Sem 2 AFS - 1 Ratio Analysispptver 1.1

8/9/2019 Sem 2 AFS - 1 Ratio Analysispptver 1.1

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Ratio AnalysisOfIT Sector


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Presented By:Suhas Patil 41

Anand Rajawat 42

Manish Rana 43

Priyanka Rane 44

Subodh Sakpal 45

Pushkaraj Save 46

Jay Savla 47

Hetal Shah 48

Ravish Shah 49

Vivek Shah 50


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IT industry: on a steady growth track

Total revenues for the Indian IT industry wereUS$ 71.7 billion in 2008-09.

The Indian IT industry has been growing at acompound annual growth rate (CAGR) of 27 %for the last five years.

Contribution of IT industry to Indias grossdomestic product (GDP) has grown from 1.2 percent in 1997-98 to an estimated 5.8 per cent in2008-09.


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The total revenues from export were around US$47.3 billion in 2008-09.

The total exports have been growing at a CAGR of28.7per cent over the last five years.

Domestic market revenues touched around US$24.3 billion in 2008-09.

Domestic market revenues have been growing at aCAGR of 24 per cent for the last five years.

CONT


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ScripCode

Company ClosePrice

Full Mkt.Cap.

500209 INFOSYS TECH 2,671.40 1,53,214.20

532540 .TCS LTD 807.75 1,58,094.53

507685 .WIPRO LTD 721.05 1,05,846.20

532281 HCL TECHNO 356.9 24,072.83

532466 ORACLE FIN 2,308.95 19,360.35
http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=500209http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=500209http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532540http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532540http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=507685http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=507685http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532281http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532281http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532466http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532466http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532466http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532281http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=507685http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532540http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=500209


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ScripCode

Company ClosePrice

No.of Shares(normal)

Full Mkt.Cap.

500209 INFOSYS TECH2,671 57,35,35,233 1,53,214

532540 .TCS LTD 807 1,95,72,20,996 1,58,094

507685 .WIPRO LTD 721 1,46,79,45,361 1,05,846
http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=500209http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=500209http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=500209http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532540http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532540http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=507685http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=507685http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=507685http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=532540http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcd=500209


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Short Term Solvency Ratios

Current Ratio Conventionally a current ratio of 2:1 is considered

satisfactory

=

Current AssetsCurrent Ratio

Current Liabilities

oTo ensure solvency the current ratiohas to exceed 1.0

n

Generally a value greater than 1.5 or2.0 is required for comfort

nAs always, compare to the industry

o


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Immediate Solvency Ratios

Quick Ratio (or Acid-Test Ratio)

Conventionally a quick ratio of 1:1 isconsidered satisfactory.

= Current Assets Stock Prepaid Exp..

Current Liabilities Bank Overdraft Advance Incomen

nMeasures liquidity without consideringinventory (the firms least liquid

current asset)


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Long Term Solvency Ratios

Debt-to-equity ratio

Generally, financial institutions favour aratio of 2:1.

= Loan Funds . Own Funds

nMany sources use long term debt instead

of total liabilities

nMeasures the mix of debt and equity

within the firms total capital


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Long Term Solvency Ratios

Interest Coverage Ratio

= EBIT

Interest

nInterest coverage ratio

oA high level of interest coverage

implies safety


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Financial Management Ratios

Debtors turnover ratioThis ratio is a test of the liquidity of the debtors of a

firm. It shows the relationship between credit sales anddebtors.

In general a high debtor turnover ratio and shortcollection period is preferable.

Debtors turnover ratio = Credit sales. Average

Debtors and bills receivables

A high turnover ratio and shorter collection periodindicate prompt payment by the debtor. On the contrary

low turnover ratio and longer collection period indicatesdela ed a ments b the debtor.


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Financial Management Ratios

Capital Gearing RatioThis ratio studies the proportion between capital

bearing fixed rate of return & capital not bearingfixed rate of return

Capital Gearing Ratio = Debentures + Pref. Sh. Capital

Equity Shareholders fund Pref. Sh.Capital

Capital gearing ratio is important to the company and theprospective investors. It must be carefully planned as itaffects the company's capacity to maintain a uniformdividend policy during difficult trading periods. It reveals the

suitability of company's capitalization.


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Proprietary Ratios

Proprietary Ratio = Proprietor'sFund

TotalAssets

nThis Ratio Explains us the Extent towhich total assets of the company are

financed by the proprietors i.e.shareholders of the company.


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Earning Per share

Earning Per Share

= NPAT Pref. Dividend No. of Equity Share


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Profitability Ratios

Return On Capital Employed

= EBIT x 100 CAPITAL EMPLOYED


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Profitability Ratios

Return on Net Worth (%)

= NPAT x 100 Proprietary Funds


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Tech GROWTH STORY MAY LOSE A BITOF ZIP

Global Valuation Comparison

Company PE EBITDA FY10 FY11 FY10 FY11Infosys 23.8 21.4 17.5 14.5TCS 22.3 18.6 17.3 14.9Wipro 21.6 20.2 15.1 13.1

HCL 19.3 15.0 9.5 8.2


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Very Important Reason

For I.T Company incurrent scenario

Further Rise in Rupee mayerode IT margin


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Thank You..

Documents

Sem 2 AFS - 1 Ratio Analysispptver 1.1