Aniruddh Thakur, B-06, Fsa, Indus Tower

Project Report
Financial Statement Analysis
Of
Indus Tower
Aniruddh singh thakur
Enrolment №: B-06
Batch: 2020 – 2022
Submitted to
Dr. Ishan Sharma
Shanti Business School

Financial Statement Analysis 2022
Undertaking
I, Aniruddh Singh thakur the author of the project report titled Financial Statement Analysis,
hereby declare that this is an independent work of mine carried out towards partial fulfilment of
the requirements for the award of the PGDM/PGDM-C diploma by Shanti Business School,
Ahmedabad, India. All views and opinions expressed in this report are my mine, and do not
necessarily represent those of the institute. The report is my original work and all references have
been duly acknowledged.
Signature of the Student : __________________

Name of student : Aniruddh singh thakur
Enrolment №: : B-06
Date : 26/11/2022
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Certificate
This is to certify that the Project Report titled “Financial Statement Analysis on Indus tower”
has been submitted by Aniruddh singh thakur towards partial fulfilment of the requirements
for the award of PGDM/PGDM-C diploma at Shanti Business School and has been carried out
under my/our supervision.
Guide (Name) : Dr. Ishan Sharma
Guide Signature :
Date :
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Acknowledgment
I Aniruddh singh thakur, would like to take this opportunity to express my deepest gratitude to
my faculty guide Dr. Ishan Sharma, for the continuous support and follow up during the entire
process without which the successful completion of project report would not have been possible.
I am also grateful to our institute Shanti Business School (SBS) and its director Dr. Neha Sharma
and Academic Director Dr. Rinki Rola for providing us with this wonderful opportunity to work
in such projects that has enhanced our learning despite challenging times.
Finally I would like to thank people associated directly or indirectly with me for my report
writing at SBS.
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Index
Chapter No. Content Page No.
1 Introduction 8
2 Objective and methodology of project
Objective of study 13
Limitations of study 14
3 Company profile 15
4 Ratio analysis and interpretation 24
5 Findings and suggestions 49
Findings
Suggestions 49
Conclusion 50
6 Annexure/appendix
7 Bibliography 48
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Introduction to financial statement analysis

1.1 Definition and Application of Financial Statements:
Financial statements are written records that convey the business activities and the financial
performance of a company. Financial statements are often audited by government agencies,
accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes. For-
profit primary financial statements include the balance sheet, income statement, statement of
cash flow, and statement of changes in equity. Nonprofit entities use a similar but different
set of financial statements.
Financial statements are written reports created by a company’s management to summarize
the business’s financial condition over a certain period (quarter, six-monthly, or yearly).
These statements, which comprise the balance sheet, income statement, cash flow statement,
and statement of shareholders’ equity, must be prepared by specified and standardized
accounting standards to ensure that reporting is consistent.
 Financial Statements provide a representation of a company’s financial performance over
time.
 The balance sheet provides the details of the company’s sources and uses of funds.
 An income statement provides an understanding of the revenues and expenses.
 Cash flows, on the other hand, tracks the movement of cash in the business.
 Statement of Changes in Shareholders’ equity summarizes shareholders’ accounts for a
given period.
Financial Statements are considered to be the most important documents in the accounting
system. The Financial Statement of a venture is duly audited either by the government or the
certified accountant, etc.
A company's financial statements are the basis for determining the total business done in a
financial year, day-to-day transactions, cost of business, profits and returns, tax, and other
important information about its financial position. Moreover, these statements also ensure the
correctness and accuracy of the financial aspect of a venture.
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1.2- Types of financial statement

There are four main financial statements. They are: (1) balance sheets; (2) income
statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance
sheets show what a company owns and what it owes at a fixed point in time. Income
statements show how much money a company made and spent over a period of time. Cash
flow statements show the exchange of money between a company and the outside world also
over a period of time. The fourth financial statement, called a “statement of shareholders’
equity,” shows changes in the interests of the company’s shareholders over time.
Let’s look at each of the first three financial statements in more detail.
 Balance sheet- A balance sheet provides detailed information about a

company’s assets, liabilities and shareholders’ equity.
Assets are things that a company owns that have value. This typically means they can
either be sold or used by the company to make products or provide services that can be
sold. Assets include physical property, such as plants, trucks, equipment and inventory. It
also includes things that can’t be touched but nevertheless exist and have value, such as
trademarks and patents. And cash itself is an asset. So are investments a company makes.
Liabilities are amounts of money that a company owes to others. This can include all
kinds of obligations, like money borrowed from a bank to launch a new product, rent for
use of a building, money owed to suppliers for materials, payroll a company owes to its
employees, environmental cleanup costs, or taxes owed to the government. Liabilities
also include obligations to provide goods or services to customers in the future.
Shareholders’ equity is sometimes called capital or net worth. It’s the money that would
be left if a company sold all of its assets and paid off all of its liabilities. This leftover
money belongs to the shareholders, or the owners, of the company.
The following formula summarizes what a balance sheet shows:
ASSETS = LIABILITIES + SHAREHOLDERS' EQUITY a company's assets have to equal,
or "balance," the sum of its liabilities and shareholders' equity.
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 Income statement- An income statement is a report that shows how much revenue a
company earned over a specific time period (usually for a year or some portion of a year).
An income statement also shows the costs and expenses associated with earning that
revenue. The literal “bottom line” of the statement usually shows the company’s net
earnings or losses. This tells you how much the company earned or lost over the period.
Income statements also report earnings per share (or “EPS”). This calculation tells you
how much money shareholders would receive if the company decided to distribute all of
the net earnings for the period. (Companies almost never distribute all of their earnings.
Usually they reinvest them in the business.)
To understand how income statements are set up, think of them as a set of stairs. You
start at the top with the total amount of sales made during the accounting period. Then
you go down, one step at a time. At each step, you make a deduction for certain costs or
other operating expenses associated with earning the revenue. At the bottom of the stairs,
after deducting all of the expenses, you learn how much the company actually earned or
lost during the accounting period. People often call this “the bottom line.”
At the top of the income statement is the total amount of money brought in from sales of
products or services. This top line is often referred to as gross revenues or sales. It’s
called “gross” because expenses have not been deducted from it yet. So the number is
“gross” or unrefined.
The next line is money the company doesn’t expect to collect on certain sales. This could
be due, for example, to sales discounts or merchandise returns.
When you subtract the returns and allowances from the gross revenues, you arrive at the
company’s net revenues. It’s called “net” because, if you can imagine a net, these
revenues are left in the net after the deductions for returns and allowances have come out.
 Cash flow statement- Cash flow statements report a company’s inflows and outflows of
cash. This is important because a company needs to have enough cash on hand to pay its
expenses and purchase assets. While an income statement can tell you whether a
company made a profit, a cash flow statement can tell you whether the company
generated cash.
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A cash flow statement shows changes over time rather than absolute dollar amounts at a
point in time. It uses and reorders the information from a company’s balance sheet and
income statement.
The bottom line of the cash flow statement shows the net increase or decrease in cash for
the period. Generally, cash flow statements are divided into three main parts. Each part
reviews the cash flow from one of three types of activities: (1) operating activities;
(2) investing activities; and (3) financing activities.
 Statement of change in equity: This statement shows the change in the owner’s
equity of the company. The change in equity shown in this statement concerns with
preferential shares and common shares allotted to the promoters and not the change in
retail shares.
1.3 - Analysis of Financial Statements

One of the main tasks of an analyst is to perform an extensive analysis of financial
statements. In this free guide, we will break down the most important methods, types, and
approaches to financial analysis.
This guide is designed to be useful for both beginners and advanced finance
professionals, with the main topics covering: (1) the income statement, (2) the balance
sheet, (3) the cash flow statement, and (4) rates of return.
Most analysts start their financial statement analysis with the income statement.
Intuitively, this is usually the first thing we think about with a business… we often ask
questions such as, “How much revenue does it have?” “Is it profitable?” and “What are
the margins like?” In order to answer these questions, and much more, we will dive into
the income statement to get started. There are two main types of analysis we will
perform: vertical analysis and horizontal analysis.
 Vertical analysis: Vertical analysis is a method of analyzing financial statements that list
each line item as a percentage of a base figure within the statement. The first line of the
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statement always shows the base figure at 100%, with each following line item
representing a percentage of the whole. For example, each line of an income statement
represents a percentage of gross sales, while each line of a cash flow statement represents
each cash inflow or outflow as a percentage of total cash flows.
 Horizontal analysis: Horizontal analysis is an approach used to analyze financial

statements by comparing specific financial information for a certain accounting period
with information from other periods. Analysts use such an approach to analyze historical
trends. Trends or changes are measured by comparing the current year’s values against
those of the base year. The goal is to determine any increase or decline in specific values.
A percentage or an absolute comparison may be used in horizontal analysis. Horizontal
analysis can also be compared with vertical analysis. Whereas vertical analysis analyzes a
particular financial statement using only one base financial statement of the reporting
period, horizontal analysis compares a specific financial statement with other periods or
the cross-sectional analysis of a company against another company.
 Ratio Analysis: There are different types of ratios calculated in order to understand the
financial position of the company. Some of these ratios are Profitability ratio, Investment
utilization ratio, dividend policy ratio, overall performance ratio. The inputs for these
ratios are taken from either of the three financial statements i.e Balance Sheet, Income
Statement or cashflow statements. It is upto the analyst as to how is he going to interpret
these ratios, and what are the inferences he would like to draw from the values.
 Trend Analysis: trend analysis is a technique used in technical analysis that attempts to

predict future stock price movements based on recently observed trend data. Trend
analysis uses historical data, such as price movements and trade volume, to forecast the
long-term direction of market sentiment.
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2: Objective and Methodology

2.1- Objective of the study
The objective of this study is to analyze the financial statements of Indus tower one of the largest
digital communication infrastructure providers, Indus tower limited provides affordable, high
quality and reliable passive infrastructure services to the growing digital connectivity need of
India. Indus Towers’ objective is to provide shared telecom infrastructure to telecom operators
on a non-discriminatory basis. The company’s commitment towards continuous innovation
enhances operational efficiencies and results in substantial cost savings for its customers.
The financial statement analysis is also useful for a short-term investor. It is not always
necessary that traders will invest only in blue-chip stocks. Sometimes, to create quick returns,
traders also temporarily invest in not so healthy companies, with an intention to sell of the shares
in the short run. Such investments are usually risky. But if the investor has analyzed the
financial statements of the company meticulously, he will also know the right time to exit the
stock.
By the end of this report, we aim to reach a conclusion, whether this is a company worth
investing or not. We will analyze the company’s performance over the years in every aspect of
its operation. We will be able to analyze the pattern of spending Indus tower has followed over
the years. We will study the returns; Indus tower shares have given to its investors over the last 5
years of period.
The objective of this study is to understand that weather it is worth to spend in this company or
not. It will give us an idea about the liquidity and solvency of the firm. We can understand
the growth trajectory of the company over the years. We can try to extrapolate the reasons of a
sudden growth or decline of the company, if any, during the intermittent years.
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2.1- Limitations of the study
 There are various scenarios where a value within financial statements cannot be measured
with high accuracy. For this, accountants make use of estimates to have an approximation
of the value that cannot be exactly measured. For instance, when equipment is purchased,
the company should estimate how long it will be used. This process is necessary for
financial reporting as accountants need to calculate the yearly depreciation cost of the
equipment, which is the reduction of the value of the asset. If the company fails to make a
proper estimate of the useful life of the equipment, the provided accounting information
will be considered wrong.
 Other limitations of accounting and financial reporting are the accounting methods as
well as unusual data. Concerning accounting methods, they differ from one country to
another. In addition, many regulatory bodies allow using multiple accounting methods.
For instance, two companies that perform in the same industry might record their
inventory using two different methods. Company A might use the FIFO method, which
means the oldest unit of inventory is sold first, and company B might use the LIFO
method, which means the newest unit of the inventory is sold first
 While analyzing the balance sheet of the firm, it is difficult to know the asset quality of
the company. This is because, financial statements do not explicitly provide details in
terms of qualitative value of the company.
 The human resource of a company plays a huge role in deciding the future of the
company and the chances of success in its new venture. As the financial statements do
not provide any qualitative data, it is impossible to assess the skills and acumen of the
employees in the firm.
 It is important to highlight that financial statements have lots of lacking data. One of the
main limitations of financial reporting is the non-measurability issue, where accountants
only record transactions capable of being measured.
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3.Company Profile
3.1 Introduction
Indus Towers Limited is an independently managed company offering passive infrastructure
services to telecom operators and other wireless services providers such as broadband service
providers. Incorporated in November 2006, its market capital is $6 billion with $800 million net
profit. Indus Towers Limited has been promoted under a joint venture between entities of Bharti
Group including Bharti Infratel (rendering telecom and tower infrastructure services in India
under the brand name Airtel and Bharti Infratel Limited respectively) and Vi (rendering telecom
services under the brand name Vodafone and Idea) to render passive infrastructure services to
telecom service providers.
Indus Towers Limited has over 175,000 towers and 319,100 co-locations and a nationwide
presence covering all 22 telecom circles, it has the widest coverage in India and has already
achieved 289,000 tenancies, a first in the telecom tower industry globally. Indus Towers Limited
is formed by the merger of Bharti Infratel Limited and Indus Towers. This combined strength
makes Indus Towers one of the largest telecom tower companies in the world. Some of its major
customers are Airtel, Bharti Hexacom, Jio and Vi.
(Figure 1: Indus tower CEO)
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(Figure 2: Indus tower head quater)
Table 1: indus tower location in India.

Ahmedabad Jaipur
Gurugram Udaipur
pune Lucknow
Mumbai Chandigarh
Indore Kolkata
Noida Nashik
Surat Varanasi
3.2- Employees
Indus tower is one of the largest private sector employers in India and the third-largest employer
among listed Indian companies, Indus tower had total of 3,300 employees as of 31 December
2021.
3.2- Board of Directors

The board of directors in TCS is distributed in three groups, 1) Non-Executive Board Members,
2) Executive Board Members and 3) Committees of Board Directors. The names under each
category are as follows.
Table 2: (Non-Executive Board Members)
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Names of the individual Designation

Ms. Anita Kapoor Non- executive Non-independent
director
Mr. Gopal Vittal Non- executive Non-independent
director
Mr. harjeet Kohli Non- executive Non-independent
director
Mr. Ranjan bharti Mittal Non- executive Non-independent
director
Mr. Ravindra Takkar Non- executive Non-independent
director
Ms. Sonu bhasan Non- executive Non-independent
director
Mr. Sunil sood Non- executive Non-independent
director
4. Data Analysis & Interpretation

4.1- Vertical Analysis of financial statement
4.1.1 Vertical Analysis of financial statement
Vertical analysis is a kind of financial statement analysis wherein each item
in the financial statement is shown in the percentage of the base figure. It is
one of the popular methods of financial statements used as it is simple and
also called a common size analysis. Here, all the income statement items are
stated as a percentage of gross sales. Likewise, all the items in the balance
sheet are stated as a percentage of the total assets. Whereas the opposite of
the vertical analysis of financial statements is the Horizontal analysis always
looks at the amount from the financial statement over the horizon of many
years.
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Table 3: (Vertical Analysis of Balance Sheet)
Change in the distribution of Assets over the years is explained by the pie chart below
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NON-CURRENT ASSETS CURRENT ASSETS
(Figure 3: Pie Chart of Distribution of

Change in assets over the year)
Above shown pie chart depicts the distribution of assets in Indus tower. The company had
more non- current assets in both the year comparing with current assets. Noncurrent assets are a
company's long-term investments for which the full value will not be realized within the
accounting year. They are typically highly illiquid, meaning these assets cannot easily be
converted into cash. Examples of noncurrent assets include investments, intellectual property,
real estate, and equipment. Noncurrent assets appear on a company's balance sheet.
4.1.1 Vertical Analysis of Income Statement
Vertical analysis is a method of financial statement analysis in which each line item is listed as
a percentage of a base figure within the statement. Thus, line items on an income statement can
be stated as a percentage of gross sales, while line items on a balance sheet can be stated as a
percentage of total assets or liabilities, and vertical analysis of a cash flow statement shows each
cash inflow or outflow as a percentage of the total cash inflows
 Vertical analysis makes it easier to understand the correlation between single items on a
balance sheet and the bottom line, expressed in a percentage.
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 Vertical analysis can become a more potent tool when used in conjunction with
horizontal analysis, which considers the finances of a certain period of time.
(Table 4: Vertical Analysis of Income

Statement)
We will project the vertical analysis of the income statement using pie
charts as shown below
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Total revenue Total expenses
(Figure 4: Pie Chart of Distribution of

income and Expenses)
The pie charts shown above, depicts the distribution of expenses and income of Indus tower
from 2021 to 2022.
4.2- Horizontal Analysis of Financial Statements

4.2.1 - Horizontal Analysis of Balance Sheet
You use horizontal analysis to find and monitor trends over a period of time. Instead of creating
an income statement or balance sheet for one period, you would also create a comparative
balance sheet or income statement to cover quarterly or annual business activities.
From that comparative statement, you highlight increases or decreases within that time frame.
This way, you can quickly see growth, as well as any red flags that require attention.
With horizontal analysis, you use a line-by-line comparison (compare each line item from base
to the chosen accounting period) to the totals. For instance, if you run a comparative income
statement for 2019 and 2020, horizontal analysis allows you to compare the revenue totals for
both years to see if it increased or decreased, or remained relatively stable. If possible, you
should aim to add 2018 to the mix, so you’ll be able to see if it was a trend or just a fluke.
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(Table 5: Horizontal Analysis of Balance

Sheet)
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We will now visualize the displayed data of current asset in form of graphical presentation₹
Crores
₹ Crores
(Figure 5: Stacked Bar Chart depicting the current assets of various years w.r.t
2020)
We will now visualize the displayed data of non-current assets in form

of graphical presentation:
(Figure 6: Stacked Bar Chart depicting the non-current assets)
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₹ Crores ₹ Crores
4.3-RATIO ANALYSIS
Dividend Yield Ratio: The Dividend Yield is a financial ratio that measures the
annual value of dividends received relative to the market value per share of a
security. In other words, the dividend yield formula calculates the percentage of a
company's market price of a share that is paid to shareholders in the form of dividends.
FORMULA:
Dividend Per Share / Market Price of the Share
Dividend Yield Ratio

YEAR 2018 2019 2020 2021 2022
DIVIDEND PER SHARE 140 150 105 201 110
MARKET PRICE OF 380 313 203 249 206
SHARE
0.3 0.4 0.5 0.8 0.5
We will analyze these values by graphical representation:
(Figure 7: Dividend Yield Ratio)
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This is a display of the company’s commitment to its shareholders and also a proof of how
optimistic the management is, about the post pandemic business scenario.
Working Capital Turnover:
The working capital ratio shows the ratio of assets to liabilities, i.e. how many times a company
can pay off its current liabilities with its current assets. The working capital ratio calculation is:
Working capital ratio = current assets / current liabilities
working capital ratio

YEAR 2022 2021 2020 2019 2018
Current 27,662.30 22,867.60 16,299.30 15,670.00 17,725.40
assets
current 18,552.90 20,464.40 3,450.50 2,127.60 2,215.90
liability
working 9,109.40 2,403.20 12,848.80 13,542.40 15,509.50
capital
We will analyze these values by graphical representation-
working capital
18,000.00
16,000.00
14,000.00
12,000.00
10,000.00
8,000.00
6,000.00
4,000.00
2,000.00
0.00
2022 2021 2020 2019 2018
₹C
(Figure 8: working capital ratio)
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Comparing to all the other year the working capital was all time high in back 2018 and low in 2021.
Current Ratio:
The current ratio is a liquidity ratio that measures a company’s ability to pay short-term
obligations or those due within one year. It tells investors and analysts how a company can
maximize the current assets on its balance sheet to satisfy its current debt and other payables.
A current ratio that is in line with the industry average or slightly higher is generally considered
acceptable. A current ratio that is lower than the industry average may indicate a higher risk
of distress or default. Similarly, if a company has a very high current ratio compared with its
peer group, it indicates that management may not be using its assets efficiently. Formula-
Current assets / current liabilities
Current ratio
YEAR 2022 2021 2020 2019 2018
Current 27,662.30 22,867.60 16,299.30 15,670.00 17,725.40
assets
current 18,552.90 20,464.40 3,450.50 2,127.60 2,215.90
liability
current 1.49 1.12 4.72 7.37 8.00
ratio
current ratio
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
2022 2021 2020 2019 2018
(Figure 9: current ratio)
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The current ratio of Indus tower was 1 in 2022. With a peak of 8 in 2018, Indus is gradually
reducing its current ratio until 2021. The industry mandate of current ratio is 2.0. This means,
according to Industry standards, the amount of current assets must be double than the amount of
current liabilities.
Quick acid ratio

The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to pay
its current liabilities when they come due with only quick assets. Quick assets are current assets
that can be converted to cash within 90 days or in the short-term. Cash, cash equivalents, short-
term investments or marketable securities, and current accounts receivable are considered quick
assets.
Formula – (current assets – inventory- prepaid) / current liabilities
Quick acid ratio
YEAR 2022 2021 2020 2019 2018
Current 27,662.30 22,867.6 16,299.30 15,670.00 17,725.40
assets 0
inventor 0 0 0 0 0
y
27,662.30 22,867.6 16,299.30 15,670.00 17,725.40
0
current 18,552.90 20,464.4 3,450.50 2,127.60 2,215.90
liability 0
Quick 1.49 1.12 4.72 7.37 8.00
acid ratio
While calculation the quick acid ratio I realized that there was no inventory in the balance
sheet, after searching a lot from google and company profile I got to know that Indus
tower have no inventory in their company
Non-Inventory Item – is a type of product that is purchased or sold but whose quantity is
not tracked. This type of items is purchased for company use or custom product purchased
for Projects.
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Quick acid ratio

9.00
8.00
8.00
7.00 7.37
6.00
5.00
4.72
4.00
3.00
2.00
1.00 1.49
1.12
0.00
2022 2021 2020 2019 2018
(Figure 10- Quick acid ratio)
The acid test ratio of Indus tower was 1.12 in 2021. Which was the lowest It increased to over
8.00 in 2018. And then it is showing steady decline until 2021. The ideal acid test ratio is 1.49.
Comparing to this benchmark, Indus tower is apparently having excess liquidity than the
required industry standards
Account receivable turnover-

The accounts receivables turnover ratio measures the number of times a company collects its
average accounts receivable balance. It is a quantification of a company's effectiveness in
collecting outstanding balances from clients and managing its line of credit process.
An efficient company has a higher accounts receivable turnover ratio while an inefficient
company has a lower ratio. This metric is commonly used to compare companies within the
same industry to gauge whether they are on par with their competitors.
Formula- Net credit sales / average receivables
Account receivable turnover
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YEAR 2022 2021 2020 2019 2018

Net sales 27,708.20 13,950.80 6,738.3 6,821.70 6,618.00
0
recivables 7,058.20 3,828.50 366.7 545.4 274.5
Account 3.93 3.64 18.38 12.51 24.11

recivable
turnover
Account recivable turnover

30
25
20
15
10
0
2022 2021 2020 2019 2018
(Figure 11- Account receivable turnover)
The account receivable turnover of Indus tower was 4.5 in 2021. Which was the lowest It
increased to over 25 in 2018 Which was highest and then it kept on fluctuating due to the impact
of covid 19 at was lowest in 2021.
Average day to collect receivables-
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The average collection period is the average number of days it takes a business to collect and
convert its accounts receivable into cash. It is one of six main calculations used to determine
short-term liquidity, that is, the ability of a company to pay its bills (current liabilities) as they
come due.
The formula for calculating average collection period is:
Average collection period = (accounts receivable / sales) x number of days in a year
A shorter average collection period (60 days or less) is generally preferable and means a business
has higher liquidity.
Average collection period is also used to calculate another liquidity measure, the receivables
turnover ratio.
Average day to collect receivables
YEAR 2022 2021 2020 2019 2018
Days 365.00 365.00 365.00 365.00 365.00
Account receivable turnover 3.93 3.64 18.38 12.51 24.11
Average day to collect 93 100 20 29 15

receivables
Average day to collect re -

civables
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00
Days Average day to collect recivables
2022 2021 2020 2019 2018
(Figure 12- Average day to collect recivable)
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In average day to collect receivable the days are 365 from that we have compared all the other
data to get ADC (accounts receivable / sales) x number of days in a year after putting this
formula we have get different days for different year.
Inventory turnover-
The inventory turnover ratio is the number of times a company has sold and replenished its
inventory over a specific amount of time. The formula can also be used to calculate the number
of days it will take to sell the inventory on hand.
The turnover ratio is derived from a mathematical calculation, where the cost of goods sold is
divided by the average inventory for the same period. A higher ratio is more desirable than a low
one as a high ratio tends to point to strong sales.
Knowing your turnover ratio depends on effective inventory control, also known as stock
control, where the company has good insight into what it has on hand.
Formula- cost of good sold / average inventory
As there are no inventory in the company it was not possible for me to take out COGS
that’s why I have left this ratio
Average day to sell inventory-
The days sales of inventory (DSI) is a financial ratio that indicates the average time in days that
a company takes to turn its inventory, including goods that are a work in progress, into sales.
DSI is also known as the average age of inventory, days inventory outstanding (DIO), days in
inventory (DII), days sales in inventory, or days inventory and is interpreted in multiple ways.
Indicating the liquidity of the inventory, the figure represents how many days a company’s
current stock of inventory will last. Generally, a lower DSI is preferred as it indicates a shorter
duration to clear off the inventory, though the average DSI varies from one industry to another.
Debt to assets ratio-
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A debt-to-assets ratio is a type of leverage ratio that compares a company's debt obligations
(both short-term debt and long-term debt) to the company's total assets. It is calculated using
the following formula:
Debt-to-Assets Ratio = Total Debt / Total Assets.

If the debt-to-assets ratio is greater than one, a business has more debt than assets. If the ratio
is less than one, the business has more assets than debt. A company with a high ratio of total
debt to total assets has a relatively high degree of leverage (DoL) and may lack the financial
flexibility of a business where assets outweigh debts.
Dept to assets ratio

YEAR 2022 2021 2020 2019 2018
Total 27,662.30 22,867.60 16,299.3 15,670.00 17,725.40
liabilities 0
Total 47,988.50 44,946.70 20,072.1 18,083.90 20,204.00

assets 0
Dept to 0.6 0.5 0.8 0.9 0.9
assets
ratio
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Dept to assets rati o

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Dept to assets ratio
Dept to assets ratio 2022 Dept to assets ratio 2021 Dept to assets ratio 2020
Dept to assets ratio 2019 Dept to assets ratio 2018
(Figure 12- Dept to assets ratio)
Historically, since 2018 to 2022 the dept to assets ratio of Indus tower has not gone down, the
ratio is between 0.5 to 0.8 in all there year.
Dept of equity ratio-
The debt-to-equity ratio measures your company’s total debt relative to the amount originally
invested by the owners and the earnings that have been retained over time.
The debt-to-equity ratio of your business is one of the things the bank looks at to assess your
situation before agreeing to lend you an additional amount.
Definition: The debt-equity ratio is a measure of the relative contribution of the creditors and
shareholders or owners in the capital employed in business. Simply stated, ratio of the total long-
term debt and equity capital in the business is called the debt-equity ratio.
It can be calculated using a simple formula:
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Description: This financial tool gives an idea of how much borrowed capital (debt) can be
fulfilled in the event of liquidation using shareholder contributions. It is used for the assessment
of financial leverage and soundness of a firm and is typically calculated using previous fiscal
year's data.
A low debt-equity ratio is favorable from investment viewpoint as it is less risky in times of
increasing interest rates. It therefore attracts additional capital for further investment and
expansion of the business.
dept to equity ratio
YEAR 2022 2021 2020 2019 2018

total liabilities 27662.3 22867.6 16299.3 15670 17725.4
total assets 47988.5 44946.7 20072.1 18083.9 20204
stock holder equity 20326.2 22079.1 3772.8 2413.9 2478.6

dept to equity ratio 1.36091842 1.035713 4.3202131 6.49157 7.151376
dept to equity ratio

8
0
2022 2021 2020 2019 2018
(Figure 13- Dept to equity ratio)
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In 2018, the debt to equity ratio has substantially increased to over 11%. This is because Indus
tower has become more leveraged in FY2020.
Nevertheless, the debt to equity ratio Indus tower is very healthy when compared to its Industry
peers. There are enough funds present in the shareholder’s equity in order to meet the
obligations of company’s long-term liability
Number of time interest is earned-
The Times Interest Earned (TIE) ratio measures a company’s ability to meet its debt obligations
on a periodic basis. This ratio can be calculated by dividing a company’s EBIT by its
periodic interest expense. The ratio shows the number of times that a company could,
theoretically, pay its periodic interest expenses should it devote all of its EBIT to debt
repayment.
The TIE’s main purpose is to help quantify a company’s probability of default. This, in turn,
helps determine relevant debt parameters such as the appropriate interest rate to be charged or
the amount of debt that a company can safely take on.
(Figure 14- formula for TIE)
Number of time interest is earned
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YEAR 2022 2021 2020 2019 2018

EBIT 8,424.30 4,316.0 2,412.20 3,665.1 3,227.00
0 0
INTEREST 2,057.20 977.8 665.6 886.1 813.1
Number of time interest is 6,367.10 3,338.2 1,746.60 2,779.0 2,413.90
earned 0 0
We will analyze these values by pie chart representation-
Number of time interest is earned
2022
2413.9; 15% 2021
6367.1; 38% 2020
2779; 17% 2019
2018
1746.6; 10%
3338.2; 20%
(Figure 15- Number of time interest is earned)
Indus tower has earned a highest amount of interest in 2022 with total of 6367.10, 38% of the
total. Comparing with all the other this was the highest in all the time. this could happen because
of a good investing strategy which the company had followed in couple of the year
Plant assets to long term liabilities-
The long-term debt-to-total-assets ratio is a measurement representing the percentage of a

corporation's assets financed with long-term debt, which encompasses loans or other debt
obligations lasting more than one year. This ratio provides a general measure of the long-term
Indus tower Page 34

financial position of a company, including its ability to meet its financial obligations for

outstanding loans.
Formula:
Net plant assets / long term liabilities
asc
Plant assets to long term liabilities
YEAR 2022 2021 2020 2019 2018
Total fixed assets 31,991.60 32,041.20 6,732.60 5,428.90 5,688.90
total current assets 12,326.80 9,632.50 4,967.30 4,290.80 7,637.50
total current liabilities 8,822.40 13,946.30 3,821.70 1,773.50 1,814.90
total long-term liabilities 12,804.70 11,960.30 2,067.20 373.8 415.3
Net assets 48,300.70 39,687.70 9,945.40 8,320.00 11,926.80
total long-term liabilities 12,804.70 11,960.30 2,067.20 373.8 415.3
Plant assets to long term liabilities 3.8 3.3 4.8 22.3 28.7
Plant assets to long term liabiliti es

35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2022 2021 2020 2019 2018
5541551554
(Figure 16- plant assets to long term liabilities)
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In 2018 the company has the highest long-term debt-to-total-assets ratio representing the
percentage of a corporation's assets financed with long-term debt, which encompasses loans or
other debt obligations lasting more than one year .
Net margin-
The net profit margin, or simply net margin, measures how much net income or profit is
generated as a percentage of revenue. It is the ratio of net profits to revenues for a company or
business segment.
Net profit margin is typically expressed as a percentage but can also be represented in decimal
form. The net profit margin illustrates how much of each dollar in revenue collected by a
company translates into profit.
Understanding Net Profit Margin
Net profit margin is one of the most important indicators of a company's financial health. By
tracking increases and decreases in its net profit margin, a company can assess whether current
practices are working and forecast profits based on revenues.
Because companies express net profit margin as a percentage rather than a dollar amount, it is
possible to compare the profitability of two or more businesses regardless of size.
Formula- Net income / net sales.
Net margin
YEAR 2022 2021 2020 2019 2018
total 28,166.70 14,766.80 7,204.0 8,489.90 7,698.10
revenue 0
total 12,819.90 6,772.80 3,181.1 3,708.20 3,462.00
expenses 0
net income 15,346.80 7,994.00 4,022.9 4,781.70 4,236.10
0
net sales 27,708.20 13,950.80 6,738.3 6,821.70 6,618.00
0
Net margin 0.55 0.57 0.60 0.70 0.64
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Net margin
0.80
0.70
0.70
0.60 0.64
0.60
0.50 0.55 0.57
0.40
0.30
0.20
0.10
0.00
2022 2021 2020 2019 2018
(Figure 17- net margin )
From the graph, we can observe that the Net Profit Margin of indus tower is showing marginal
decline from 2017. This is because, Although the net sales of the company have increased, the
operational expense has also increased more proportionately. Besides, the amounts of
depreciation and payment towards the interests have also increased in the past couple of
years. This has reduced the net profit of Indus tower
Assets turnover-
The asset turnover ratio measures the value of a company's sales or revenues relative to the
value of its assets. The asset turnover ratio can be used as an indicator of the efficiency with
which a company is using its assets to generate revenue.
The higher the asset turnover ratio, the more efficient a company is at generating revenue from
its assets. Conversely, if a company has a low asset turnover ratio, it indicates it is not
efficiently using its assets to generate sales.
Formula- Net sales / average total assets
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₹ Crores
₹ Crores
Assets turnover
YEAR 2022 2021 2020 2019 2018
net sales 27,708.20 13,950.80 6,738.30 6,821.70 6,618.00
Total assets of current year + total assets of previous year/2 = average total
assets
average total 46467.6 32509.0 19078.0 19143.0 1255.0

assets
Assets turnover 0.6 0.4 0.4 0.4 5.3
₹ Crores
Assets turnover
6
0
2022 2021 2020 2019 2018
(Figure 18- assets turnover )
₹ Crores
The asset turnover ratio of Indus tower has been consistently recorded below 1.0 in the last four
years. In 2018, the ratio was 5.3. which mean the company sale or revenue was all time high in
Indus tower Page 38

that particular year.
₹ Crores
Return on investment-
Return on investment (ROI) is a performance measure used to evaluate the efficiency

or profitability of an investment or compare the efficiency of a number of different investments.
ROI tries to directly measure the amount of return on a particular investment, relative to the
investment’s cost.
To calculate ROI, the benefit (or return) of an investment is divided by the cost of the
investment. The result is expressed as a percentage or a ratio.
Formula- net income / average total assets
Return on investment
YEAR 2022 2021 2020 2019 2018
net income 15346.80 7994.00 4022.0 4781.70 7236.10
9
average total assets 46467.6 32509.0 19078. 19143.0 1255.0
0
Return on 0.33 0.25 0.21 0.25 5.77

investment
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Return on investment
7
6 5.77
1
0.33 0.25 0.21 0.25
0
2022 2021 2020 2019 2018
(Figure 18- Return on investment)
₹ Crores
In 2018 Indus tower got the highest amount of interest comparing with all the other year the
reason would be a good % of return which was given to Indus tower From the graph it is evident,
that the return of invested capital of Indus tower was 0.21 in 2020, In 2019 and 2022, it increased
a bit.
Return on equity
Return on Equity (ROE) is the measure of a company’s annual return (net income) divided by
the value of its total shareholders’ equity, expressed as a percentage (e.g., 12%). Alternatively,
ROE can also be derived by dividing the firm’s dividend growth rate by its earnings retention
rate (1 – dividend payout ratio).
Return on Equity is a two-part ratio in its derivation because it brings together the income
statement and the balance sheet, where net income or profit is compared to the shareholders’
equity. The number represents the total return on equity capital and shows the firm’s ability to
turn equity investments into profits. To put it another way, it measures the profits made for each
dollar from shareholders’ equity.
Formula-
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Return on equity
YEAR 2022 2021 2020 2019 2018
net income 15346.80 7994.00 4022.0 4781.70 7236.10
9
stock holder 20326.2 22079.1 3772.8 2413.9 2478.6
equity
Return on equity 0.76 0.36 1.07 1.98 2.92
Return on equity
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2022 2021 2020 2019 2018
(Figure 18- Return on Equity)
From the graph it is evident, that the return of equity of Indus was 3.00 in 2018 In 2022 & 2021,
it dipped below 1.00 We can observe, from 2018, there is a gradual decrease of return on
equity.
Indus tower Page 41

Earning per share-
Earnings per share or EPS is an important financial measure, which indicates the profitability of
a company. It is calculated by dividing the company’s net income with its total number of
outstanding shares. It is a tool that market participants use frequently to gauge the profitability of
a company before buying its shares.
EPS is the portion of a company’s profit that is allocated to every individual share of the stock.
It is a term that is of much importance to investors and people who trade in the stock market. The
higher the earnings per share of a company, the better is its profitability. While calculating the
EPS, it is advisable to use the weighted ratio, as the number of shares outstanding can change
over time.
Formula- (Net Income after Tax - Total Dividends)/Total Number of Outstanding Shares
Earning Per Share

YEAR 2022 2021 2020 2019 2018
Earning Per Share 23.63 12.39 9.44 15.02 13.05
(Rs)
Earning Per Share (Rs)

25
20
15
10
0
2022 2021 2020 2019 2018
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(Figure 19- Earning per share)
As evident from the graph, the EP Ratio of Indus tower in 2018 was 13. It increased to 15 in
2019. The ep Ratio by the end of FY 2020 is seen to be lesser than the value in last couple of
years. This is because, the Markets had hit lower circuit in the face of rising Covid-19 cases and
the lockdown that followed after.
Book value per share-
Book value per common share (or, simply book value per share - BVPS) is a method to
calculate the per-share book value of a company based on common shareholders' equity in the
company. The book value of a company is the difference between that company's total assets
and total liabilities, and not its share price in the market.
Should the company dissolve, the book value per common share indicates the dollar value
remaining for common shareholders after all assets are liquidated and all debtors are paid.
Book Value (Rs)

YEAR 2022 2021 2020 2019 2018
Book Value (Rs) 82.29 58.99 75.05 84.69 95.83
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Book Value (Rs)

120
100
80
60
40
20
0
2022 2021 2020 2019 2018
(Figure 20- Book value)
Price earning ratio-
the price-to-earnings ratio is the ratio for valuing a company that measures its current share
price relative to its earnings per share (EPS). The price-to-earnings ratio is also sometimes
known as the price multiple or the earnings multiple.
P/E ratios are used by investors and analysts to determine the relative value of a company's
shares in an apples-to-apples comparison. It can also be used to compare a company against its
own historical record or to compare aggregate markets against one another or over time.
P/E may be estimated on a trailing (backward-looking) or forward (projected) basis.
Formula-
Market price per share / earning per share
Price earning ratio

YEAR 2022 2021 2020 2019 2018
MARKET PRICE 206 249 203 313 380.00
OF SHARE
Earning Per Share 23.6 12.39 9.44 15.02 13.05
(Rs) 3
Price earning ratio 8.72 20.10 21.5 20.84 29.12
0
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Price earning rati o

35
30
25
20
15
10
0
2021 2020 2019 2018
(Figure 21- Book value)
Because there was no inventory given in the balance sheet that’s why it was unable for me
to take out the dupont analysis.
DuPont analysis-
DuPont analysis is a framework for analyzing fundamental performance originally
popularized by the DuPont Corporation, now widely used to compare the operational
efficiency of two similar firms. DuPont analysis is a useful technique used to decompose the
different drivers of return on equity (ROE).
The DuPont analysis is a framework for analyzing fundamental performance popularized by the
DuPont Corporation. DuPont analysis is a useful technique used to decompose the different
drivers of return on equity (ROE). The decomposition of ROE allows investors to focus on the
key metrics of financial performance individually to identify strengths and weaknesses. There
are two versions of the tool—one which accounts for decomposition in three steps while the
other does so in five steps.
Bibliography
Indus tower Page 45
[1] Wikipedia.com
[2] Annual report of the company.
[3] Investopedia.com
[4] Class notes of SBS.
[5] Law.com
[6] https://www.netsuite.com/
[7] www.businessnewsdaily.com
[8] www.economictime.com
[9] www.industower.com
[10] Kanoon.com
Finding and suggestion

1. Is Indus Towers Ltd a good quality company?
Indus tower Page 46

Past 10 year's financial track record analysis by Moneyworks4me indicates that Indus Towers
Ltd is a good quality company.
2. Is Indus Towers Ltd undervalued or overvalued?
The key valuation ratios of Indus Towers Ltd's currently when compared to its past seem to
suggest it is in the Undervalued zone.
3. Is Indus Towers Ltd a good buy now?
The Price Trend analysis by MoneyWorks4Me indicates it is Weak which suggest that the price
of Indus Towers Ltd is likely to Fall in the short term. However, please check the rating on
Quality and Valuation before investing
Conclusion-
Indus Towers Limited (formerly Bharti Infratel Limited) is India’s leading provider passive
telecom infrastructure and it deploys, owns and manages telecom towers and communication
structures, for various mobile operators. The Company’s portfolio of over 187,926 telecom
towers, makes it one of the largest tower infrastructure providers in the country with presence in
all 22 telecom circles. Indus Towers caters to all wireless telecommunication service providers in
India. The Company has been the industry pioneer in adopting green energy initiatives for its
operation
Indus Towers has suffered around a 28% sequential jump in its trade receivables to Rs 7,351
crore in the December quarter due to delayed collections from loss-making Vodafone Idea (Vi),
a scenario that poses business risks for the leading telecom tower company, say analysts.
Indus tower Page 47

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Project Report

Financial Statement Analysis

Aniruddh singh thakur

Batch: 2020 – 2022

Dr. Ishan Sharma

Shanti Business School

Signature of the Student : __________________

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Guide (Name) : Dr. Ishan Sharma

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Introduction to financial statement analysis

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1.2- Types of financial statement

 Balance sheet- A balance sheet provides detailed information about a

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1.3 - Analysis of Financial Statements

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 Horizontal analysis: Horizontal analysis is an approach used to analyze financial

 Trend Analysis: trend analysis is a technique used in technical analysis that attempts to

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2: Objective and Methodology

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2.1- Limitations of the study

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(Figure 1: Indus tower CEO)

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(Figure 2: Indus tower head quater)

Table 1: indus tower location in India.

3.2- Board of Directors

Table 2: (Non-Executive Board Members)

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Names of the individual Designation

4. Data Analysis & Interpretation

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Table 3: (Vertical Analysis of Balance Sheet)

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NON-CURRENT ASSETS CURRENT ASSETS

(Figure 3: Pie Chart of Distribution of

4.1.1 Vertical Analysis of Income Statement

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(Table 4: Vertical Analysis of Income

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Total revenue Total expenses

(Figure 4: Pie Chart of Distribution of

4.2- Horizontal Analysis of Financial Statements

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(Table 5: Horizontal Analysis of Balance

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We will now visualize the displayed data of non-current assets in form

(Figure 6: Stacked Bar Chart depicting the non-current assets)

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Dividend Yield Ratio

We will analyze these values by graphical representation:

(Figure 7: Dividend Yield Ratio)

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Working Capital Turnover:

Working capital ratio = current assets / current liabilities

working capital ratio

We will analyze these values by graphical representation-

Indus tower Page 23