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Introduction

Tata Consultancy Services is an Indian Multinational Information Technology


Services, Consulting and Business Solution company headquarter in Mumbai,
Maharashtra

It is the world's Tenth largest IT Service provider measured by the revenue


Placed amongst big 4 most valuable IT Services provider worldwide

Financing Decisions of TCS


Financial decision deals with the decisions regarding the arrangement of funds and
finances for a company.
C-suite leaders expect the finance function to play a more strategic
role in the organisation’s future, especially as new regulations, fast-
pace market change, disruptive business models and intense
competition heighten the need for accurate, real-time finance
inputs for strategic decisions. It means that chief financial officer
must be enabled with fast, high-quality data to advise the
organisation’s moves.
Imagine a finance and accounting function that does just that
through automated transactions and workflows, running
harmonized, integrated, efficient, and business-aligned. A single
financial system manages the enormous volume of finance-related
transaction data feeding into it from multiple source systems (ie:
across lines of business, decentralized business units) and at
granular level manages all relevant data in a centralized location. It
enables real-time, accurate and consolidated visibility into
operational and commercial positions, making for better audits and
financial closing, more efficient regulatory compliance, and well-
informed business decisions on parameters such as working capital,
cash flow position, investments and risk mitigation. The
organization also gains exceptionally fast cycle time for aggregating
core financial transactions and reducing effort invested in data
consolidation.

The financial data for the company TCS is as follows-


TCS INCOME DATA
Net Sales Rs m 818,094 946,484 1,086,460 1,179,660 1,231,040
Other income Rs m 16,367 32,299 30,840 42,210 36,420
Total revenues Rs m 834,461 978,783 1,117,300 1,221,870 1,267,460
Gross profit Rs m 251,528 244,817 306,770 323,110 325,160
Depreciation Rs m 13,492 17,987 18,880 19,870 20,140
Interest Rs m 385 1,042 330 320 520
Profit before tax Rs m 254,019 258,087 318,400 345,130 340,920
Minority Interest Rs m -1,680 -2,075 0 0 0
Prior Period Items Rs m 0 0 0 0 0
Extraordinary Inc (Exp) Rs m 0 4,898 0 0 0
TCS INCOME DATA
Tax Rs m 60,700 62,388 75,020 81,560 82,120
Profit after tax Rs m 191,639 198,522 243,380 263,570 258,800
Gross profit margin % 30.7 25.9 28.2 27.4 26.4
Effective tax rate % 23.9 24.2 23.6 23.6 24.1
Net profit margin % 23.4 21.0 22.4 22.3 21.0

Investment Decisions
The investment decisions refer to the decisions of a firm in relation
to the various investments that it has to make. The investment
decision represents the ability of the firm to generate sales from
the investments that it has made in fixed assets and short term
assets. The ratio of the investment decision is calculated by
comparing the amount of investment made in fixed assets to the
amount of sales generated. The short term investment ratio is
calculated by comparing the amount of the investment made in
short term assets to the amount of sales generated.
The investment decision of the firm in relation to the long term
assets, that the firm owns and or the new assets of the firm. The
investment decisions of the firm are often influenced by the interest
rates that are available to the firm. This means that the firm would
like to invest more if it is receiving a higher rate of interest on the
investment made. The firm in order to maximise its profits and
revenues would like to invest in maximisation schemes and would
like to avoid the investment schemes wherein the firm gets a lower
rate of interest on the investment made.

The balance sheet of the firm for the three consecutive years is as
follows-

Balance Sheet of Tata Consultancy Services ------------------- in Rs. Cr. -------------------


Mar '18 Mar '17 Mar '16 Mar '15 Mar '14
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 191.00 197.00 197.00 195.87 195.87
Equity Share Capital 191.00 197.00 197.00 195.87 195.87
Reserves 75,675.00 77,825.00 64,816.00 45,220.57 43,856.01
Networth 75,866.00 78,022.00 65,013.00 45,416.44 44,051.88
Secured Loans 39.00 44.00 162.00 64.13 88.64
Unsecured Loans 181.00 200.00 1.00 186.14 1.05
Total Debt 220.00 244.00 163.00 250.27 89.69
Total Liabilities 76,086.00 78,266.00 65,176.00 45,666.71 44,141.57
Mar '18 Mar '17 Mar '16 Mar '15 Mar '14
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 20,338.00 18,698.00 9,080.00 14,095.04 11,220.11
Less: Accum. Depreciation 10,898.00 9,467.00 0.00 6,098.75 5,290.92
Net Block 9,440.00 9,231.00 9,080.00 7,996.29 5,929.19
Capital Work in Progress 1,238.00 1,477.00 1,640.00 2,706.94 3,047.53
Investments 37,259.00 42,930.00 24,159.00 3,398.70 5,832.42
Inventories 25.00 21.00 9.00 12.34 8.57
Sundry Debtors 18,882.00 16,582.00 19,058.00 17,036.76 14,471.89
Cash and Bank Balance 3,487.00 1,316.00 4,806.00 16,502.50 12,566.26
Total Current Assets 22,394.00 17,919.00 23,873.00 33,551.60 27,046.72
Loans and Advances 20,725.00 18,201.00 18,665.00 15,411.77 15,748.33
Total CA, Loans & Advances 43,119.00 36,120.00 42,538.00 48,963.37 42,795.05
Current Liabilities 14,773.00 11,387.00 12,086.00 10,252.33 7,355.18
Provisions 197.00 105.00 155.00 7,146.26 6,107.44
Total CL & Provisions 14,970.00 11,492.00 12,241.00 17,398.59 13,462.62
Net Current Assets 28,149.00 24,628.00 30,297.00 31,564.78 29,332.43
Total Assets 76,086.00 78,266.00 65,176.00 45,666.71 44,141.57
Contingent Liabilities 8,355.00 10,149.00 19,695.42 9,161.54 10,880.43
Book Value (Rs) 396.31 395.96 329.94 231.87 224.90

Dividend Decisions
The dividend decisions of the firm “TCS”,
TCS has been returning cash to shareholders consistently from the
time of listing, through interim dividends every quarter, final
dividends at the year-end and an occasional special dividend.

Fiscal Year Quarter Type of Dividend Record Date Actual


Dividend Amount per Payment Date
share (INR) *

2017-18 Q4 Final 29.00 2-Jun-18 19-Jun-18


2017-18 Q3 Interim 7.00 23-Jan-18 31-Jan-18
2017-18 Q2 Interim 7.00 26-Oct-17 01-Nov-17
2017-18 Q1 Interim 7.00 25-Jul-17 01-Aug-17
2016-17 Q4 Final 27.50 14-Jun-17 23-Jun-17
2016-17 Q3 Interim 6.50 24-Jan-17 01-Feb-17
2016-17 Q2 Interim 6.50 25-Oct-16 02-Nov-16
2016-17 Q1 Interim 6.50 26-Jul-16 2-Aug-16
2015-16 Q4 Final 27.00 7-Jun-16 24-Jun-16
2015-16 Q3 Interim 5.50 22-Jan-16 29-Jan-16
2015-16 Q2 Interim 5.50 26-Oct-15 30-Oct-15
2015-16 Q1 Interim 5.50 21-Jul-15 03-Aug-15

The dividend decisions include the decisions related to the payment


of dividend to the shareholders. The firm has to decide how much
dividend it has to pay and the frequency of the dividend payments
to the debenture holders in order to make them happy and invest
more in the company.
The dividend is that part of the profits of the firm, which the firm
distributes amongst its debenture holders in order to make them
happy and mmotivaate them to invest more in their company. The
firms often engage in dividend distribution to their debenture
holders, paying them a part of the firms profits as dividends. At the
time of maturity of debentures, the debenture holders also have the
option of either continuing with their investment in the firm or
converting their debentures into equity shares of the firm. The
shareholders have the option of converting either their whole share
of debentures into equity or a part of them into equity or they may
want to hold debentures instead of equity. The debenture holders
do not have any voting rights in the firm, but when the debentures
are converted into equity shares of the company, the debenture
holders get the voting right as they become a part of the owners of
the company.
The dividend function of the company is calculated as-
The