditors, banks and other financial institutions to
make decisions about lending to the company concerned Profit.
The company's ability to make a profit and its efficiency in using assets
to increase profits. The study concluded that the "TATA CONSULTANCY
SERVICES" position for liquidity and solvency is considered satisfactory.