Project Report

(Submitted for the Degree of B.Com Honours in Accounting & Finance

under the University of Calcutta)

Title of the Project

FINANCIAL STATEMEMT ANALYSIS OF INFOSYS LIMITED

Submitted By
Name of the Candidate : Srirupa Mukherjee

Registration no. : IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIX

047-1211-0762-17

University Roll no. : XXXXXXXXXXXX

171047-11-0456

Name of the college : Sivanath Sastri College

College roll no. : XXXX

1013

Paper code : CC 6.1 Ch

Supervised By
Name of the Supervisor : Prof. Sayantani Bagchi
Name of the College : Sivanath Sastri College

Month & year of submission

SEPTEMBER 2020

1
Annexure- IA

Supervisor's Certificate

This is to certify that Srirupa Mukherjee, a student of B.Com. Honours in

Accounting & Finance of Sivanath Sastri College under the University of
Calcutta has worked under my supervision and guidance for her Project Work
and prepared a Project Report with the title FINANCIAL STATEMEMT
ANALYSIS OF INFOSYS LIMITED which she is submitting, is her genuine
and original work to the best of my knowledge.

Signature :

Date :

Name : Sayantani Bagchi

Designation : Professor

Name of College : Sivanath Sastri College

Place : Kolkata

2
Annexure- IB

Student's Declaration

I hereby declare that the Project Work with the title FINANCIAL
STATEMEMT ANALYSIS OF INFOSYS LIMITED submitted by me for
the partial fulfilment of the degree of B.Com. Honours in Accounting &
Finance under the University of Calcutta is my original work and has not been
submitted earlier to any other University /Institution for the fulfilment of the
requirement for any course of study.
I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has been
duly acknowledged providing details of such literature in the references.

Signature :

Date :

Name : Srirupa Mukherjee

Address : XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
5/5A, Viveknagar, Jadavpur, Kolkata - 700075

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIII
Registration No. : 047-1211-0762-17

Place : Kolkata

3
 ACKNOWLEDGEMENT

I would like to thank University of Calcutta for providing with such a

wonderful opportunity to prepare the project by including this as part of our
study curriculum. I am very grateful to my college and my principal.

I am also very thankful to my supervisor Sayantani Bagchi for her valuable and
timely guidance throughout the project. Her feedbacks, guidance and support
have been very useful. I would thank her for being my mentor in doing this
project. This project has allowed me a practical exposure in the corporate field
and a brief introduction in the day to day working of an organisation.

Last but not the least I would like to thank my parents and friends for their
support and guidance.

Srirupa Mukherjee

4
 CONTENTS

PARTICULARS PG. NO.

1. INTRODUCTION 6-11
1.1. BACKGROUND OF THE STUDY 7-8
1.2. NEED OF THE STUDY 8
1.3. LITERATURE REVIEW 8-9
1.4. OBJECTIVE OF THE STUDY 9
1.5. LIMITATIONS OF THE PROJECT 10
1.6. RESEARCH METHODOLOGY 10
1.7. CHAPTER PLANNING 11

2. CONCEPTUAL FRAMEWORK 12-18

2.1. MEANING OF FINANCIAL STATEMENT ANALYSIS 13-14
2.2. OBJECTIVE OF FINANCIAL STATEMENT ANALYSIS 14
2.3. ADVANTAGES OF FINANCIAL STATEMENT ANALYSIS 15
2.4. LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS 15
2.5. USERS OF FINANCIAL STATEMENT ANALYSIS 16-17
2.6. COMPANY PROFILE 17-18

3. PRESENTATION OF DATA, ANALYSIS AND FINDINGS 19-40

3.1. RATIO ANALYSIS 20-29
• Net profit Ratio 20
• Return on Assets 21
• Return on Shareholders’ Equity 22
• Return on Capital Employed 23
• Current Ratio 24
• Quick Ratio 25
• Proprietary Ratio 26
• Debt Equity Ratio 27
• Asset Turnover Ratio 28
• Capital Turnover Ratio 29
3.2. COMMON SIZE STATEMENT ANALYSIS 30-33
3.3. COMPARATIVE STATEMENT ANALYSIS 34-39
3.4. FINDINGS
40

4. CONCLUSION AND RECOMMENDATION 41-43

4.1. CONCLUSION 42
4.2. RECOMENDATION 43

5
CHAPTER : 1
INTRODUCTION

6
 INTRODUCTION

Financial statement analysis is the process of reviewing and analyzing a company's financial
statements to make better economic decisions to earn income in future. These statements
include the income statement, balance sheet, statement of cash flows, notes to accounts, etc.
Financial statement analysis is a method or process involving specific techniques for
evaluating risks, performance, financial health, and future prospects of an organization. It is
used by a variety of stakeholders, such as credit and equity investors, the government, the
public, and decision-makers within the organization. These stakeholders have different
interests and apply a variety of different techniques to meet their needs. For example, equity
investors are interested in the long-term earnings power of the organization and perhaps the
sustainability and growth of dividend payments. Creditors want to ensure the interest and
principal is paid on the organizations debt securities when due. All these can be known to a
great extent by financial statement analysis of the company.

1.1 BACKGROUND OF THE STUDY

Common methods of financial statement analysis include fundamental analysis, horizontal

and vertical analysis and the use of financial ratios. Historical information combined with a
series of assumptions and adjustments to the financial information may be used to project
future performance. The study of financial statement is prepared for the purpose of
presenting a periodical review or report by the management

The different tools used for analyzing the financial statement includes comparative statement
analysis, common size statement analysis, trend analysis, ratio analysis, cash flow statement
analysis, fund flow statement analysis, net working capital analysis or statement changes in
working capital and cost volume profit analysis.

Comparative statements: Comparative statements deal with the comparison of different

items of the Profit and Loss Account and Balance Sheets of two or more periods. Separate
comparative statements are prepared for Profit and Loss Account as Comparative Income
Statement and for Balance Sheets.

Common Size Statements: A vertical presentation of financial information is followed for

preparing common-size statements. The total assets or total liabilities or sales are taken as
100 and the balance items are compared to the total assets, total liabilities or sales in terms of

7
percentage. Thus, a common size statement shows the relation of each component to the
whole. Separate common size statement is prepared for profit and loss account as Common
Size Income Statement and for balance sheet as Common Size Balance Sheet.

Ratio Analysis: Ratio analysis is an attempt of developing meaningful relationship between

individual items in the balance sheet or profit and loss account. Ratio analysis is not only
useful to internal parties of business concern but also useful to external parties. Ratio analysis
highlights the liquidity, solvency, profitability and capital gearing.

1.2 NEED OF THE STUDY

The purpose of this project is to understand the financial position of the company and
assessment of financial ratios based on the statements of the company. The aim of the project
is to understand the strength and weakness of the company through the ascertain ratios and
data available. We will try to understand how different decisions are taken and forecasts are
made based on the past data available.

Financial statements analysis helps us to take various decisions at various places of a firm. It
helps us to know the reasons for relative changes either in profitability or in the financial
position as a whole.

1.3 LITERATURE REVIEW

Literature review is indispensable part of a thesis/article because it represents the whole

range of research in the past on the topic selected by the researcher on the basis of which
research design of a study is formulated. Literature review gives better insight and helps to
bridge gap for the research to be undertaken. Efforts have been made to present a common
scheme of various facets and issues relating to this empirical studies carried out in past. Some
important conclusions and research gap have been drawn from the review of some research
papers, articles, theses and textbooks available in the accessible libraries and internet sources.

Anshan Lakshmi (2003) made “A Study of the Financial Performance with Reference to
Steel Industries Kerala Ltd”. This study covered from 1977-1998 to 2001-2002. The
objectives of the study was to analyze and evaluate the working capital management, to
analyze the liquidity position of the company, to evaluate the receivables, payables and cash
management and to suggest ways and means to improve the present date of working capital.

8
The major tools used for the analysis said that the working capital management suggested
that the inventory management have to be corrected.

Krishna Prasad Upadhyay (2004) used different types of financial ratios to check up the
financial performance of the selected finance companies. Basically in this study he used
solvency ratio, liquidity ratio, efficiency ratio, profitability ratio and valuation ratio. Different
measures like return on investment, return on equity, return on assets, earning per share,
dividend per share, and asset utilization ratio are used to assess the profitability of the
companies. He concluded his study stating that the solvency position of both companies is
not sound and credit creation capacity is good in both the companies in aggregate

Moses Joshuva Daniel (2013) in his study “A Study on Financial Status of TATA Motors
Ltd” stated the main objectives to analyzing the overall financial status of the TATA Motors
Ltd by using various financial tools. In order to analyze financial status in terms of
Profitability, Solvency, Activity and Financial stability various accounting ratios have been
used. It is cleared from the study that the company’s financial performance is satisfactory.
The company has stable growth and it shows a greater status in all the areas it works. The
company has been suggested to reduce the expenditure as it increases every year. Decrease in
expenses will increase the profitability.

1.4 OBJECTIVE OF THE STUDY

Through financial statement analysis we can determine and identify financial strengths,
weaknesses and relationships that exist in the company. The objectives of the study are as
follows:
• To ascertain short-term liquidity position & long-term solvency position of the firm by
the application of various liquidity ratios & solvency ratios.
• To assess the risk involved with firm. To assess the performance of the firm by the
application of various ratios.
• Above all, the company is able to analyze its own performance over a specific time
period.
• To evaluate the efficiency of the firm for proper utilisation of financial resources.
• To assess the intra-firm comparison among of the various components of the firm.

9
 1.5 LIMITATION OF THE STUDY

• The study is limited to the analysis of the financial statement of Infosys Limited only.
Therefore we cannot get an idea of the performance of the competitors.
• The project is done using secondary data which is not as reliable as primary data.
• There might be manipulation in the data published by the company.
• There might be confidential information or any trade secret which are not published in
the financial reports of the company.

1.6 RESEARCH METHODOLOGY

Research in common parlance refers to a search for knowledge. One can also define research
as a scientific and systematic search for pertinent information on a specific topic. In fact,
research is an art of scientific investigation.

The title of the study is “Financial Statement Analysis Of Infosys Limited” The report is
of study of the financial statements of Infosys limited of the period of five years from 2014-
15 to 2018-19.

The research is based on secondary data. Secondary data is the data that have been already
collected by and readily available from other sources. Such data are cheaper and more
quickly obtainable than the primary data and also may be available when primary data cannot
be obtained at all. Financial data are taken from the company’s site and annual reports of the
last five years from current year are used in this study

The tools which will be used for analysis of financial statements are as follows:
• Ratio Analysis with the help of different types of ratio.
• Comparative Statement analysis.
• Common size statement analysis.

For the purpose of evaluating:

• Financial performance of the company in last five years.
• Changes in the financial position of the company in last five years
• Short term liquidity position of the company.
• Long term solvency position of the company.
• Efficiency of the company.

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 1.7 CHAPTER PLANNING

There will be four chapters in this project report:

Chapter1 which is the “introduction” chapter contains a brief introduction about the
financial statement analysis, background of the study, need of the study, literature
review, objective, limitation, methodology and chapter planning.

Chapter 2 “conceptual frameworks” contains meaning, objective, advantages,

limitation, users of financial statement analysis and a brief company profile of Infosys
limited.

Chapter3 “presentation of data, analysis and finding” contains various tables and
charts of different types of ratio, common size balance sheet, and comparative balance
sheet based on the data of five years and their analysis and finding.

Chapter4 “conclusion and recommendation” contains the conclusion of the study and
recommendation.

11
CHAPTER : 2
CONCEPTUAL FRAMEWORK

12
 2.1 MEANING OF FINANCIAL STATEMENT ANALYSIS

Financial statements are prepared primarily for decision-making. They play a

dominant role in setting the framework of managerial decisions. But the information
provided in the financial statements is not an end in itself as no meaningful
conclusions can be drawn from these statements alone. However, the information
provided in the financial statements is of immense use in making decisions through
analysis and interpretation of financial statements. Financial analysis is the process of
identifying the financial strengths and weaknesses of the firm by properly establishing
relationship between the items of the balance sheet and the profit and loss account.
There are various methods or techniques used in analyzing financial statements, such
as comparative statements, trend analysis, common-size statements, schedule of
changes in working capital, funds flow and cash flow analysis, cost-volume-profit
analysis and ratio analysis.

The term financial analysis, also known as analysis and interpretation of financial
statements', refers to the process of determining financial strengths and weaknesses of
the firm by establishing strategic relationship between the items of the balance sheet,
profit and loss account and other operative data. The purpose of financial analysis is
to diagnose the information contained in financial statements so as to judge the
profitability and financial soundness of the firm. A financial analyst analyses the
financial statements with various tools of analysis before commenting upon the
financial health or weaknesses of an enterprise. The analysis and interpretation of
financial statements is essential to bring out the mystery behind the figures in
financial statements. Financial statements analysis is an attempt to determine the
significance and meaning of the financial statement data so that forecast may be made
of the future earnings, ability to pay interest and debt maturities and profitability of a
sound dividend policy.

The term financial statement analysis includes both 'analysis' and 'interpretation'. A
distinction should, therefore, be made between the two terms. While the term
'analysis' is used to mean the simplification of financial data by methodical
classification of the data given in the financial statements, 'interpretation' means
13
explaining the meaning and significance of the data so simplified. However, both
analysis and interpretation' are interlinked and complimentary to each other Analysis
is useless without interpretation and interpretation without analysis is difficult or even
impossible. Most of the authors have used the term 'analysis' only to cover the
meanings of both analysis and interpretation as the objective of analysis is to study the
relationship between various items of financial statements by interpretation.

2.2 OBJECTIVE OF FINANCIAL STATEMENT ANALYSIS

The following are the main objectives of the analysis of financial statements:-

• To estimate the earning capacity of the firm.

• To judge the financial position and financial performance of the firm.
• To determine the debt capacity of the firm.
• To determine the long-term liquidity of the funds as well as solvency.
• To decide about the future prospects of the firm.

As a matter of fact, the objectives of analysis of these statements, depends to a large

extent on the point of the view of the analyst, the degree of interest in the company
and the need for depth of enquiry and finally on the amount and quality of the data
available. A trade creditor considering what action to take on long overdue accounts
may well focus his inquiry on the immediate financial condition have the firm and
liquidity in the resources. In contrast, a security analysis considering a purchase of
equity shares may tend to centre its efforts on the measurement of financial condition
and future profitability of the firm. The object of the analysis determines the extent,
depth and the nature of analysis. If a thorough analysis is desired and the full data
needed are not available or if the suspicion exists that the firm is trying to hide or
confuse its real position, the financial analyst must be virtual detective in order to find
out the truth.

14
 2.3 ADVANTAGES OF FINANCIAL STATEMENT ANALYSIS

The different advantages of financial statement analysis are listed below:

• The most important benefit if financial statement analysis is that it provides an

idea to the investors about deciding on investing their funds in a particular
company.
• Another advantage of financial statement analysis is that regulatory authorities
like can ensure the company following the required accounting standards.
• Financial statement analysis is helpful to the government agencies in analyzing
the taxation owed to the firm.
• Above all, the company is able to analyze its own performance over a specific
time period.

2.4 LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS

In spite of financial statement analysis being a highly useful tool, it also features some
limitations, including comparability of financial data and the need to look beyond
ratios. Although comparisons between two companies can provide valuable clues
about a company’s financial health, alas, the differences between companies’
accounting methods make it, sometimes, difficult to compare the data of the two.

Besides, many a times, sufficient data are on hand in the form of foot notes to the
financial statements so as to restate data to a comparable basis. Or else, the analyst
should remember the lack of data comparability before reaching any clear-cut
conclusion. However, even with this limitation, comparisons between the key ratios of
two companies along with industry averages often propose avenues for further
investigation.

15
 2.5 USERS OF FINANCIAL STATEMENT ANALYSIS

Financial Statement Analysis includes different users of the information. The user of
information is divided into internal users which include management of the
organization for whom financial statement is used for decision making and external
users including owners, creditors, employee, government, general public and
customers, having a financial interest in the company. The users of information are
discussed below:

Internal User

• Management: Intelligent decision in relation to performance is taken by the

managers by the use of financial statement analysis. For example, the management
judge cost on each distribution channel or how much amount of cash the
organization is left with.

External User

• Owner: The small business entrepreneurs requires to know whether the

organization is earning profit or not. It helps the owners to take decision relating
with strategies and policies.
• Investors: Investors are the people who require financial information so that they
can judge the company’s performance and ascertain how to handle the investments
done by them in the company. So, on the basis of performance the investors decide
to keep the investments or to sell it off.
• Creditors: Creditors focus on how the company will make the payment as and
when it will become due. The cash flow statement provides the company’s
liquidity and the ability of the company to make short short-term payments.
• Government: To understand the performance of the economy in general and plan
the financial and industrial policies, the government goes through the financial
statements of the organization. To calculate the Tax burden on the company, tax
authorities analyses organization’s statement

16
• Employees: Employees have interest in knowing whether there is security in
employment and is there any chance of pay rise. Hence, they are abreast of
stability and profitability of the company. The Employee is also interested in
knowing the expansion plan of the organization which will increase their career
prospects.
• Customers: Customers require to know the capability of the organization to serve
its clients in future. They also require to know whether the stability of the
operations in more if the customer is totally dependent on the supply.
• General Public: General Public includes students, researcher and analyst will be
interested in analysing the financial statement. They ascertain the impact of the
organization on economy, local community or environment.

2.6 COMPANY PROFILE

Infosys was established by seven engineers in Pune, Maharashtra, India with an initial
capital of $250 in 1981. It was registered as Infosys Consultants Private Limited on 2
July 1981. In 1983, it relocated its office to Bangalore, Karnataka, India.

The company changed its name to Infosys Technologies Private Limited in April 1992
and to Infosys Technologies Limited when it became a public limited company in June
1992. It was later renamed to Infosys Limited in June 2011.

Infosys Limited is an Indian multinational corporation that provides business

consulting, information technology and outsourcing services. It has its headquarters
in Bangalore, Karnataka, India.

Infosys is the second-largest Indian IT company after Tata Consultancy Services by

2017 revenue and 596th largest public company in the world based on revenue On
March 29, 2019, its market capitalization was $46.52 billion. The credit rating of the
company is A− (rating by Standard & Poor's)

Infosys provides software development, maintenance and independent validation

services to companies in finance, insurance, manufacturing and other domains. One of

17
its known products is Finacle which is a universal banking solution with various
modules for retail & corporate banking.

Its key products and services are:

• NIA – Next Generation Integrated AI Platform.

• Infosys Consulting – a global management consulting service
• Infosys Information Platform (IIP) – Analytics platform
• EdgeVerve Systems which includes finacle, a global banking platform
• Panaya Cloud Suite
• Skava

Listing and share holding pattern of Infosys

Shareholders (as of 30 June 2017) Shareholding

Promoters group 12.75%

Foreign institutional investors (FII) 37.47%

ADR 16.70%

Individual shareholders 09.83%

Banks, financial institutions and insurance companies 11.24%

Mutual funds 08.97%

Others 03.04%

Total 100.00%

Source: Wikipedia.org

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CHAPTER : 3
PRESENTATION OF DATA,
ANALYSIS AND FINDINGS

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 3.1. RATIO ANALYSIS

Ratio analysis is a quantitative method of gaining insight into a company's liquidity,

operational efficiency, and profitability by studying its financial statements.

3.1.1. PROFITABILITY RATIO

a. Net profit Ratio: It is a measure of the firm's overall ability to turn each rupee of sales
into net profit. This ratio is very useful to the proprietor as it indicates overall
profitability of the concern.

Table 1 : net profit ratio (Source- Infosys.com)

Net profit ratio = Net Profit *100
Net Sales
Net Profit After Tax Net Sales
Year Net Profit Ratio
(in crores) ( in crores)
2014-15 12,164.00 47,300.00 25.71%
2015-16 12,693.00 53,983.00 23.51%
2016-17 13,818.00 59,289.00 23.30%
2017-18 16,155.00 61,941.00 26.08%
2018-19 14,702.00 73,107.00 20.11%

NET PROFIT RATIO

30.00%

25.00%

20.00%

15.00%
NET PROFIT RATIO
10.00%

5.00%

0.00%
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION
Net profit ratio was 25.71%, 23.51%, 23.30%, 26.08%, and 20.11% in respective year of 14-15,
15-16, 16-17, 17-18 and 18-19 so the company achieved maximum Net profit ratio in the year
17-18. The overall ratio is showing a good position of profitability of the company.

20
b. Return on Assets: It is a measure of the profitability of all financial resources invested in
the firm’s assets or on total funds without any regard to the sources of fund.

Table 2: return on assets (Source- Infosys.com)

Return on Assets = Net Profit__
Total Assets

Net Profit Total Assets

Year Return on Assets
(in crores) ( in crores)
2014-15 12,164.00 61,813.00 19.67%

2015-16 12,693.00 72,732.00 17.45%

2016-17 13,818.00 79,885.00 17.29%

2017-18 16,155.00 75,877.00 21.29%

2018-19 14,702.00 78,930.00 18.62%

Return on Assets
25

20

15

Return on Assets
10

0
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

Return on asset ratio are 19.67%, 17.45%, 17.29%, 21.29% and 18.62% in respective year of
2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 so the company achieved maximum Return
on asset ratio in 2017-18.

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c. Return on Shareholders’ Equity: This ratio indicates how well the firm has used the
resources of the owners. It reflects the extent to which the objective of the owner has been
accomplished.

Table 3: Return on shareholders’ equity (Source- Infosys.com)

Return on Shareholders’ Equity = PAT________
Shareholders’ Equity

Shareholders’ Return on
PAT
Year Equity Shareholders’
(in crores)
( in crores) Equity
2014-15 12,164.00 48,068.00 25.30%

2015-16 12,693.00 61,082.00 20.78%

2016-17 13,818.00 68,017.00 20.31%

2017-18 16,155.00 63,502.00 25.44%

2018-19 14,702.00 62,711.00 23.44%

Return on Shareholders’ Equity

30.00%

25.00%

20.00%

15.00%
Return on Shareholders’
10.00% Equity

5.00%

0.00%
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

Return on equity ratio was 25.30%, 20.78%, 20.31%, 25.44% and 23.44% in respective year
of 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 so the company achieved maximum
Return on shareholder's equity ratio in 2017-18.

22
d. Return on Capital Employed: It is the most important profitability ratio as it reflects the
overall efficiency with which capital is used. It indicates how well management has used
the funds supplied by outsiders & owners.

Table 4: return on capital employed (Source- Infosys.com)

Return on Capital Employed = EBIT______
Capital Employed

EBIT Capital Employed Return on Capital

Year
(in crores) ( in crores) Employed
2014-15 16,798.00 48098.00 34.92%

2015-16 17,600.00 61144.00 28.78%

2016-17 18,938.00 68099.00 27.80%

2017-18 19,908.00 64215.00 31.00%

2018-19 19,927.00 63500.00 31.38%

Return on Capital Employed

40.00%

35.00%

30.00%

25.00%

20.00%
Return on Capital
15.00% Employed
10.00%

5.00%

0.00%
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

Return on capital employed was 34.92%, 28.78%, 27.80%, 31.00% and 31.38% in respective
year of 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 and the company achieved
maximum Return on capital employed in 2014-15.

23
3.1.2. SHORT TERM SOLVENCY RATIO
a. Current Ratio: It is also known as working capital ratio is a popular tool to evaluate
short-term solvency position of a business. A higher current ratio indicates strong
solvency position and is therefore considered better.

Table 5: Current Ratio (Source- Infosys.com)

Current Ratio = Current Asset___
Current Liability

Current Asset Current Liability

Year Current Ratio
(in crores) ( in crores)
2014-15 42,752.00 13,715.00 3.12

2015-16 46,097.00 11,588.00 3.98

2016-17 47,682.00 11,786.00 4.05

2017-18 44,090.00 11,662.00 3.78

2018-19 46,223.00 15,430.00 3.00

Current Ratio
4.5

3.5

2.5

2 Current Ratio

1.5

0.5

0
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

The above table shows the current ratio of five years of Infosys Ltd. The Current Ratio of
Infosys Ltd. varied from 3.00 to 4.05. The solvency position of Infosys Ltd. in terms of
current ratio was above the standard norm volume of 2:1 for the entire period which shows the
solvency position of the company is favorable.

24
b. Quick Ratio: It is also known as “acid test ratio” and “liquid ratio” and is used to test the
ability of a business to pay its short-term debts. It measures the relationship between liquid
assets and current liabilities.

Table 6: Quick Ratio (Source- Infosys.com)

Quick Ratio = Liquid Asset___
Current Liability

Liquid Asset Current Liability

Year Quick Ratio
(in crores) ( in crores)
2014-15 42,752.00 13,715.00 3.12

2015-16 46,097.00 11,588.00 3.98

2016-17 47,682.00 11,786.00 4.05

2017-18 44,090.00 11,662.00 3.78

2018-19 46,223.00 15,430.00 3.00

Quick Ratio
4.5

3.5

2.5

2 Quick Ratio

1.5

0.5

0
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

The current ratio and the liquid ratio are same because the company Infosys Ltd. mainly dealt
in the service sector which is why they do not have the element of inventories or raw material
or stock in trade etc. It was above the standard norm of 1:1 for the entire period which shows
the firm has the ability to meet its current liabilities.

25
3.1.3. LONG TERM SOLVENCY RATIO
a. Proprietary Ratio: (also known as net worth ratio or equity ratio) is used to evaluate
the soundness of the capital structure of a company. It is computed by dividing the
stockholders’ equity by total assets.

Table 7: Proprietary Ratio (Source- Infosys.com)

Proprietary Ratio = Shareholders’ Equity _
Total Asset

Shareholders’
Total Asset
Year Equity Proprietary Ratio
( in crores)
( in crores)
2014-15 48,068.00 61,813.00 77.76%

2015-16 61,082.00 72,732.00 83.98%

2016-17 68,017.00 79,885.00 85.14%

2017-18 63,502.00 75,877.00 83.69%

2018-19 62,711.00 78,930.00 79.45%

Proprietary Ratio

86.00%

84.00%

82.00%

80.00% Proprietary Ratio

78.00%

76.00%

74.00%
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

Proprietary ratio was 77.76%, 83.98%, 85.14%, 83.69% and 79.45% in respective year of
2014-15, 2015-16, 2016-17, 2017-18 and 2018-19. We can observe that the ratio was
increasing up to 2016-17 then it is again decreasing.

26
b. Debt Equity Ratio: It is a long term solvency ratio that indicates the soundness of long-
term financial policies of a company. It shows the relation between the portion of assets
financed by creditors and the portion of assets financed by stockholders.

Table 8: Debt Equity Ratio (Source- Infosys.com)

Debt Equity Ratio = Total Debt_
Equity

Total Debt Equity

Year Debt Equity Ratio
(in crores) ( in crores)
2014-15 0 48,068.00 0

2015-16 0 61,082.00 0

2016-17 0 68,017.00 0

2017-18 0 63,502.00 0

2018-19 0 62,711.00 0

INTERPRETATION

The standard norm for the ratio is 2:1. The Infosys Ltd do not have any debt capital in the
capital structure. Therefore we cannot calculate debt equity ratio.

Therefore we can say that the firm is losing the benefit of having debt capital. The benefit of
debt financing is that it allows a business to leverage a small amount of money into a much
larger sum, enabling more rapid growth than might otherwise be possible. In addition,
payments on debt are generally tax-deductible.

27
3.1.4. OTHER RATIOS
a. Asset Turnover Ratio: It is an activity ratio that measures the efficiency with which
assets are used by a company. It is computed by dividing net sales by average total
assets for a given period.

Table 9: Asset Turnover Ratio (Source- Infosys.com)

Asset Turnover Ratio = Net Sales _
Total Asset

Net Sales Total Asset Asset Turnover

Year
( in crores) ( in crores) Ratio
2014-15 47,300.00 61,813.00 76.52

2015-16 53,983.00 72,732.00 74.22

2016-17 59,289.00 79,885.00 74.21

2017-18 61,941.00 75,877.00 81.63
2018-19 73,107.00 78,930.00 92.62

Asset Turnover Ratio

100
90
80
70
60
50 Asset Turnover Ratio
40
30
20
10
0
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

Total Assets Turnover Ratio of the company is rotating their assets into business purpose.
Above Table shows the Total Assets Turnover Ratio for the period of five years. The
company achieved the highest asset turnover ratio in 2018-19 which is 92.62%.

28
b. Capital Turnover Ratio: Capital Turnover Ratio indicates the efficiency of the
organization with which the capital employed is being utilized. A high capital
turnover ratio indicates the capability of the organization to achieve maximum sales
with minimum amount of capital employed.

Table 10: Capital Turnover Ratio (Source- Infosys.com)

Capital Turnover Ratio = Net Sales _____
Shareholder's fund

Net Sales Shareholder's Fund Capital Turnover

Year
( in crores) ( in crores) Ratio
2014-15 47,300.00 48,068.00 98.40%

2015-16 53,983.00 61,082.00 88.38%

2016-17 59,289.00 68,017.00 87.18%

2017-18 61,941.00 63,502.00 97.54%
2018-19 73,107.00 62,711.00 116.58%

Capital Turnover Ratio

120.00%

100.00%

80.00%

60.00% Capital Turnover Ratio

40.00%

20.00%

0.00%
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION

Capital turnover ratio was 98.40%, 88.38%, 87.18%, 97.54% and 116.58% in respective year
of 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 so the company achieved maximum
capital turnover ratio in2018-19.
29
 3.2. COMMON SIZE STATEMENT ANALYSIS OF INFOSYS

Common size analysis (also known as vertical analysis) is a popular method of financial
statement analysis that shows each item on a statement as a percentage of a base figure
within the statement.

In a vertical analysis the percentage is computed by using the following formula:

Percentage of base = (Amount of individual item/Amount of base item) × 100

COMMON SIZE BALANCESHEET:

A common size balance sheet includes in a separate column the relative percentages of total
assets, total liabilities, and shareholders' equity. This format is useful for comparing the
proportions of assets, liabilities, and equity between different companies, particularly as part
of an industry analysis or an acquisition analysis.

COMMON SIZE INCOME STATEMENT:

The base item in the income statement is usually the total sales or total revenues. Common
size analysis is used to calculate net profit margin, as well as gross and operating margins.
The ratios tell investors and finance managers how the company is doing in terms of
revenues, and they can make predictions of future revenues. Companies can also use this tool
to analyze competitors to know the proportion of revenues that goes to advertising, research
and development, and other essential expenses.

30
 COMMON SIZE BALANCE SHEET ANALYSIS

Balance sheets as on 31.3.15 to 31.3.19

Amount(₹ (in crores)

Particulars MAR 19 MAR 18 MAR 17 MAR 16 MAR 15

I. EQUITY AND LIABILITIES

1. Shareholders' Funds
a. Share Capital 2,178.00 1,092.00 1,148.00 1,148.00 574.00
b. Reserves And Surplus 60,533.00 62,410.00 66,869.00 59,934.00 47,494.00
TOTAL SHAREHOLDERS' FUNDS 62,711.00 63,502.00 68,017.00 61,082.00 48,068.00
2.Non-Current Liabilities
a. Long Term Borrowings 0.00 0.00 0.00 0.00 0.00
b. Deferred Tax Liabilities 541.00 505.00 0.00 0.00 0.00
c. Other Long Term Liabilities 248.00 208.00 82.00 62.00 30.00
d. Long Term Provisions 0.00 0.00 0.00 0.00 0.00
TOTAL NON CURRET LIABILITIES 789.00 713.00 82.00 62.00 30.00
3. Current Liabilities
a. Short Term Borrowings 0.00 0.00 0.00 0.00 0.00
b. Trade Payables 1,604.00 738.00 269.00 623.00 124.00
C. Other Current Liabilities 13,321.00 10,488.00 11,167.00 10,529.00 5,546.00
d.ShortTerm Provisions 505.00 436.00 350.00 436.00 8,045.00
TOTAL CURRENT LIABILITIES 15,430.00 11,662.00 11,786.00 11,588.00 13,715.00
TOTAL 78,930.00 75,877.00 79,885.00 72,732.00 61,813.00
II. ASSETS
1. Non Current Assets
a. Fixed Assets
i. Tangible Assets 10,394.00 9,027.00 8,605.00 8,248.00 7,347.00
ii.Intangible Assets 103.00 130.00 0.00 0.00 0.00
iii. Capital Work-In-Progress 1,212.00 1,442.00 1,247.00 934.00 769.00
b. Non-Current Investments 12,062.00 11,993.00 15,334.00 11,076.00 6,108.00
c. Long Term Loans And Advances 16.00 19.00 5.00 5.00 4,378.00
d. Other Non Current Assets 7,806.00 8,048.00 6,666.00 5,967.00 26.00
e. Deferred tax asset (net) 1,114.00 1,128.00 346.00 405.00 433.00
TOTAL NON CURRENT ASSETS 32,707.00 31,787.00 32,203.00 26,635.00 19,061.00
2. Current Assets
a. Cuurent Investments 6,077.00 5,906.00 9,643.00 2.00 749.00
b.Inventories 0.00 0.00 0.00 0.00 0.00
c.Trade Receivables 13,370.00 12,151.00 10,960.00 9,798.00 8,627.00
d. Cash and Cash Equivalents 15,551.00 16,770.00 19,153.00 29,176.00 27,722.00
e. Short Term Loans And Advances 1,048.00 393.00 310.00 355.00 3,231.00
f. Other Current Assets 10,177.00 8,870.00 7,616.00 6,766.00 2,423.00
TOTAL CURRENT ASSETS 46,223.00 44,090.00 47,682.00 46,097.00 42,752.00
78,930.00 75,877.00 79,885.00 72,732.00 61,813.00
TOTAL

31
 Common size balance sheet as on 31.3.2115 to 31.3.19

Percentage % of total
Particulars MAR 19 MAR 18 MAR 17 MAR 16 MAR 15

I. EQUITY AND LIABILITIES

1. Shareholders' Funds
a. Share Capital 2.76 1.44 1.44 1.58 0.93
b. Reserves And Surplus 76.69 82.25 83.71 82.40 76.83
TOTAL SHAREHOLDERS' FUNDS 79.45 83.69 85.14 83.98 77.76
2.Non-Current Liabilities
a. Long Term Borrowings 0 0 0 0 0
b. Deferred Tax Liabilities 0.69 0.67 0.00 0.00 0.00
c. Other Long Term Liabilities 0.31 0.27 0.10 0.09 0.05
d. Long Term Provisions 0.00 0.00 0.00 0.00 0.00
TOTAL NON CURRET LIABILITIES 1.00 0.94 0.10 0.09 0.05
3. Current Liabilities
a. Short Term Borrowings 0 0 0 0 0
b. Trade Payables 2.03 0.97 0.34 0.86 0.20
C. Other Current Liabilities 16.88 13.82 13.98 14.48 8.97
d.ShortTerm Provisions 0.64 0.57 0.44 0.60 13.02
TOTAL CURRENT LIABILITIES 19.55 15.37 14.75 15.93 22.19
TOTAL 100 100 100 100 100
II. ASSETS
1. Non Current Assets
a. Fixed Assets
i. Tangible Assets 13.17 11.90 10.77 11.34 11.89
ii.Intangible Assets 0.13 0.17 0.00 0.00 0.00
iii. Capital Work-In-Progress 1.54 1.90 1.56 1.28 1.24
b. Non-Current Investments 15.28 15.81 19.20 15.23 9.88
c. Long Term Loans And Advances 0.02 0.03 0.01 0.01 7.08
d. Other Non Current Assets 9.89 10.61 8.34 8.20 0.04
e. Deferred tax asset (net) 1.41 1.49 0.43 0.56 0.70
TOTAL NON CURRENT ASSETS 41.44 41.89 40.31 36.62 30.84
2. Current Assets
a. Cuurent Investments 7.70 7.78 12.07 0.00 1.21
b. Inventories 0 0 0 0 0
c.Trade Receivables 16.94 16.01 13.72 13.47 13.96
d. Cash and Cash Equivalents 19.70 22.10 23.98 40.11 44.85
e. Short Term Loans And Advances 1.33 0.52 0.39 0.49 5.23
f. Other Current Assets 12.89 11.69 9.53 9.30 3.92
TOTAL CURRENT ASSETS 58.56 58.11 59.69 63.38 69.16
TOTAL 100 100 100 100 100

32
 Interpretation

On the basis of the above common size balance sheet of 5yrs of Infosys following
comments are made:

• The shareholder's fund takes the majority part of the total liability which is
77.76% of total liability in 2014-15, 83.98% in 2015-16, 85.14% in 2016-17,
83.69% in 2017-18 and 79.45% in 2018-19.
• It is also noticed that the total non-current liabilities takes a very minimal part
of the total liabilities which is 0.05% in 2014-15, 0.09% in 2015-16, 0.10% in
2016-17, 0.94% in 2017-18 and 1.00% in 2018-19.
• And the total current liabilities takes 22.19% in 2014-15, 15.93% in 2015-16,
14.75% in 2016-17, 15.37% in 2017-18 and 19.55% in 2018-19 of the total
liabilities.
• Therefore we can say that the capital structure mainly consists of the
shareholder's fund and have no element of long term borrowed fund.
• It is observed that the total noncurrent assets are increasing and the total
current assets are decreasing over the 5years.
• The major parts of the noncurrent assets are taken by the tangible assets, non
current investment and other noncurrent assets.
• The major parts of the current assets are taken by the current investment, trade
receivable, cash and cash equivalent and other current assets.
• There is no element of inventories present in the total assets. It may be because
the company operates in the service sector and not in other sectors.

33
 3.3. COMPARATIVE STATEMENT ANALYSIS

Comparative Financial Statement analysis provides information to assess the direction

of change in the business. Financial statements are presented as on a particular date
for a particular period. The financial statement Balance Sheet indicates the financial
position as at the end of an accounting period and the financial statement Income
Statement shows the operating and non-operating results for a period. But financial
managers and top management are also interested in knowing whether the business is
moving in a favorable or an unfavorable direction. For this purpose, figures of current
year have to be compared with those of the previous years. In analyzing this way,
comparative financial statements are prepared.

Comparative Financial Statement Analysis is also called as Horizontal analysis. The

Comparative Financial Statement provides information about two or more years'
figures as well as any increase or decrease from the previous year's figure and it's
percentage of increase or decrease. This kind of analysis helps in identifying the
major improvements and weaknesses. For example, if net income of a particular year
has decreased from its previous year, despite an increase in sales during the year, is a
matter of serious concern. Comparative financial statement analysis in such situations
helps to find out where costs have increased which has resulted in lower net income
than the previous year.

Comparative Balance Sheet

A comparative balance sheet showcases:

• Assets and liabilities of business for the previous year as well as the current
year
• Changes (increase or decrease) in such assets and liabilities over the year both
in absolute and relative terms

Thus, a comparative balance sheet not only gives a picture of the assets and liabilities
in different accounting periods. It also reveals the extent to which the assets and
liabilities have changed during such periods.

34
Comparative Balance Sheet of Infosys Ltd. for the year 2014-15 and 2015-16

Amount(₹ (in crores) Percentage

Particulars MAR 15 MAR 16 Absolute Change
Change %
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
a. Share Capital 574.00 1,148.00 574.00 100.00
b. Reserves And Surplus 47,494.00 59,934.00 12,440.00 26.19
TOTAL SHAREHOLDERS' FUNDS 48,068.00 61,082.00 13,014.00 27.07
2.Non-Current Liabilities
a. Long Term Borrowings 0.00 0.00 0.00
b. Deferred Tax Liabilities 0.00 0.00 0.00
c. Other Long Term Liabilities 30.00 62.00 32.00 106.67
d. Long Term Provisions 0.00 0.00 0.00
TOTAL NON CURRET LIABILITIES 30.00 62.00 32.00 106.67
3. Current Liabilities
a. Short Term Borrowings 0.00 0.00 0.00
b. Trade Payables 124.00 623.00 499.00 402.42
C. Other Current Liabilities 5,546.00 10,529.00 4,983.00 89.85
d.ShortTerm Provisions 8,045.00 436.00 -7,609.00 -94.58
TOTAL CURRENT LIABILITIES 13,715.00 11,588.00 -2,127.00 -15.51
TOTAL 61,813.00 72,732.00 10,919.00 17.66
II. ASSETS
1. Non Current Assets
a. Fixed Assets
i. Tangible Assets 7,347.00 8,248.00 901.00 12.26
ii.Intangible Assets 0.00 0.00 0.00
iii. Capital Work-In-Progress 769.00 934.00 165.00 21.46
b. Non-Current Investments 6,108.00 11,076.00 4,968.00 81.34
c. Long Term Loans And Advances 4,378.00 5.00 -4,373.00 -99.89
d. Other Non Current Assets 26.00 5,967.00 5,941.00 22850.00
e. Deferred tax asset (net) 433.00 405.00 -28.00 -6.47
TOTAL NON CURRENT ASSETS 19,061.00 26,635.00 7,574.00 39.74
2. Current Assets
a. Cuurent Investments 749.00 2.00 -747.00 -99.73
b.Inventories 0.00 0.00 0.00
c.Trade Receivables 8,627.00 9,798.00 1,171.00 13.57
d. Cash and Cash Equivalents 27,722.00 29,176.00 1,454.00 5.24
e. Short Term Loans And Advances 3,231.00 355.00 -2,876.00 -89.01
f. Other Current Assets 2,423.00 6,766.00 4,343.00 179.24
TOTAL CURRENT ASSETS 42,752.00 46,097.00 3,345.00 7.82
TOTAL 61,813.00 72,732.00 10,919.00 17.66

35
Comparative Balance Sheet of Infosys Ltd. for the year 2015-16 and 2016-17

Amount(₹ (in crores) Percentage

Particulars MAR 16 MAR 17 Absolute Change
Change %
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
a. Share Capital 1,148.00 1,148.00 0.00 0.00
b. Reserves And Surplus 59,934.00 66,869.00 6,935.00 11.57
TOTAL SHAREHOLDERS' FUNDS 61,082.00 68,017.00 6,935.00 11.35
2.Non-Current Liabilities
a. Long Term Borrowings 0.00 0.00 0.00 -
b. Deferred Tax Liabilities 0.00 0.00 0.00 -
c. Other Long Term Liabilities 62.00 82.00 20.00 32.26
d. Long Term Provisions 0.00 0.00 0.00
TOTAL NON CURRET LIABILITIES 62.00 82.00 20.00 32.26
3. Current Liabilities
a. Short Term Borrowings 0.00 0.00 0.00 -
b. Trade Payables 623.00 269.00 -354.00 -56.82
C. Other Current Liabilities 10,529.00 11,167.00 638.00 6.06
d.ShortTerm Provisions 436.00 350.00 -86.00 -19.72
TOTAL CURRENT LIABILITIES 11,588.00 11,786.00 198.00 1.71
TOTAL 72,732.00 79,885.00 7,153.00 9.83
II. ASSETS
1. Non Current Assets
a. Fixed Assets
i. Tangible Assets 8,248.00 8,605.00 357.00 4.33
ii.Intangible Assets 0.00 0.00 0.00 -
iii. Capital Work-In-Progress 934.00 1,247.00 313.00 33.51
b. Non-Current Investments 11,076.00 15,334.00 4,258.00 38.44
c. Long Term Loans And Advances 5.00 5.00 0.00 0.00
d. Other Non Current Assets 5,967.00 6,666.00 699.00 11.71
e. Deferred tax asset (net) 405.00 346.00 -59.00 -14.57
TOTAL NON CURRENT ASSETS 26,635.00 32,203.00 5,568.00 20.90
2. Current Assets
a. Cuurent Investments 2.00 9,643.00 9,641.00 482050.00
b.Inventories 0.00 0.00 0.00
c.Trade Receivables 9,798.00 10,960.00 1,162.00 11.86
d. Cash and Cash Equivalents 29,176.00 19,153.00 -10,023.00 -34.35
e. Short Term Loans And Advances 355.00 310.00 -45.00 -12.68
f. Other Current Assets 6,766.00 7,616.00 850.00 12.56
TOTAL CURRENT ASSETS 46,097.00 47,682.00 1,585.00 3.44
TOTAL 72,732.00 79,885.00 7,153.00 9.83

36
Comparative Balance Sheet of Infosys Ltd. for the year 2016-17 and 2017-18

Amount(₹ (in crores) Percentage

Particulars MAR 17 MAR 18 Absolute Change
Change %
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
a. Share Capital 1,148.00 1,092.00 -56.00 -4.88
b. Reserves And Surplus 66,869.00 62,410.00 -4,459.00 -6.67
TOTAL SHAREHOLDERS' FUNDS 68,017.00 63,502.00 -4,515.00 -6.64
2.Non-Current Liabilities
a. Long Term Borrowings 0.00 0.00 0.00 -
b. Deferred Tax Liabilities 0.00 505.00 505.00 -
c. Other Long Term Liabilities 82.00 208.00 126.00 153.66
d. Long Term Provisions 0.00 0.00 0.00 -
TOTAL NON CURRET LIABILITIES 82.00 713.00 631.00 769.51
3. Current Liabilities
a. Short Term Borrowings 0.00 0.00 0.00 -
b. Trade Payables 269.00 738.00 469.00 174.35
C. Other Current Liabilities 11,167.00 10,488.00 -679.00 -6.08
d.ShortTerm Provisions 350.00 436.00 86.00 24.57
TOTAL CURRENT LIABILITIES 11,786.00 11,662.00 -124.00 -1.05
TOTAL 79,885.00 75,877.00 -4,008.00 -5.02
II. ASSETS
1. Non Current Assets
a. Fixed Assets
i. Tangible Assets 8,605.00 9,027.00 422.00 4.90
ii.Intangible Assets 0.00 130.00 130.00
iii. Capital Work-In-Progress 1,247.00 1,442.00 195.00 15.64
b. Non-Current Investments 15,334.00 11,993.00 -3,341.00 -21.79
c. Long Term Loans And Advances 5.00 19.00 14.00 280.00
d. Other Non Current Assets 6,666.00 8,048.00 1,382.00 20.73
e. Deferred tax asset (net) 346.00 1,128.00 782.00 226.01
TOTAL NON CURRENT ASSETS 32,203.00 31,787.00 -416.00 -1.29
2. Current Assets
a. Cuurent Investments 9,643.00 5,906.00 -3,737.00 -38.75
b.Inventories 0.00 0.00 0.00 -
c.Trade Receivables 10,960.00 12,151.00 1,191.00 10.87
d. Cash and Cash Equivalents 19,153.00 16,770.00 -2,383.00 -12.44
e. Short Term Loans And Advances 310.00 393.00 83.00 26.77
f. Other Current Assets 7,616.00 8,870.00 1,254.00 16.47
TOTAL CURRENT ASSETS 47,682.00 44,090.00 -3,592.00 -7.53
TOTAL 79,885.00 75,877.00 -4,008.00 -5.02

37
Comparative Balance Sheet of Infosys Ltd. for the year 2017-18 and 2018-19

Amount(₹ (in crores) Percentage

Particulars MAR 18 MAR 19 Absolute Change
Change %
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
a. Share Capital 1,092.00 2,178.00 1,086.00 99.45
b. Reserves And Surplus 62,410.00 60,533.00 -1,877.00 -3.01
TOTAL SHAREHOLDERS' FUNDS 63,502.00 62,711.00 -791.00 -1.25
2.Non-Current Liabilities
a. Long Term Borrowings 0.00 0.00 0.00 -
b. Deferred Tax Liabilities 505.00 541.00 36.00 7.13
c. Other Long Term Liabilities 208.00 248.00 40.00 19.23
d. Long Term Provisions 0.00 0.00 0.00 -
TOTAL NON CURRET LIABILITIES 713.00 789.00 76.00 10.66
3. Current Liabilities
a. Short Term Borrowings 0.00 0.00 0.00 -
b. Trade Payables 738.00 1,604.00 866.00 117.34
C. Other Current Liabilities 10,488.00 13,321.00 2,833.00 27.01
d.ShortTerm Provisions 436.00 505.00 69.00 15.83
TOTAL CURRENT LIABILITIES 11,662.00 15,430.00 3,768.00 32.31
TOTAL 75,877.00 78,930.00 3,053.00 4.02
II. ASSETS
1. Non Current Assets
a. Fixed Assets
i. Tangible Assets 9,027.00 10,394.00 1,367.00 15.14
ii.Intangible Assets 130.00 103.00 -27.00 -20.77
iii. Capital Work-In-Progress 1,442.00 1,212.00 -230.00 -15.95
b. Non-Current Investments 11,993.00 12,062.00 69.00 0.58
c. Long Term Loans And Advances 19.00 16.00 -3.00 -15.79
d. Other Non Current Assets 8,048.00 7,806.00 -242.00 -3.01
e. Deferred tax asset (net) 1,128.00 1,114.00 -14.00 -1.24
TOTAL NON CURRENT ASSETS 31,787.00 32,707.00 920.00 2.89
2. Current Assets
a. Cuurent Investments 5,906.00 6,077.00 171.00 2.90
b.Inventories 0.00 0.00 0.00 -
c.Trade Receivables 12,151.00 13,370.00 1,219.00 10.03
d. Cash and Cash Equivalents 16,770.00 15,551.00 -1,219.00 -7.27
e. Short Term Loans And Advances 393.00 1,048.00 655.00 166.67
f. Other Current Assets 8,870.00 10,177.00 1,307.00 14.74
TOTAL CURRENT ASSETS 44,090.00 46,223.00 2,133.00 4.84
TOTAL 75,877.00 78,930.00 3,053.00 4.02

38
 Interpretation

On the basis of the above comparative balance sheet of 5yrs of Infosys following
comments are made:

• The total shareholder's fund increased by 27.20% in 2015-16, then in 2016-17

it increased by 11.35% then it started decreasing by 6.64% in 2017-18 and by
1.25% in 2018-19.
• The major changes in the shareholder's fund is due to share capital which just
doubled in 2015-16 i.e. increased by 100% , in 2016-17 there was no change,
then it decreased by 4.88 in 2017-18 and then again in 2018-19 it increased
almost double i.e. 99.45%.
• In 2015-16 the total non-current liabilities increased by 106.67%, in 2016-17 it
increased by 32.26%, in 207-18 it increased a lot by 769.51% and in 2018-19 it
increased by 10.66%.
• The current liabilities decreased by 15.51% in 2015-16, in 2016-17 it increased
by 1.71%, in 2017-18 it decreased by 1.05% and in 2018-19 it increased by
32.31%.
• The non-current assets increased by 39.74% in 2015-16, in 2016-17 it
increased by 20.90%, in 2017-18 it decreased by 1.29% and in 2018-19 it
increased by 2.89%.
• The current assets increased by 7.82% in 2015-16, in 2016-17 it increased by
3.44%, in 2017-18 it decreased by 7.53% and in 2018-19 it increased by
4.84%.
• The overall position of the company i.e. the balance sheet total increased by
17.66% in 2015-16, in 2016-17 it increased by 9.83%, in 2017-18 it decreased
by 5.02% and in 2018-19 it increased by 4.02%.

39
 3.4. FINDINGS

• The net profit ratio is satisfactory and showing a good position of profitability of
the company.
• The company achieved maximum Return on asset ratio in 2017-18 which is
21.29%.
• The company achieved maximum Return on shareholder's equity ratio in2017-18.
• Return on capital employed was highest in the 2014-15 then there was a fall then again the
ratio was increasing.
• The solvency position of Infosys Ltd. in terms of current ratio is above the standard norm
volume of 2:1 for the entire period of which study is made which shows the solvency
position of the company is favorable.
• We can observe that the proprietary ratio was increasing up to 2016-17 then it is again
decreasing.
• The company achieved the highest asset turnover ratio in 2018-19 which is 92.62%.
• Capital turnover ratio was 98.40%, 88.38%, 87.18%, 97.54% and 116.58% in respective
year of 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 so the company achieved
maximum capital turnover ratio in 2018-19.
• The shareholder's fund takes the majority part of the total liability which is 77.76% of
total liability in 2014-15, 83.98% in 2015-16, 85.14% in 2016-17, 83.69% in 2017-18
and 79.45% in 2018-19.
• The major changes in the shareholder's fund is due to share capital which just doubled in
2015-16 i.e. increased by 100% , in 2016-17 there was no change, then it decreased by
4.88 in 2017-18 and then again in 2018-19 it increased almost double i.e. 99.45%.
• We can see that the capital structure mainly consists of the shareholder's fund and have
no element of long term borrowed fund.
• It is observed that the total noncurrent assets are increasing and the total current assets are
decreasing over the 5years.

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CHAPTER : 4
CONCLUSION AND
RECOMENDATION

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 4.1. CONCLUSION

The objective of the project was to analyse the financial statement and to determine and
identify financial strengths, weaknesses and relationships that exist in the company.

The conclusion of the above study is as follows:

• Financial statement analysis provides valuable insights into a firm's

performance. By doing this study we get to understand the basics of financial
statement analysis and how it is done with the help of data available. Financial
statement analysis helps us in understanding the overall position of the
company.
• The profitability position of the company is satisfactory which we can see from
the various tables and charts of profitability ratios.
• The company does not have any debt capital and because of that the risk is also
not there or very minimal risk.
• Though the liquidity and solvency position of the company has deteriorated
over the past two years but it is not bad as it is over the standard ratios.

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 4.2. RECOMMENDATIONS

The following recommendations are made:

• The company only has equity capital which increases the cost of capital a lot.
The company should try to take measures to reduce it.
• The company should try to use more of debt capital to improve the profitability
of the company. A calculative risk of using debt capital should be taken as it
has other benefits also such as reducing the tax burden, etc.
• Company should not use proper working capital management techniques.
• The major part of the company deals in BPO which to large extent depends on
the efficiency of the employees therefore they should do time to time training
and skill development programs for the staff to get the maximum benefit of the
human resources.

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 BIBLIOGRAPHY
The sources of the data are as follows:

• www.infosys.com
• www.wikipedia.com
• www.moneycontrol.com
• www.investopedia.com
• Text books and study material for reference.

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