Ratio Analysis for Infosys techn

2005- 2009
Balance Sheet
P&L account
Cash Flows
Ratios- Definitions
Ratios for Infosys- 2005- 2009
Analysis
s technologies

Submitted by:
Name Manju Chandel
Class MBA General
Roll No. 16
 Ratio

Liquidity Ratios
Current Ratio
Quick Ratio
Cash Ratio

Solvency Ratios

Debt Equity Ratio

Total assets to debt ratio
Interest coverage ratio
Long term debt to equity

Profitability Ratios
Gross profit margin
Operating profit margin
Pre tax profit margin
Net profit margin

Efficiency Ratios

Return on assets
Return on equity
Inventory turnover ratio

Earnings Per Share

 Explanation
Liquidity ratios attempt to measure a company's ability to pay off its short-term debt
obligations. This is done by comparing a company's most liquid assets (or, those that
can be easily converted to cash), its short-term liabilities.
Current Assets/ Current liabilities
Cash& equivalents+short term investments+accounts receivables/Current liabilities
Cash & equivalents/ Current liabilities

These ratios give users a general idea of the company's overall debt load as well as
its mix of equity and debt. Debt ratios can be used to determine the overall level of
financial risk a company and its shareholders face. In general, the greater the
amount of debt held by a company the greater the financial risk of bankruptcy.
Total Debt/ Total Equity
Total assets/ Debt
Earnings before interest and taxes/ Interest expense
Long term debt/ Net worth

These ratios give users a good understanding of how well the company utilized its
resources in generating profit and shareholder value.
Gross profit/ Net sales(Revenue)
Operating profit/ Net Sales(Revenue)
Profit before tax/ Net sales (Revenue)
Net profit/ Net sales (Revenue)

Ratios that are typically used to analyze how well a company uses its assets and
liabilities internally. Efficiency Ratios can calculate the turnover of receivables,
the repayment of liabilities, the quantity and usage of equity and the general use of
inventory and machinery.
Net income/Average total assets
Net income/Average shareholders equity
Sales/ Average Inventory

(Net income- dividends on preferred stock)/ Average outstanding shares

 Ratio Mar '05 Mar '06 Mar '07 Mar '08

Liquidity Ratios

Current Ratio 2.80 2.75 4.96 3.30

Quick Ratio 2.63 2.55 2.56 2.53
Cash Ratio 0.46 0.67 0.59 0.44

Solvency Ratios

Debt Equity Ratio -- -- -- --

Total assets to debt ratio -- -- -- --
Interest coverage ratio -- -- -- --
Long term debt to equity -- -- -- --

Profitability Ratios
Gross profit margin 36.4% 34.7% 35.0% 36.1%
Operating profit margin 33.9% 33.1% 32.1% 31.7%
Pre tax profit margin 32.5% 30.2% 31.4% 32.6%
Net profit margin 27.8% 26.8% 28.8% 28.6%

Efficiency Ratios

Return on assets 36.3% 35.1% 33.9% 33.1%

Return on equity 14.08 17.54 13.23 15.63
Inventory turnover ratio -- -- -- --

Earnings Per Share

70.38 87.86 66.23 78.15
 Mar '09 Comments
The optimal current ratio is 2:1 and that for quick ratio is 1:1.
The trend indicates that the company is capable of properly
paying off its short term debt obligations. The short term
4.71
assets have shown constant change whereas the most liquid
2.72 assets and cash ratio is almost same.
0.52

Debt on a company's balance sheet is crucial. No debt on the

balance sheet is a sign of prosperity. The company doesn’t
--
have any debt.
--
--
--

36.6% This has almost the same ratio in 5 year period and is
34.1% indicative that the company is doing well.
33.1%
28.7%

This ratio for Return on assets have decreased which indicates

that the company is not able to use the assets and liabilities
in a fruitful manner internally. The return to equity is varying
but is on upward trend for last two years. It indicates that the
32.7% company is using shareholders money properly to gain profit.
20.35
-- Inventory is 0 for all the years

EPS is on increasing trend showing the company is able to

101.58 generate wealth for the shareholders.
6.00

5.00 4.96
4.71
4.00
3.30
3.00
2.80
2.63 2.75 2.72
2.55 2.56 2.53
2.00

1.00
0.67 0.59 0.52
0.46 0.44
0.00
Mar '05 Current Mar
Ratio'06 Quick RatioMar '07
Cash Ratio Mar '08 Mar '09

Profitability Ratios
40%

35%

30%

25%

20% Gross profit Operating profit Pre tax profit Net profit margin
Marmargin
'05 margin
Mar '06 margin
Mar '07 Mar '08 Mar '09

Return on Assets
37.0%
36.0%
35.0%
34.0%
33.0%
32.0%
31.0%
30.0%
Mar '05 Mar '06 Return onMar
assets
'07 Mar '08 Mar '09

Return on equity
25.00
20.00 20.35
17.54
15.00 15.63
14.08 13.23
10.00
5.00
0.00
Return on equity
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
 4.71

2.72

0.52

Mar '09

Mar '09

Mar '09

20.35

Mar '09
 Infosys Technologies
Balance Sheet - in Rs. Cr. -
Mar '05 Mar '06 Mar '07 Mar '08
12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 135.29 138 286 286
Equity Share Capital 135.29 138 286 286
Share Application Money 0 0 0 0
Preference Share Capital 0 0 0 0
Reserves 5,106.44 6,759.00 10,876.00 13,204.00
Revaluation Reserves 0 0 0 0
Networth 5,241.73 6,897.00 11,162.00 13,490.00
Secured Loans 0 0 0 0
Unsecured Loans 0 0 0 0
Total Debt 0 0 0 0
Total Liabilities 5,241.73 6,897.00 11,162.00 13,490.00
Mar '05 Mar '06 Mar '07 Mar '08
12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 2,182.72 2,837.00 3,889.00 4,508.00
Less: Accum. Depreciation 1,005.82 1,275.00 1,739.00 1,837.00
Net Block 1,176.90 1,562.00 2,150.00 2,671.00
Capital Work in Progress 317.52 571 957 1,260.00
Investments 1,328.70 876 839 964
Inventories 0 0 0 0
Sundry Debtors 1,252.82 1,518.00 2,292.00 3,093.00
Cash and Bank Balance 268.15 544 680 657
Total Current Assets 1,520.97 2,062.00 2,972.00 3,750.00
Loans and Advances 1,030.29 1,308.00 1,241.00 2,804.00
Fixed Deposits 1,213.39 2,735.00 4,827.00 5,772.00
Total CA, Loans & Advances 3,764.65 6,105.00 9,040.00 12,326.00
Deffered Credit 0 0 0 0
Current Liabilities 578.56 808 1,162.00 1,483.00
Provisions 767.48 1,409.00 662 2,248.00
Total CL & Provisions 1,346.04 2,217.00 1,824.00 3,731.00
Net Current Assets 2,418.61 3,888.00 7,216.00 8,595.00
Miscellaneous Expenses 0 0 0 0
Total Assets 5,241.73 6,897.00 11,162.00 13,490.00
Contingent Liabilities 289.87 523 670 603
Book Value (Rs) 193.73 250.29 195.41 235.84
 Mar '09
12 mths

286
286
0
0
17,523.00
0
17,809.00
0
0
0
17,809.00
Mar '09
12 mths

5,986.00
2,187.00
3,799.00
615
1,005.00
0
3,390.00
805
4,195.00
3,303.00
8,234.00
15,732.00
0
1,544.00
1,798.00
3,342.00
12,390.00
0
17,809.00
347
310.9
 Infosys Technologies
Profit & Loss account - in Rs. Cr. -
Mar '05 Mar '06 Mar '07 Mar '08
12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover 6,859.66 9,028.00 13,149.00 15,648.00
Excise Duty 0 0 0 0
Net Sales 6,859.66 9,028.00 13,149.00 15,648.00
Other Income 172.79 144 379 683
Stock Adjustments 0 0 0 0
Total Income 7,032.45 9,172.00 13,528.00 16,331.00
Expenditure
Raw Materials 13.55 16 22 18
Power & Fuel Cost 40.2 62 88 106
Employee Cost 3,183.25 4,274.00 6,316.00 7,771.00
Other Manufacturing Expenses 563.47 792 1,290.00 1,443.00
Selling and Admin Expenses 697.15 773.49 1,050.53 1,214.00
Miscellaneous Expenses 35.84 120.51 156.47 132
Preoperative Exp Capitalised 0 0 0 0
Total Expenses 4,533.46 6,038.00 8,923.00 10,684.00
Mar '05 Mar '06 Mar '07 Mar '08
12 mths 12 mths 12 mths 12 mths
Operating Profit 2,326.20 2,990.00 4,226.00 4,964.00
PBDIT 2,498.99 3,134.00 4,605.00 5,647.00
Interest 1.09 1 1 1
PBDT 2,497.90 3,133.00 4,604.00 5,646.00
Depreciation 268.22 409 469 546
Other Written Off 0 0 0 0
Profit Before Tax 2,229.68 2,724.00 4,135.00 5,100.00
Extra-ordinary items -4.59 0 -5 0
PBT (Post Extra-ord Items) 2,225.09 2,724.00 4,130.00 5,100.00
Tax 325.3 303 352 630
Reported Net Profit 1,904.38 2,421.00 3,783.00 4,470.00
Total Value Addition 4,519.91 6,022.00 8,901.00 10,666.00
Preference Dividend 0 0 0 0
Equity Dividend 309.8 1,238.00 649 1,902.00
Corporate Dividend Tax 42.17 174 102 323
Per share data (annualised)
Shares in issue (lakhs) 2,705.71 2,755.55 5,712.10 5,719.96
Earning Per Share (Rs) 70.38 87.86 66.23 78.15
Equity Dividend (%) 230 900 230 665
Book Value (Rs) 193.73 250.29 195.41 235.84
 Mar '09
12 mths

20,264.00
0
20,264.00
502
0
20,766.00

20
125
9,975.00
1,697.00
1,367.00
172
0
13,356.00
Mar '09
12 mths
6,908.00
7,410.00
2
7,408.00
694
0
6,714.00
-1
6,713.00
895
5,819.00
13,336.00
0
1,345.00
228

5,728.30
101.58
470
310.9
 Infosys Technologies
Cash Flow - in Rs. Cr. -
Mar '05 Mar '06 Mar '07 Mar '08
12 mths 12 mths 12 mths 12 mths
Net Profit Before Tax 2184.49 2724 4129 5100

Net Cash From Operating Activities 1359.7 2237 3256 3816

Net Cash (used in)/from
Investing Activities -939.88 -392 -1065 -978
Net Cash (used in)/from Financing
Activities -580.1 244 -316 -777
Net (decrease)/increase In Cash
and Cash Equivalents -156.32 2096 1871 2079

Opening Cash & Cash Equivalents 1839.4 1683 3779 5610

Closing Cash & Cash Equivalents 1683.08 3779 5650 7689

 Mar '09
12 mths
6714

5152

-195

-2430

2600

7689

10289
 Analysis
1. The firm works on zero inventory and zero debt policy.
2. The profitability of the company has remained the same over the years though the
liquidity has increased.
3. The company can look at raising some debt to decrease the overall cost of capital
and increase the value of the firm.