Ratio analysis of tcs wipro infosys
From Liquidity analysis, we can conclude that the IT service industry as a whole has the capability of paying its short-term liabilities.
Literature review on comparative financial analysis
We have done the time series analysis of our primary company , Infosys. TCS has been fairly efficient in utilizing its assets as compared to Infosys, whereas Mindtree has been more efficient in utilizing its assets. Short term borrowings for the company have remained negligible over the years at about 0. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date and exchange gains and losses are recognised in the statement of profit and loss. These have remained negligible over the years at about 0. Dividend coverage ratio Av5 It indicates the earnings obtained on the total assets of the firm. Time Series analysis : Time Series analysis.
Cross Sectional Analysis : Cross Sectional Analysis In this analysis we compare the ratio of one firm with respect to those of its competitors in the same industry. On the contrary, Infosys has started to show declining profitability.
This is due to a constant stream of Profits being transferred into the Reserves and Surplus account. Cash Flow Ratios — We see that the company has stable levels of cash flow to sales and cash flow to assets and on par with industry standards.
A comparative study on financial statement analysis
From Liquidity analysis, we can conclude that the IT service industry as a whole has the capability of paying its short-term liabilities. Infosys Technologies Ltd is a public limited and India's second largest software exporter company. In , due to macroeconomic factor, the Indian IT industry as a whole was under market pressure and sales growth decreased. It is highest for Infosys. It indicates that Infosys has sufficient net working to meet its current obligations. This is due to a constant stream of Profits being transferred into the Reserves and Surplus account. In respect of Business Process Outsourcing BPO services, revenue on time and material and unit priced contracts is recognised as the related services are rendered, whereas revenue from fixed price contracts is recognised as per the proportionate completion method with contract cost determining the degree of completion. During the year, the revenues of the top four players, i. Operational Weakness: The Cash flow to yield and sales are lower than the industry standards highlighting a weak translation of sales and assets into CFOA compared to the industry. Interest Coverage ratio — Interest coverage ratio indicates the comfort with which the company may be able to service the interest expense on its outstanding debt. The amount invested has gone up every year except in It is evident from the fact that in FY14, sales grew by It is highest in case of Infosys indicating that it has the greatest return on its total assets. It tells how much times of sales is a company producing for one rupees of capital employed in net assets.
Satisfactory gross profit margin Av5 : Time Series Analysis : Time Series Analysis The time series analysis shows how the ratios of the firms change over a period of time. Operational Position: Operational Strength: The operational margins has been growing strongly and has shot up above its competitors.
Comparative ratio analysis of two companies
Slide It tells the firms ability to generate sales from all financial resources committed to total assets. Reversal of impairment loss is recognised as income in the statement of profit and loss. This has been possible because of a strong and constant stream of Net Profits ensuring that the Reserves and Surpluses account has increased at a CAGR of The company offers a range of IT services, outsourcing and business solutions. The reason being the net assets which are growing at a faster rate compared to the sales being generated. From the trend analysis, we see high correlation between current ratio and profitability for all the companies. Interest Coverage ratio — Interest coverage ratio indicates the comfort with which the company may be able to service the interest expense on its outstanding debt. The interval ratio of has increased over the years from days to days from year to which indicates that the company has sufficient liquid assets to finance its operations for days. Risks due to exchange rate fluctuations: A majority of the business of Indian IT services players is transacted in foreign currencies, which makes the industry vulnerable to fluctuations in the Indian rupee against major global currencies, namely the dollar, pound, yen and euro. They also offer IT infrastructure services, business process outsourcing services, engineering and industrial services, global consulting and asset leveraged solutions.
It indicates the the firm ability to generate sales from all its assets.
based on 54 review