“RATIO ANALYSIS”

A
SUMMER INTERNSHIP PROJECT REPORT
SUBMITTED IN THE PARTIAL FULFILMENT
OF THE REQUIREMENTS OF
ARKA JAIN UNIVERSITY

For the award of the degree of

BACHELOR OF COMMERCE (HONORS)
For the session 2021-2024

Submitted By
Name: PURVI VERMA
University Enrolment Number: AJU/210094

Faculty Mentor
Name: Prof. Ranjan Kumar
Designation: Assistant Professor

School of Commerce and Management, ARKA JAIN UNIVERSITY

 DECLARATION BY THE STUDENT

I, PURVI VERMA, hereby declare the project titled “RATIO ANALYSIS”, has been
carried out by me during my ‘SUMMER INTERNSHIP PROJECT REPORT’ and is
hereby submitted in the partial fulfilment of the requirement of ARKA JAIN UNIVERSITY
for the award of the degree of Bachelor of Commerce.

To the best of my knowledge, the project undertaken, has been carried out by me and is my
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Name of the Student: PURVI VERMA
University Enrolment No.: AJU/210094
B.COM (H) (2021- 2024)
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 CERTIFICATE FROM THE FACULTY MENTOR

This is to certify that PURVI VERMA, of ARKA JAIN UNIVERSITY, AJU/210094, a

student of B. Com (H) (2021-2024), has undertaken Dissertation Report Title “RATIO
ANALYSIS” for the partial fulfilment of the requirement of ARKA JAIN UNIVERSITY
for the award of the degree of Bachelor of Business Administration, under my supervision.

Signature of the Faculty Mentor,

Name of the Faculty Mentor: Prof. Ranjan Kumar
Designation of the Faculty Mentor: Assistant Professor
 ACKNOWLEDGEMENT

I take this opportunity to thank my faculty mentor Prof. , SCHOOL OF

COMMERCE AND MANAGEMENT, ARKA JAIN UNIVERSITY, for his/ her valuable
guidance, closely supervising this work over with helpful suggestions, which helped me to
complete the report properly and present.
More importantly, his/ her valuable advice and support helped me to put some creative efforts
on my project. He/ She has really been an inspiration and driving force for me has constantly
enriched my row ideas with his vast experience and knowledge.

Specially, I would also like to give my special thanks to my parents whose blessings and love
enabled me to complete this work properly as well.

Name of the Student: PURVI VERMA

University Enrolment No.: AJU/210094
B. Com (HONS.) (2021-2024)
 EXECUTIVE SUMMARY

Ratio analysis is one of the techniques of financial analysis where ratios are used as a
yardstick for evaluating the financial condition and performance of a firm. Analysis and
interpretation of various accounting ratios gives a better understanding of the financial and
performance of firms. Trend ratio indicates the direction in the performance- improvement,
deterioration or consistency over the years.
 INDEX

CHAPTER NO. CHAPTER NAME PAGE NO.

Executive Summary
Chapter 1 Introduction to the Topic
Chapter 1.1 Industry Profile
Chapter 1.2 Company Profile
Chapter 2 Review of Literature
Chapter 3 Project Objectives
Chapter 4 Research Methodology
Chapter 5 Data Analysis and Interpretation
Chapter 6 Findings of Study
Chapter 7 Scope of Study
Chapter 8 Conclusion
Bibliography/ References

INTRODUCTION
Ratio analysis is a fundamental tool used in financial analysis to evaluate the financial
performance and health of a company. It involves the calculation and interpretation of various
ratios that provide insights into different aspects of a company's operations, profitability,
liquidity, solvency, and efficiency. By examining these ratios, analysts, investors, and
stakeholders can make informed decisions about the company's financial condition and
performance.

❖ KEY POINTS:

● Ratio analysis compares line-item data from a company's financial statements to reveal
insights regarding profitability, liquidity, operational efficiency, and solvency.
● Ratio analysis can mark how a company is performing over time, while comparing a
company to another within the same industry or sector.
● While ratios offer useful insight into a company, they should be paired with other metrics,
to obtain a broader picture of a company's financial health.

⮚ What does RATIO ANALYSIS tell you?

Investors and analysts employ ratio analysis to evaluate the financial health of companies by
scrutinizing past and current financial statements. Comparative data can demonstrate how a
company is performing over time and can be used to estimate likely future performance. This
data can also compare a company's financial standing with industry averages while
measuring how a company stacks up against others within the same sector.
Investors can use ratio analysis easily, and every figure needed to calculate the ratios is found
on a company's financial statements.
Ratios are comparison points for companies. They evaluate stocks within an industry.
Likewise, they measure a company today against its historical numbers. In most cases, it is
also important to understand the variables driving ratios as management has the flexibility to,
at times, alter its strategy to make its stock and company ratios more attractive. Generally,
ratios are typically not used in isolation but rather in combination with other ratios. Having a
good idea of the ratios in each of the four previously mentioned categories will give you a
comprehensive view of the company from different angles and help you spot potential red
flags.

 RATIO ANALYSIS is broadly categorized into the following:

1. Liquidity Ratios:
 Current Ratio: This ratio measures a company's ability to cover its short-term
liabilities with its short-term assets. It is calculated by dividing current assets
by current liabilities. A ratio above 1 indicates good short-term liquidity.
 Quick Ratio (Acid-Test Ratio): Similar to the current ratio, but it excludes
inventory from current assets. It provides a more stringent measure of a
company's ability to meet short-term obligations.
2. Profitability Ratios:
 Profit Margin: This ratio measures the percentage of sales that turn into
profits. It is calculated by dividing net income by total revenue.
 Return on Assets (ROA): ROA indicates how efficiently a company is
utilizing its assets to generate profits. It is calculated by dividing net income
by average total assets.
 Return on Equity (ROE): ROE evaluates the profitability of a company from
the perspective of its shareholders. It is calculated by dividing net income by
average shareholders' equity.
3. Efficiency Ratios:
 Inventory Turnover: This ratio measures how many times a company's
inventory is sold and replaced over a period. It is calculated by dividing the
cost of goods sold by average inventory.
 Accounts Receivable Turnover: It measures how quickly a company collects
payments from its customers. It is calculated by dividing total credit sales by
average accounts receivable.
4. Solvency Ratios:
 Debt-to-Equity Ratio: This ratio indicates the proportion of a company's
financing that comes from debt compared to equity. It is calculated by
dividing total debt by shareholders' equity.
 Interest Coverage Ratio: It assesses a company's ability to cover its interest
expenses with its operating income. It is calculated by dividing earnings
before interest and taxes (EBIT) by interest expense.

5. Coverage Ratios:
Coverage ratios measure a company's ability to make the interest payments and
other obligations associated with its debts. Examples include the times interest earned
ratio and the debt-service coverage ratio.
 6. Market Prospect Ratios

These are the most commonly used ratios in fundamental analysis. They include
dividend yield, P/E ratio, earnings per share (EPS), and dividend pay-out ratio.
Investors use these metrics to predict earnings and future performance.

Ratio analysis is most effective when used in comparison with industry benchmarks,
historical performance, and competitors. It helps stakeholders make informed decisions,
identify trends, and pinpoint areas that may require attention or improvement within a
company's financial structure and operations. Keep in mind that while ratios provide valuable
insights, they should be used in conjunction with other financial analysis methods for a
comprehensive understanding of a company's financial health.
 INDUSTRY PROFILE

Global consulting and IT services refer to the provision of professional advice and
technology-related solutions to organizations on a global scale. These services are typically
offered by consulting firms and IT service providers with a presence in multiple countries and
regions. The goal is to assist businesses in optimizing their processes, implementing
technology solutions, and achieving their strategic objectives.

Here are key components of global consulting and IT services:

1. Consulting Services:
- Strategic Consulting: Providing guidance on overall business strategy and helping
organizations align their business goals with technological initiatives.
- Management Consulting: Assisting in organizational change, process improvement, and
operational efficiency.
- Risk and Compliance Consulting: Advising on regulatory compliance, risk
management, and security measures.

2. IT Services:
- Application Development and Maintenance: Designing, developing, and maintaining
software applications tailored to meet specific business needs.
- Infrastructure Services: Managing and supporting the hardware, software, networks, and
other IT infrastructure components.
- Cloud Services: Offering solutions related to cloud computing, including migration to the
cloud, cloud infrastructure management, and optimization.

3. Digital Transformation:
- Assisting organizations in leveraging digital technologies to transform their business
models, improve customer experiences, and stay competitive in the digital age.

4. Outsourcing:
- Providing outsourcing services, where certain business functions or IT processes are
delegated to external service providers to improve efficiency and reduce costs.

5. Data Analytics and Business Intelligence:

 - Utilizing data analytics and business intelligence tools to help organizations make
informed decisions, identify trends, and gain insights from their data.

6. Cybersecurity Services:
- Offering solutions to protect organizations from cyber threats, including security
assessments, threat detection, and incident response.

7. Managed Services:
- Providing ongoing support and management of IT systems and services, allowing
organizations to focus on their core business functions.

8. ERP (Enterprise Resource Planning):

- Implementing and supporting ERP systems that integrate various business processes and
functions across an organization.

Global consulting and IT services firms often work with clients from diverse industries, and
their expertise spans a wide range of technologies and business practices. These services are
critical for businesses looking to adapt to rapidly changing technological landscapes and
remain competitive in the global market.

GLOBAL CONSULTING AND IT SERVICES IN INDIA:

Several global consulting and IT services companies operate in India. These companies
provide a range of services, including IT consulting, software development, business process
outsourcing, and more. Some of the prominent global consulting and IT services firms in
India include:

1. Tata Consultancy Services (TCS): TCS is one of the largest IT services and consulting
companies in the world and is headquartered in Mumbai, India. It operates in various
domains, including IT services, consulting, and business solutions.

2. Infosys: Another major player in the Indian IT industry, Infosys is headquartered in

Bangalore and provides services such as consulting, technology, outsourcing, and more.
3. Wipro: Wipro is a global IT consulting and services company based in Bangalore. It offers
a range of services, including IT consulting, business process outsourcing, and software
development.

4. HCL Technologies: HCL is a multinational IT services and consulting company with a

significant presence in India. It provides services in areas such as IT infrastructure
management, engineering, and R&D services.

5. Accenture: While Accenture is a multinational company, it has a significant presence in

India and provides consulting, technology, and outsourcing services.

6. Capgemini: Capgemini is a global consulting and IT services firm with operations in

India. It offers services in consulting, technology, outsourcing, and more.

7. Cognizant: Cognizant is an American multinational IT services company with a

considerable presence in India. It provides services in IT consulting, digital solutions, and
business process outsourcing.

8. IBM India: IBM, a global technology and consulting company, has a substantial presence
in India, offering services in cloud computing, AI, and other technology domains.

9. Deloitte India: Deloitte is a multinational professional services firm, and its Indian
operations provide consulting, audit, tax, and advisory services.

These are just a few examples, and there are many other global consulting and IT services
firms operating in India.

COMPANY PROFILE
Infosys is a global leader in next-generation digital services and consulting. We enable
clients in more than 56 countries to navigate their digital transformation.
Infosys Limited is an Indian multinational information technology company that provides
business consulting, information technology and outsourcing services. The company was
founded in Pune and is headquartered in Bangalore. Infosys is the second-largest Indian IT
company, after Tata Consultancy Services, by 2020 revenue figures.
On 24 August 2021, Infosys became the fourth Indian company to reach US$100 billion in
market capitalization. It is one of the top Big Tech (India) companies.
With over four decades of experience in managing the systems and workings of global
enterprises, we expertly steer clients, in more than 56 countries, as they navigate their digital
transformation powered by cloud and AI. We enable them with an AI-first core, empower the
business with agile digital at scale and drive continuous improvement with always-on
learning through the transfer of digital skills, expertise, and ideas from our innovation
ecosystem. We are deeply committed to being a well-governed, environmentally sustainable
organization where diverse talent thrives in an inclusive workplace.

HISTORY:

Infosys, founded in 1981 by N.R. Narayana Murthy and six other engineers, has played a
significant role in the growth of the Indian IT industry. Here's a brief history of Infosys:

1. Founding (1981): Infosys was founded on July 2, 1981, in Pune, India, by N.R. Narayana
Murthy, Nandan Nilekani, N.S. Raghavan, S. Gopalakrishnan, S.D. Shibulal, K. Dinesh, and
Ashok Arora. The initial capital of the company was borrowed from Murthy's wife, Sudha
Murthy.

2. Initial Years (1981-1991): In the first decade, Infosys primarily focused on providing end-
to-end IT services, including software development and maintenance. The company started
gaining recognition for its commitment to quality and customer satisfaction.
3. Public Listing (1993): Infosys went public in 1993, with an initial public offering (IPO)
on the Indian stock exchanges. This move marked a significant milestone in the company's
growth and provided funds for expansion.

4. Global Expansion (1990s-2000s): In the 1990s and early 2000s, Infosys expanded its
operations globally. It established offices and development centres in the United States,
Europe, and other regions to better serve its international clients.

5. Leadership Changes: N.R. Narayana Murthy served as the CEO of Infosys from its
founding until 2002. Subsequently, other leaders, including Nandan Nilekani, S.
Gopalakrishnan, and S.D. Shibu Lal, took on leadership roles in the company.

6. Global Recognition and Growth: Infosys gained global recognition for its innovative
approach to software development, quality management practices, and commitment to
corporate governance. The company continued to grow, expanding its service offerings and
client base.

7. Landmark Achievements: Infosys achieved several milestones, including being the first
Indian company to be listed on NASDAQ in 1999. It also became the first Indian company to
receive the Global Most Admired Knowledge Enterprises (MAKE) award in 2003.

8. Acquisitions: Infosys engaged in strategic acquisitions to enhance its capabilities and

expand its service offerings. Notable acquisitions include the purchase of Axon Group plc, a
UK-based consulting firm specializing in SAP solutions, in 2008.

9. Challenges: Like many companies, Infosys faced challenges, including concerns related to
corporate governance and leadership changes. However, the company worked to address
these issues and maintain its reputation.

10. Recent Years (2010s-2022): Infosys continued to adapt to changing market dynamics,
emphasizing digital transformation, artificial intelligence, and other emerging technologies.
There were leadership changes, with Salil Parekh becoming the CEO in 2018.

11. COVID-19 Pandemic Response: During the COVID-19 pandemic, Infosys, like many
IT companies, implemented remote work policies to ensure the safety of its employees while
maintaining business continuity.
PRODUCTS AND SERVICES:

Infosys provides software development, maintenance and independent validation services to

companies in finance, insurance, manufacturing and other domains.
Its key products and services are:
 NIA – Next Generation Integrated AI Platform (formerly known as Mana)
 Infosys Consulting – a global management consulting service
 Cloud-based enterprise transformation services
 Infosys Information Platform (IIP), an analytics platform
 Edge Verve Systems, which includes Finacle, a global banking platform
 Panaya Cloud Suite
 Skava (now Infosys Equinox)
 Engineering Services
 Digital Marketing
 Blockchain

SWOT ANALYSIS OF INFOSYS:

INFOSYS STRENGTHS:
1. Second-largest Indian IT Company
Infosys is ranked second after Tata Consultancy Services, with a market
capitalization of $79 billion. In August 2021, Infosys became the fourth Indian company to
cross the $100 billion mark in market capitalization.
The large scale gives Infosys a competitive advantage in cost minimization and business
negotiations.
2. Strong financial growth
Infosys has had tremendous growth in the past few years, achieving a 5-year CAGR
of 28% in revenue. The company reported revenue of Rs 1.03 Billion in FY22, a 21%
increment compared to the previous fiscal year.
3. Light Balance Sheet
Infosys is the largest public company with zero debt on its books. It creates higher free cash
flow levels, which give the tech giant more flexibility in returning value to shareholders
while also providing the company ample room to adjust the capital structure and easier access
to capital.
5. Phenomenal brand growth
Infosys has been recognized as the fastest-growing IT services company in the world,
according to Brand Finance’s 2022 annual report.
The tech giant’s brand value has grown by 52% since 2021 and 80% since 2020, reaching
US$12.8 billion.
6. Strong brand recognition
Infosys has a strong brand image for the quality of products and services it provides. The
company has also won several awards, such as leader in Gartner Magic Quadrant, Green
Apple Award, and Global System Integrator of the Year.
The company can use its strong brand reputation to attract customers and influence consumer
decisions.

INFOSYS WEAKNESSES:
1. Overreliance on a few clients
Infosys has an over-concentrated client base which leaves it in a vulnerable position.
For example, 20.5% of its consolidated revenue in FY22 was generated by the top 10 clients,
and the top 5 clients generated 11.9% of revenue. With the global market entering a highly
uncertain business environment, this could affect the tech giant’s revenues.
2. Unsuccessful company acquisitions
On former CEO Vishal Sikka’s watch, Infosys bought Panaya, a US-based automation
technology company, in 2015 for $200 million, and Skava, a US-based retail digital solutions
company in 2015 for $120 million. Both the acquisitions were unsuccessful, resulting in the
tech giant write off $90 million on the deals.
3. Controversies
Infosys has been involved in several controversies. Most notable was its involvement in
the Russian energy industry after the country’s invasion of Ukraine.
Another faux pas was its forced settlement of $800k for tax fraud in the US in 2019 due to its
failure to adhere to California’s laws on immigrant workers’ payrolls.
4. Management/ownership changes
Infosys has been plagued by wrangles in its top leadership, where the board and founders
didn’t see eye to eye over issues of governance. This led to the departure of CEO Vishal
Sikka in 2018.
INFOSYS OPPORTUNITIES:
1. Opportunity in the unexploited IT value chain
India is emerging as one of the fastest-growing digital ecosystems in the world. India’s IT
industry had an extraordinary growth rate of 15.5% in early 2022, twice as fast as the
country’s economic growth.
Experts estimate that by 2025 there will be a $1 trillion opportunity in the software product
sector globally.
2. Increasing demand for cloud-based solutions
Major organizations are increasingly turning to cloud computing to help streamline their
operations.
Research shows the segment was valued at around $430 billion in 2021 and is expected to
grow to about $1,026 billion by 2028, registering an average compound annual growth rate
of 15.8%.
3. Emerging markets
In 2021, India was the top outsourcing destination in the world, making up 55% of the market
for IT and Business Processing Management services.
The IT sector in India has attracted cumulative foreign direct investment of around $86
billion in the past 12 years. This is a segment that Infosys can further exploit.
5. Expansions and acquisitions
The size of Infosys gives it an advantage in acquiring smaller competitors and expanding
its business landscape.
Most of the previous acquisitions have greatly benefited the company, and Infosys can
continue doing so to advance its business to the next level.

INFOSYS THREATS:
1. Higher interest rate environment
Infosys’ growth prospects could be dimmed by Fed rate hikes in 2022, which are likely to see
potential clients decrease their CapEx investments.
2. Rising wages
Wage hikes and increased travel costs have been eating into the profits of India’s three tech
giants – TCS, Infosys, and Wipro.
These companies are spending up to 62% of their revenues on salaries, creating an
unsustainable situation for the tech giants.
Infosys spent, on average, 55% on remunerations in the last 4 fiscal years, making it the 3rd IT
company in India that paid the most in salaries.
3. Workforce attrition
Indian IT companies are unable to stem the tide of employees leaving, with Infosys
experiencing the worst overall attrition rate among the tech giants.
The company experienced an attrition rate of 27.1% in the most recent quarter. Employee
attrition has cost implications as recruits taking up the vacancies must undergo training.
4. Intensified competition
Infosys operates in the highly competitive IT industry, with major competitors such as
Accenture, IBM, and Oracle. This could possibly lead to pricing pressure and cost concerns
in the future.
The race in innovation could also put Infosys at a disadvantageous position if it fails to catch
up with competitors.

GEOGRAPHICAL PRESENCE

As of 31 March 2018, Infosys had 82 sales and marketing offices and 123 development
centres across the world with major presence in India, United States, China, Australia, Japan,
Middle East and Europe.
In 2019, 60%, 24%, and 3% of its revenues were derived from projects in North America,
Europe, and India, respectively. The remaining 13% of revenues were derived from the rest
of the world.
Infosys's presence in Russia came under scrutiny after Russia had started the invasion of
Ukraine on 24 February 2022. Infosys issued a clarification stating that they didn't have
active relationships with Russian firms. By November 2022, the only people working there
were administrative staff helping with transferring the existing contracts to other contractors.

REVIEW OF LITERATURE
 Susan Ward (2008) emphasis that financial analysis using ratios between key values help
investors cope with the massive am ount of numbers in company’s financial statements. For
example, they can compute the percentage of net profit a company is generating on the funds
it has deployed. All other things remaining the same, a company that earns a higher
percentage of profit compared to other companies is a better investment option.

Dr. Mrs. Vijaya Lakshmi, J. Nandhini, P.V. Nivashini and G. Pavithra (2019), this study
is mainly done to analyse the financial performance of Ashok Leyland Limited for the period
of 2014-2018. It is based on the secondary data collected from the annual report of the
company

Anil Kumar Goyal (2020), a study on financial performance analysis of Bharat Petroleum
Corporation India″ The author uses profitability, liquidity and solvency ratio for analysis of
the company’s financial performance. The study covers the period of study from 2004-2005
to 2011-2012. It is concluded that the company was unable to even touch the ideal quick
ratio during the period of study which may create problem to the short-term liquidity

Dr. P.R Brinda K alyani (2021), ‶ A study on the financial performance of Infosys Limited″
took a period of 5 years from 2016 to 2020. It was found that market value of the firm were
higher to cover the debts of firm. Pattern of the firm remains almost same but there were
technological changes for every year.

OBJECTIVES OF THE STUDY

The primary objective of studying ratio analysis is to evaluate and interpret the financial
performance and health of a business or organization. Ratio analysis involves the calculation
and analysis of various financial ratios that provide insights into different aspects of a
company's operations, profitability, liquidity, solvency, and efficiency. Let’s take a look at
some objectives that ratio analysis fulfil:

1. Financial Performance Assessment:

Ratio analysis helps in assessing the overall financial performance of a business. It provides a
snapshot of the company's profitability, efficiency, and effectiveness in utilizing its resources.

2. Inter-Firm and Intra-Firm Comparison:

Ratios allow for the comparison of a company's performance with that of its industry peers
(inter-firm) and also with its own historical performance (intra-firm). This comparative
analysis helps identify strengths, weaknesses, opportunities, and threats.

3. Decision-Making Support:
Ratio analysis aids in decision-making by providing a quantitative basis for evaluating
different financial aspects. It assists management in making informed decisions related to
investments, financing, and operations.

4. Liquidity Analysis:
Ratios such as the current ratio and quick ratio assess a company's short-term liquidity and its
ability to meet its short-term obligations. This is crucial for understanding the company's
short-term financial health.

5. Profitability Analysis:
Profitability ratios, such as net profit margin and return on equity, evaluate the company's
ability to generate profits in relation to its revenue, assets, and equity. This helps stakeholders
gauge the efficiency of the company in generating returns.

6. Solvency Analysis:
Solvency ratios, such as debt-to-equity ratio and interest coverage ratio, assess the long-term
financial viability of a company. They indicate the company's ability to meet its long-term
obligations and the level of financial risk.

7. Operational Efficiency:
Efficiency ratios, such as inventory turnover and receivables turnover, measure how
efficiently a company is managing its assets. High turnover ratios may indicate effective asset
utilization.

8. Forecasting and Planning:

Ratio analysis can assist in forecasting future financial trends based on historical ratios. This
can be valuable for financial planning and setting realistic financial goals.

9. Communication with Stakeholders:

Ratios provide a standardized and concise way to communicate financial information to
various stakeholders, such as investors, creditors, employees, and management.

RESEARCH METHODOLOGY
 We can use several tools to evaluate a company, but I will use one of the most valuable
tools that is “financial ratios”. Ratios are an analyst’s microscope; they allow us to get
a better view of the firm’s financial health than just looking at the raw financial statements.
Ratios are useful both to internal and external analysts of the firm. For internal purposes:
ratios can be useful in planning for planning for the future, setting goals, and evaluating
the performance of managers. External analysts use ratios to decide whether to grant
credit, to monitor financial performance, to forecast financial performance, and to decide
whether to invest in the company. I will use Microsoft Word and Microsoft Excel work
sheets to compute the

different ratios and analysis.

Sources of data

All the necessary information to prepare this report is collected from secondary sources of

data.

Secondary data sources: It includes sources of existing/published data, such as:

. Studies and files and other related projects and documents.

. Official Website of INFOSYS.
. Journals
. Various websites providing data on the topic.
. Reviews of previous reports related to the topic
. Annual Report of the company

Methods of data collection:

I have used following methods and tools to gather our necessary data or information:
Secondary data: I have used following tools to gather our necessary secondary data:

. Reviews of previous reports

. Studies and files
. Net browsing
. Annual report

DATA ANALYSIS AND INTEPRETATION

RATIO ANALYSIS:
 Financial ratios are useful indicators of a firm’s performance and financial situations.
Financial ratios can be used to analyze trends and to compare the firm’s financials to
those of other firms. Ratio analysis is the calculation and comparison of ratios which
are derived from the information in a company’s financial statement. Financial ratios
are usually expressed as a percent or as times per period. Ratio analysis is a widely
used tool of financial analysis. It is defined as the systematic use of ratio to interpret
the financial statements so that the strength and weaknesses of a firm as well as its
historical performance and current financial conditions can be determined. The term
ratio refers to the numerical or quantitative relationship between two variables. With
the help of ratio analysis conclusion can be drawn regarding several aspects such as
financial health, profitability and operational efficiency of the undertaking. Ratio
points out the operating efficiency of the firm, that is whether the management has
utilized the firm’s assets correctly, to increase the investor’s wealth. It ensures a fair
return to its owners and secures optimum utilization of firm’s assets. Ratio analysis
helps in inter-firm comparison by providing necessary data. An inter-firm comparison
indicates related position. It provides the relevant data for the comparison of the
performance of different departments. If comparison shows a variance, the possible
reasons of variations may be identified and if results are negative, the actions may be
initiated immediately to bring them in line. Yet another dimension of usefulness or
ratio analysis, relevant from the view point of management is that it throws light on the
degree efficiency in the various activity ratios this kind of operational efficiency.

CURRENT RATIO:
Current ratio = Current assets / current liabilities
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. The current ratio is called current because, unlike some other liquidity ratios, it
incorporates all current assets and current liabilities. The current ratio is sometimes called
the working capital ratio.
 YEAR 2023 2022 2021 2020 2019
RATIO 1.81 1.81 2.00 2.55 2.62

CURRENT RATIO
3

2.5

1.5

0.5

0
2023 2022 2021 2020 2019

QUICK RATIO:
Current Assets – Inventory / current liabilities
The quick ratio is an indicator of a company’s short-term liquidity position and measures a
company’s ability to meet its short-term obligations with its most liquid assets.
Since it indicates the company’s ability to instantly use its near-cash assets (assets that can be
converted quickly to cash) to pay down its current liabilities, it is also called the acid test
ratio.

YEAR 2023 2022 2021 2020 2019

RATIO 1.56 1.56 1.77 2.28 2.34
 QUICK RATIO
2.5

1.5

0.5

0
2023 2022 2021 2020 2019

DEBT/ EQUITY RATIO:

Debt/ equity = Total debt/ Total shareholder’s equity the debt-to-equity ratio or D/E ratio is an
important metric in finance that measures the financial leverage of a company and evaluates the extent
to which it can cover its debt. It is calculated by dividing the total liabilities by the
shareholder equity of the company.

It shows the proportion to which a company is able to finance its operations via debt rather
than its own resources. It is also a long-term risk assessment of the capital structure of a
company and provides insight over time into its growth strategy.

YEAR 2023 2022 2021 2020 2019

RATIO 0.11 0.11 0.07 0.07 0.07
 DEBT EQUITY RATIO
0.12

0.1

0.08

0.06

0.04

0.02

0
2023 2022 2021 2020 2019

ASSET TURNOVER RATIO:

Asset turnover ratio = Net sales/Average total assets
The asset turnover ratio is an efficiency ratio that measures and helps analyse a company’s
ability to generate sales from its assets by comparing net sales with average total assets. To
simply put it, this ratio shows how efficiently a company can use its assets to generate sales.

The total asset turnover ratio calculates net sales as a percentage of assets to show how many
sales are generated from each penny of company assets.

YEAR 2023 2022 2021 2020 2019

RATIO 1.18 1.18 1.07 1.00 1.04
 ASSET TURNOVER RATIO
1.2

1.15

1.1

1.05

0.95

0.9
2023 2022 2021 2020 2019

INTEREST COVERAGE RATIO:

Earnings before interest and tax/ Interest expense
The Interest Coverage Ratio, or ICR, is a financial ratio used to determine how well a
company can pay its outstanding debts. Also called the "times interest earned ratio," it is used
in order to evaluate the risk in investing capital in that company--and how close that company
is to debt insolvency.
The ICR is calculated using the Earnings Before Interest and Taxes, or EBIT, and the
company's interest payments due.
Both measurements should be taken for the same set period of time, such as the trailing
twelve months (TTM).

YEAR 2023 2022 2021 2020 2019

RATIO 118.80 118.80 150.30 138.92 129.62
 INTEREST COVERAGE RATIO
160

140

120

100

80

60

40

20

0
2023 2022 2021 2020 2019

RETURN ON EQUITY:
ROE = Net income/ Average total equity
The Interest Coverage Ratio, or ICR, is a financial ratio used to determine how well a
company can pay its outstanding debts.
Also called the "times interest earned ratio," it is used in order to evaluate the risk in
investing capital in that company--and how close that company is to debt insolvency.
The ICR is calculated using the Earnings Before Interest and Taxes, or EBIT, and the
company's interest payments due.
Both measurements should be taken for the same set period of time, such as the trailing
twelve months (TTM).

YEAR 2023 2022 2021 2020 2019

RATIO 31.20% 31.20% 29.10% 27.40% 25.80%
 ROE
35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2023 2022 2021 2020 2019

RETURN ON ASSETS:
ROA = Net income/ total assets
The term return on assets (ROA) refers to a financial ratio that indicates how profitable a
company is in relation to its total assets. Corporate management, analysts, and investors can
use ROA to determine how efficiently a company uses its assets to generate a profit.
The metric is commonly expressed as a percentage by using a company's net income and its
average assets. A higher ROA means a company is more efficient and productive at
managing its balance sheet to generate profits while a lower ROA indicates there is room for
improvement

YEAR 2023 2022 2021 2020 2019

RATIO 19.30% 19.30% 19.50% 19.30% 19.00%
 ROA
19.60%

19.50%

19.40%

19.30%

19.20%

19.10%

19.00%

18.90%

18.80%

18.70%
2023 2022 2021 2020 2019

RETURN ON INVESTED CAPITAL:

ROIC = Net operating profit after tax/ total invested capital
Return on invested capital (ROIC) assesses a company's efficiency in allocating capital to
profitable investments. It is calculated by dividing net operating profit after tax (NOPAT) by
invested capital.
ROIC gives a sense of how well a company is using its capital to generate profits. Comparing
a company's ROIC with its weighted average cost of capital (WACC) reveals
whether invested capital is being used effectively.

YEAR 2023 2022 2021 2020 2019

RATIO 27.16% 27.16% 25.89% 21.69% 22.21%
 ROIC
30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2023 2022 2021 2020 2019

PAYOUT RATIO:
Payout Ratio = Total dividends/ net income
Dividends per share/ Earnings per share
The dividend payout ratio is the ratio of the total amount of dividends paid out to
shareholders relative to the net income of the company. It is the percentage of earnings paid
to shareholders via dividends. The amount that is not paid to shareholders is retained by the
company to pay off debt or to reinvest in core operations. It is sometimes simply referred to
as simply the payout ratio.

YEAR 2023 2022 2021 2020 2019

RATIO 60.44% 57.90% 57.10% 46.80% 46.00%
 PAYOUT RATIO
70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2023 2022 2021 2020 2019
 BALANCE SHEET

BALANCE SHEET OF MAR 23 MAR 22 MAR 21 MAR 20 MAR 19

INFOSYS (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND
LIABILITIES

SHAREHOLDER'S
FUNDS

Equity Share Capital 2,074.00 2,103.00 2,130.00 2,129.00 2,178.00

TOTAL SHARE CAPITAL 2,074.00 2,103.00 2,130.00 2,129.00 2,178.00

Reserves and Surplus 64,793.00 66,597.00 69,029.00 59,808.0 60,533.00

0

TOTAL RESERVES AND 64,793.00 66,597.00 69,029.00 59,808.0 60,533.00

SURPLUS 0

TOTAL 67,745.00 69,306.00 71,531.00 62,234.0 62,711.00

SHAREHOLDERS 0
FUNDS

NON-CURRENT
LIABILITIES

Long Term Borrowings 0.00 0.00 0.00 0.00 0.00

Deferred Tax Liabilities 866.00 841.00 511.00 556.00 541.00

[Net]

Other Long-Term 5,284.00 4,264.00 4,275.00 3,031.00 248.00

Liabilities

Long Term Provisions 0.00 0.00 0.00 0.00 0.00

TOTAL NON-CURRENT 6,150.00 5,105.00 4,786.00 3,587.00 789.00

LIABILITIES

CURRENT LIABILITIES
Short Term Borrowings 0.00 0.00 0.00 0.00 0.00

Trade Payables 2,426.00 2,669.00 1,562.00 1,529.00 1,604.00

Other Current Liabilities 23,853.00 21,387.00 15,399.00 13,185.0 13,321.00

0

Short Term Provisions 1,163.00 920.00 661.00 506.00 505.00

TOTAL CURRENT 27,442.00 24,976.00 17,622.00 15,220.0 15,430.00

LIABILITIES 0

TOTAL CAPITAL AND 101,337.0 99,387.00 93,939.00 81,041.0 78,930.00

LIABILITIES 0 0

ASSETS

NON-CURRENT ASSETS

Tangible Assets 15,217.00 14,695.00 14,365.00 13,897.0 10,394.00

0

Intangible Assets 214.00 243.00 234.00 77.00 103.00

Capital Work-In-Progress 275.00 411.00 906.00 945.00 1,212.00

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 15,706.00 15,349.00 15,505.00 14,919.0 11,709.00

0

Non-Current Investments 23,686.00 22,869.00 22,118.00 13,916.0 12,062.00

0

Deferred Tax Assets [Net] 779.00 970.00 955.00 1,429.00 1,114.00

Long Term Loans And 39.00 34.00 30.00 298.00 16.00

Advances

Other Non-Current Assets 9,045.00 7,728.00 7,049.00 6,659.00 7,806.00

TOTAL NON-CURRENT 49,255.00 46,950.00 45,657.00 37,221.0 32,707.00

ASSETS 0

CURRENT ASSETS
Current Investments 4,476.00 5,467.00 2,037.00 4,006.00 6,077.00

Inventories 0.00 0.00 0.00 0.00 0.00

Trade Receivables 20,773.00 18,966.00 16,394.00 15,459.0 13,370.00

0

Cash And Cash 6,534.00 12,270.00 17,612.00 13,562.0 15,551.00

Equivalents 0

Short Term Loans and 291.00 219.00 229.00 307.00 1,048.00

Advances

Other Current Assets 20,008.00 15,515.00 12,010.00 10,486.0 10,177.00

0

TOTAL CURRENT 52,082.00 52,437.00 48,282.00 43,820.0 46,223.00

ASSETS 0

TOTAL ASSETS 101,337.0 99,387.00 93,939.00 81,041.0 78,930.00

0 0

OTHER ADDITIONAL
INFORMATION

CONTINGENT
LIABILITIES,
COMMITMENTS

Contingent Liabilities 5,148.00 5,348.00 4,372.00 4,730.00 4,617.00

CIF VALUE OF IMPORTS

Raw Materials 0.00 0.00 0.00 0.00 0.00

Stores, Spares And Loose 0.00 0.00 0.00 0.00 0.00

Tools

Trade/Other Goods 0.00 0.00 0.00 0.00 0.00

Capital Goods 0.00 0.00 0.00 0.00 0.00

EXPENDITURE IN
FOREIGN EXCHANGE

Expenditure In Foreign 70,534.00 57,224.00 46,433.00 44,254.0 39,467.00

Currency 0

REMITTANCES IN
FOREIGN CURRENCIES
FOR DIVIDENDS

Dividend Remittance In -- -- -- -- --
Foreign Currency

EARNINGS IN FOREIGN
EXCHANGE

FOB Value Of Goods 121,605.0 101,854.00 84,252.00 77,974.0 71,719.00

0 0

Other Earnings -- -- -- -- --

BONUS DETAILS

Bonus Equity Share 1,989.20 2,017.09 2,117.09 2,117.09 2,165.82

Capital

NON-CURRENT
INVESTMENTS

Non-Current Investments 11,336.00 12,552.00 11,507.00 4,048.00 4,374.00

Quoted Market Value

Non-Current Investments 16,034.00 15,134.00 11,003.00 9,490.00 --

Unquoted Book Value

CURRENT
INVESTMENTS

Current Investments 1,050.00 1,003.00 713.00 1,101.00 6,131.00

Quoted Market Value

Current Investments 3,445.00 1,337.00 1,326.00 3,578.00 12,219.00

Unquoted Book Value
 FINDINGS OF THE STUDY

The current ratio has shown in fluctuating out of which the ratios are increasing indicating an
increase in current assets and liabilities
The quick ratio of the company is also increasing year after year indicating that the liquidity
position of the company is getting better
Assets turnover ratio has been declining year after year. It was good at previous year but now
its average
We can see that the interest coverage ratio is higher. It shows that the company is able to
meet the interest obligation through profits
 SCOPE OF THE STUDY

This project has been prepared with an intention to make one realize and understand the
significance of RATIO ANALYSIS.

Studying ratio analysis has a wide range of applications and benefits across various fields,
particularly in finance, accounting, and business management. Here are some key aspects and
scopes of studying ratio analysis:

1. Financial Analysis:
- Performance Evaluation: Ratios help assess the financial performance of a company
over time. Key ratios like profitability, liquidity, and efficiency ratios provide insights into
how well a company is managing its resources.
- Trend Analysis: Ratio analysis allows for the comparison of financial data over different
periods, aiding in the identification of trends and patterns.

2. Investment Analysis:
- Investor Decision-Making: Investors use ratios to make informed decisions about
whether to buy, hold, or sell a particular stock. Financial ratios provide a snapshot of a
company's financial health and potential for future growth.

3. Credit Analysis:
- Creditworthiness Assessment: Lenders and creditors use ratio analysis to evaluate the
creditworthiness of a company before extending credit. Liquidity and leverage ratios are
particularly important in this context.

4. Risk Management:
 - Risk Assessment: Ratios help in assessing various financial risks, such as liquidity risk,
solvency risk, and operational risk. This is crucial for making risk management decisions.

5. Strategic Planning:
- Decision Support: Ratio analysis assists in strategic planning by providing insights into a
company's strengths and weaknesses. Management can use this information to make
informed decisions about resource allocation, expansion, and other strategic initiatives.

6. Budgeting and Forecasting:

- Predictive Analysis: Ratios can be used in forecasting future financial performance,
aiding in the development of realistic budgets and financial plans.

7. Benchmarking:
- Comparison with Industry Standards: Ratios facilitate benchmarking a company's
performance against industry standards and competitors. This comparative analysis helps
identify areas where a company may need improvement.

8. Communication with Stakeholders:

- Financial Reporting: Ratio analysis simplifies complex financial information into easily
understandable metrics. This is valuable when communicating with stakeholders, including
shareholders, employees, and the broader market.

9. Educational and Research Purposes:

- Academic Study: Ratio analysis is a fundamental concept in finance and accounting
education. It serves as a basis for understanding financial statements and the overall health of
a business.

10. Performance Monitoring:

- Key Performance Indicators (KPIs): Ratios can be used as KPIs to monitor and
evaluate the success of specific strategies and initiatives.

In summary, studying ratio analysis provides a versatile set of tools for assessing and
interpreting financial information, making it a valuable skill for professionals in finance,
accounting, management, and investment.
 CONCLUSION

Financial ratios compare the results in different line items of the financial statements. The
analysis of these ratios is designed to draw conclusions regarding the financial performance,
liquidity, leverage, and asset usage of a business. This information is then used to decide
whether to invest in or extend credit to a business. Ratio analysis is widely used, since it is
solely based on the information located in the financial statements, which is generally easy to
obtain. In addition, the results can be compared to industry averages or to the results of
benchmark companies, to see how a business is performing in comparison to other
organizations.

Ratio analysis is the basic tool of financial analysis itself is an important part of any business
planning process as SWOT, being basic tool of the strategic analysis plays a vital role in a
business planning process and no SWOT analysis would be complete without an analysis of
company’s financial position. In this way ratio analysis is very important part of whole
business strategic planning.

As companies dispatch their long annual report once a year, the financial ratio helps us to
profile a company easily.
 BIBLIOGRAPHY

The sources through which I have been able to make this project have helped me provide data
of the company. Interpretation was not to write but irrespective of my mentor, these websites
helped me in building a favourable project.
The WEBSITES which I referred to are:
1. https://www.google.co.in
2. www.investopedia.com
3. www.toppr.com
4. en.wikipedia.org
5. indiancompanies.in
6. www.infosys.com