PROJECT REPORT

(Submitted for the Degree ofB.Com. Honours in Accounting& Finance under the University
of Calcutta)

Title of the Project

FINANCIAL STATEMENT ANALYSIS - A STUDY BASED ON

INFOSYS LIMITED

Submitted by:-
Name of the Candidate : Sujay Pramanick
Registration No. : 011-1125-0373-15
Name of the College :ACHARYA JAGADISH CHANDRA BOSE COLLEGE
University Roll No. : 1011-61-5029

Supervised by:-

Name of the Supervisor : Prof. Tribhuwan Nath Ojha

Name of the College : Acharya Jagadish Chandra Bose College

Month & Year of Submission:

February 2020

1
Annexure-IA
Supervisor's Certificate
This is to certify that Mr.SUJA Y PRAMANICK student of
B.com Honors in Accounting & Finance of Acharya
Jagadish Chandra Bose College under the University of
Calcutta has prepared a proj ect report with the title -
FINANCIAL STATEMENT ANALYSIS- STUDY
BASED ON INFOSYS LTD.
My contribution however, was mainly in the form of
general guidance and discussion.
Signature
Place : KOLKATA
Name : Prof. Tribbuwan Natb Ojba
Date
Designation
College : Acharya Jagadish Chandra Bose College

2
Annexure- IB

Student Declaration
I hereby declare that the project work with the title FINANCIAL
STATEMENT ANALYSIS-A STUDY BASED ON INFOSYS LIMITED
Submitted by me for the partial fulfillment of the degree B.com Honors in
Accounting and Finance under the university of Calcutta is my original
work and has not been submitted earlier to any other university for the
fulfillment of the requirement for any course of study.
That no chapter of this manuscript in I also declare whole or in part has
been incorporated in this from any earlier work done by others or me.
However, extracts of any literature which has been used for this report
duly acknowledge providing details of such literature in the references.
Signature : g~ \2acCOl''(V'-':;'''' ~~ I-L

Place : KOLKATA
Name : SUJAY PRAMANICK
Date : ~I~/')_~;)~
Address :39b, Beltala Road, Kolkata - 700020

C.U. Registration No. : 011-1125-0373-15

C.U. Roll No. :1011-61-5029

3
 ACKNOWLEDGEMENT

I use this opportunity to acknowledge all the help and support I got from the
various quarters without which this project would never have reached fructification.
Before I get into details, I would like to give my heartiest thanks to my college,

Acharya Jagadish Chandra Bose College and all the people who have helped me
with this project in numerous ways. First of all, I would like to take this opportunity and
show my gratitude towards our PRINCIPAL, and Prof. Tribhuwan Nath Ojha. I
would like to show my gratitude towards all the teachers of our department for their
valuable suggestions.

I am thankful to Prof. Tribhuwan Nath Ojha for his continuous guidance and
invaluable support throughout the course of the project and I am indebted to him for
every bit of this project.

Teacher's signature

Student's signature

4
 TABLE OF CONTENTS

SLNO. CHAPTERS NAME OF THE CHAPTERS PAGE

NUMBER
1 CHAPTER-1 INTRODUCTION:
1.1 BACKGROUND 6
1.2 NEED OF THE STUDY 7
1.3 LITERATURE REVIEW 8
1.4 OBJECTIVES OF THE STUDY 8
1.5 RESEARCH METHODOLOGY 9
1.6 LIMITATIONS 9
1.7 CHAPTER PLANNING 10
2 CHAPTER-2 CONCEPTUAL FRAMEWORK:
2.1 INTRODUCTION 11
2.2 TOOLS AND TECHNIQUES OF FINANCIAL 11
STATEMENT ANALYSIS
2.3 TYPES OF FINANCIAL STATEMENT ANALYSIS 12
2.4 FEATURES OF FINANCIAL STATEMENT 13
ANALYSIS
3 CHAPTER-3 PRESENTATION OF DATA, ANALYSIS AND
FINDINGS:
3.1 COMPANY PROFILE 14
3.2 ANALYSIS OF DATA
(A) COMPARATIVE BALANCE SHEET 15-16
STATEMENT
(B) COMMOM SIZE STATEMENT ANALYSIS 16-17
(C) CALCULATION OF RATIO
1. LIQUIDITY RATIO 17-20
2. SOLVENCY RATIO 20-22
3. ACTIVITY RATIO 22-24
4. PROFITIBILITY RATIO 25-27
4 CHAPTER-4 CONCLUSION AND SUGGESTIONS:
4.1 CONCLUSION 28
4.2. SUGGESTIONS 29

BIBLIOGRAPHY REFERENCE\BIBLIOGRAPHY

5
.------------------------------------- -------

CHAPTER-l

INTRODUCTION

1.1 BACKGROUND
Accounting is related to identifying, measuring, and communicating accounting information.

It means involved with regarding, classifying, summarizing, finalizing, interpreting and

communicating financial information. It is a body of systematic knowledge, pricuiples and
techniques by applying which financial data is translated in to final information and
communicated to the users of accounting information.

Financial statement analysis (FSA) convey different pieces of information to different but
specific users. They need this mainly for decision making. The users analysis and interpret
the statements in their own prespectives and according to their own needs. In the accounting
process interpretation of the reported date is the ultimate step. The data conveyed fmancial
statements needs proper analysis and interpretation for being usable for decession making.
So,financial statement analysis implies analysis an interpretation of the financial statement
for facilitating the drawing of valid conclusions from the reported facts and figures. it helps
to understands performance of a firm based on particulars prediction to be made and the
overall risks involved for the firms. Afinancial statement analysis applies different tools of
analysis to gauge the financial strength or weakness of a firm. Ther after ,he can proceed to
predict about the future of the business and decide the future course action needed for general
development or improvement

1.2 NEED OF THE STUDY

Financial statement analysis is an important tool for analyzing the company's fmancial
performance. The following are the important advantages of the accounting ratios.

1. Analyzing Financial Statements

Ratio analysis is an important technique of fmancial statement analysis. Accounting ratios are
useful for understanding the fmancial position of the company. Different users such as
investors and creditors use the ratio to analyze the financial situation of the company for their
decision making purpose.

2. Judging Efficiency

Accounting ratios are important for judging the company's efficiency in terms of its
operations and management. They help judge how well the company has been able to utilize
its assets and earn profits.

6
3. Locating Weakness Accounting ratios can also be used in locating weakness of the
company's operations even though its overall performance may be quite good. Management
can then pay attention to the weakness and take remedial measures to overcome them.

4. Formulating Plans

Although accounting ratios are used to analyze the company's past financial performance,
they can also be used to establish future trends of its financial performance. As a result, they
help formulate the company's future plans.

1.3 LITERATURE REVIEW

MILLER AND BAHNSON(2009) "ACCOUNTING TODAY": As discussed

in his literature review financial reports did not give timely and usefull
information during the financial crysis as they were not transparent enough.
They deemed that financial reports did not give information that vcan be using
early enough to make decision.

JAMES TURLY (2009):CEO of Ernst & young see the key causes of the
crisis being too much leverage, misuse of financial instruments ,bad loan
,unrealstick expection and gaps in regulatory system. the complexities of
financial instrument build the information gap between institution and those
who use the ire financial report making it hard to use them in decession making.

BARTH AND LANDSMAN (2010) HOW DOES FINANCIAL REPORTS

CONTRIBUTE TO THE FINANCIAL CRISIS: State that the lack of
transparency in financial reports during the financial crisis especially
concerning derivative fianacial instrument made it hard for user to determine
real value of assets.

ADAIN TURNER (2010): Commented on Martin Taylor's article by saying

that it was not nearly criticism of bankers of concern accounting standard and
there application. He agreed executive remuneration would have an effect on
customer confidence and the payment of large bonus would indicate a stable
financial position.

7
 1.40BJECTIVES OF THE STUDY

The major objectives of the recent study are to know about financial strengths
and weakness of tlINFOSYS" ltd. through FINANCIAL STATEMENT
ANALYSIS

The main objectives of the recent study are aimed at:

1) The objective has been developed to get a clear understanding about the concept of
financial performances and ratio analysis.

2) To analyze the financial performance ofInfosys Ltd.By calculating their profitability

liquidity and solvency position for the last five years.

3) To make a comparative study between different year of the company.

4) To help also the outsiders of a business to understand the affairs of an enterprise.

5) To help the management to take decision.

1.5RESEARCH METHODOLOGY

The information is collected through secondary sources during the project. That information
was utilize for calculating performance evaluation and based on that interpretation were
made.

Sources of Secondary Data:

1. Most of the calculation are made on the financial statement of the company
provided statements.

2.Referring standard texts and referred book collected some of the information
regarding theoretical aspects.

3. Method -to assess the performance of the company method of observation of

the work in finance department in followed.

DATA COLLECTION

Magazines, last 5 years balance sheet, P/L Account. This research study is
based on secondary data, means data that are already available i.e. the data
which have been already collected and analyzed by someone else.
8
Secondary data are used for the study of financial statement analysis of Infosys
ltd. To collect the data we have refer company annual report.

1.7LIMITATIONS OF THE STUDY

Several limitations were faced while conducting this project.

1. The principal limitations of the study include the limitation of the various
tools and techniques used.
2. Lack of primary data.
3. Lack of updated data.
4. Short time span.
5. Ratio may be worked out for insignificant and unrelated figure.
6. Changes in accounting are procedure.

1.7CHAPTER PLANNING
The study Financial statement analysis of Infosys ltd" is composed of different
If

chapters which are classified as follows:-

1. Introduction
2. Conceptual frame work
3. Presentation and data analysis
4. Conclusions and suggestions
5. Bibliography

9
 CHAPTER-2

CONCEPTUAL FRAMEWORK

2.1INTRODUCTION

The project aims at analysis various financial statements of "Infosys ltd" and
interpreting the impact of these ratios on the financial decision making.
Fundamental analysis has a very broad scope. One aspect looks at the general
factors of a company. The other side considers tangible and measurable
factors.

2.2TOOLS AND TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS

There is a recurring need to evaluate the past performances, present financial

position of liquidity and assist in forecasting the future prospects of the
organization, various financial statements are to be examined in order that the
forecast on the earning may be made and the progress of the company be
ascertained.

The financial statements are: income statement, balance sheet, statement of

changes in financial position and the cash flow statement. The income
statement having been termed as profit & loss accounting is the most useful
financial statement to enlighten what was happened to the business between
the specific time intervals while showing revenues, expenses, gains and losses.
Balance sheet is a statement which shows the financial position of the business
at certain point of time. The distinction between income statement and the
balance sheet is that the former is for a period and the latter indicates the
financial position of a particular date. However on the basis of financial
statements, the objectives of financial analysis is to draw information to
facilitate decision making, to evaluate the strength and the weakness of the
business, to determine the earning capacity, to provide insights on liquidity,
solvency and profitability and to decide the future prospects of a business
entity.

2.3TVPES OF FINANCIAL STAEMENT ANALYSIS

There are various types of financial analysis. They are briefly mentioned here
in:

10
1. External analysis: The external analysis done on the basis of published
financial statements by those who do not have access to the accounting
information such as stock holders, banks, creditors and the general
public.
2. Internal analysis: the types of analysis are done by finance and
accounting department. The objectives of such analysis is to provide the
information to the top management, while assisting the decision making
process.
3. Horizontal analysis: the comparative financial statements are an
example of horizontal analysis as it involves analysis of financial
statements for a number of years. Horizontal analysis is also regarded as
dynamic analysis.
4. Vertical analysis: it is performed when financial ratios are to be
calculated for one year only. It is also called as static analysis.
5. Ratio analysis: the most popular way to analyze the financial statements
is the computing ratios. It is an important widely used tool of analysis of
financial statements. While developing a meaningful relationship
between the Individual items of balance sheets and income statements,
it highlights the key performance indicators, such as, liquidity, solvency,
and profitability of a business entity. The tool of ration analysis performs
in a way that it makes the process of comprehension of financial
statements simpler, at the same time, it revels a lot about the changes in
the financial condition of a business entity.
2.4FEATURES OF FINANCIAL STATEMENT ANALYSIS
Analytical statement: it applies all the analytical tools to general
purpose, financial statement and related data to derive estimates and
inferences useful in effective business decision.
Briefly as uniformly: The results of such analysis are expressed in a very
manner with the help of some charts, etc and some uniformly in
principles is always maintained between different organization.

Meaning comparison: An effective, clear and meaningful comparison is

done at time of critical analysis of financial statements.Storehouse of
financial statistics: As a result of financial statement analysis one can
know the detailed financial data and statistics. So, it becomes a rich and
real store house of financial statistics.

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 CHAPTER-3

PRESENTATION OF DATA, ANALYSIS& FINDINGS

PRESENTATION OF DATA

3.1Company profile of infosys ltd

INFOSYSwas co- founded in 1981 by CEONarayan murthi, Nandan Nilekani, N.S. Raghavan,
S.GopalaKrishnan, S.D. Shibulal,K.Dinesh and Ashok Arora all of whom where former
employees of patni computer system. They started of as Infosys consultants pvt ltd. in pune,
maharastra. The first clind of the company was data basis corporation, New York in 1983.
The company started its business with mere $167. In a span of few years, Infosys reached
new heights in IT services. It was then that they moved their head quarters to Bangalore,
Karnataka.

Infosys changed its name to Infosys Limited when they went public, they made public offer
in the 1993 offering Rs.98per share. In the year 1994, the company offered 550000 shares
to public @ Rs.450each. It has around 80 clients from 30 countries like Australia, China, and
Japanetc

From last few years, Infosys started shifting its operations to United States and some of the
other company in the world. There are around 1200 employees working in the U.Soffice of
the company. Infosys is a leader in providing software development services to different
sectors like insurance, banking, manufacturing etc.

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 3.2ANALYSIS OF DATA

A. COMPARATIVE BALANCE SHEET STATEMENT

Comparative Balance Sheet

For The Year 2018-17

Particulars P.V.2018 C.V.2019 Absolute Change Percentage

(In cr.) (in cr.) Change (%)
EQUITYAND LIABILITIES:
Share Capital 1148.00 1148.00 0.00 0.00
Shareholder's Fund 61082.00 68017.00 6935.00 11.35
Non-Current Liabilities
Long Term Borrowings 0.00 0.00 0.00 0.00
Secured Loans 0.00 0.00 0.00 0.00
Unsecured Loans 0.00 0.00 0.00 0.00
Deferred Tax Assets/liabilities (405.00) (346.00) 59.00 14.57
Other Long term Liabilities 62.00 82.00 20.00 32.26
Long Term Trade Payables 0.00 0.00 0.00 0.00
Long Term Provisions 0.00 0.00 0.00 0.00
Total Non-Current Liabilities (A) (343.00) (264.00) 79.00 23.03
Current Liabilities
Trade Payables 623.00 269.00 (354.00) (56.82)
Other Current Liabilities 7225.00 7405.00 180.00 2.49
Short Term Borrowings 0.00 0.00 0.00 0.00
Short Term Provisions 3740.00 4112.00 372.00 9.95
Total Current Liabilities (B) 11588.00 11786.00 198.00 1.71
Total Liabilities (A+B) 72327.00 79539.00 7212.00 9.97

Assets:
Non-Current Assets
Gross Block 14739.00 16240.00 1501.00 10.18
Less:-Accumulated Depreciation 6491.00 7635.00 1144.00 17.62
Less:-Impairment of Assets 0.00 0.00 0.00 0.00
Net Block 8248.00 8605.00 357.00 4.33
LeaseAdjustment Account 0.00 0.00 0.00 0.00
Capital Work-in-progress 934.00 1247.00 313.00 33.51
Intangible Assets Under Development 0.00 0.00 0.00 0.00
Pre-operative ExpensesPending 0.00 0.00 0.00 0.00
Assets In Transit 0.00 0.00 0.00 0.00
Non-Current Investments 11076.00 15334.00 4258.00 38.44
Long Term LoansAnd Advances 555.00 6237.00 5682.00 1023.78
Other Non-Current Assets 422.00 434.00 12.00 2.84
Total Non-Current Assets (A) 26230.00 31857.00 5627.00 21.45
Total Reserve 59925.00 66749.00 6824.00 11.39
Current Assets Loans And Advances
Current Investments 2.00 9643.00 9641.00 4820.50
Inventories 0.00 0.00 0.00 0.00
CashAnd Bank 29176.00 19153.00 (10023.00) (34.35)
Other Current Assets 3735.00 4443.00 708.00 18.96
Short Term LoansAnd Advances 3386.00 3483.00 97.00 2.86
Total Current Assets 46097.00 47682.00 1585.00 3.44
Total Assets (A+B) 72327.00 79539.00 7212.00 9.97

13
 INTERPRETATION:-

1. Liquidity position:- in the above statement as we can see that the current liability
increased by Rs.198 cr. or 1.71% but current assets increase by Rs.1585 cr or3.44%.
so we can say that the liquidity position of the firm is good.
2. Longterm solvency position:- the increase in owner's equity is RS.6935cr. or 11.35%
and there is no any increment in long- term liability. So long term solvency position
has definitely increased.
3. Growth of the firm:- the net worth of the company increased by Rs.6935 cr. or
11.35%.The growth rate is not too much, but definitely has been a growth.

B.
Common Size Balance Sheet

For The Year 2018-19

Particulars P.Y.2018 C.Y.2019 % Of Balance Sheet % Of Balance

{In cr.) (in cr.) Total Sheet Total
2018 2019
EQUITYAND LIABILITIES:
Share Capital 1148.00 1148.00 1.59 1.44
Shareholder's Fund 61082.00 68017.00 84.45 85.51
Non-Current Liabilities
long Term Borrowings 0.00 0.00 0.00 0.00
Secured loans 0.00 0.00 0.00 0.00
Unsecured loans 0.00 0.00 0.00 0.00
Deferred Tax Assets/liabilities (405.00) (346.00) (0.56) (0.44)
Other long term liabilities 62.00 82.00 0.09 0.10
long Term Trade Payables 0.00 0.00 0.00 0.00
long Term Provisions 0.00 0.00 0.00 0.00
Total Non-Current Liabilities (A) (343.00) (264.00) (0.47) (0.33)
Current liabilities
Trade Payables 623.00 269.00 0.86 0.34
Other Current liabilities 7225.00 7405.00 9.99 9.31
Short Term Borrowings 0.00 0.00 0.00 0.00
Short Term Provisions 3740.00 4112.00 5.17 5.17
Total Current liabilities (B) 11588.00 11786.00 16.02 14.82

Total liabilities (A+B) 72327.00 79539.00 100.00 100.00

Assets
Non-Current Assets
Gross Block 14739.00 16240.00 20.38 20.42
less:- Accumulated Depreciation 6491.00 7635.00 8.97 9.60
less:- Impairment of Assets 0.00 0.00 0.00 0.00
Net Block 8248.00 8605.00 11.40 10.82
lease Adjustment Account 0.00 0.00 0.00 0.00
Capital Work-in-progress 934.00 1247.00 1.29 1.57
Intangible Assets Under Development 0.00 0.00 0.00 0.00
Pre-operative ExpensesPending 0.00 0.00 0.00 0.00
Assets In Transit 0.00 0.00 0.00 0.00
Non-Current Investments 11076.00 15334.00 15.31 19.28
long Term loans And Advances 555.00 6237.00 0.77 7.84

14
Other Non-Current Assets 422.00 434.00 0.58 0.55
Total Non-Current Assets (A) 26230.00 31857.00 36.27 40.05
Total Reserve 59925.00 66749.00 82.85 83.92
Current Assets Loans And Advances
Current Investments 2.00 9643.00 0.02 12.12
Inventories 0.00 0.00 0.00 0.00
CashAnd Bank 29176.00 19153.00 40.33 24.08
Other Current Assets 3735.00 4443.00 5.16 5.59
Short Term LoansAnd Advances 3386.00 3483.00 4.68 4.38
Total Current Assets 46097.00 47682.00 63.73 59.95

Total Assets (A+B) 72327.00 79539.00 100.00 100.00

INTERPRETATION:-

Liquidity position:-In the above statement we can see that decrease in current assets of 2019 by
59.95% as compared to 2018 by 63.73%. and the current liabilities also decreased from 16.02%in
2018 to 14.82% in 2019. Sothe liquidity position of the company is not in a stable condition.gug

Growth of the firm: - the net worth of the company increased by Rs.6935 cr. the growth rate
is not too much, but definitely has been a growth.

C.RATIO ANALYSIS

1. Liquidity Ratio :-

Liquidity ratio measure the ability of the firm to meet its short term obligation. Short term is
conventionally viewed as period upto one year. By liquidity we mean the amount of cash or cash
equivalent the firm has on hand and the amount of cash it can arrange in a short period of time. cash
is most liquid asset.

(A) Current Ratio :-

The current ratio is a popular financial ratio used to test a company's liquidity (also referred
to as its current or working capital position) by deriving the proportion of current assets
available to cover current liabilities

Current Ratio = Current Assets/Current liability

Calculation of Current Ratio with Diagram

Year Current Current Current

Assets Liabilities Ratio
Rs.(in cr.) Rs.(in cr.)
2019 47682 11786 4.05
2018 46097 11588 3.98
2017 42752 13715 3.12
2016 39237 10256 3.83
2015 32738 6793 4.82

15
 Current Ratio

2016

2017
• Current Ratio
2018

o 1 2 3 4 5

Interpretation :

Fromtheaboveinformationwecanseethatthecurrentratiofrom 2013 -
2019isinincreasingtrend. Thehigherratiomayresultthat,
thereisagreaterassurancethatcurrentliabilitywillbepaidintime.

(B) Quick Ratio :-

The quick ratio - aka the quick assets ratio or the acid-test ratio - is a liquidity
indicator that further refmes the current ratio by measuring the amount of the
most liquid current assets there are to cover current liabilities

The quick ratio is more conservative than the current ratio because it excludes
inventory and other current assets, which are more difficult to turn into cash.
Therefore, a higher ratio means a more liquid current position.

Quick Ratio = Quick Assets/Quick Liabilities

Calculation of Quick Ratio with Diagram

Year Quick Quick Quick

Assets Liabilities Ratio
Rs.(in cr.) Rs.(in cr.)
2019 44199 11786 3.75
2018 42711 11588 3.69
2017 38949 13715 2.84
2016 36984 10256 3.61
2015 30799 6793 4.53 ..~---
..------ ....----.--------------

Quick Ratio

5
4 V

3 V
• Quick
2 V Ratio

1
0
t:l
2019
-a
2018 2017
I
2016 -
2015
/'

16
Interpretation:

The desirable quick ratio is 1:1. A firm must have at least one rupee to pay one rupee of its
quick liability. From the above statement we can see that from 2013- 2019 company able to
maintain the desirable quick ratio. So quick ratio should be used wisely.

2. Solvency Ratio :-

The solvency ratio is only one of the measure use to determine whether a company can stay
solvent. Other solvency ratio includes debt-equity ratio total debt to total assets and interest
I

coverage ratio.

(A) Debt-Equity Ratio :-

The debt-equity ratio is another leverage ratio that compares a company's total
liabilities to its total shareholders' equity. This is a measurement of how much
suppliers, lenders, creditors and obligors have committed to the company versus what
the shareholders have committed.

Similar to the debt ratio, a lower percentage means that a company is using less
leverage and has a stronger equity position.

Debt-Equity Ratio = Long term Debt/Proprietor's Fund

Calculation of Debt-Equity Ratio with Diagram

Year Long term Proprietor's Debt-

Debt Fund Equity
Rs.(in cr.) Rs.(in cr.) Ratio
2019 82 68017 0.001
2018 62 61082 0.001
2017 30 48068 0.0006
2016 364 42092 0.008
2015 120 36059 0.003

Debt-Equity Ratio
0.01 ~'---------------'--
0.008 +-----------
0.006 +------------
0.004 +----------- • Debt-EquityRatio

0.002

o +---.--.-".--r-----..-
+-------------

2019 2018 2017 2016 2015

17
Interpretation:

The ideal debt equity ratio is 2:1. From the above statement we can see that from 2013-
2019 company try to maintain minimum or low debt- equity ratio; it implies that company
too much depend on own fund and also try to maintain higher margin of safety for outside
suppliers.

(8) Proprietary Ratio :-

The Proprietary Ratio (also known as the equity ratio) is the proportion of
shareholder's fund to total assets and as such provides a rough estimate of the amount
of capitalization currently used to support a business. Proprietary Ratio is a general
indicator of financial stability. It should be used in conjunction with the net profit
ratio and an examination of the cash flow statement to gain a better overview of the
Ofinancial circumstances of a business. These additional measures reveal the ability of
a business to earn a profit and generate cash flow respectively.
Proprietary Ratio = Proprietors fund/Total Assets

Calculation of Proprietary Ratio with Diagram

Year Proprietor's Total Proprietary

Fund Assets Ratio
Rs.(in cr.) Rs.(in cr.)
2019 68017 79539 0.86
2018 61082 72327 0.84
2017 48068 61380 0.78
2016 42092 52170 0.81
2015 36059 42650 0.85

Proprietary Ratio
0.88
0.86 t-- r---------------------------------
0.84 I- I---

0.82 l- I---
I
0.8 t- ---- 1--"- • Proprietary Ratio

0.78 i-- r-'""-- I---

0.76 i-- 1-----."-- 1--'--- I-~-

0.74 i--
2019 2018 2017 2016 2015

Interpretation:

The standard Proprietary Ratio is 0.67: 1. If the ratio is high this indicates that a company has
a sufficient amount of equity to support the function of the business. Conversely a low ratio
indicates that a business may be use of too much debt or trade payables rather than equity to
support operations. The Proprietary Ratio ofINFOSYS LTD. is looking good.

18
3. Activity Ratio:-

Activity ratios are accounting ratios that measures a firm ability to convert different
accounts within its balance sheets into cash or sales. Activity ratios are use to measure the
relative efficiency of a firm based on its use of its assets, leverage or other such balance
sheet.

Working Capital Turnover Ratio:-

This is the ratio between turn over (sales) and working capital (current assets less
current liabilities). This ratio shows the extend to which a business is using a
working capital to generate sales.
Working Capital Turnover Ratio = Sales/Working Capital

Calculation of Working Capital Turnover Ratio with Diagram

Year Sales Working Working Capital

Rs.(in cr.) Capital Turnover Ratio
Rs.(in cr.)
2019 59289 35896 1.65
2018 53983 34509 1.56
2017 47300 29037 1.63
2016 44341 28981 1.53
2015 36765 25945 1.42 -----

Working Capital Turnover Ratio

1.7 -
1.65 f- ,------------------------
1.6 f- 1------------
1.55 -f- ----- ------

1.5 ~---
• Working Capital Turnover Ratio
1.45 r-
1.4 f- -
1.35 f- -
1.3 f- '----

2019 2018 2017 2016 2015

Interpretation:

Fromtheabovestatementwecanfindthattheworkingcapitalturnoverratioof 2013 - 2019 is

1.42, 1.53, 1.63, 1.56 and 1.65 respectively. We can see that working capital turnover
ratio is in increasing trend.

(A) Fixed Assets Turnover Ratio:-

Fixed assets turnover ratio is an activity ratio that measures how successfully a company
is utilizing its fixed assets in generating revenue. It calculates the rupees in revenue
earned per one rupee of investment in fixed assets. A higher fixed assets turnover ratio is
generally good.
Fixed Assets Turnover Ratio = Sales/Fixed Assets

19
 Calculation of Fixed Assets Turnover Ratio with Diagram

Year Sales Fixed Fixed Assets

Rs. (in cr.) Assets Turnover
Rs. (in cr.) Ratio
2019 59289 8605 6.89
2018 53983 8248 6.54
2017 47300 7347 6.44
2016 44341 5732 7.74
2015 36765 4453 8.26

Fixed Assets Turnover Ratio

9 .------------------------------------
8 +-------------------------------
7
6
5
4 • Fixed Assets TurnoverRatio
3
2
1
o
2019 2018 2017 2016 2015

Interpretation:

In 2013 fixed assets turnover ratio is high but from 2014- 2019 this ratio going to decrease
respectively. Thissituation indicated under trading, hence company must have to improve
this ratio wisely.

4. Profitability Ratio:-

Profitability means the returns achieved through the efforts of the

management on funds invested by the owners of a business. Profitability ratios
measure managements overall efficiency as shown by the returns generated
on sales and investments.

(A) Gross Profit Ratio:-

The gross Profit Ratio shows the proportion of profit generated by the sale of products or
services before selling and administrative expenses. In essence, the ratio reveals the
ability of a business to create sellable products in a cost effective manner. The ratio is of
some importance especially when tracked on a trend line, to see if a business can
continue to provide products to the market place for which customers are willing to pay a
reasonable price.
Gross Profit Ratio = Gross Profit/Sales*100

20
 Calculation of Gross Profit Ratio with Diagram

Year Gross Profit Sales Gross

Rs. (in cr.) Rs. (in cr.) ProfitRatio (
In %)
2019 17207 59289 29.02
2018 15664 53983 29.02
2017 13970 47300 29.53
2016 12533 44341 28.27
2015 11016 36765 29.96

Gross Profit Ratio ( In %)

30.5 ..,---------------------
30 +------------------
29.5 i-----------------------,
29
28.5 • Gross ProfitRatio ( In %
28
27.5
27
2019 2018 2017 2016 2015

Interpretation:

The gross profit ratio of the company is high in 2013 and in 2014 it decrease and after 2014
- 2019 its increase and look stable. It indicated improvement in performance of the
company.

(8) Net Profit Ratio:-

The ratio indicates the ratio of the net profit to net sales. The amount left out of sales for the
proprietors' fund may be known from the ratio. The ratio is very helpful for measuring the
profitability of the business. It is also helpful to measure the operational efficiency of the
management of the concern. The more the ratio, greater is the profitability of the business.
It's expressed as:

Net Profit Ratio = Net Profit/Sales*100

Calculation of Net Profit Ratio with Diagram

Year Net Profit Sales Net Profit

Rs. (in cr.) Rs. (in cr.) Ratio (In %)
2019 16808 59289 28.35
2018 15443 53983 28.61
2017 12406 47300 26.23
2016 11119 44341 25.08
2015 9585 36765 26.07

21
 Net Profit Ratio ( In % )

• Net Profit Ratio ( In % )

2019 2018 2017 2016 2015

Interpretation:

Fromthe above statement we can see that in 2013 company net profit ratio at its minimum
level but from 2014 - 2019 there is a healthy increment in net profit ratio. It indicate that
company run in a right direction.

22
 CHAPTER-4

CONCLUSION AND SUGGESTIONS

4.1 CONCLUSION

Infosys referred as IT giant in India. Infosys has been increasingly

growing since the beginning. It is still expected to record a sharper
increase in next decade. IT is a prime economic back bone of India
and having a huge employment potential.

Infosys contribute about 8.36% of the GDP of the country and 8.89%
to the tax kitty of the Indian government. Infosys an enterprise of
approx 1,22,468 employees. It helps to grow and meet the needs of
millions and millions of Indians who are determined to achieve a
higher standard of living.

The IT seems to be a productive to boost the Indian economy and

now it becomes necessary to generate employment as whole. Thus
as one of the main product which gearing up and additional to
national income. It playing a domestic role in the social, economic
cultural and political life of the country.

However, the last five year performance were ups and down but its
contribution was phenomenal to the economy as a whole. The
Infosys ltd. Need not be paradox adoption in technological views
and new innovation should take place so overall performance can
be improved.

4.2. RECOMMENDATION:

1. By absorbing the financial performance of the company Infosys limited.

We can say that the company is running in profit from the financial year
2013 to 2019 the net profit of the company increase from 9585(cr.) in
march 2013 to 16808(cr.) in march 2019. It will be suggestedthat the
company to maintain its net profit ratio so, that it will help to increase
there profit.

23
 2. The company's current ratio is decreased in the year 2013 to 2019 by
0.77% and quick ratio in the year 2013 to 2019 by 0.78% respectively.
Hence, It will be suggested that the company has to increase there
current and quick ratio so, there liquidity position can be stable.
3. The company maintain low debt-equity ratio it indicates that the
company too much depends on its own capital hence, It will be
suggested that the company should maintain a proportionate capital
structure by proper debt-equity finance.
4. In order to maintain a proper working capital management, maintain
cash and bank balance must be available in fund of the company. After
observation, It is found the liquidity position is some how not sufficient.
5. The performance of assets appreciation decreased from 8.26% to 6.89%
between the year 2013 to 2019. It would be recommended that the ratio
however must be increased so, that the multiple creation of assets can
be increased.
6. At last but not the least, it will be suggested that the company have to
think about such above problems, then there will be a increments in the
future periods.

BIBLIOGRAPHY
REFERENCE:

(I) MOHAMMED HANIF, AMITABHA MUKHERJEE,FINANCIAL

ACCOUNTING III, TATA MCGRAWL-HILL PUBLISHINGCOMPANY
LIMITED 2003.

(II) AMITABHA BASU FINANCIALACCOUNTING III, TEE DEEPUBLICATIONS

(P) LTD, 2011.

(III) MAHADEV DEY,NIRMAL KUMAR ourrx, FINANCIAL ACCOUNTING III,

BHATTACHARJEEBROTHERSPUBLICATIONS,2012.
WESITES:
www.wikipedia.com
www.infosysltd.in
www.ndtv.in
www.economicstimes.com

24
--------------------------------------------------------------------------------------

BALANCE SHEET OF INFOSVS LTD

Parameters MAR'19 MAR'18 MAR'17 MAR'16 MAR'15

(~ Cr.) (~ Cr.) (~ Cr.) (~ Cr.) (~ Cr.)

EQUITYAND LIABILITIES

Share Capital 1,148.00 1,148.00 574.00 286.00 287.00

Share Warrants & Outstandings

Shareholder's Funds 68,017.00 61,082.00 48,068.00 42,092.00 36,059.00

Long-Term Borrowings 0.00 0.00 0.00 0.00 0.00

Secured Loans 0.00 0.00 0.00 0.00 0.00

Unsecured Loans 0.00 0.00 0.00 0.00 0.00

Deferred Tax Assets/ Liabilities -346.00 -405.00 -433.00 -542.00 -322.00

Other LongTerm Liabilities 82.00 62.00 30.00 364.00 120.00

LongTerm Trade Payables 0.00 0.00 0.00 0.00 0.00

LongTerm Provisions 0.00 0.00 0.00 0.00 0.00

Total Non-Current Liabilities -264.00 -343.00 -403.00 -178.00 -202.00

Trade Payables 269.00 623.00 124.00 68.00 178.00

Current Liabilities

Other Current Liabilities 7,405.00 7,225.00 5,546.00 4,071.00 2,827.00

Short Term Borrowings 0.00 0.00 0.00 0.00 0.00

Short Term Provisions 4,112.00 3,740.00 8,045.00 6,117.00 3,788.00

Total Current Liabilities 11,786.00 11,588.00 13,715.00 10,256.00 6,793.00

25
Total Liabilities 79,539.00 72,327.00 61,380.00 52,170.00 42,650.00

Non-Current Assets 0.00 0.00 0.00 0.00 0.00

ASSETS

Gross Block 16,240.00 14,739.00 12,869.00 10,420.00 8,060.00

Less:Accumulated Depreciation 7,635.00 6,491.00 5,522.00 4,688.00 3,607.00

Less:Impairment of Assets 0.00 0.00 0.00 0.00 0.00

Net Block 8,605.00 8,248.00 7,347.00 5,732.00 4,453.00

LeaseAdjustment Alc 0.00 0.00 0.00 0.00 0.00

Capital Work in Progress 1,247.00 934.00 769.00 954.00 1,135.00

Intangible assets under development 0.00 0.00 0.00 0.00 0.00

Pre-operative Expensespending 0.00 0.00 0.00 0.00 0.00

Assets in transit 0.00 0.00 0.00 0.00 0.00

Non Current Investments 15,334.00 11,076.00 6,108.00 3,968.00 2,764.00

LongTerm Loans & Advances 6,237.00 5,550.00 4,371.00 2,269.00 1,552.00

Other Non Current Assets 434.00 422.00 33.00 10.00 8.00

Total Non-Current Assets 31,857.00 26,230.00 18,628.00 12,933.00 9,912.00

Total Reserves 66,749.00 59,925.00 47,492.00 41,806.00 35,772.00

Current Assets Loans & Advances

Currents Investments 9,643.00 2.00 749.00 2,749.00 1,580.00

Inventories 0.00 0.00 0.00 0.00 0.00

26
Cash and Bank 19,153.00 29,176.00 27,722.00 24,100.00 20,401.00

Other Current Assets 4,443.00 3,735.00 1,851.00 2,799.00 2,453.00

Short Term Loansand Advances 3,483.00 3,386.00 3,803.00 2,253.00 1,939.00

Total Current Assets 47,682.00 46,097.00 42,752.00 39,237.00 32,738.00

Net Current Assets (Including Current

35,896.00 34,509.00 29,037.00 28,981.00 25,945.00
Investments)

Total Current Assets Excluding Current

38,039.00 46,095.00 42,003.00 36,488.00 31,158.00
Investments

Miscellaneous Expensesnot written off 0.00 0.00 0.00 0.00 0.00

Total Assets 79,539.00 72,327.00 61,380.00 52,170.00 42,650.00

Contingent Liabilities 1,902.00 188.00 189.00 193.00 554.00

Total Debt 0.00 0.00 0.00 0.00 0.00

Book Value (in ~) 295.72 0.00 418.69 735.87 628.21

Adjusted Book Value (in ~) 295.72 0.00 209.35 183.97 157.05

PROFIT & LOSS ACCOUNT OF INFOSYS LTD

Parameters MAR'19 MAR'18 MAR'17 MAR'16 MAR'lS

(~Cr.) (~Cr.) (~Cr.) (~Cr.) (~Cr.)

Operating Income 59,289.00 53,983.00 47,300.00 44,341.00 36,765.00

Less:Inter divisional transfers 0.00 0.00 0.00 0.00 0.00

Less:Excise 0.00 0.00 0.00 0.00 0.00

27
Net Sales 59,289.00 53,983.00 47,300.00 44,341.00 36,765.00

EXPENDITURE:

StockAdjustments 0.00 0.00 0.00 0.00 0.00

Raw Materials Consumed 0.00 0.00 0.00 0.00 0.00

Power & Fuel Cost 180.00 179.00 185.00 181.00 180.00

Employee Cost 30,944.00 28,207.00 25,115.00 24,350.00 19,932.00

Cost of Software developments 6,044.00 5,466.00 3,888.00 3,516.00 2,465.00

Operating Expenses 399.00 221.00 1,564.00 1,414.00 1,431.00

General and Administration

3,884.00 3,666.00 1,877.00 1,916.00 1,464.00
Expenses

Selling and Marketing Expenses 276.00 229.00 94.00 77.00 151.00

Miscellaneous Expenses 355.00 351.00 607.00 354.00 126.00

ExpensesCapitalised 0.00 0.00 0.00 0.00 0.00

Total Expenditure 42,082.00 38,319.00 33,330.00 31,808.00 25,749.00

PBIOT (Exe! 01) 17,207.00 15,664.00 13,970.00 12,533.00 11,016.00

Other Income 3,062.00 3,051.00 3,337.00 2,576.00 2,217.00

Operating Profit 20,269.00 18,715.00 17,307.00 15,109.00 13,233.00

Interest 0.00 0.00 8.00 6.00 3.00

PBDT 20,269.00 18,715.00 17,299.00 15,103.00 13,230.00

Depreciation 1,331.00 1,115.00 913.00 1,101.00 956.00

28
Profit Before Taxation &
18,938.00 17,600.00 16,386.00 14,002.00 12,274.00
Exceptional Items

Exceptional Income / Expenses 0.00 0.00 412.00 0.00 83.00

Profit Before Tax 18,938.00 17,600.00 16,798.00 14,002.00 12,357.00

Provision for Tax 5,120.00 4,907.00 4,634.00 3,808.00 3,241.00

PAT 13,818.00 12,693.00 12,164.00 10,194.00 9,116.00

Extraordinary Items 0.00 0.00 0.00 0.00 0.00

Adj to Profit After Tax 0.00 0.00 -42.00 69.00 0.00

Profit Balance B/F 44,698.00 40,065.00 30,392.00 25,383.00 19,993.00

Appropriations 58,516.00 52,758.00 42,514.00 35,646.00 29,109.00

Equity Dividend (%) 515.00 485.00 1,190.00 1,260.00 840.00

EarningsPer Share (in ~) 60.18 55.28 105.96 178.22 158.82

Book Value (in ~) 295.72 266.00 418.69 735.87 628.21

29