Ratio Analysis

Liquidity Ratios
1) Current ratio= current asset/Current liability

2013 2014 2015

Current Ratio 0.83 0.82 0.86
The current ratio measures whether or not a firm has enough resources to meet its short-term and
long-term obligations. If current liabilities exceed current assets (the current ratio is below 1), then
the company may have problems meeting its short-term obligations. Over the years from 2013 to
2015 the current ratios has been increased by 0.03 that is from 0.83 to 0.86.this indicates that the ACC
ltd has problems in working capital management.

2) Quick ratio = (Current assets-Inventories)/Current Liability

2013 2014 2015

Quick Ratio 0.57 0.54 0.59
A firm with a quick ratio of 1:1 is considered to have sufficient liquidity and it is fit enough to pay off
all the liabilities on time. The higher the ratio, the more financially secure a company is in the short
term. A common rule of thumb is that companies with a quick ratio of greater than 1.0 are sufficiently
able to meet their short-term liabilities. In this case, the quick ratio in the year 2015 is higher when
compared to the other two years by 0.02 and 0.05 but less than 1.

3) Absolute Liquid Ratio = (cash equivalent+ marketable)/Current Liability

2013 2014 2015

Absolute Liquid Ratio 0.70 0.43 0.36
The cash ratio or absolute liquid ratio measures a firm's ability to pay off its current liabilities with only
cash and cash equivalents. Here, over the years the liquidity ratio is decreasing from 0.70 to 0.36. The
company has problems in paying off its liabilities with only cash and cash equivalents.

SOLVENCY RATIO

4) Debt to asset ratio= total debt/total asset

2013 2014 2015

Debt to asset ratio 0.35 0.35 0.342
The debt to total assets ratio is an indicator of financial leverage. It tells you the percentage of total
assets that were financed by creditors, liabilities, debt. In the year 2013 and 2014, the ratios were the
same, that is, 0.35%. but in the year 2015 it decreased to 0.342%. A ratio of 0.5 indicates that half of
the total assets of the company are financed by the liabilities. In other words, the debt is only 50% of
the total assets. A lower value of the ratio is better than a higher number. A lower ratio signals a stable
company with a lower proportion of debt.
5) Debt to equity ratio = total debt/ total equity

2013 2014 2015

Debt to equity ratio 0.55 0.538 0.521
A lower debt to equity ratio usually implies a more financially stable business. Companies with a higher
debt to equity ratio are considered more risky to creditors and investors than companies with a lower
ratio. In the year 2015 the debt to equity ratio of the company is 0.521%. since its more than the
standard ratio of 0.5% the company is considered to be more riskier to its creditors and investors.

6) Debt to capital ratio = Debt/ (Shareholders equity + debt)

2013 2014 2015

Debt to capital ratio 0.35 0.35 0.342
The debt-to-capital ratio gives analysts and investors a better idea of a company's financial structure
and whether or not the company is a suitable investment. The higher the debt-to-capital ratio, the
riskier the company. In the year 2013 and 2014 the ratios were the same, that is, 0.35% but in the year
2015 the debt to capital ratio decreased to 0.342%.

Profitability ratio
8) Gross profit ratio = Gross profit/ net sales

2013 2014 2015

Gross profit ratio 0.0936 0.0741 0.0741
Gross profit is very important for any business. It should be sufficient to cover all expenses and provide
for profit. There is no norm or standard to interpret gross profit ratio (GP ratio). Generally, a higher
ratio is considered better. The gross profit has decreased from the year 2013 to 2014, that is, from
0.0936% to 0.0741% and in the year 2015 it is 0.0741%.

9) Operating profit ratio = operating income/ net sales

2013 2014 2015

Operating profit ratio 0.15 0.13 0.13
The operating profit ratio is a key indicator for investors and creditors to see how business is
supporting their operations. If companies can make enough money from their operations to support
the business, the company is usually considered more stable. A higher operating profit is more
favourable compared with a lower ratio. The operating profit ratio has decreased from the year 2013
to 2014 by 0.02% and in the year 2015 it is 0.13% making the company not very stable in making
money from their operations.

10) Profit Before Interest And Tax Ratio

2013 2014 2015

Cash Profit Ratio 14.62 14.32 11.76

EBIT measures the profit a company generates from its operations, making it synonymous with
"operating profit." By ignoring tax and interest expenses, it focuses solely on a company's ability to
generate earnings from operations, ignoring variables such as the tax burden and capital structure.
The EBIT ratio is been decreasing from the year 2013 to 2015, that is from 4.62% to 11.76%.

11) Net profit ratio = net profit after tax/ net sales

2013 2014 2015

Net profit ratio 0.1 0.1 0.0498
Net profit (NP) ratio is a useful tool to measure the overall profitability of the business. A high ratio
indicates the efficient management of the affairs of business. There is no norm to interpret this ratio.
To see whether the business is constantly improving its profitability or not, the analyst should compare
the ratio with the previous years ratio. The net profit ratio has been decreased to 0.0498% in the year
2015 as when compared to 2014 and 2013 where it was 0.1%.

12) Return on asset ratio=annual net income/average total assets

2013 2014 2015

Return on asset ratio 11.03 10.84 21.68
It measures efficiency of the business in using its assets to generate net income. The higher values of
return on assets show that business is more profitable. In the year 2014, the return on assets
decreased as when compared to the year 2013 from 11.03% to 10.84%. in the year 2015, it has
increased to 21.68%

13) Return on equity ratio=net income/ stockholders equity

2013 2014 2015

Return on equity ratio 16.19 14.63 11.81
Return on equity measures how efficiently a firm can use the money from shareholders to generate
profits and grow the company. Investors want to see a high return on equity ratio because this
indicates that the company is using its investors' funds effectively. Higher ratios are almost always
better than lower ratios. This ratio is been decreasing over the year from 16.19 % to 11.81% thus
showing that the company is not effectively using its investors funds.

14) Return On Capital Employed =

2013 2014 2015

Return On Capital 16.19 14.63 11.81
Employed
ROCE is a profitability ratio that measures how efficiently a company can generate profits from its
capital employed by comparing net operating profit to capital employed. ROCE is a long-term
profitability ratio because it shows how effectively assets are performing while taking into
consideration long-term financing.

Financial leverage ratio

15) Total debt to total asset ratio=short term debt + long term debt /total assets
 2013 2014 2015
Total debt to total 0.35 0.35 0.34
asset ratio
If this ratio is >0.5, it is considered that the company is highly leveraged i.e. more than 50% assets are
from borrowings either short term or long term. A lower debt ratio usually implies a more stable
business with the potential of longevity because a company with lower ratio also has lower overall
debt. In the year 2013 and 2014, the companys debt to assets ratio is 0.35 and it decreased to 0.34
showing that the company is highly leveraged

16) Interest Coverage Ratio = Operating Income / Interest Expense

2013 2014 2015

Interest Coverage 24.49 14.53 15.39
Ratio
The interest coverage ratio is a financial ratio that measures a companys ability to make interest
payments on its debt in a timely manner. If the computation is less than 1, it means the company isnt
making enough money to pay its interest payments. If the coverage equation equals 1, it means the
company makes just enough money to pay its interest. If the coverage measurement is above 1, it
means that the company is making more than enough money to pay its interest obligations. In this
company the ratio has been drastically decreased from the year 2013 to 2014 from 24.49% to 14.53%
and in the year 2015 it is 15.39%.

Management Efficiency Ratios

17) Inventory Turnover Ratio

2013 2014 2015

Inventory Turnover 11.13 10.43 11.13
Ratio
Inventory turnover is a measure of how efficiently a company can control its merchandise, so it is
important to have a high turn. The inventory turnover ratio is an efficiency ratio that shows how
effectively inventory is managed by comparing cost of goods sold with average inventory for a period.
In the year 2015, this ratio has been increased from 10.43 to 11.13

18) Debtors Turnover Ratio

2013 2014 2015

Debtors Turnover Ratio 26.36 29.06 31.92
This ratio measures a business' ability to efficiently collect its receivables. Higher ratios mean that
companies are collecting their receivables more frequently throughout the year. Accounts receivable
turnover also is an indication of the quality of credit sales and receivables. A company with a higher
ratio shows that credit sales are more likely to be collected than a company with a lower ratio. In the
year 2015, the debtors turnover ratio is 31.13 being the highest which means that credit sales are
more likely to be collected.
19) Investments Turnover Ratio

2013 2014 2015

Investments Turnover 11.13 10.43 11.13
Ratio
A high turnover ratio means the manager is buying and selling stocks on a regular basis, while a low
turnover means the fund holds its investments for a longer period of time. Managers with higher
turnover rates usually have more aggressive investing strategies. the year 2015, this ratio has been
increased from 10.43 to 11.13.

20) Fixed Assets Turnover Ratio

2013 2014 2015

Fixed Assets Turnover 1.07 1.06 1.03
Ratio
This ratio measures the efficiency with which a company uses its fixed assets to generate its sales
revenue. a high fixed assets turnover ratio indicates better utilization of fixed assets and a low ratio
means inefficient or under-utilization of fixed assets. In the years from 2013 to 2015 the fixed assets
turnover ratios is decreasing from 1.07 to 1.

21) Total Assets Turnover Ratio

2013 2014 2015

Total Assets Turnover 1.43 1.43 1.40
Ratio

22) Asset Turnover Ratio

2013 2014 2015

Asset Turnover Ratio 1.46 1.46 1.42
This ratio measures how efficiently a firm uses its assets to generate sales, so a higher ratio is always
more favorable. Higher turnover ratios mean the company is using its assets more efficiently. Lower
ratios mean that the company isn't using its assets efficiently and most likely have management or
production problems. in the year 2013 and 2014, the asset turnover ratio is 1.43 and in the year 2015
this ratio has decreased to 1.43 showing that the company is not using the assets efficiently.

Cash Flow Indicator Ratios

2013 2014 2015
Dividend Pay-out Ratio Net Profit 60.19 65.20 65.37

Dividend Pay-out Ratio Cash Profit 39.25 43.80 30.72

Earning Retention Ratio 39.09 34.17 48.09

Cash Earning Retention Ratio 60.44 55.92 72.62

 CORPORATE GOVERNANCE
OVERVIEW OF INFOSYS

Infosys Ltd. was incorporated on 2 July 1981 as Infosys Consultants Pvt. Ltd. in Mumbai, Maharashtra.
The name of the company was changed to Infosys Technologies Pvt. Ltd. on 21 April 1992. The
company converted into a public limited company and changed the name to Infosys Technologies Ltd.
on 2 June 1992. The name was further changed to Infosys Ltd. on 29 June 2011. Equity shares of the
company were listed on the Bombay Stock Exchange (BSE) on 14 June 1993 and the National Stock
Exchange (NSE) on 3 November 1994. The registered office of the company is located at Electronics
City, Hosur Road in Bangalore, Karnataka.

Infosys started its operations in 1981 as a private limited company and was promoted by a team of
seven software professionals namely N R Narayan Murthy, N S Raghavan, Nandan Nilekini, S
Gopalkrishnan, K Dinesh and S D Shibulal. Later on it became a public limited company and completed
its initial public offering (IPO) of equity shares in India in 1993 and its initial public offering of ADSs in
the United States in 1999. It became the first Indian software company to be added to the NASDAQ--
100 index. It has received Capability Maturity Model level (CMM-5) status which indicates that the
company has a high quality of organisation management system and processes and methodology.

The company provides software services like application development & maintenance, consulting
services & package implementation, infrastructure management, systems integration, product
engineering and Business Processing Outsourcing (BPO) services. These services are provided to
various clients across industry segments like banking, financial services, insurance, manufacturing,
telecom, retail, transportation and others. Banking & financial services segment (BFSI) is the largest
industry vertical followed by telecom, manufacturing and retail. The company has developed a core
banking application, Finacle, which caters to large and medium sized banks in South Asia, parts of
Africa, Europe and India.

Exports account for 93 per cent of the company's revenues. The US is the largest export destination
of the company followed by Europe.

Overview on ACC (Associated Cement Company)

In a historic merger of 10 cement companies, ACC Ltd. (formerly known as Associated Cement
Companies) was incorporated on 1 August 1936. These companies belonged to four prominent
business groups - Tatas, Khataus, Killick Nixon and F E Dinshaw groups. The company was owned by
the Tata group during the period 1936-2000. Between 1999 and 2000, the Tata group sold all 14.45
per cent of its shareholding in ACC in three stages to subsidiary companies of Gujarat Ambuja Cements
Ltd. (later called Ambuja Cement Ltd.), who then became the largest single shareholder in A C C Ltd.

The company is engaged in the manufacture of cement and ready-mixed concrete. They manufacture
a range of portland cement for general construction and special applications.

The company has taken various initiatives towards innovative concepts which include usage of waste
material to produce cement, induction of pollution control equipment, commercial manufacture of
ready--mix concrete and introduction of customer help centres. It has also shown interest in the fields
of Sustainable Development & Corporate Social Responsibility.

CORPORATE GOVERNANCE

Corporate governance is the system of rules and regulations and processes by which a company is
governed and controlled. Corporate governance essentially involves balanceing of all the stakeholders
of the company such as shareholders, customers, suppliers and other individuals or group who have
a interest in the company.

The company has to disclose the following details in the annual report of the company.

Format of Quarterly Compliance Report on Corporate Governance

Name of the Company: Quarter ending on:

Annexure I B

Particulars Clause of Listing agreement

I. Board of Directors 491
(A) Composition of Board 49 (IA)
(B) Non-executive Directors compensation & disclosures 49 (IB)
(C) Other provisions as to Board and Committees 49 (IC)
(D) Code of Conduct 49 (ID)
II. Audit Committee 49 (II)
(A) Qualified & Independent Audit Committee 49 (IIA)
(B) Meeting of Audit Committee 49 (IIB)
(C) Powers of Audit Committee 49 (IIC)
(D) Role of Audit Committee 49 II(D)
(E) Review of Information by Audit Committee 49 (IIE)
III. Subsidiary Companies 49 (III)
IV. Disclosures 49 (IV)
(A) Basis of related party transactions 49 (IV A)
(B) Disclosure of Accounting Treatment 49 (IV B)
(C) Board Disclosures 49 (IV C)
(D) Proceeds from public issues, rights issues, preferential issues etc. 49 (IV D)
(E) Remuneration of Directors 49 (IV E)
(F) Management 49 (IV F)
(G) Shareholders 49 (IV G)
V. CEO/CFO Certification 49 (V)
VI. Report on Corporate Governance 49 (VI)
VII. Compliance 49 (VII)

ANAYASIS OF CORPORATE GOVERNANCE WITH REGARD TO SPECIFIC COMPONENTS-

A) REVENUE RECOGNITION-
 Revenue recognition is an accounting principal under GAAP that determines the specific conditions
under which revenue is recognized or accounted for. Generally revenue is recognized only when a
specific event has occurred.

Revenue recognition for ACC Ltd is done under the three respective heads:

Sale of goods-

Revenue is recognized when the significant risks and rewards of ownership of the goods have been
passed to the buyer. Sales are disclosed net of sales tax / value added tax (VAT), trade discounts and
returns, as applicable. Sales exclude self-consumption of cement. Excise duties deducted from
turnover (gross) are the amounts that are included in the amount of turnover (gross) and not the
entire amount of liability that arose during the year.

Income from services-

Revenue from services is recognized (net of service tax, as applicable) pro-rata over the period of the
contract as and when services are rendered.

Interest and Dividend Income-

Interest income is recognized on a time proportion basis taking into account the amount outstanding
and the rate applicable. Dividend income is recognized when the Companys right to receive dividend
is established by the Balance Sheet date.

B) Business Concentration-

The company operates only in one segment which is developing and Mining of coal mines. This
segment is regarded as the primary segment for business for ACC Ltd. ACC Ltd has not yet started any
commercial activities because of which it doesnt have any geographical segment as such. ACC Ltd has
disclosed in the report that the two major segments the company plays in are Cement and Ready mix
concrete. Cement comprises around 90% of the company sales and ready mix has a share of 10%
approximately taken from the statements given in the annual report.

C) FIXED ASSETS AND DEPRICIATION-

Tangible assets:

Depreciation on fixed assets, other than Captive Power Plant related assets (CPP assets), is provided
using the straight-line method and on CPP assets using the written-down value method based on their
respective estimated useful lives. Estimated useful lives other than CPP assets of assets are
determined based on technical parameters / assessment. Depreciation is calculated on a pro-rata
basis from the date of installation till the date the assets are sold or disposed off. It is disclosed that
the useful life of than Captive Power Plant related assets is 20 years.

D) Intangible assets and amortization-

Intangible assets are stated at cost of acquisition or construction less accumulated amortization and
impairment losses if any. Intangible assets are amortized over their estimated useful economic life.
Computer Software cost is amortized over a period of three years using straight-line method.Gains
or losses arising from derecognition of intangible assets are recognized in the statement of P/L when
the asset is derecognized.
E) Inventories

Inventories are valued after providing for obsolescence, as follows.

i) Raw Materials, Stores & Spare parts, Packing Material and Fuels Lower of cost and net realizable
value. However, materials and other items held for use in the Production of inventories is not written
down below cost if the finished products in which they will be incorporated are expected to be sold
at or above cost. Cost is determined on a weighted average basis.
ii) Work-i n-progress, finished goods and Stock-i n-Trade Lower of cost and net realizable value. Cost
includes direct materials and labor and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty. Cost of Stock-in-Trade includes cost of
purchase and other cost incurred in bringing the inventories to the present location and condition.
Cost is determined on a weighted average basis.Net realizable value is the estimated selling price in
the ordinary course of business, less estimated costs of completion and estimated costs necessary to
make the sale.

F) Employee benefit-

Defined Contribution Plans-

Amount recognized and included in Note 24 Contributions to the Provident Funds of Statement of
Profit and Loss 18.28 Core (Previous Year - 1482 Core).

Defined Benefit Plans As per actuarial valuation on December 31, 2015

The Company has a defined benefit gratuity, additional gratuity, post-retirement medical benefit plans
and Trust managed provident fund plan as given below:

i. Every employee who has completed minimum five years of service is entitled to gratuity at 15 days
salary for each completed year of services. The scheme is funded with insurance companies in the
form of qualifying insurance policies.

ii. Every employee who has joined before 1st December2005 and separates from service of the
Company on Superannuation and on medical grounds is entitled to additional gratuity. The scheme is
Non Funded.

iii. Benefits under Post Employment Medical Benefit Plans are payable for actual domiciliary treatment
/hospitalization for employees and their specified relatives. The scheme is Non Funded.

iv. Provident fund for certain eligible employees is managed by the Company through trust The
Provident Fund of ACC Ltd., in line with the Provident Fund and Miscellaneous Provision Act, 1952.
The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution
by the employer and employee together with the interest accumulated thereon are payable to
employees at the time of separation from the Company or retirement, whichever is earlier. The
benefits vests immediately on rendering of the services by the employee. The minimum interest rate
payable by the Trust to the beneficiaries every year is being notified by the Government. The Company
has an obligation to make good the shortfall, if any, between the return from the investments of the
Trust and the notified interest rate.

G) Taxation and provision-

RS.52,23,427 (Previous year - Nil) provision for current tax is made as at 31st December, 2015. Tax
expense comprises of Current, Deferred tax .Current Income tax is measured at the amount expected
to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred Income Taxes
reflect the impact of current timing differences between taxable income & accounting income for the
year & reversal of timing differences of earlier years. ACC Ltd tax expenses has raised from 1.63crores
to 192.04 crores and the reason behind this are
(i) In the previous year, on completion of assessments and review of certain tax positions, provision
for tax of 309.23Crore and provision for interest on income tax of 69.37 Crore had to be written back,
whereas no such write backs are necessary in 2015.
(ii) In the current year, an additional depreciation charge of 173.14 Crore (net of tax) has been made
on account of change in useful lives of fixed assets in accordance with the provisions of Schedule Il of
the Companies Act, 2013.
It has been disclosed that the companies maintains a provision for income tax which has increased to
454.66 crore from 382.39 crore.
Company maintains two types of Provisions which are for long term and for short term and amounts
to 119.86crore and 639.33 crore respectively. The value of short term provision has decrease and the
reasons for the downfall are, Provision for employee benefits has decreased duet contribution of Rs.75
Crore to the fund against provision for compensated absences. Provision for proposed final dividend
(including dividend distribution tax) has decreased by Rs.292.46 Crore. Proposed final dividend is Rs.6
per Share as against Rs.19 per Share in the previous year. Provision for Income Tax (Net of advance
tax) has increased by Rs.72.27 Crore.
The company enjoys a lot of tax benefit from the government and all those details are duly disclosed
in the annual report.

H) Contingent Liability-
ACC Ltd has not disclosed any facts and figures about contingent liability maintained by the
company, it can also be the case that the company doesnt have any kind of contingent liability to be
disclosed in the Annual report.

Conclusion
On comparing the Disclosures made by ACC Ltd in the annual report of the year 2015 with the
Disclosure practice followed by Infosys, we can see a vast gap between the disclosures made by both
the companies. As it is assumed that, Infosys holds a benchmark when it comes to disclosing the exact
facts and figures in their annual report, for example the amount of depreciation expected, useful, life
of each assets, cost of capital, return on capital employed, return on investment, age of debtors and
amount of debtors written off, name of banks with the exact amount held with them. Infosys had
clearly mentioned the details about these components in their annual report but there were no traces
found for the following disclosures in ACC Ltd.s annual report.