ACCOUNTS ASSIGNMENT ON RATIO

ANALYSIS

INFOSYS LTD. Infosys was co-founded in 1981 by N. R. Narayana Murthy, Nandan

Nilekani, N. S. Raghavan, S. Gopalakrishnan, S. D. Shibulal, K. Dinesh and Ashok Arora after they resigned from Patni Computer Systems.Infosys ranked among the most innovative companies in a Forbes survey, leading technology companies in a report by The Boston Consulting Group and top ten green companies in Newsweek's Green Rankings.

Infosys was voted India's most admired company in The Wall Street Journal Asia every year since 2000

Mr. K.V. Kamath is the chairman of the board and Mr. S.D. Shibulal is the CEO and Managing director as per Annual Report 2011-12

CONSOLIDATED BALANCE SHEET OF INFOSYS

------------------- in Rs. Cr. -------------------

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of FundsTotal Share Capital 286 286 286 286 286Equity Share Capital 286 286 286 286 286Share Application Money 0 0 0 0 0Preference Share Capital 0 0 0 0 0Init. Contribution Settler 0 0 0 0 0Preference Share Application Money 0 0 0 0 0Employee Stock Opiton 0 0 0 0 0Reserves 31,046.00 25,690.00 22,763.00 17,968.00 13,509.00Revaluation Reserves 0 0 0 0 0Networth 31,332.00 25,976.00 23,049.00 18,254.00 13,795.00Secured Loans 0 0 0 0 0Unsecured Loans 0 0 0 0 0Total Debt 0 0 0 0 0Minority Interest 0 0 0 0 0Policy Holders Funds 0 0 0 0 0Group Share in Joint Venture 0 0 0 0 0Total Liabilities 31,332.00 25,976.00 23,049.00 18,254.00 13,795.00

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of FundsGross Block 9,194.00 8,501.00 7,839.00 7,093.00 5,439.00Less: Accum. Depreciation 3,639.00 3,266.00 2,893.00 2,416.00 1,986.00Net Block 5,555.00 5,235.00 4,946.00 4,677.00 3,453.00Capital Work in Progress 1,034.00 525 409 677 1,324.00Investments 372 144 3,712.00 0 72Inventories 0 0 0 0 0Sundry Debtors 5,882.00 4,653.00 3,494.00 3,672.00 3,297.00Cash and Bank Balance 20,591.00 777 1,128.00 912 884Total Current Assets 26,473.00 5,430.00 4,622.00 4,584.00 4,181.00Loans and Advances 5,193.00 5,817.00 4,619.00 3,442.00 2,890.00Fixed Deposits 0 14,318.00 9,428.00 8,783.00 6,066.00Total CA, Loans & Advances 31,666.00 25,565.00 18,669.00 16,809.00 13,137.00Deffered Credit 0 0 0 0 0Current Liabilities 3,475.00 2,853.00 2,575.00 2,041.00 1,912.00Provisions 3,820.00 2,640.00 2,112.00 1,868.00 2,279.00Total CL & Provisions 7,295.00 5,493.00 4,687.00 3,909.00 4,191.00Net Current Assets 24,371.00 20,072.00 13,982.00 12,900.00 8,946.00Minority Interest 0 0 0 0 0Group Share in Joint Venture 0 0 0 0 0Miscellaneous Expenses 0 0 0 0 0Total Assets 31,332.00 25,976.00 23,049.00 18,254.00 13,795.00

Contingent Liabilities 1,116.00 1,085.00 329 376 667Book Value (Rs) 545.64 452.42 401.67 318.66 241.17

CONSOLIDATED KEY FINANCIAL RATIOS OF INFOSYS

------------------- in Rs. Cr. -------------------

Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Investment Valuation RatiosFace Value 5 5 5 5 5Dividend Per Share -- -- -- -- --Operating Profit Per Share (Rs) 156.23 137.03 125.66 91.59 76.89Net Operating Profit Per Share (Rs) 478.99 396.32 378.7 291.82 243.22Free Reserves Per Share (Rs) 444.74 394.93 313.69 235.68 191.94Bonus in Equity Capital 93.59 93.59 93.59 93.59 93.59Profitability RatiosOperating Profit Margin(%) 32.61 34.57 33.18 31.38 31.61Profit Before Interest And Tax Margin(%) 28.3 29.42 28.47 26.69 27.25Gross Profit Margin(%) 29.51 30.59 29.67 27.8 27.91Cash Profit Margin(%) 26.67 29.95 31.79 30.17 30.49Adjusted Cash Margin(%) 26.67 29.95 31.79 29.15 30.49Net Profit Margin(%) 23.84 26.49 26.48 26.8 27.1Adjusted Net Profit Margin(%) 23.84 26.49 26.48 26.8 27.1Return On Capital Employed(%) 35.74 34.1 40.25 38.65 37.42Return On Net Worth(%) 26.31 27.18 32.8 33.77 34.26Adjusted Return on Net Worth(%) 26.15 26.8 35.2 32.4 33.98Return on Assets Excluding Revaluations 452.42 401.67 318.66 241.17 197.04Return on Assets Including Revaluations 452.42 401.67 318.66 241.17 197.04Return on Long Term Funds(%) 35.74 34.1 40.25 38.65 37.42

Liquidity And Solvency RatiosCurrent Ratio 4.65 3.98 4.3 3.13 4.47Quick Ratio 4.56 3.89 4.26 3.11 4.43Debt Equity Ratio -- -- -- -- --Long Term Debt Equity Ratio -- -- -- -- --

Debt Coverage RatiosInterest Cover -- -- -- -- --Total Debt to Owners Fund -- -- -- -- --Financial Charges Coverage Ratio 5,069.50 4,383.50 2,703.33 5,931.00 4,726.00Financial Charges Coverage Ratio Post Tax 3,845.50 3,586.50 2,250.67 5,258.00 4,371.00

Management Efficiency RatiosInventory Turnover Ratio -- -- -- -- --Debtors Turnover Ratio 6.75 6.35 6.23 5.82 6.87Investments Turnover Ratio -- -- -- -- --Fixed Assets Turnover Ratio 3.63 3.29 3.39 3.51 3.43Total Assets Turnover Ratio 1.09 1.02 1.23 1.27 1.3Asset Turnover Ratio 3.63 3.29 3.39 3.51 3.43

Average Raw Material Holding -- -- -- -- --Average Finished Goods Held -- -- -- -- --Number of Days In Working Capital 262.75 221.33 214.08 192.94 193.38

Profit & Loss Account RatiosMaterial Cost Composition 0.09 0.1 0.1 0.12 0.17Imported Composition of Raw Materials Consumed-- -- -- -- --Selling Distribution Cost Composition 0.17 0.47 0.19 0.6 1.51Expenses as Composition of Total Sales -- -- -- -- --

Cash Flow Indicator RatiosDividend Payout Ratio Net Profit 58.71 26.71 26.26 47.75 19.47Dividend Payout Ratio Cash Profit 52.19 23.34 23.3 42.32 17.18Earning Retention Ratio 40.93 72.91 75.53 50.23 80.37Cash Earning Retention Ratio 47.53 76.37 78.12 56.1 82.7AdjustedCash Flow Times -- -- -- -- --

GROSS PROFIT RATIO IS THE RATIO OF GROSS PROFIT TO NET SALES I.E. SALES LESS SALES RETURNS. THE RATIO THUS REFLECTS THE MARGIN OF PROFIT THAT A CONCERN IS ABLE TO EARN ON ITS TRADING AND MANUFACTURING ACTIVITY. IT IS THE MOST COMMONLY CALCULATED RATIO. IT IS EMPLOYED FOR INTER-FIRM AND INTER-FIRM COMPARISON OF TRADING RESULTS.GP RATIO =GROSS PROFIT / (NET SALES × 100)

INTERPRETATION OF GROSS PROFIT MARGIN

The gross profit margin of Infosys reduces in the year 2009 but it increase tremendously in the year 2009 & 2010 as compare to previous years. The reason being the company is getting more efficient in production because of increase in demand. But it slightly decrease in the year 2011 reason could be the company has to cut price to generate sales.

NET PROFIT MARGIN IS NET PROFIT DIVIDED BY SALES AND EXPRESSED AS A PERCENTAGE. NET PROFIT IS EQUAL TO SALES MINUS THE COST OF GOODS SOLD, OPERATING EXPENSES, INTEREST AND TAXES. FINANCIAL RATIOS, SUCH AS NET PROFIT MARGIN, EXPRESS RELATIONSHIPS BETWEEN FINANCIAL STATEMENT ITEMS. THESE RATIOS ARE USEFUL FOR ASSESSING PERFORMANCE OVER TIME AND COMPARING THE FINANCIAL RESULTS OF COMPANIES IN THE SAME INDUSTRY. HOWEVER, THEY ARE USUALLY NOT VERY MEANINGFUL AS STANDALONE NUMBERS.GROSS PROFIT MARGIN = GROSS PROFIT ÷ TOTAL REVENUE

INTERPRETATION OF NET PROFIT MARGIN

The net profit margin of Infosys decreased over the period from 2007-2011 because sales has been increasing but profit after tax is increasing at much slower rate

OPERATING MARGIN OR OPERATING PROFIT MARGIN MEASURES WHAT PROPORTION OF A COMPANY'S REVENUE IS LEFT OVER, AFTER DEDUCTING DIRECT COSTS AND OVERHEAD AND BEFORE TAXES AND OTHER INDIRECT COSTS SUCH AS INTEREST. OPERATING MARGIN FORMULA IS: EBIT/NET SALES*100

INTERPRETATION OF OPERATING PROFIT MARGIN

The operating profit margin increases from the year 2008 to 2010. This is due to sales are increasing faster than costs, which is the optimal situation for the company.  But in the year 2011 operating profit margin decreases which is not a good sign for a company.

RETURN ON CAPITAL EMPLOYED (ROCE) IS THE RATIO OF NET OPERATING PROFIT OF A COMPANY TO ITS CAPITAL EMPLOYED. IT MEASURES THE PROFITABILITY OF A COMPANY BY EXPRESSING ITS OPERATING PROFIT AS A PERCENTAGE OF ITS CAPITAL EMPLOYED.ROCE =NET OPERATING PROFIT/CAPITAL EMPLOYEDWHERE CAPITAL EMPLOYED IS THE SUM OF STOCKHOLDERS' EQUITY AND LONG-TERM FINANCE.

INTERPRETATION OF RETURN OF CAPITAL EMPLOYED

The Return on Capital Employed of Infosys increases smoothly from the year 2007 to 2009 which means company generates more earnings per rupee of capital employed. It decreases in the year 2010 which indicates lower profitability. But in the year 2011 it again increases reason could be the company reduces its capital investment.

CURRENT RATIO:IT IS USED TO APPRAISE THE ABILITY OF THE COMPANY TO SATISFY ITS CURRENTDEBTS OUT OF THE CURRENT ASSETS. GENERALLY, 2 TO 1 CURRENT RATIO IS CONSIDERED.THE SATISFACTORY MINIMUM CURRENT RATIO= CURRENT ASSETS/CURRENT LIABILITIES

INTERPRETATION OF CURRENT RATIO

The current ratio of Infosys is almost increasing over the years except for the year 2008 because the current liablities in 2008 grew proportionally more in comparison to current asset in the same year. But overall its current ratio is healthy enough which shows company’s current assets to meet its obligation is increasing

QUICK RATIO/ACID TEST RATIO:THE QUICK RATIO IS THE STRINGENT TEST TO LIQUIDITY. IT IS FOUNDED BY DIVIDING THE MOST LIQUID CURRENT ASSETS BY CURRENT LIABILITIES. INVENTORY IS NOT INCLUDED SINCE THE LENGTH OF TIME NEEDED TO CONVERT TO CASH IS LONG. PREPAID EXPENSES ARE ALSO NOT AN ELEMENT SINCE THEY ARE NOT CONVERTIBLE IN CASH. GENERALLY ACCEPTABLE RATIO IS 1 TO 1.QUICK RATIO=QUICK ASSETS/CURRENT LIABILITIES

INTERPRETATION OF QUICK RATIO

In all 5 years the Quick Ratio of Infosys is above 1 which is good. If the company's liquidity ratio has increased that indicates that a company is experiencing solid top-line growth, quickly converting receivables into cash, and easily able to cover its financial obligations. If increased that means the company does not manage their asset that well or probably has more short term obligations. However, the company does not seem to face any financial distress in the future years.

DEBTORS TURNOVER RATIO:IT INDICATES THE VELOCITY OF DEBT COLLECTION OF A FIRM. IN SIMPLE WORDS IT INDICATES THE NUMBER OF TIMES AVERAGE DEBTORS (RECEIVABLE) ARE TURNED OVER DURING A YEAR. TRADE DEBTORS ARE EXPECTED TO BE CONVERTED INTO CASH WITHIN A SHORT PERIOD OF TIME AND ARE INCLUDED IN CURRENT ASSETS. HENCE, THE LIQUIDITY POSITION OF CONCERN TO PAY ITS SHORT TERM OBLIGATIONS IN TIME DEPENDS UPON THE QUALITY OF ITS TRADE DEBTORS. DEBTORS TURNOVER RATIO = NET CREDIT SALES /AVERAGE DEBTORS

INTERPRETATION OF DEBTORS TURNOVER RATIO

The debtors turnover ratio of Infosys decreased in the year 2008, it is because the huge difference in increase of sales and debtors. Debtors increase significantly compare to sales. It is due to decrease in debtors collection period. This has result in decrease in debtors turnover ratio. Thereafter we can see an increasing trend from year 2008 to 2011 which indicates that a short lapse of time between sales and the collection of cash or its extension of credit and collection of accounts receivable are efficient .

ASSET TURNOVER MEASURES A FIRM'S EFFICIENCY AT USING ITS ASSETS IN GENERATING SALES OR REVENUE - THE HIGHER THE NUMBER THE BETTER. IT ALSO INDICATES PRICING STRATEGY: COMPANIES WITH LOW PROFIT MARGINS TEND TO HAVE HIGH ASSET TURNOVER, WHILE THOSE WITH HIGH PROFIT MARGINS HAVE LOW ASSET TURNOVER.ASSET TURNOVER= NET SALES/AVERAGE TOTAL ASSET

INTERPRETATION OF ASSET TURNOVER RATIO

The asset turnover Ratio of Infosys decreases from the year 2008-2010. It may appears that the company has utilised its assets less effectively. But we can see enormous increase in the year 2011 reason being it has increased its assets which may help in increase in company’s future growth.