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Financial Statements Ratio Analysis of Infosys

This document analyzes financial ratios for Infosys Technologies Ltd. over several years: - Profitability ratios like EPS, ROE, and ROCE have generally increased, indicating higher profits. However, DPS has decreased, which may reduce attractiveness to shareholders. - Liquidity ratios like current and quick ratios have increased, showing more efficient use of current assets and ability to meet short-term obligations. - Infosys has no debt, so debt ratios cannot be calculated but this provides advantages like no interest burden and disadvantages like lower EPS. - Activity ratios like asset turnover and debtors collection period are stable or improving, showing efficient use of assets and good quality of debtors.

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Vishal Kushwaha
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666 views15 pages

Financial Statements Ratio Analysis of Infosys

This document analyzes financial ratios for Infosys Technologies Ltd. over several years: - Profitability ratios like EPS, ROE, and ROCE have generally increased, indicating higher profits. However, DPS has decreased, which may reduce attractiveness to shareholders. - Liquidity ratios like current and quick ratios have increased, showing more efficient use of current assets and ability to meet short-term obligations. - Infosys has no debt, so debt ratios cannot be calculated but this provides advantages like no interest burden and disadvantages like lower EPS. - Activity ratios like asset turnover and debtors collection period are stable or improving, showing efficient use of assets and good quality of debtors.

Uploaded by

Vishal Kushwaha
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Financial Statements

Ratio Analysis of Infosys


About Infosys
• Infosys Technologies Ltd. (NASDAQ.INFY) was started in 1981 by
seven people with US$250.
• Today , it is a global leader in the “next generation” of IT and
consulting with revenues of over US$4 billion.
• Infosys defines, designs and delivers technology-enabled business
solutions that help global 2000 companies win in a flat world.
• Infosys offers application services , system integration , product
engineering , business process outsourcing etc.
• Infosys has a global footprint with over 50 offices and
development centre's in India , china , US, UK, Canada , Japan etc.
Infosys and its subsidiaries have 1,05,453 employees as on
December 31,2009.
Fact file of Infosys
• On July 2, 2011 Infosys technologies will complete its
30 years .
• In these 30 years , however , Infosys has set new
standards in governance and wealth creation (both for
employees and shareholders ).
• During the fiscal year ended on march 31, 2006 ,
Infosys generated revenues of 2.152 billion USD and
had a net income of 555 million USD.
• Infosys derived 65% of revenues from North America
and 25% from Europe.
Ratio Analysis of Infosys
• Profitability ratio
• Liquidity ratio
• Long term solvency ratio
• Activity ratio
Profitability ratio
RATIO 2009-08 2008-07 2007-06 2006-05 2005-04
EPS= 108.08 78.06 65.42 90.65 68.38
(NPAT/No.
of equity
share)
DPS= (T.D. 24.15 44.35 17.66 49.89 16.20
paid to
share
holder/No.
of sh. Out
standing)
Book value 311.35 235.84 195.14 249.89 194.15
per share=
(Equity
shareholder
fund/No. of
sh. Out
standing)
RATIO 2009-08 2008-07 2007-06 2006-05 2005-04
ROE= (Net 32.67 33.13 33.89 35.10 36.33
income after
tax/Share
holder
equity)
ROCE= (Net 37.71 37.81 37.05 39.51 42.54
income
before
tax/Capital
employed)
Interpretation
• In the above table we can see that EPS in
2007,2008,2009 is increasing i.e. 65.42,78.06,108.08.
Hence higher EPS will attract more investors to acquire
share in the company . As it indicates that the business is
more profitable enough to pay the dividend in time.
• ROE of the company in last five years is
32.67,33.13,33.89,35.10,36.33. which shows percentage
return on equity or return per equity share. Table shows
that company has marketable value of equity share.
• DPS of the company in 2009 and 2008 is 24.15 and 44.35
which shows that its DPS is reduced and the company is
giving less dividend per share to their shareholders . In
order to attract more shareholders the company has to
increase the DPS.
Liquidity ratio
RATIO 2009-08 2008-07 2007-06 2006-05 2005-04
Current 4.71:1 3.30:1 4.96:1 2.75:1 2.80:1
ratio=
(CA/CL)
Quick ratio= 4.67:1 3.28:1 4.91:1 2.73:1 2.77:1
(Quick
assets/CL)
Interpretation
• In year 2008,2009 current ratio is increased
from 3.30 to 4.71 which shows that the
company is using its current assets very
efficiently .
• In last two years liquid ratio is increased from
3.28 to 4.67 which shows company's ability to
meet its short-term obligations with its most
liquid assets. The higher the liquidity ratio ,the
better the position of the company.
Long term solvency ratio
RATIO 2009-08 2008-07 2007-06 2006-05 2005-04
Debt equity - - - - -
=(Debt/Equi
ty)
Capital - - - - -
gearing =
(Fixed
interest
bearing
security/Ow
ners fund)
Interpretation
• Company has no debt and preference capital which
means that there is no capital gearing ratio , no
debt-equity ratio , and no interest coverage ratio.
• As Infosys is a debt free company , it has certain
advantages and disadvantages.
ADVANTAGES:-
1. Not dependent on external borrowers.
2.No interest burden , hence high profit.
3. No burden for loan payment.
DISADVANTAGES:-
1. Gives lower EPS for shareholders.
Activity ratio
RATIO 2009-08 2008-07 2007-06 2006-05 2005-04

FA 3.39 3.47 3.38 3.18 3.20


turnover=
(Net
sales/FA)

WC 0.61 0.54 0.54 0.42 0.35


Turnover=
(Net sales/
WC)

Debtors 58.39 62.80 52.88 56.02 50.16


collection
period=
(Months or
Days/DTR)

Creditors 17.14 38.16 35.43 37.09 41.41


payment
period=
(Months or
Days/CTR)
Interpretation
• In the above table we can see that the fixed
asset ratios are similar in last five years i.e.
3.39,3.47,3.38,3.18,3.20 . Which means that
the company is utilizing its fixed assets very
efficiently.
• All debtors are considered good and reliable .
Because we can see that the debtors collection
period is less i.e. 58.39,62.80,52.88 days . So its
good for the company.
• In 2009 creditors payment period is less as
compare to previous year i.e. 17.14 and 38.16 .
So again its beneficial for the company.
Depreciation method used by Infosys
• The company is using straight line
depreciation method .
• Depreciation is calculated over the useful life
of assets estimated by the management.
• Depreciation for assets purchased / sold
during a period is proportionately charged.
• Individual low cost assets(acquired for less
than Rs.5000/-) are depreciated over a period
of one year from the date of acquisition.
Presented by:-
Richa Motwani
Renu Antil
Vinika Tyagi
Vishal Kharra
Vishal kushwaha
Rahul jain

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