RATIO

ANALYSIS
Infosys Ltd

PREPARED BY: Santhana Krishnan B

PROJECT TOPIC: Ratio Analysis of the last five years

financial statements of a listed company. Including trend
analysis, ROI, ROE & Dupont analysis

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RATIO ANALYSIS OF INFOSYS LTD
Infosys is a renowned global information technology and consulting company that
has significantly impacted the IT industry and the global business landscape.
Founded in 1981 by N.R. Narayana Murthy and a group of six engineers in Pune,
India, Infosys has grown to become one of the world's largest and most influential
IT services providers.

Headquartered in Bangalore, India, Infosys has a global presence with offices and
development centers in numerous countries, serving clients across various industries.
The company's core mission is to help organizations harness the power of
technology and innovation to drive business transformation, improve efficiency, and
stay competitive in an ever-evolving digital world.

Infosys offers a wide range of services, including software development, IT

consulting, system integration, application maintenance, and business process
outsourcing. The company is known for its commitment to quality and its emphasis
on delivering value to its clients. Infosys has a strong track record of implementing
cutting-edge technologies, such as artificial intelligence, machine learning,
blockchain, and cloud computing, to solve complex business challenges.

Infosys has played a pivotal role in the IT services industry's globalization and has
contributed significantly to India's reputation as a global technology hub. The
company strongly emphasizes corporate social responsibility, sustainability, and
ethical business practices.

Over the years, Infosys has garnered numerous awards and accolades for its
innovation, corporate governance, and commitment to social and environmental
responsibility. It has also fostered a culture of continuous learning and development,
making it an employer of choice for talented professionals in the IT sector.

Infosys continues to be at the forefront of digital transformation and is dedicated to

helping its clients navigate the challenges and opportunities presented by the digital
age. It remains a symbol of India's IT prowess and a global leader in the technology
and consulting industry.

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Ccorporate information
What is the area of operation of Infosys?
Infosys Limited (Infosys) – along with its majority-owned and controlled
subsidiaries – is a global leader in next-generation digital services and
consulting. The company provides end-to-end business solutions that
leverage technology. The company provides solutions that span the entire
software life cycle encompassing consulting, technology, engineering, and
outsourcing services. In addition, the company offers software products and
platforms.

Where and in which year was Infosys incorporated?

Infosys was incorporated in 1981 as Infosys Consultants Private Limited, a
private limited company under the Indian Companies Act, of 1956. It
changed its name to Infosys Technologies Private Limited in April 1992, to
Infosys Technologies Limited in June 1992, when it became a public limited
company, and to Infosys Limited in June 2011. Infosys completed its initial
public offering of equity shares in India in 1993 and its initial public offering
of American Depositary Shares (ADSs) in the United States in 1999. In July
2003, June 2005, and November 2006, it completed sponsored secondary
offerings of ADSs in the United States on behalf of its shareholders.

3) What is the revenue and profit of Infosys for the recently concluded
quarter and the recently concluded annual year?

As per IFRS (Rs cr) As

Q2 FY24 revenues 38,994 4,7

Q2 FY24 net profits (pre minority) 6,215 75

FY 23 revenues 146,767 18

FY 23 net profits 24,108 2,9

What is the 5-year revenue and profit CAGR of Infosys?

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 As per IFRS (Rs cr) As per IFRS ($ m)

Revenue* 12.2% 9.8%

Net profit* 9.1% 6.8%

*Based on FY23 financials

What is the employee strength of the Infosys Group?

Infosys and its subsidiaries had 328,764 employees as of Sep 30, 2023.

Does the company have debt on its balance sheet?

Infosys is a debt-free company. It doesn't have any outstanding debt or fixed
deposits. The company presently generates sufficient cash internally to
finance all its operational, financing, and investment requirements.

What is the credit rating of the company?

The credit rating of the company is as follows:

Rating agency Rating Outlook

Moody’s Baa1 Stable

Standard & Poor’s A Stable

Dun & Bradstreet 5A1 Condition: Strong

CRISIL AAA Stable

How is the global presence of Infosys?

Infosys’ operations are spread across 234 locations in more than 50
countries. Please visit https://www.infosys.com/investors/reports-
filings/documents/global-presence2022.pdf for details related to our global
locations.

What is Infosys Limited Corporate Identity Number (CIN)?

The Company is incorporated under the provisions of the Companies Act,
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of 1956. The Corporate Identity Number (CIN) provided by the Ministry of
Corporate Affairs is - L85110KA1981PLC013115.

When does the financial year of Infosys end?

The Infosys financial year ends on March 31.

In which stock exchanges are Infosys shares / American Depositary

Receipts (ADRs) listed and what are the codes?
The equity shares of Infosys are listed on BSE and NSE in India and its ADS
is listed on the NYSE in the US. The respective codes are as below.

India

NSE BSE

Exchange code INFY INFY

Reuters code INFY.NS INFY.BO

Bloomberg code INFO IS INFO IB

What is Infosys Limited's International Securities Identification

Number (ISIN)?
ISIN is a 12-digit alphanumeric code that uniquely identifies a specific
security. The ISIN number of Infosys is - INE009A01021.

ADR information
What is an American Depositary Share (ADS)?
An ADS is a negotiable certificate evidencing ownership of an outstanding
class of stock in a non-US company. ADSs are created when ordinary
shares are delivered to a custodian bank in the domestic market, which then
instructs a depositary bank in the US to issue ADSs based on a
predetermined ratio. ADSs are SEC-registered securities and may trade
freely, just like any other security, either on an exchange or in the over-the-
counter market.

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 What is the ratio of equity shares to ADS?
1 equity share held/traded in India is equivalent to 1 ADS held/traded on
NYSE.

Do the ADSs have voting rights?

Yes. In the event of a matter submitted to the holders of ordinary shares for
a vote, the ADS holders on record as at a particular date will be allowed to
instruct the depositary bank to exercise the vote in respect of the equity
shares representing the ADS held by them.

Are the ADSs entitled to cash dividends?

Yes, whenever dividends are paid to ordinary shareholders, cash dividends
to ADS holders are declared in local currency and paid in dollars (based on
the prevailing exchange rate) by the depositary bank, net of the depositary’s
fees and expenses.

Equity shares information

20) When did Infosys make its initial public offer (IPO) and what was
the initial listing price? Was there any follow-on offering?
Infosys made an initial public offer in February 1993 and its shares were
listed on stock exchanges in India in June 1993. Trading opened at Rs. 145
per share, compared to the IPO price of Rs. 95 per share. In October 1994,
Infosys made a private placement of 5,50,000 shares at Rs. 450 each to
Foreign Institutional Investors (FIIs), Financial Institutions (FIs), and body
corporates. In March 1999, it issued 20,70,000 ADSs (equivalent to
10,35,000 equity shares of par value of Rs. 10 each) at US$34 per ADS
under the American Depositary Shares Program and the same were listed
on the NASDAQ National Market. All the above data is unadjusted for the
issue of stock split and bonus shares. During July 2003, June 2005, and
November 2006, it made successful secondary ADR issues of US$294
million, US$1.07 billion, and US$1.605 billion respectively.

In December 2012, Infosys transferred the listing of its American Depositary

Shares (ADS) to the NYSE from the NASDAQ. In February 2013, Infosys
was listed in Euronext London and Paris markets. In June 2018, Infosys
voluntarily delisted its shares from Euronext London and Paris due to the
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low average daily trading volume of Infosys’ ADS on these exchanges which
was not commensurate with the related administrative requirements.

Infosys currently does not offer a dividend reinvestment program or dividend

stock program.

INTRODUCTION TO FINANCIAL
RATIOS ANALYSIS
Financial ratios are key metrics used to evaluate a company's financial
performance and health. They provide valuable insights into various aspects of a
company's operations, such as profitability, liquidity, solvency, and efficiency.
These ratios are calculated using data from a company's financial statements,
including the income statement, balance sheet, and cash flow statement.

These ratios help investors, analysts, and management assess a company's

financial health, its ability to meet short-term and long-term obligations, its
profitability, and its efficiency in managing assets. It's important to note that the
interpretation of these ratios can vary by industry, so it's often helpful to compare
a company's ratios to those of its peers or competitors.

Additionally, financial ratios should not be considered in isolation but rather in

the context of a company's overall financial situation and its industry's standards.
They are valuable tools for financial analysis and decision-making.

Financial ratio analysis is a fundamental tool used to evaluate the financial health
and performance of a company. By examining various financial ratios, you can
gain insights into a company's profitability, liquidity, solvency, and efficiency.

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When analyzing financial ratios, it's crucial to compare them to industry
benchmarks or historical data to understand their significance fully. Additionally,
it's essential to consider the context and industry-specific factors that might affect
a company's performance. Financial ratio analysis is a valuable tool for investors,
creditors, and internal management to make informed decisions about a
company's financial health and prospects.

PRACTICAL APPLICATIONS OF FINANCIAL

RATIOS

Financial ratios are essential tools for analyzing and assessing the financial health
and performance of a company. They provide valuable insights into various
aspects of a company's operations, making them useful for a wide range of
practical applications, including:

1. Financial Health Assessment: Financial ratios can help investors, lenders,

and analysts assess the overall financial health of a company. For example,
the current ratio and quick ratio can indicate a company's ability to meet its
short-term obligations.
2. Investment Decision-Making: Investors use financial ratios to evaluate
the attractiveness of an investment. Ratios such as price-to-earnings (P/E)
ratio and earnings per share (EPS) are commonly used to compare stocks
and make investment decisions.
3. Credit Analysis: Lenders and creditors use financial ratios to assess the
creditworthiness of a borrower. They examine ratios like debt-to-equity,
interest coverage, and debt service coverage to evaluate a company's ability
to repay its debts.
4. Operational Efficiency: Ratios such as inventory turnover, accounts
receivable turnover, and asset turnover can provide insights into a

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 company's operational efficiency and effectiveness in managing its assets
and working capital.
5. Profitability Analysis: Profitability ratios like return on equity (ROE),
return on assets (ROA), and gross margin help in evaluating a company's
ability to generate profits from its operations.
6. Valuation: Financial ratios can be used in the valuation of a company. For
example, the price-to-earnings (P/E) ratio is often employed to determine
the relative valuation of a company's stock in comparison to its peers.
7. Budgeting and Forecasting: By analyzing historical financial ratios,
companies can make more accurate financial forecasts and set budgets. This
helps in aligning future financial goals with past performance.
8. Mergers and Acquisitions: During merger and acquisition (M&A)
activities, financial ratios are used to assess the financial health and
performance of target companies. This is critical in making informed
decisions about acquisitions or mergers.
9. Risk Management: Ratios can help in identifying and mitigating financial
risks. For instance, a high debt-to-equity ratio may indicate a higher
financial risk, and companies may take steps to reduce their leverage.
10. Performance Benchmarking: Companies can use financial ratios to
benchmark their performance against industry peers or competitors. This
helps in identifying areas that need improvement.
11. Dividend Decisions: Companies can use payout ratios to determine
how much of their earnings should be distributed as dividends to
shareholders, striking a balance between reinvesting in the business and
rewarding shareholders.
12. Resource Allocation: Financial ratios can guide resource allocation
decisions by highlighting areas where a company may need to allocate
more or fewer resources based on its performance and financial position.
13. Strategic Planning: Businesses can incorporate financial ratios into
their strategic planning process to set financial targets and goals, helping
to ensure that their strategic initiatives are financially viable.

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10
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KEY FINANCIAL RATIOS

INVESTMENT VALUATION RATIOS

• Dividend per share
• Operating profit per share

PROFITABILITY RATIOS
• Return on capital employed
• Return on net worth
• Net profit margin
• Operating profit margin

LIQUIDITY AND SOLVENCY RATIOS

• Current ratio
• Quick ratio

DEBT COVERAGE RATIOS

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 • Interest coverage ratio

MANAGEMENT EFFICIENCY RATIOS

• Debtor’s turnover ratio
• Investment turnover ratio
• Total asset turnover ratio

PROS AND CONS OF RATIO

ANALYSIS
Ratio analysis is a valuable tool used by businesses, investors, and analysts to
evaluate the financial health and performance of a company. However, like any
analytical method, it has its own set of pros and cons.

Pros of Ratio Analysis:

1. Simplicity and Ease of Understanding: Ratios are straightforward to

calculate, making them accessible to a wide range of users, from investors
to management.
2. Comparative Analysis: Ratios enable you to compare a company's
financial performance over time or against competitors, industry
benchmarks, or sector averages. This comparison can provide valuable
insights.

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 3. Identifying Financial Strengths and Weaknesses: Ratios help in
identifying a company's financial strengths and weaknesses, allowing
management to focus on areas that need improvement.
4. Forecasting and Budgeting: Ratio analysis can assist in forecasting future
financial performance and making more accurate budgets.
5. Decision-Making: Investors use ratio analysis to make informed
investment decisions, while lenders use it to assess creditworthiness.
6. Detection of Financial Irregularities: Ratios can help identify financial
irregularities or potential fraud by highlighting unusual or unexpected
changes in financial performance.

Cons of Ratio Analysis:

1. Simplified View: Ratios provide a simplified view of a company's financial

health and may not capture all the nuances and complexities of the
business.
2. Variability in Accounting Practices: Differences in accounting methods,
practices, and standards among companies can distort comparisons,
especially when comparing companies in different industries or regions.
3. Limited Historical Perspective: Ratios are backward-looking and may
not account for sudden changes in a company's operating environment or
strategy.
4. Manipulation: Companies can manipulate their financial statements to
improve their ratios, making it important to be cautious when analyzing a
single ratio in isolation.
5. Lack of Industry Benchmarks: For some industries, finding appropriate
benchmark ratios can be challenging, as each industry has unique
characteristics.
6. Ignoring Non-Financial Factors: Ratios focus solely on financial data and
may ignore important non-financial factors like market conditions,
technological advancements, and management expertise.
7. Failure to Consider Economic Conditions: Ratios may not reflect the
impact of broader economic conditions on a company's performance.

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 8. Not a Comprehensive Analysis: Ratio analysis should be used in
conjunction with other analytical tools and methods for a more
comprehensive assessment of a company's financial health.

In summary, ratio analysis is a valuable tool when used appropriately and with a
critical eye. It can provide valuable insights into a company's financial
performance, but it should be part of a broader analysis that takes into account
the specific context and potential limitations of ratios.

RATIO ANALYSIS OF INFOSYS

DIVIDEND PER SHARE

The Dividend Per Share (DPS) ratio, also known as the Dividend Payout Ratio, is a
financial metric that measures the proportion of a company's earnings that is
returned to its shareholders in the form of dividends, on a per-share basis. It is
calculated as follows:

Dividend Per Share (DPS) = Total Dividends Paid / Total Number

of Outstanding Shares

Where:

• Total Dividends Paid: This represents the total amount of dividends

distributed to shareholders during a specific period, often on an annual or
quarterly basis.
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 • Total Number of Outstanding Shares: This is the total number of shares
issued by the company that are currently held by investors. It includes
common shares and preferred shares.

FINANCIAL YEAR DIVIDEND PER SHARE

MARCH 2019 RS 21.50

MARCH 2020 RS 17.50
MARCH 2021 RS 27.00
MARCH 2022 RS 31.00
MARCH 2023 RS 34.00

40

34
35
31
30
27

25
21.5
20 17.5

15

10

0
2019 2020 2021 2022 2023

Series 1

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The above ratio indicates that the company has made considerable profits for the last
five years and there is a significant change in the dividends. The change in dividend is Rs
9.5 from the year 2020 to 2021. There are so many factors responsible for this but the
main factor is COVID-19 and the imposition of lockdowns. This made their employees
work from home which cut their work environment expenses. during this time, there
was a huge boost for the IT sector.

OPERATING PROFIT PER SHARE

Operating Profit Per Share is a financial metric that measures the profitability of a
company's core or primary operations on a per-share basis. It is calculated as
follows:

Operating Profit Per Share = Operating Profit / Total Number of

Outstanding Shares

• Operating Profit: Also known as operating income or operating earnings,

it represents the profit a company generates from its core business
operations. Operating profit is calculated by subtracting operating
expenses (such as cost of goods sold, operating overhead, and
depreciation) from total revenue.
• Total Number of Outstanding Shares: This is the total number of shares
issued by the company that are currently held by investors. It includes
common shares and preferred shares.

FINANCIAL YEAR OPERATING PROFIT

MARCH 2019 RS 42.87

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MARCH 2020 RS 45.99
MARCH 2021 RS 57.40
MARCH 2022 RS 66.15
MARCH 2023 RS 73.99

The above ratio indicates that the company has made profits through its operating
activity of consultancy services. In the above trend, we can see that the increase in
earnings from the year 2020 to 2021 is huge. This is because the pandemic cut their
other sources of incomes

80
73.99

70 66.15

60 57.4

50 45.99
42.87
40

30

20

10

0
2019 2020 2021 2022 2023

RETURN ON CAPITAL EMPLOYED

Return on Capital Employed (ROCE) is a financial ratio that measures the
profitability and efficiency of a company's use of its capital, both equity and debt,
in its operations. It is a key indicator of a company's financial performance and
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effectiveness in generating returns for its investors and creditors. ROCE is
calculated using the following formula:

ROCE = EBIT/CAPITAL EMPLOYED ×100

Where:

• EBIT (Earnings Before Interest and Tax) refers to the operating profit of the
company, which is the profit generated from its core operations before
deducting interest and taxes.
• Capital Employed represents the total capital invested in the company's
operations, including both equity and debt. It is typically calculated as the
sum of shareholders' equity and long-term debt.

Key points to consider about Return on Capital Employed (ROCE):

1. Profitability Measurement: ROCE measures the efficiency of a company

in generating profits from its total capital base. It indicates how well the
company utilizes both its own and borrowed funds to generate earnings.
2. Comparative Analysis: ROCE is useful for comparing a company's
performance with other companies in the same industry or sector, as it
considers the capital structure. This makes it a valuable metric for investors
and analysts.
3. Higher ROCE is Preferred: A higher ROCE is generally preferred, as it
signifies that the company is generating more returns for its investors and
creditors. A company with a higher ROCE is considered more efficient and
profitable.
4. Risk and Leverage: Companies with a high level of debt may have a
higher ROCE due to financial leverage, but this comes with increased
financial risk. Therefore, it's important to consider a company's capital
structure when interpreting ROCE.
5. Benchmarking: Companies often set internal benchmarks for their ROCE
to evaluate their performance against their targets and objectives.
6. Long-Term Perspective: ROCE is a long-term performance metric, and
changes in this ratio over time can indicate the effectiveness of a company's
strategic decisions and investments.
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 7. Limitations: While ROCE is a valuable metric, it doesn't provide a
complete picture of a company's financial health. It should be used in
conjunction with other financial ratios and analyses to gain a
comprehensive understanding of a company's performance.

In summary, Return on Capital Employed (ROCE) is a financial ratio that assesses

how effectively a company generates profits from its total capital, including equity
and debt. It's a crucial metric for investors, analysts, and company management
when evaluating the financial performance and efficiency of a business.

YEAR RETURN ON CAPITAL

EMPLOYED

MARCH 2019 31.77%

MARCH 2020 33.08%
MARCH 2021 34.39%
MARCH 2022 41.29%
MARCH 2023 46.94%

20
 50 46.94
45
41.29
40
34.39
35 33.08
31.77
30

25

20

15

10

0
2019 2020 2021 2022 2023

The above ratio indicates that the company is using its capital effectively and efficiently.
The change in ratio for the year 2022 is way higher than the preceding years because
they might have invested very carefully and the investment decisions they made during
the years 2021-2022 turned out to be successful

RETURN ON NETWORTH
Return on Net Worth (RONW) is a financial ratio that measures the profitability of a company
to its shareholders' equity or net worth. It is a critical metric for both investors and company
management because it provides insight into how effectively a company is generating profits
based on the capital invested by its shareholders. RONW is also known as Return on Equity
(ROE), and the terms are often used interchangeably. Return on Net Worth (RONW) is a financial
ratio that measures the profitability of a company to its shareholders' equity or net worth. It is
a critical metric for both investors and company management because it provides insight into
how effectively a company is generating profits based on the capital invested by its
shareholders. RONW is also known as Return on Equity (ROE), and the terms are often used
interchangeably. The debt ratio, also known as the debt-to-equity ratio, is a financial metric
used to assess a company's leverage and its ability to meet its financial obligations. It compares
the total amount of debt a company has incurred to the total amount of equity it holds. In other
words, it measures the proportion of a company's financing that comes from debt as opposed
to equity.

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The formula for calculating the debt ratio is:

Debt Ratio = Total Debt / Total Equity

• Total Debt: This includes all of a company's short-term and long-term debt obligations,
including loans, bonds, and any other forms of debt.
• Total Equity: This represents the shareholders' equity in the company, which includes
common stock, retained earnings, and additional paid-in capital.

The formula for calculating Return on Net Worth (RONW) is as follows:

RETURN ON NETWORTH = NET INCOME/ SHAREHOLDERS EQUITY

×100

FINANCIAL YEAR RETURN ON NETWORTH

MARCH 2019 23.44%

MARCH 2020 25.09%
MARCH 2021 25.36%
MARCH 2022 30.90%
MARCH 2023 34.79%

22
 40

34.79
35
30.9
30
25.09 25.36
25 23.44

20

15

10

0
2019 2020 2021 2022 2023

The above ratio indicates the usage of shareholder's wealth to manage the company.
This shows how an investor's fund is used to make profits. In this case, the company has
shown very little improvement, especially in the year 2020-2021 but it has grown in the
upcoming year

NET PROFIT MARGIN

The Net Profit Margin Ratio, often simply referred to as the Net Profit Margin, is
a financial metric that measures the profitability of a company. It indicates the
percentage of each dollar of revenue that translates into profit after all expenses,
including operating costs, taxes, interest, and other deductions have been
accounted for. The net profit margin is a crucial measure for investors and analysts
as it reflects a company's ability to manage its costs effectively and generate
profit. The formula to calculate the net profit margin is as follows:

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NET PROFIT MARGIN= NET PROFIT/TOTAL REVENUE × 100

FINANCIAL YEAR NET PROFIT MARGIN

MARCH 2019 20.11%

MARCH 2020 19.66%
MARCH 2021 21.00%
MARCH 2022 20.43%
MARCH 2023 18.76%

21.5
21
21

20.43
20.5
20.11
20
19.66

19.5

19 18.76

18.5

18

17.5
2019 2020 2021 2022 2023

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The above ratio indicates they retain after all expenses. this ratio has declined in
recent years as their operating expenses have increased which resulted in lower
net profit

OPERATING PROFIT MARGIN

The operating profit margin, also known as the operating margin or operating
income margin, is a financial ratio that measures a company's profitability by
expressing its operating profit as a percentage of its total revenue. It is a key
indicator of a company's operational efficiency and profitability before
considering interest and taxes. The formula for calculating the operating profit
margin is as follows:

Operating Profit Margin = (Operating Profit / Total Revenue) ×

100

In this formula:

• Operating Profit (also known as operating income or operating earnings)

represents the profit a company makes from its core operations, excluding
non-operating income and expenses like interest and taxes. It is calculated
as Gross Profit (revenue minus the cost of goods sold) minus Operating
Expenses (including items like salaries, rent, utilities, and depreciation).

• Total Revenue is the total sales or income generated by the company from
its primary business activities.

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FINANCIAL YEAR OPERATING PROFIT MARGIN

MARCH 2019 25.54%

MARCH 2020 25.34%
MARCH 2021 28.46%
MARCH 2022 26.77%
MARCH 2023 24.77%

29
28.46

28

27 26.77

26
25.54
25.34

25 24.77

24

23

22
2019 2020 2021 2022 2023

The above ratio indicates that the company is maintaining its profits and growing
steadily as its other profits are increasing and its operating profit in the same
proposition as there is no significant change in the ratio over the years

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CURRENT RATIO
The current ratio is a financial ratio used to evaluate a company's short-term
liquidity and its ability to cover its short-term financial obligations. It is one of the
key liquidity ratios and provides insights into a company's ability to meet its
current liabilities (obligations due within one year) using its current assets (assets
that are expected to be converted into cash or used up within one year). The
formula for calculating the current ratio is as follows:

Current Ratio = Current Assets / Current Liabilities

In this formula:

• Current Assets typically include cash, accounts receivable, inventory, and

other assets that are expected to be converted into cash or used up within
one year.

• Current Liabilities include obligations due within one year, such as accounts
payable, short-term debt, and other short-term financial obligations.

FINANCIAL YEAR CURRENT RATIO

MARCH 2019 3.03

MARCH 2020 2.56
MARCH 2021 2.42
MARCH 2022 1.85
MARCH 2023 1.71

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 3.5

3.03
3
2.56
2.42
2.5

2 1.85
1.71

1.5

0.5

0
2019 2020 2021 2022 2023

The above ratio indicates that current liabilities are increasing than the current
assets as the ratio has been declining for the past five years.

QUICK RATIO
The quick ratio, also known as the acid-test ratio, is a financial ratio used to assess
a company's short-term liquidity and ability to meet its immediate or near-term
financial obligations without relying on the sale of inventory. It is a more stringent
measure of liquidity than the current ratio and provides insight into a company's
financial strength in the short term. The formula for calculating the quick ratio is
as follows:

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

In this formula:

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 • Current Assets typically include cash, accounts receivable, and other assets
that are expected to be converted into cash within one year.

• Inventory is excluded from current assets because it is not as easily

convertible to cash in the short term.

• Current Liabilities are obligations due within one year, such as accounts
payable, short-term debt, and other short-term financial obligations.

FINANCIAL YEAR QUICK RATIO

MARCH 2019 2.96

MARCH 2020 2.41
MARCH 2021 2.38
MARCH 2022 1.82
MARCH 2023 1.69

The above ratio indicates the company’s ability to pay off all its short-term- term
liabilities without liquidating the inventories. the above ratio has been declining
for the past five years because there is an increase in the short-term liabilities and
a decrease in the current assets

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 3.5

2.96
3

2.42 2.38
2.5

2 1.82
1.69

1.5

0.5

0
2019 2020 2021 2022 2023

INTEREST COVERAGE RATIO

The interest coverage ratio, also known as the time's interest earned ratio, is a
financial metric used to assess a company's ability to meet its interest payments
on its debt. It measures the company's ability to generate enough operating
income to cover its interest expenses. The interest coverage ratio is important for
both creditors and investors because it provides insights into a company's
financial health and its capacity to service its debt.

The formula for calculating the interest coverage ratio is as follows:

Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) /

Interest Expense

• Earnings Before Interest and Taxes (EBIT): This represents the company's
operating income before interest and taxes are deducted. It is sometimes
referred to as operating profit.

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 • Interest Expense: This is the total amount of interest a company is obligated
to pay on its debt during a specific period, such as a year.

FINANCIAL YEAR INTEREST COVERAGE RATIO

MARCH 2019 --------------------------------

MARCH 2020 180.62
MARCH 2021 195.26
MARCH 2022 223.62
MARCH 2023 202.55

250
223.62

202.55
195.26
200
180.62

150

100

50

2
0
2019 2020 2021 2022 2023

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the above ratio indicates the interest paid for the debts to the amount of profit
made before paying interest and tax. This shows how much profit is left after the
payment of interest and how much is available for other purposes. Thus it shows
how much profit is spent on payment of interest. This ratio is increasing from the
year 2020 to 2022 but decreased in the year 2023 because of increase in debt

DEBTOR’S TURNOVER RATIO

The debtor turnover ratio, also known as the accounts receivable turnover ratio,
is a financial metric used to assess how efficiently a company manages its
accounts receivable. Accounts receivable are the amounts that customers owe to
a company for goods or services that have been delivered but not yet paid for.
The ratio helps measure how quickly a company can collect payments from its
customers.

The formula for calculating the debtor turnover ratio is:

Debtors Turnover Ratio = Net Credit Sales / Average Accounts

Receivable

Where:

1. Net Credit Sales: This is the total sales made on credit to customers during
a specific period. It doesn't include cash sales or sales on credit that have
not been paid yet.

2. Average Accounts Receivable: This is the average amount of accounts

receivable a company has during a specific period. It can be calculated as
(Beginning Accounts Receivable + Ending Accounts Receivable) / 2.

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 FINANCIAL YEAR DEBTORS TURNOVER
RATIO

MARCH 2019 5.73

MARCH 2020 5.48
MARCH 2021 5.39
MARCH 2022 5.88
MARCH 2023 6.24

6.4
6.24
6.2

6
5.88

5.8 5.73

5.6
5.48
5.39
5.4

5.2

4.8
2019 2020 2021 2022 2023

The above ratio indicates the ability of the company to recover their receivables
from their debtors. A lower ratio shows how effective the company is in recovering

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its receivables. This ratio declined from the year 2019-2021 but started to increase
over the past two years. This shows that recovering their debts is becoming lower
and debt sales are increasing.

INVESTMENT TURNOVER RATIO

The Investment Turnover Ratio, sometimes referred to as the Asset Turnover

Ratio, is a financial ratio that measures how efficiently a company is using its
assets to generate revenue or sales. This ratio is important for evaluating the
company's operational efficiency and how well it is utilizing its investments in
assets to generate income.

The formula for calculating the Investment Turnover Ratio is as follows:

Investment Turnover Ratio = Net Sales / Average Total Assets

Where:

1. Net Sales: This is the total revenue or sales generated by the company
during a specific period, typically after accounting for discounts, returns,
and allowances. It's a measure of a company's top-line performance.

2. Average Total Assets: This represents the average total assets the company
holds during a specific period, usually calculated as (Beginning Total Assets
+ Ending Total Assets) / 2. Total assets include both current and non-current
assets.

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FINANCIAL YEAR INVESTMENT TURNOVER
RATIO

MARCH 2019 1.17

MARCH 2020 1.28
MARCH 2021 1.21
MARCH 2022 1.51
MARCH 2023 1.83

2
1.83
1.8

1.6 1.51

1.4 1.28
1.17 1.21
1.2

0.8

0.6

0.4

0.2

0
2019 2020 2021 2022 2023

The above ratio shows the company’s potential to make sales or profit using the
total assets they have. The above ratio is increasing at a constant rate but declined
in the year 2020-2021 for which covid would have been a reason. And increased
during the years 2022-2023.

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TOTAL ASSETS TURNOVER RATIO

The total assets turnover ratio is a financial metric that measures a company's
efficiency in using its total assets to generate sales. It indicates how well a
company utilizes its assets to generate revenue. The formula for calculating the
total assets turnover ratio is:

Total assets turnover ratio= net sales/ average total assets

where

• Net SalesNet Sales refers to the total revenue generated by a company after
deducting sales returns, allowances, and discounts.

• Average Total AssetsAverage Total Assets is the average value of a

company's total assets over a specific period, usually calculated as the
average of the total assets at the beginning and end of the period.

FINANCIAL YEAR TOTAL ASSETS TURNOVER

RATIO

THE YEAR 2019

1.17
THE YEAR 2020 1.27
THE YEAR 2021 1.21

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YEAR 2022 1.51
YEAR 2023 1.84

2
1.84
1.8

1.6 1.51

1.4
1.27
1.17 1.21
1.2

0.8

0.6

0.4

0.2

0
2019 2020 2021 2022 2023

The above ratio shows how efficient and effective the company is in using its
assets to generate sales. This in turn helps to increase profits with limited assets.
The ratio was increasing for the years 2019 and 2020. But it declined in the year
2021 because of the pandemic which resulted in decreased sales.

RETURN ON EQUITY
Return on Equity (ROE) is a financial metric that measures the profitability of a
company in relation to its shareholders' equity. It is expressed as a percentage
and is calculated by dividing net income by shareholders' equity. The formula for
Return on Equity is:
37
Here's a breakdown of the components:

RETURN ON EQUITY= NET INCOME/ SHAREHOLDERS EQUITY ×

100

1. Net Income: This is the company's total earnings after deducting all
expenses, taxes, and other costs.

2. Shareholders' Equity: This represents the owners' residual interest in the

company's assets after deducting liabilities. It is the book value of
shareholders' ownership in the company.

ROE is a key financial ratio and is used by investors and analysts to assess a
company's profitability and efficiency in utilizing shareholders' equity to generate
profits. A higher ROE is generally considered favorable, as it indicates that the
company is using equity capital effectively to generate profits.

It's important to note that while a high ROE is generally positive, it should be
analyzed in the context of the industry and compared to peers. Additionally, a
high ROE can be influenced by financial leverage (using debt to finance
operations), so it's crucial to consider the company's overall financial health and
risk profile.

Infosys's return on common equity hit its 5-year low in March 2019 of 22.7%.
Infosys's return on common equity decreased in 2019 (22.7%, -5.8%) and
increased in 2020 (25.8%, +13.7%), 2021 (27.4%, +5.9%), 2022 (29.1%, +6.2%), and
2023 (31.2%, +7.3%).

FINANCIAL YEAR RETURN ON EQUITY

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2019 22.7%
2020 25.8%
2021 27.4%
2022 29.1%
2023 31.2%

35
31.2
30 29.1
27.4
25.8
25
22.7

20

15

10

0
2019 2020 2021 2022 2023

The above ratio has been increasing for the past five years which indicates that
shareholders are enjoying a good amount of profits that the company is making.
But the only catch is that shareholders only enjoy that equity and profits only if
dividends are distributed. The ratio shows that the company’s sales are increasing
or they have their shareholders reduced as they have been buying back their
shares in the past years.

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RETURN ON INVESTMENT

Return on Investment (ROI) is a financial metric used to evaluate the profitability

or efficiency of an investment. It is expressed as a percentage and is calculated by
dividing the net gain or loss from an investment by the initial cost or outlay of the
investment and then multiplying the result by 100. The formula for ROI is:

RETURN ON INVESTMENT= NET GAIN OR LOSS / COST OF

INVESTMENT × 100

Here are the key components:

1. Net Gain or Loss: This is the final value of the investment minus the initial
cost. If the result is positive, it represents a net gain; if it's negative, it's a net
loss.

2. Cost of Investment: This is the initial amount of money invested in the

project, asset, or venture.

The ROI metric is often used by investors, businesses, and analysts to assess the
profitability and attractiveness of different investment opportunities. A positive
ROI indicates a gain, while a negative ROI indicates a loss.

It's important to note that ROI does not consider the time factor explicitly. It
provides a simple measure of the profitability of an investment but doesn't
account for the time it takes to achieve the return. Additionally, ROI is a relative
measure and is most valuable when comparing the returns of different investment
opportunities.

ROI is a simple metric, and it has its limitations. For a more comprehensive analy
sis, other financial metrics and factors should also be considered.ROI is a simple

40
metric, and it has its limitations. For a more comprehensive analysis, other financ
ial metrics and factors should also be considered.

infosys's return on invested capital for fiscal years ending March 2019 to 2023
averaged 23.9%. Infosys operated at median return on invested capital of 24.7%
from fiscal years ending March 2019 to 2023. Looking back at the last 5 years,
Infosys's return on invested capital peaked in June 2023 at 28.4%.

The current price of Infosys is Rs 1368.65, with a decrease of 0.44% today. Over
the past 5 years, the stock has shown a remarkable return of 107.01%

41
SOURCE OF INFORMATION

CHAT GPT
GOOGLE
MONEY CONTROL.COM
INFOSYS.COM

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