ACKNOWLEDGEMENT

The successful completion of this project required a lot of attention and support. 
We acknowledge with gratitude to Dr. MANOJ KUMAR for providing us with the opportunity
of working on this insightful project and guiding us throughout this journey of learning. 
This project has been a source of great learning and productive collaboration for us as a group.
We hope to have done justice to the project assigned.

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 TABLE OF CONTENTS

TOPICS PAGE NO.

Introduction 4

Objectives and Methodology 5

Financial Statement Analysis 7

Significant Accounting Policies 11

Ratio Analysis 15

Cash Flow Statement Analysis 23

Competitor Analysis 24

Other Policies 26

Conclusion 27

Contribution Chart 28

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Introduction
Wipro Limited is a major worldwide IT services, counselling and business measure
administrations organization. The organization was consolidated on 29 th Dec 1945 in Amalner,
Maharashtra and its founder Mohamed Premji then named it as "Western India Palm Refined Oil
Limited", later shortened to "Wipro". They bridle the potency of cognitive computing, hyper-
computerization, cloud, investigation and developing innovations to enable their clients to
change in accordance with the serious world and make them fruitful. Wipro is an association
known in general to the world for its exhaustive plan of organizations, solid duty to
supportability and incredible corporate citizenship. Wipro has in excess of 180,000 submitted
delegates serving clients across six landmasses. They discover considerations and arrive at an
undeniable determination to create a prevalent and a solid new future.
Wipro Ltd. Being a major player of the IT industry works through two fragments: Industrial
Technology Services and Industrial Technology Products. The Company's IT Services business
gives an extent of IT and IT-engaged organizations. India's Industrial Technological Services
industry was considered in Mumbai in the year 1967 with the development of TCS which united
with Burroughs in 1977, which began India's charge of IT administrations.
The IT sector has extended its promise to our country’s Gross Domestic Product to 7.7% in 2017
from 1.2% in 1998. According to NASSCOM, the totalled revenues of US$180 billion in 2019,
with send out income remaining at US$99 billion and domestic income at US$48 billion,
developing by over 13%. Starting at 2020, our country's Industrial Technology sector’s
workforce represents 4.36 million employees. The US represents 66% of India's Industrial
Technology organizations exports.
Wipro Limited, has been positioned as the third quickest developing worldwide IT
administrations brand in 2019 out of an examination directed by Brand Finance, the world's
driving image valuation firm. Wipro is additionally among the main 10 most significant brands
in the worldwide IT administrations area.
As per Brand Finance's IT Services yearly report for 2019, which highlights 15 driving brands in
the fragment, Wipro has an absolute brand estimation of USD 4.002 billion, up 25% on year,
rising as probably the most grounded brand in the classification with an AA+ Brand rating.

Brand Finance, in their official public statement noticed that Wipro's huge interests in advanced
change capacities, specialty acquisitions, and an ongoing brand revive, have impelled it to the
third quickest developing brand in the section.

3
Objective and Methodology
To analyse your Wipro’s financial position, performance and do a competitive analysis of Wipro
Ltd. based on the strength, weaknesses, opportunities and threats of its competitors.
SWOT Analysis analyzes the strengths, weaknesses, opportunities and threats of the Wipro. The
strengths and weakness are the internal factors that affect the company whereas opportunities
and threats are the external factor on which company has to regularly work upon. SWOT
analysis helps Wipro to benchmark its performance when compared with competitors. Wipro is
distinguished as one of the leading brand in Information Technology.

The strengths, weaknesses, opportunities and threats of Wipro are mentioned below:
Strengths
 High standard of quality
 Wide range of research and development Service
 Mega partners and clients like- Cisco, Microsoft, IBM, Oracle
 Highly skilled workforce

Weaknesses
 Less number of Free-Floating Stock
 Other group of companies operate on low margins
 Lack of product range offered by the company
 Day inventory is comparatively higher than the competitors

Opportunities
 Potential domestic market
 Technological enhancement for better coverage and retention
 Current environment and future policies that will lead to more and more technological
usage
 Diversification in brand product category and consultancy services will lead to better
growth

Threats
 Intense competition
 Increasing cost of human capital
 Slowdown of domestic and other major economies where clients are based
 No supply of innovative products or services

4
Areas of strengths and weaknesses are provided below:
 The company has many clients and partner who are well established in their field. We can
take the example of Cisco, Microsoft, and Oracle. This describes the well-established
professional relationship among the Industries. Wipro is well known organization for its
professional and intellectual workforce. Currently Wipro have 1, 75,000 employees. It
can attract qualified human resource and adapting them to the organization’s
environment. The technology that the organization provides is far better than many of its
competitors. The company trying its level best to keep themselves updated about the
current changes as well as changes provided by their competitors. In share market the
company has an increase of around 4% currently and has strong momentum as well.
The annual profit is being increasing since last two years
 One of the major weaknesses of Wipro is that it has lesser number of product varieties.
This leads to coverage of small amount of people. The inventories that Wipro uses has
comparatively higher rates than the competitors and leads to lesser profit margin

Current Opportunities and Threats:

 In the present scenario world is facing Covid-19 and a big slowdown in the economies. In
the scenario people are connected with each other through technology. Thus, enhancing
and upgrading the technology will directly influence an organization’s profitability and
growth. People are getting more aware about new technology and usage of internet thus
moving forward with some innovative idea will surely lead to profitable state.
 The threats can be the rivals especially IBM which is far more compatible in research and
development. The other aspects that can work as threat is unacceptance of any innovative
idea that company might come up with. If one needs to operate for larger amount of
people, he must be very much informed about its operating population. In simple terms
population need to be aware about presence and usage of the technology. One of the
biggest challenges for Wipro is to keep track of all new technologies and keep working
on R&D to upgrade its technology otherwise rivals will take over its markets.

5
 Opportunities Threats/Challanges

technological well established

upgradation competitors

Innovative ideas changing environment

Recent anecdote:
Wipro Ltd on Thursday said it has consented to a conclusive arrangement to obtain 4C, one of
the biggest Salesforce accomplices in the United Kingdom, Middle East and Europe for 68
million euros.
The securing, seen as Wipro's methodology to grow in Europe, is required to shut in the
subsequent quarter finished 30 September.
Settled in Belgium, 4C is a free Salesforce Platinum Partner with profound abilities over
numerous Salesforce mists including deals, showcasing, and field benefits and has some
expertise in changing Quote-to-Cash measures with Salesforce's arrange, value, quote (CPQ) and
charging arrangements.
With more than 350 workers based out of workplaces in Paris, London, Brussels, Dubai 4C has a
Salesforce practice in the United Kingdom, France, Benelux, the Nordics and the United Arab
Emirates districts.
Financial Statements Analysis- Face Presentation:
The period of reporting for the Indian firms is 1st April to 31st March & the period of reporting
for US firm IBM is 1st January to 31st December.
When we observe the Balance sheet of Indian Firms, the order of Assets, Liabilities & Equity, it
is Assets, Equity and Liabilities. When we observe the Order in the financial statements of IBM,
the order is Assets, Liabilities & Equity.
Also, when we observe the line items in Liabilities and assets, the order of the line items in
financial statements of Indian Firms will be in the order of Low liquidity to High liquidity. In
contrast when we observe the Line items in financial statements of IBM, the order will be of
High Liquidity to low liquidity.
The reason for such deviation is, the Indian firms follow IND AS framework for Presentation of
financial statements. While the financial statements of IBM are prepared and presented as per US
GAAP.

6
Extract of Balance sheet of WIPRO

7
EXTRACT OF BALANCE SHEET OF TCS

8
EXTRACT OF BALANCE SHEET OF IBM

9
A glance of Income statement across the companies:

Significant Accounting Policies:

Revenue Recognition:

Wipro:
FY 2017-18, company recognized revenue based on based on IND AS 18.
Revenue From
Fixed Price Contracts: Percentage completion method is used for recognition.
It involves various estimates like total expected contract revenue and costs. If estimates indicate
the probability of loss, the loss need to be accommodated for in the period in which the loss
becomes likely.

FY 2018-19, company recognized revenue based on IND AS115, as per the statutory
requirement.
“As per the IND AS 115, the company applies the concept of,
Relative standalone selling price: For separately recognizable performance obligation
deliverables. Cost-Plus margin approach: Company was not able to determine the standalone
selling price. Percentage completion method: Fixed price contracts. If estimates indicate the
probability of loss, the loss need to be accommodated for in the period in which the loss becomes
likely.”
FY 2019-20: Same as FY 2018-19
TCS:

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FY 2017-18
Recognized revenue as per IND AS 18
FY 2018-19,
Recognized revenue as per IND AS 115 as per the statutory requirement
Revenue from
Job, Material & time contracts: Recognised on the basis of units of output delivered
Support services & Fixed price maintenance: Recognised based on time elapse mode
Fixed Price Contracts: Recognized on the basis of Percentage of completion method etc.
TCS: FY 2019-20, same as FY 2019-20.
IBM:
FY2017
Company recognize revenue as per the principles of US GAAP.
Revenue from
License fee for Software: At the inception of license term
Fixed price maintenance and support services: Recognized based on time elapse mode.
Revenue from Hardware Sales: Recognised when there are no unfulfilled obligations and risk of
loss has been transferred to client.
If estimates indicate the probability of loss, the loss has to provided immediately.
2018 & 2019: Same as 2017.
Therefore, from the above, all the firms have applied the revenue recognition policies
consistently. The companies have recognized revenue on the basis of applicable standards and
Generally accepted accounting policies (GAAP) and also, they have applied various methods to
recognize revenue based on the crux of the contact to present a fair presentation of financial
statements.
The companies have followed conservative approach. We can observe that, companies have
applied polices to estimate losses and provide for in the income statement and also, they
recognize revenue only when the organization meets all the performance obligations relating to
contract.
Inventory valuation policy:
Wipro: The inventory valuation policy has been consistent for wipro throughout the recent
years. Wipro has valued its inventory at lower of cost and net value including necessary

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provision for obsolescence. The cost of the inventories are determined using the weighted
average method.
TCS: The inventory valuation policy has been consistent for TCS throughout the recent years.
“Inventories are carried at lower of net realisable value or Cost. The cost of sub-assemblies, raw
materials, and components is determined on a weighted average basis. Cost of finished
goods produced or purchased by the Group includes direct material and labour cost and a
proportion of manufacturing overheads.”

IBM: The inventory valuation policy has been consistent for IBM throughout the recent years.
“Inventories consisting of Raw materials, work in process and finished goods are stated at the
lower of average cost or net realizable value. Cash flows related to the sale of inventories are
reflected in net cash provided by operating activities in the Consolidated Statement of Cash
Flows.”

Depreciation Policies:
Wipro:
Wipro has been using straight-line method in the recent years where its asset value decreased
over the estimated useful life. Assets which are procured under finance lease are depreciated
over the more limited of the lease term or estimated useful life. As per their approaches land can't
be depreciated. These strategies are consistent in all the recent years. By analysing its
depreciation figures, Wipro shows conservative approach.
IBM:
In IBM, Depreciation is perceived on straight-line basis for Fixed assets over the estimated
useful life. If an asset is contract explicit, at that point the depreciation period is the more limited
of the useful existence of the contract term or the asset. Depreciation policy has been consistent
with the way organization does its business in the recent years. IBM also shows conservative
approach according to its depreciation figures.
TCS:
TCS depreciates their assets on SLM basis over the useful estimated lives. The estimated
residual value and useful life of assets are investigated yearly and with the impact of any
adjustments in estimate is represented on a prospective basis. TCS has been perceived same
depreciation approaches in the recent years. It is following aggressive approach when compared
with the depreciation figures of other peer companies. Thus, its net profit is lower than Wipro
and IBM.
Fixed Assets Accounting Policies:
All the organizations chosen has been using the concept of Historical cost concept model for
fixed assets and there are no revaluations happened in the recent years.
Impairment of Assets:

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Wipro
Wipro test its goodwill, intangible assets and investments in subsidiaries for impairment at least
once per year and where such an event occurs when the recoverable amount i.e. the current value
of an asset is less than the book or carrying value of the same, the company show them as
impairment losses if any. The Company assesses for impairment on acquired intangible assets
which has a finite useful life, whether their current carrying amount is recoverable or not. The
cost price of property-plant and equipment are measures, price less accumulated depreciation and
impairment losses if any arises during the financial period. Cost includes all the expenditures
directly associated to acquire the asset and is ready to use. General and specifying expenditures
that are directly related to the construction of an assets are capitalized then as a part of cost only.
Also, capital work in progress is calculated at cost less any impairment losses occurred during
the financial period.
Reasons: The impairment was deducted from the invested equity the impairment is on account
of the value of step subsidiary at Wipro LLC. This loss is occurred due to the uncertainties on
account of Affordable Care Act. Also, impairment loss charges on the software platform were
recognized through acquisitions.
Implication: The impairment was shown as an expense in the income statement, which reduced
the income and in the adjustment of the cash flow statement to calculate cash flow from
operating activities.
TCS
TCS assesses every year at the time of preparation of balance sheet that whether any assets or
group of assets have any impairment changes or not. Ind AS 109 additionally necessitates that
any normal misfortunes to be estimated through the impairments if the organization have any.
The organization evaluates lifetime anticipated misfortunes of all the agreement resources and all
exchange receivables that don't establish any money related exchange. Property-plant and types
of gear are estimated at a cost which is the buying cost and any immediate uses caused to carry
advantages for its working conditions for its expected use, less the gather devaluation (other than
any freehold land), a hindrance misfortune assuming any.

Reasons: Impairment charges in values of investments in subsidiaries was shown in the

consolidated financial statements.
Implication: The impairment loss was deducted from income in the income statement of the
subsidiary and had the same impact on the consolidated balance sheet.

IBM
The application of impairment accounting and business combinations related to it requires a
significant estimation and assumption. The accounting method for business combination requires
to estimate the assets’ fair value that is being acquired by the company including all separately
identifiable tangible assets, intangible assets, liabilities assumed and any interest amount which
is not under the control of business, to properly allocate the consideration for purchase price. The
test for impairment on assets, other than goodwill requires proper allocation of cash flows to
estimate the actual fair value. They annually review goodwill for impairment if such
circumstances arise where the carrying value of goodwill may not be recoverable.

13
 Implication: There was no material impairment loss in the case of IBM.

Financial Analysis- (Ratio Analysis)

1. Liquidity Ratio
Liquidity means an organization’s capacity to dilute its assets into cash quickly without
changing its price to a large extent. Liquidity ratios help in assessing an organization’s
ability to meet its current liabilities using its current assets.
 Current Ratio
“The current ratio (CR) is equal to total current assets divided by total current liabilities.
It indicates the extent to which current assets can be used to pay off current liabilities.”
Current Ratio = Current Assets /Current Liabilities
Wipro LTD

Particulars 2019-2020 2018-2019 2017-2018

Current Assets/ Current Liabilities 519851/216393 571960/214350 506156/213507

Ratio 2.40:1 2.67:1 2.37:1

TCS
Particulars 2019-2020 2018-2019 2017-2018

Current Assets/ Current Liabilities 90237/27060 92131/22084 81224/17828

Ratio 3.33:1 4.17:1 4.56:1

IBM

Particulars 2019-2020 2018-2019 2017-2018

Current Assets/ Current Liabilities 38,420 /37,701 49,146/38,227 49,735/37,363

Ratio 1.02:1 1.29:1 1.33:1

Remarks: The current ratio of Wipro Ltd. was consistent over all three past years which is near
to 2:1, its competitors' TCS and IBM also show a consistent current ratio throughout the three
years this means that they can meet up their current liabilities with the current assets. For TCS
the current Ratio is the highest among the three.

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  Quick Ratio
“It indicates the ability of an organization to extent to aid off its current liabilities using
its liquid current assets which includes cash, marketable securities, and accounts
receivables. The quick ratio is also called as the acid test ratio.”

“Quick ratio = Current Assets – Inventory – Advances – Prepayments"

Current Liabilities

Wipro
Particulars 2019-2020 2018-2019 2017-2018

Quick Assets / Current Liabilities 517180/216393 568028/214350 501742/213507

Ratio 2.39:1 2.65:1 2.35:1

TCS
Particulars 2019-2020 2018-2019 2017-2018

Quick Assets / Current Liabilities 90110/27060 92090/22084 81118/17828

Ratio 3.33:1 4.17:1 4.55:1

IBM
Particulars 2019-2020 2018-2019 2017-2018

Quick Assets/ Current Liabilities 34700/37,701 45086/38,227 46292/37,363

Ratio 0.92:1 1.18:1 1.24:1

Remarks: The quick ratio of Wipro ltd shows a consistent rate which states that it can meet its
current liabilities with quick assets. For TCS and IBM, they both have a consistent rate but here
also TCs showed the highest ratio.
2. Efficiency ratio
Efficiency ratio also is known as activity ratios, is used to measure an organization’s
efficiency to use its assets such as inventories, account receivables, working capital, and
fixed assets.
 Accounts Receivables Turnover Ratio
This ratio measures the number of times average debtors are turned over during a
financial year. It indicates the frequency with which the sundry debtors in an organization
are converted into cash.
“Accounts Receivable turnover Ratio = Net Credit Sales ”.
Average Accounts Receivables

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 Wipro

Particulars 2019-2020 2018-2019 2017-2018

Net Credit Sales/Average Accounts 610232/102481.5 585845/100739.5 544871/97918

Receivables
Ratio 5.95 times 5.81 times 5.56 times

TCS
Particulars 2019-2020 2018-2019 2017-2018

Net Credit Sales/Average Accounts Receivables 156949/28939 146463/26144.5 123104/23780

Ratio 5.42 times 5.60 times 5.17

IBM
Particulars 2019-2020 2018-2019 2017-2018

Net Credit Sales/Average Accounts Receivables 77147 /19528 79591/22916.5 79139/21382.5

Ratio 3.95 3.47 3.70

Remarks: The ratio states that in Wipro there is a 5-time cycle for trade receivables and the
same is for TCS but IBM is around 3 times. That means Wipro is efficient in recovering and
turning their debtors in an accounting period.
 “Account Payable Turnover Ratio = Net Credit purchases "
Working Capital Turnover Ratio = Net sales .
Average Working Capital

Wipro

Particulars 2019-2020 2018-2019 2017-2018

Net Sales/ Average Working Capital 610232/151729 585845/178778 544871/146324.5

Ratio 4.02 times 3.27 times 3.72 times

TCS
Particulars 2019-2020 2018-2019 2017-2018

Net Sales/ Average Working Capital 156949/31588.5 146463/35023.5 123104/31698

Ratio 4.96 times 4.18 times 3.88 times

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 IBM
Particulars 2019-2020 2018-2019 2017-2018

Net Sales/ Average Working Capital 77147/3595 79591/5459.5 79139/6186

Ratio 21.4 times 14.57 times 12.79 times

Remarks: The working capital requirement of the Indian firm is less as compare to international
firm IBM. The ratio is consistent for Wipro over the years.
3. Solvency Ratio
Solvency ratios are to understand the ability of an organization to meet its long term debt
and the interest on those debts.
 Debt-Equity Ratio
The debt-equity ratio is a financial ratio that is used to compare an organization's total
debt against total equity. It reveals the relationship between external equities and internal
equities.
“Debt-Equity Ratio = Total Liabilities__”_
Shareholders’ Equity
Wipro

Particulars 2019-2020 2018-2019 2017-2018

Total Liabilities/Shareholders’ Equity 257697/114270 262385/120680 275260/90480

Ratio 2.25times 2.17 times 3.04times

TCS

Particulars 2019-2020 2018-2019 2017-2018

Total Liabilities/Shareholders’ Equity 36150/84126 25044/89446 20766/85128

Ratio 0.42 times 0.27 times 0.24 times

IBM

Particulars 2019-2020 2018-2019 2017-2018

Total Liabilities/Shareholders’ Equity 131202/55895 106452/55151 107631/54566

Ratio 2.34 times 1.93 times 1.97 times

Remarks: The combination of external and internal equity of Wipro is high in

comparison to its competitor firms. As the ratio in Wipro is relatively high that TCS and
somewhat similar to IBM.

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  Proprietary ratio
It is also referred to as Capital Ratio or Net Worth to Total Assets Ratio. This ratio is
used to establish the relationship between shareholder funds and the total assets of an
organization.
“Proprietary ratio = Shareholder’s Funds/ Total Assets x 100”

Wipro
Particulars 2019-2020 2018-2019 2017-2018

Shareholders’ Funds/Total Assets 555092/812789 566863/829248 481673/756933

Ratio 68.29% 68.35% 63.63%

TCS

Particulars 2019-2020 2018-2019 2017-2018

Shareholders’ Funds/Total Assets 84749/120899 89899/114943 85530/106296

Ratio 70.09% 78.21% 80.46%

IBM
Particulars 2019-2020 2018-2019 2017-2018

Shareholders’ Funds/Total Assets 20985/152186 16929/123382 17725/125356

Ratio 13.78% 13.72% 14.13%

Remarks: The above ratio suggests that Wipro and TCS have higher internal liabilities whereas
IBM is more funded through external liabilities. That shows there is more control of shareholders
in Wipro and TCS.
 Debt to Total Assets ratio
Debt to Total assets ratio indicates the fraction between long term debts and total assets,
which shows that if an organization is able to meet its long-term obligations or not.
.Debt to Total assets ratio = Long Term Debt /Total assets
Wipro

Particulars 2019-2020 2018-2019 2017-2018

Long Term Debt/Total assets 41304/812789 48035/829248 61753/756933

Ratio 0.08times 0.08times 0.12times

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 TCS

Particulars 2019-2020 2018-2019 2017-2018

Long Term Debt/Total assets 9090/120899 2960/114943 2938/106296

Ratio 0.075times 0.025times 0.027times

IBM
Particulars 2019-2020 2018-2019 2017-2018

Long Term Debt/Total assets 54102/152186 35605/123382 39837/125356

Ratio 0.355times 0.288times 0.317times

Remarks: The above ratio shows that for all the three firms the long-term debt is
comparatively low to total assets which means they have more internal liabilities.

4. Profitability Ratio
A profitability ratio is used to measure an organization’s profitability to assess its
performance. In other words, Profitability ratios measure an organization’s performance
in generating earnings over related expenses over a specified time.
 Net Profit Ratio
The net profit ration shows the relationship between the net profit after tax and net sales
of an organization during a financial period. Net profit is calculated through adjustments
of operating and non-operating expenses from gross profit.
Net Profit Ratio = (Net Profit after tax/Net sales) x 100

Wipro
Particulars 2019-2020 2018-2019 2017-2018

Net Profit after tax/Net Sales 97718/610232 90179/585845 80031/544871

Ratio 16.01% 15.39% 14.68%

TCS
Particulars 2019-2020 2018-2019 2017-2018

Net Profit after tax/Net Sales 32447/156949 31562/146463 25880/123104

Ratio 20.67% 21.54% 21.02%

IBM

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 Particulars 2019-2020 2018-2019 2017-2018

Net Profit after tax/Net Sales 9431/77147 8728/79591 5753/79139

Ratio 12.22% 10.96% 7.26%

Remarks: The net profit shows that Wipro is earning a net income of around 16% and TCS
around 20%, for IBM the profit is 12%. That means after all the expenses and taxes they can
generate this much percentage of profit over their net sales.
 Return on Assets (ROA)
This ratio measures how profitable an organization is relative to its total assets.
ROA = Net Income/ Total Assets
Wipro

Particulars 2019-2020 2018-2019 2017-2018

Net Income/Total Assets 97718/812789 90179/829248 80031/756933

Ratio 12.02% 10.87% 10.57%

TCS
Particulars 2019-2020 2018-2019 2017-2018

Net Income/Total Assets 32447/120899 31562/114943 25880/106296

Ratio 26.83% 27.45% 24.34%

IBM

Particulars 2019-2020 2018-2019 2017-2018

Net Income/Total Assets 9431/152186 8128/123382 5753/125356

Ratio 6.19% 6.58% 4.58%

Remarks: TCS is more profitable in terms of total assets to net income comparison than
Wipro. But the growth rate for all the firms is consistent. This compares how much these
firms can earn over its total assets.
THE DUPONT ANALYSIS
DuPont equation is named after the US chemical company, The DuPont Corporation in
the 1920s. The equation is a financial ratio used to analyses an organization’s ability to
increase its return on equity.
ROE = Net Income x Revenues x Total Assets .=== Net Income .
Revenues x Total Assets x Shareholders’ Equity Shareholders’ Equity

20
 WIPRO

Particulars 2019-2020 2018-2019 2017-2018

Net Income/Revenues x 97718 x 610232x 812789 90178 x 585845 x 829248 80031 x 544871 x 756933
Revenues/Total Assets 610232 812789 553217 585845 829248 564226 544871 756933 479263
x Total Assets
/Shareholders’ Equity

Ratio 17.66% 15.98% 16.69%

TCS

Particulars 2019-2020 2018-2019 2017-2018

Net Income/Revenues x 32447x 156949x120899 31562x 146463x 114943 25880x 123104 x106296
Revenues/Total Assets 156949 120899 84126 146463 114943 89446 123104 106296 85128
x Total Assets
/Shareholders’ Equity

Ratio 38.56% 35.28% 30.40%

IBM

Particulars 2019-2020 2018-2019 2017-2018

Net Income/Revenues x 9431x 77147x 152186 8728 x79591x 123382 5753x 79139x 125356
Revenues/Total Assets 77147 152186 20985 79591 123382 16929 79139 125356 17725
x Total Assets
/Shareholders’ Equity

Ratio 44.94% 51.55% 32.45%

Remarks: The return on equity for Wipro is the highest among the three that shows they are
utilizing the shareholder fund correctly. And for the competitors, their share is also increasing
per year.
Note:

21
  The ratio analysis was calculated on consolidated figures of the three companies
 The values for IBM are in dollars no conversion for ratios is considered.

Cashflow Statement Analysis:

WIPRO Cash Flow Statement Analysis for FY2020

The flow of cash from operating activities of Wipro during Financial Year 2020 stood at Rs
100.6 billion, a decrease of 13.27% on a YoY basis.

The flow of Cash from investing activities during the Financial Year 2020 stood at Rs 34
billion, a decrease of 32% on a YoY basis.

The flow of Cash from financing activities during Financial Year 2020 stood at Rs -150.9
billion, a decrease of 67.3% on a YoY basis.

Overall, net cash flows for the company during Financial Year 2020 stood at Rs -16.3 billion
from the Rs 117 billion net cash flows seen during Financial Year 2019.

On analysis, we have found that the huge outflow of cash in the form of financing activities is
because of Buyback of shares. During the year FY 2020, the company has bought back 323
million shares which had resulted to the company, a cash outflow to the extent of 105 Billion.
Buyback of shares: Normally organizations which have huge reserves and in the stage of
maturity goes for the buyback in order to maximize the earnings to the shareholders after the
buyback.

The cash flow from operating activities and investing activities are highly positive whereas the
cashflow from financing activities is negative. Hence, we can infer that the company is in a
matured phase.

TCS Cash Flow Statement Analysis

The flow of cash from operating activities of TCS during Financial Year 2020 stood at Rs 323
billion, an improvement of 12.93% on a YoY basis.

22
The flow of cash from Investing activities during Financial Year 2020 stood at Rs 86 billion,
an increase of 43.75% on a YoY basis.

The flow of cash from financing activities during Financial Year 2020 stood at Rs -400
billion.

Overall, net cash flows for the company during Financial Year 2020 stood at Rs 10 billion
from the Rs 23 billion net cash flows seen during Financial Year 2019.

It is observed from the cash flow analysis that TCS has a highly positive cash flow from
operating and investing activities whereas it has highly negative cash flow from financing
activities. Although the net cash flow for the company has declined in FY20, yet it can be
inferred that TCS too is in its maturity phase and the company is either buying back its shares
or paying dividends well to its shareholders.

IBM Cash Flow Statement Analysis

The flow of cash from operating activities of IBM during Financial Year 2019 stood at USD
14770 million, a decrease of 3.1% on a YoY basis.

The flow of cash from Investing activities during Financial Year 2019 stood at USD -26936
million, a decrease of 44.8% on a YoY basis.

The flow of cash from financing activities during Financial Year 2019 stood at USD 9042
million.

Overall, net cash flows for the company during Financial Year 2019 stood at USD -3290
million from the USD -630 million net cash flows seen during Financial Year 2018.

IBM is having a positive cashflow from operating and financing activities but a negative
cashflow from investing activities. There is a decrease in the net cashflow from operating
activities from the previous year, whereas the cashflow from financing activities increased.
The company witnessed a negative net cashflow and all of this together reveals that the
company is focusing on investing and expanding its firm, that is, the firm is on a growth
phase at present.

Competitor analysis:

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TCS is viewed as one of Wipro's top rivals. TCS's central command is in Mumbai,
Maharashtra, and was established in 1968. Like Wipro, TCS additionally works inside the IT
Services industry. TCS creates 269% of Wipro's income. Also, TCS is a firm with no Debt
and hence the huge difference in its revenue is witnessed.

SWOT analysis of TCS:

STRENGTH
 Effectively using Shareholders
fund - Return on equity (ROE)
improving since last 2 year
 Net profit is increasing with
increasing Profit Margin (QoQ)
 Company with No Debt.
 Solid money producing capacity
from centre business -
Improving Cash Flow from
activity for most recent 2 years.
WEAKNESS
 Decline in Quarterly Net Profit
with falling Profit Margin
(YoY).
 The net cashflows have been
declining.
 Book Value Per Share
deteriorating for last 2 years.

 For the recent 2 year, the yearly

net profits have been improving.

OPPORTUNITIES THREATS
 Merchants redesigned proposal  Non-Core Income has shown an
or target cost in the previous increasing trend.
three months
 Strong Price energy assisted
Negative to Positive
development in Sales and Profit

IBM has gained an upper hand on the IT/ITES industry by recognizing that almost everything
in the future will be delivered through cloud and they gain early expertise through this
acquisition.

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SWOT analysis of IBM:
STRENGTH WEAKNESS
 High-esteem brand  Imitable items
 Expertise underway cycles and  Contracting item blend
materials the executives  Low level of broadening
 Extensive protected innovation
portfolio
 High economies of scale

OPPORTUNITIES THREATS
 Business broadening in different  Impersonation of items
ventures  Rivalry
 Coalitions with firms from various  Cybercrime
businesses or markets
 Quick advancement of new items

Although Wipro has a strong presence in the industry it is operating in, yet Indian and foreign
competitors like IBM and TCS has their own strengths and opportunities as mentioned above.
Wipro Ltd. is at present at a financially better position than IBM but not TCS. The firm has to
harness its opportunities mentioned in the beginning of the report to expand and must get rid or
minimize the threats.
A very recent step WIPRO has taken to harness its opportunities is by partnering with IBM, the
first company to recognize the future importance of cloud, to help its own customers embark on
a hybrid cloud migration. Such steps and future investments should be anticipated by the firm to
expand further and increase its revenues.
Other accounting policies:
It arises because of interest on deposits, dividends and gain or losses on disposal of investments.
Interest income is recognized on the basis of Effective interest method and dividend is
recognized on the establishment of right to receive dividend. The income from this source is next

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to the revenue from operations. The same policy is applied consistently across the years. There
are no huge fluctuations in the finance income in the recent years.

Conclusion:

On detailed study of the financial statements, we found that the company (Wipro) has been
performing stable and also the company has huge reserves. The company is trying to increase the
Shareholders earnings. Relating to the financial disclosures, management has provided all the
significant accounting policies used in the preparation and presentation of financial statements.
They have also provided the readers of the financial statements an information relating to
estimates made by them during the preparation of financial statements.

On analysis of the various ratios like Current Ratio, ROE, and also various Efficiency ratios, we
can clearly understand that the Organization’s performance is relatively good.
In the recent years, the company’s revenue, net profit and also the Earnings per Share (EPS) has
been increasing. The company is regular in paying dividend. Buyback made in the last Financial
year 2020 indicates that the Organization has huge cash reserves and management is committed
to increase share holders’ earnings.

The company’s continuous investment in Digital, Engineering services, cloud and cyber security
helps the organization to be in the growth run making a tough competition for others.

Therefore, from all the above as stated, we can conclude that the company Value creation to it’s
investors is great and also based on the investment in technologies made, the company will be in
growth and attain new heights and also more money to investors.

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