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Prof. (DR.) Surendra Sunderarajan Bhatt Nistha (Roll No.02) Ramchandani Hitesh (Roll No.26)
Prof. (DR.) Surendra Sunderarajan Bhatt Nistha (Roll No.02) Ramchandani Hitesh (Roll No.26)
Prof. (DR.) Surendra Sunderarajan Bhatt Nistha (Roll No.02) Ramchandani Hitesh (Roll No.26)
Ratio Analysis
Financial Condition (LIQUIDITY RATIOS)
Sr.
Ratio
Formula
2013 14 2012 13
No
.
1.
Current
Current
43019/913 35313/628
Ratio
Assets/
8
6
Current
Liabilities
= 4.7077
= 5.6177
Interpretation
It is computed to assess the short term financial
position of the company. The current ratio here is
reduced from 5.61 to 4.70. This means that firms
ability to meet its short term obligation has gone
down in current year as compared to last year.
Ratio
Formula
2013 14
2012 13
Interpretation
Fixed
Assets
Turnover
Ratio
Net Sales/
Fixed
Assets
50133/822
9
40352/683
6
= 6.0922
times
= 5.9028
times
PROFITABILITY RATIOS
Sr.
Ratio
Formula 2013 14
No.
1.
Gross
Gross
17992/
Profit
Profit/
50133
Ratio
Sales
=
35.8885%
2.
Net
Profit
Ratio
Profit
after Tax/
Sales
10648/
50133
=
21.2395%
2012 -13
15072/
40352
=
37.3513%
9421/
40352
=
23.3470%
Interpretation
This ratio establishes the relationship of gross
profit on sales of a company. It shows the average
margin on goods sold. The ratio here is
deteriorated by 1.4628% compared to last year
means that average margin on goods sold has
gone down.
This ratio helps in determining the profitability
and managerial efficiency of the business. The
ratio here has gone down means that operational
efficiency of company has been deteriorated.
3.
Return
on
Equity
Profit
after Tax/
Net
Worth
10648/
47530
=
22.4026%
3.
P/E Ratio
Dividend
Yield
Ratio
Share
Price
(closing as
on
31.3.2013
)/EPS
Dividend
per Share/
Share
price
3278.85/
186.1538
= 17.6136
63/3278.85
=1.9214%
9421/
39797
=
23.6726%
2012
13
Interpretation
9421/
(2865)
=
164.7028
Sales
60000
50000
40000
30000
20000
Sales (Crore Rs.) 10000
0
22742 27501
33734
40352
50133
Sales
Year
200910
201011
201112
2012-
Sales
22742
27501
33734
Years
Here, we can see its sales have been increased by 24.24% in 2013-14 over 2012-13. This indicates
that company has used its operational ability effectively which lead to improved sales.
EPS
200
186.35
164.87
150
145.55
119.45
100 108.99
EPS (Rs.)
50
0
2009-10 2010-11 2011-12 2012-13 2013-14
EPS
Year
200910
201011
201112
2012-
EPS
108.99
119.45
145.55
Year
Here EPS is increasing continuously, but if we see ROE, then its deceasing. That means Infosys has
not utilized share holders fund properly.
Stock Price
4000
2752.2 2905.22373.052295.43260.45
3000
2000
1000
Share Proce (Rs.)
0
Stock Price
Year
200910
201011
201112
2012-
Stock
Price
2752.2
2905.2
2373.05
Years
The Stock Price here is fluctuating. Now, goal of any Finance manager is to maximize share holders
wealth i.e. to maximize stock price. Now generally good decisions are always reflected in term of
3
increase in stock price. In case of Infosys, stock price is fluctuating, that means decisions made by
Infosys are not consistent.
CAPITAL STRUCTURE OF INFOSYS
Infosys is debt free company. It doesnt have any outstanding debt or fixed deposits. The company
presently generates sufficient cash internally to finance all its operational, financing and investment
requirements.
Advantages
Disadvantages
Raising equity finance is costly, time consuming and may take the management focus away
from the core business activities.
Company being debt free, gives lower earnings per share (EPS) to the share holders.
Dilution of voting power, due to subsequent issue.
Most expensive source of financing, as dividend is paid out of PAT i.e. Profit after Tax.
Floatation cost is also high.
Dividend Policy
Announcement
Date
15-04-2014
26-09-2013
12-04-2013
Effective
Date
29-05-2014
17-10-2013
30-05-2013
Dividend
Type
Final
Interim
Final
Dividend
(%)
860%
400%
540%
Remarks
Rs.43.0000 per share(860%)Final Dividend
Rs.20.0000 per share(400%)Interim Dividend
Rs. 27.0000 per share (540%) Final Dividend
As per the stated dividend policy, Infosys Ltd. can pay up-to 30% of the consolidated profit
after tax as dividend. The company declares dividend twice a year (i.e. October and April).
The Board has decided to increase the dividend pay-out ratio up to 40% of post-tax profits
effective fiscal 2014.
2013 14
2012 13
Interpretation
Dividend
per
share/EPS
63/186.1538
= 33.8429%
42/164.7028 Here increased dividend payout ratio indicates that the greater
= 25.5004% portion of profit available to the equity shareholders has been
distributed while a smaller portion has been retained. The
shareholders are likely to get more cash dividend.