Session: 2017-20

ABSTRACT

Financial Statement Analysis is the process of revising and analyzing a company’s

financial statement to make better economic decisions. Financial statement records financial

data, which must be evaluated through financial statement analysis to become more useful

to investors, shareholders, managers and other interested parties. The primary objective of

financial statement analysis is to understand and diagnose the information contained in

financial statement with a view to judge the profitability and financial soundness of the

firm, and to make forecast about future prospects of the firm. The most important benefit if

financial statement analysis is that it provides an idea to the investors about deciding on

investing their funds in a particular company.

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CHAPTER-I

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INTRODUCTION

ABOUT INFOSYS LTD

Infosys is a global leader in consulting, technology, outsourcing and next-generation

services. We enable clients, in more than 50 countries, to stay a step ahead of emerging
business trends and outperform the competition. We help them transform and thrive in a
changing world by co-creating breakthrough solutions that combine strategic insights and
execution excellence.

INITIATIVES

Infosys Foundation

In 1996, Infosys established the Infosys Foundation, to support the underprivileged sections

of society. At the outset, the Infosys Foundation implemented many programs in Karnataka.
It subsequently covered Tamil Nadu, Telangana, Andhra Pradesh, Maharashtra, Odisha,
and Punjab in a phased manner. A team at the Foundation identifies all the programs in the
areas of Healthcare, Education, Culture, Destitute Care and Rural Development.

Academic Entente

Infosys' Global Academic Relations team forges Academic Entente (AcE) with academic and

partner institutions. It explores co-creation opportunities between Infosys and academia
through case studies, student trips and speaking engagements. They also collaborate on
technology, emerging economies, globalization, and research. Some initiatives include
research collaborations, publications, conferences and speaking sessions, campus visits and
campus hiring

Infosys Labs

Infosys Labs is organized as a global network of research labs and innovation hubs.

Infosys Labs collaborates with leading national and international universities such as
the University of Southern California Viterbi School of Engineering, University of
Cambridge, Queens University of Belfast, University of Illinois at Urbana-
Champaign, Indian Institute of Technology Bombay, IITB-Monash Research
Academy, Indraprastha Institute of Information Technology, Delhi, Indian Institute of
Science, Bangalore, Purdue University, Indian Institute of Information Technology,
Bangalore.

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The process of reviewing and evaluating a company's financial statements (such as

the balance sheet or profit and loss statement), thereby gaining an understanding of

the financial health of the company and enabling more effective decision making. Financial

statements record financial data; however, this information must be evaluated through

financial statement analysis to become more useful to investors, shareholders, managers and

other interested parties

Financial statement analysis is an exceptionally powerful tool for a variety of users of

financial statements, each having different objectives in learning about the financial

circumstances of the entity. Financial statement analysis is an evaluative method of

determining the past, current and projected performance of a company. Several techniques

are commonly used as part of financial statement analysis including horizontal analysis,

which compares two or more years of financial data in both rupees and percentage

form; vertical analysis, where each category of accounts on the balance sheet is shown as a

percentage of the total account; and ratio analysis, which calculates statistical relationships

between data.

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OBJECTIVES TO THE STUDY

The objectives of the study are to evaluate the financial position and performance of

the “Infosys”. The purpose of the study aims at a critical analysis of the financial

statements of the Company. And makes attempt to get better insight about the financial

strength and weakness of the organisation by analyzing and interpreting the data for a

period of 2 years i.e. 2018 and 2019.

 To study the financial performance of “Infosys”.

 To determine the profitability or earning capacity of the concern

 To analyze the strength and weakness of the organisation on the basis of its financial

position.

 To suggest solution, if any, to the unfavorable financial conditions and financial

performance.

 To act of analysis may also reveal areas where control is deficit and desirable for

the efficient operating of the organisation which in turn help to achieve

organizational goals.

 To know the solvency of the company.

 To make comparative study with other year performance.

 To know the capability of payment of dividend and interest.

 To know the profitability of the company in the form of ratios

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RESEARCH DESIGN OF THE STUDY

Research design means a search of facts, answers to question and solution to the

problems. It is a prospective investigation. Research is a systematical logical study of an

issue or problem through scientific method. It is a systematic and objective analysis and

recording of controlled observation that may lead to the development of generalization,

principles, resulting in prediction ultimate control of events.

Research design is the arrangement of conditions for the collection and analysis

of data in manner that aims to combine relevance to the research purpose with relevance

to economy. There are various designs, which are descriptive and helpful for analytical

research.

METHODOLOGY

Sources of data can be classified into two groups they are:

 Primary data and

 Secondary data

In this project all the data are analyzed on the basis of secondary data.

Secondary Sources:

The investigation relied on books, documents, annual report, financial assessments,

literature, files and personal observation to have an idea about the organizational set up,

functions of financial department and other groups.

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TOOLS USED FOR ANALYSIS OF FINANCIAL STATEMENTS:

The numbers given in the financial statement are not of much use to the decision
maker. These numbers are to be analysed over a period of time or relation to other
numbers so that significant conclusions could be drawn regarding the strengths and
weakness of a business enterprise. The tools of financial analysis help in this regard.
These tools include:
Comparative Statements;
Common-size Statements;
Comparative Balance Sheet;
Common Size Balance Sheet;
Ratio Analysis;
Cash flow Statements;
Changes in Financial Position.
In this project we show or discuss:
1. Profit & Loss Account
2. Balance Sheet
3. Comparative Statements.
4. Common-Size Statements &
5. Comparative Balance Sheet;
6. Common Size Balance Sheet;
7. Ratio Analysis of financial statement of “Infosys”
Limitation of the Study:
Every work has its own limitation. During the process of conducting the research
study the following limitations may be faced:-
 The lack of time and shortage of funds have urged the study to cover only a partial
analysis of financial information of the organisation.
 The study has its own limitations because the study is confined to only one company.
 Due to insufficient time I have analyzed only two years financial analysis of this
company.
 Statistical tools used limits the testing and findings
 Findings (Interpretations) are general.
 Confidentially of required data: financial data is confidentially expecting audited
annual reports, which limited the scope of accurate study and current estimations.

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LITERATURE REVIEW:
For the purpose of literature review the basic concepts of Fundamental analysis were studied,
and similar studies relating to financial statements analysis are examined, following are some
the articles collected from various blogs and reports
FINANCIAL STATEMENT ANALYSIS
Financial statement analysis is defined as the process of identifying financial strengths and
weaknesses of the firm by properly establishing relationship between the items of the balance
sheet and the profit and loss account. There are various methods or techniques that are used
in analyzing financial statements, such as comparative statements, schedule of changes in
working capital, common size percentages, funds analysis, trend analysis, and ratios analysis.
Financial statements are prepared to meet external reporting obligations and also for decision
making purposes. They play a dominant role in setting the framework of managerial
decisions. But the information provided in the financial statements is not an end in itself as no
meaningful conclusions can be drawn from these statements alone. However, the information
provided in the financial statements is of immense use in making decisions through analysis
and interpretation of financial statements.
Tools and Techniques of Financial Statement Analysis:
Following are the most important tools and techniques of financial statement analysis:
1. Horizontal and Vertical Analysis
2. Ratios Analysis
ANALYSIS OF FINANCIAL STATEMENTS-SELECTIVE TOOLS
Any successful business owner is constantly evaluating the performance of his or her
company, comparing it with the company's historical figures, with its industry competitors,
and even with successful businesses from other industries. To complete a thorough
examination of your company's effectiveness, however, you need to look at more than just
easily attainable numbers like sales, profits, and total assets. You must be able to read
between the lines of your financial statements and make the seemingly inconsequential
numbers accessible and comprehensible. This massive data overload could seem staggering.
Luckily, there are many well-tested ratios out there that make the task a bit less daunting.
Comparative ratio analysis helps you identify and quantify your company's strengths and
weaknesses, evaluate its financial position, and understand the risks you may be taking.
WHY SHOULD I CARE ABOUT FINANCIAL STATEMENT ANALYSIS?
The detailed information available on financial statements is only of interest to someone who
is doing some extensive research on individual stocks.  If you invest in mutual funds, index
funds or ETFs then you don’t need to know the details but it is useful to know the
terminology since fund managers and other investing types will often talk about details from
the financial statements in the business section of the news.

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FINANCIAL RATIO ANALYSIS FOR PERFORMANCE CHECK AUTHOR:
GOPINATHAN THCCHAPPILLY APR 12, 2009
Used externally, financial ratio analysis can spot better investment options for investors, and
internally, business managers can spot business areas requiring attention.
Financial analysis using ratios between key values help investors cope with the massive
amount of numbers in company financial statements. For example, they can compute the
percentage of net profit a company is generating on the funds it has deployed. All other
things remaining the same, a company that earns a higher percentage of profit compared to
other companies is a better investment option.
Financial Ratios Can Measure Different Things
The Net Profit to Capital Employed ratio mentioned above measures the success of a
company in using funds available to it. There are ratios to measure the company's:
 Financial health
 Operating performance
 Cash flows and liquidity
Under each category, there are multiple ratios that measure different aspects, or fine tune the
measurements. For example, different profitability ratios measure profit margins at different
stages return on owners' funds and effective tax burden.
We will be looking at the different ratio categories in separate articles on:
 Profitability Ratios
 Liquidity Ratios
 Debt Ratios
 Performance Ratios
SEVEN HABITS FOR FINANCIAL STATEMENT ANALYSIS AND BUSINESS
NEWS REPORTING BY CFA INSTITUTE
Journalists and analysts know that “earnings” may not really be earnings and that press
releases can be a way for a company to spotlight good news only. Add to that the myriad of
technical terms, semantic issues, and acronyms and one can easily get lost trying to discern
the real headline. To help navigate through the maze of financial data, CFA Institute created
this checklist to use when analyzing a company and its financial statements and to better
understand the due diligence that Professionals undertake in developing successful
investment strategies for 2006.

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CHAPTER-II

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COMPANY PROFILE

Infosys Limited (NYSE: INFY) was started in 1981 by seven people with US$ 250.

Today, we are a global leader in consulting, technology and outsourcing with revenues of

US$ 7.231 billion (LTM Q3 FY13). Many of the world’s most successful organizations rely

on Infosys to deliver measurable business value. Infosys provides business consulting,

technology, engineering and outsourcing services to help clients in over 30 countries build

tomorrow’s enterprise.

Our award-winning Infosys Labs and its breakthrough intellectual property can be

leveraged as a co-creation engine to accelerate innovation across the enterprise.

Infosys pioneered the Global Delivery Model (GDM), based on the principle of taking

work to the location where the best talent is available, where it makes the best economic

sense, with the least amount of acceptable risk. Continued leadership around GDM enables

Infosys to drive extraordinary efficiencies and free up clients’ resources for strategic

transformation or innovation initiatives.

Infosys has a global footprint with 67 offices and 69 development centers in US,

India, China, Australia, Japan, Middle East, UK, Germany, France, Switzerland, Netherlands,

Poland, Canada and many other countries. Infosys and its subsidiaries have 155,629

employees as on Dec 31, 2012.

Infosys takes pride in building strategic long-term client relationships. 97.5% of our

revenues come from existing customers (Q3 FY 13).

Infosys gives back to the community through the Infosys Foundation that funds

learning and education.

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CORPORATE GOVERNANCE

Corporate governance is about maximizing shareholder value legally, ethically and on a

sustainable basis. At Infosys, the goal of corporate governance is to ensure fairness for every

stakeholder – our customers, investors, vendor-partners, the community, and the governments

of the countries in which we operate. We believe that sound corporate governance is critical

in enhancing and retaining investor trust. It is a reflection of our culture, our policies, our

relationship with stakeholders and our commitment to values. Accordingly, we always seek

to ensure that our performance is driven by integrity.

Our Board exercises its fiduciary responsibilities in the widest sense of the term. Our

disclosures seek to attain the best practices in international corporate governance. We also

endeavor to enhance long-term shareholder value and respect minority rights in all our

business decisions.

We continue to be a pioneer in benchmarking our corporate governance policies with the best

in the world. Our efforts are widely recognized by investors in India and abroad. We have

been audited for corporate governance by the Investment Information and Credit Rating

Agency (ICRA) and have been awarded a rating of Corporate Governance Rating 1 (CGR 1).

We are also in compliance with the recommendations of the Narayana Murthy Committee on

Corporate Governance, constituted by the Securities and Exchange Board of India (SEBI).

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Corporate governance philosophy

Our corporate governance philosophy is based on the following principles:

 Satisfying the spirit of the law and not just the letter of the law

 Going beyond the law in upholding corporate governance standards

 Maintaining transparency and a high degree of disclosure levels

 Making a clear distinction between personal convenience and corporate resources

 Communicating externally in a truthful manner about how the company is run

internally

 Complying with the laws in all the countries in which the company operates

 Having a simple and transparent corporate structure driven solely by business needs

 Embracing a trusteeship model in which the management is the trustee of the

shareholders' capital and not the owner

 Driving the business on the basis of the belief, 'when in doubt, disclose'

Board composition

At the core of our corporate governance practice is the Infosys Board, which oversees how

the management serves and protects the long-term interests of all our stakeholders. The

majority of the board, seven out of 10, are independent members. As active and well

informed members of the board, they are fully committed to ensuring the highest standards of

corporate governance. In addition, the independent directors make up the audit,

compensation, investor grievance, nominations, and risk management committees, bringing

their valuable perspective to the board.

As a part of our commitment to follow global best practices, we comply with the

Euroshareholders Corporate Governance Guidelines 2000, and the recommendations of the

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Conference Board Commission on Public Trusts and Private Enterprises in the US. We also

adhere to the UN Global Compact Program.

Awards and Recognition

2019

 Infosys wins the Platinum Award at the Asset Corporate Awards, the longest running

Environmental, Social, and Governance (ESG) awards in Asia, for the 9th consecutive

year. This award is based on an evaluation of financial performance, management,

corporate governance, social and environmental responsibility and investor relations

 Infosys wins the “Best Investor Relations Team” award and “Best Initiative in

Environmental Responsibility” award at the Asset Corporate Awards

 Infosys received awards for Best CFO, Best Investor Relations Professional, Best

Investor Relations Program, Best Corporate Governance, Best ESG SRI Metrics, and

Best Analyst Day in the 2019 All-Asia Executive Team rankings in the

Technology/IT Services and Software sector

 Infosys Investor Relations Officer Sandeep Mahindroo wins the best investor relations

officer and the best investor relations team awards at the inaugural IR Magazine

Awards – India

 Infosys has won the 'Best ESG Metrics' award from Bloomberg. The award is given in

association with BNY Mellon and IR Society of India and is in recognition of Infosys’

effort towards environment, social, and governance

 Infosys CFO, M.D. Ranganath awarded CFO100 Roll of Honor as a tribute to his

exceptional contribution to investor relations and corporate finance

 Infosys Tax team won the coveted “Asia’s best In-house tax team” of the year 2018

awarded by Euromoney, a leading publisher in the field of business and finance. The

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award is a testimony and recognition of the manner in which tax complexities are

managed in an ever challenging and uncertain tax environment across the globe

2018

 Infosys wins the Platinum Award at the Asset Corporate Awards, the longest running

Environmental, Social, and Governance (ESG) awards in Asia. This award is based

on an evaluation of financial performance, management, corporate governance, social

and environmental responsibility and investor relations

 Infosys wins the Responsible Business and the Indo-U.S. Trade Driver of the Year

Awards at the 13th Indo-American Corporate Excellence Awards 2018

 Infosys received awards for Best CEO, Best CFO and Best Investor Relations at the

2018 All-Asia Executive Team rankings by Institutional Investor magazine in the

Technology/IT Services and Software sector

 Infosys wins Golden Peacock Environment Management Award - 2018

 Infosys CEO Dr. Vishal Sikka named CNBC Asia's India Business Leader Of The

Year at the CNBC-TV18 India Business Leader Awards 2018

2016

 Infosys adjudged Best Company in India at the 20th Finance Asia Platinum Awards.

 Infosys wins the Golden Peacock Award at the 16th London Global Convention on

‘Corporate Governance and Sustainability’.

 Infosys wins the joint Go to Market solution innovation - HPE partner award at the

recently concluded HPE Accelerate Partner Success 2016 conference.

 Infosys wins the ‘Cloud Innovation for Mainframe Migration’ award at the recently

concluded WPC Platform Modernization Alliance event.

 Infosys honored at Asia's Best Companies 2016 awards

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 Infosys has been ranked a “Leader in the Winner’s Circle – Excellent at Innovation

and Execution,” in HfS’s Research Blueprint: Design Thinking in the As-A-service

Economy.

 The Infosys ReachOut solution was selected by The American Council for

Technology - Industry Advisory council (ACT-IAC) as one of the top 40 finalists for

its Igniting Innovation 2016 Awards.

 Infosys Finacle was rated as a Market Leader in Ovum’s Core Banking Decision

Matrix for Europe.

 Infosys Finacle was positioned as one of the top selling solution in IBS Sales League

2016.

 Infosys Finacle was recognized for Best Innovations in Digital Initiative – Middle and

Back Office and the Best Islamic Banking Technology Provider in the Middle East at

the 2016 Private Banking Middle East Awards.

 Infosys was named the Tableau GSI Partner of the Year.

 Infosys was named the Hitachi Data Systems Innovation Partner of the Year.

 Infosys was in the list of top twenty green companies in Newsweek's Green Rankings

for 2012.

 The company has been voted India's most admired company in The Wall Street

Journal Asia 200

 Infosys was ranked #9 in Wired (magazine) 40 (2005).

 Infosys was ranked No.1 among the best managed companies in Asia Pacific in the

annual Euromoney Best Managed Companies in Asia survey, 2013.

 Infosys was ranked 19th on the world's most innovative companies list by Forbes.

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Optimize

Beyond transformation and innovation, it boils down to execution - delivering on

time, on budget and "on value". We can optimize your core operations to drive best-in-class

efficiency and help fund the transformation and innovation.

Innovate

We can inject a level of product and service innovation into your business to create

new revenue opportunities through collaboration and co-creation. We keep abreast of the

latest technology and how it applies to your business issues. What you get from us is best-of-

breed solutions. The foundation of our innovation capability is our core lab network – Infosys

Labs – and the new thinking that our team of over 600 researchers brings to the table.

Who we are

Our Vision, Mission and Values -

Vision

"We will be a globally respected corporation."

Mission

"Strategic Partnerships for Building Tomorrow’s Enterprise."

Values

We believe that the softest pillow is a clear conscience. The values that drive us underscore

our commitment to:

CLIFE

Client Value: To surpass client expectations consistently

Leadership by Example: To set standards in our business and transactions and be an

exemplar for the industry and ourselves

Integrity and Transparency: To be ethical, sincere and open in all our transactions

Fairness: To be objective and transaction-oriented, and thereby earn trust and respect

Excellence: To strive relentlessly, constantly improve ourselves, our teams, our services and

products to become the best.

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INFOSYS IS THE MARKET LEADER FOR DESIGN THINKING SERVICES EXECUTION

Recognized for unique employee training efforts to drive a culture shift in the organization

Bangalore - January 26, 2016: Infosys (NYSE: INFY), a global leader in consulting,

technology, outsourcing and next-generation services has received the title “Leader in the

Winner’s Circle – Excellent at Innovation and Execution,” from HfS’s Research Blueprint:

Design Thinking in the As-A-service Economy.

The report’s highlights include:

Central to Organizational Strategy: For Infosys, Design Thinking is not just a tool to serve

clients, but it is also critical to the new ways of working. It is using Design Thinking to

increase the use of creativity and drive a cultural shift in the organization.

Clear Plan to Train Every Employee: Infosys is perhaps the only service provider that has

vowed to train all employees on design thinking and it has put together a very solid plan to do

so.

Creating Awareness of Design Thinking with Clients: Apart from employees, a number of

clients are being identified who have been trained or will be trained to understand these

concepts to co-create and ideate collaboratively with Infosys.

Fast Becoming a Strategic Partner: Clients acknowledge that Infosys is changing from one

that typically was waiting for directions. For example, a client mentioned that Infosys is

helping them apply already existing technologies differently to drive new results.

Leading by Example: Clients also appreciate that Infosys is using Design Thinking to

address internal challenges.

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To date, more than 73,000 employees have received training in Design Thinking, ingraining

it into their daily work and into the programs they are driving, whether they are in a client-

facing role or in a business enabling function. The result has been significant customer

savings and value creation through programs such as Zero Distance, an initiative to bring

innovation to every existing client project. Today, 90% of the Infosys delivery organization

has found or delivered something innovative to a client, beyond the statement of work.

Moreover, Zero Distance has increased the company’s overall employee retention and

utilization. Frequently, members of the traditional IT bench prototype the projects from Zero

Distance, enabling them to gain valuable real life experience in driving innovation in ongoing

projects, and in the process, creating software assets for Infosys to bring to clients on a larger

scale.

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CHAPTER-III

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FINANCIAL STATEMENT ANALYSIS

COMPARATIVE STATEMENT:

It refers to the comparison of financial statements of an enterprise for two

consecutive periods. It measures the efforts of the farm by giving a clear sight of the

performance.

Comparative statements are of two types.

 Comparative Income Statement

 Comparative Balance Sheet.

The comparative income statements.

The comparative income statements reflect the operating activities of the

business where as the comparative. Balance Sheet reflects the finance & investing

activities of the enterprise. In such statement the figures are shown as.

1) In terms of absolute monetary value.

2) Increase/Decrease in absolute value.

3) Proportionate changes by way of Percentage.

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PROFIT & LOSS ACCOUNT

FOR THE YEAR ENDED As At 31ST MARCH, 2019

Rs. in Crores

For the year ended For the year

on 31.03.2019 ended on
31.03.2018
I. Revenue from Operations
Sale of products 5005.66 4230.59
Less: Excise Duty (58.62) (32.27)
Net sale of products 4947.04 4198.32
Other operating revenues 27.15 25.20
4974.19 4223.52
II. Other Income 58.53 48.92
III. Total Revenue (I+II) 5032.72 4272.44
IV. EXPENSES
(a) Raw materials including packaging materials
consumed 2655.01 2371.92
(b) Purchases of Stock in trade 529.53 410.31
(c) Changes in Inventory of Finished Goods, Work
in progress and stock in trade (4.79) (17.89)
(d) Employee benefit expenses 145.87 119.93
(e) Finance costs 38.07 37.75
(f) Depreciation and amortisation expense 47.32 44.59
(g) Other Expenses 1369.34 1107.77
TOTAL EXPENSES 4780.35 4074.38
V. PROFIT BEFORE TAX (III-IV) 252.37 198.06
VI. TAX EXPENSES:
(1) Current tax
Income tax 63.71 41.52
Minimum alternative tax for earlier years (13.91)
Income tax for earlier years 12.34
(2) Deferred tax 1.92 12.82
VII. Profit/(Loss) for the year (V-VI) 186.74 145.29
VIII. Earnings per equity share:- [Refer note 38]
(a) Basic [Nomial value of Rs. 2 each] 15.63 12.16
(b) Diluted [Nominal value of Rs. 2 each] 15.62 12.16
Weighted average number of equity share used in
computing earnings per share:
Basic 119450815.00 119450815.00
Diluted 119560465.00 119512374.00

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BALANCE SHEET
FOR THE YEAR ENDED As At 31ST MARCH, 2019
Rs. in Crores

As on As on
31.03.2019 31.03.2018
I. EQUITY AND LIABILITIES
1. Shareholder's funds
(a) Share Capital 23.89 23.89
(b) Reserves and surplus 496.15 427.41
520.04 451.30
Non-current liabilities
(a) Long term borrowings 28.15 430.57
(b) Deferred tax liabilities (net) 8.16 6.24
© Other lon-term liabilities 19.91 15.99
(d) Long term Provisions 116.82 122.68
173.04 575.48
Current Liabilities
(a) Trade payables 336.20 239.68
(b) Other current liabilities 518.26 119.38
(c) Short term provisions 124.80 96.65
979.26 455.71
TOTAL 1672.34 1482.49
II. ASSETS
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets 370.63 298.68
(ii) Intangible assets 8.46 5.02
(iii) Capital work-in-progress 79.73 11.70
458.82 315.40
(b) Non-current investments 218.40 308.94
(C) Long term loans and advances 125.02 142.13
(d) Other non-current assets 12.12 12.12

Current assets
(a) Current investments 210.54 236.06
(b) Inventories 382.28 311.20
(c) Trade receivables 52.14 57.26
(d) Cash and bank balances 30.94 28.75
(e) Short term loans and advances 182.08 70.63
857.98 703.90
TOTAL 1672.34 1482.49

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COMPARATIVE INCOME STATEMENT

A Comparative Income Statement gives the reader a frame of reference for

comparing the current year amounts. Comparative income statement presents both the

current period (typically current month or current year to date) compared to normally a

prior year same period. comparative income statement consist of two columns of amounts

(one is of current year and another is of prior year) appearing to the right of the account

titles or descriptions. The amounts are shown side by side to make it easy to compare the two

periods presented. Comparative income statement may also refer to this same type of

comparison for current period to budget for the same period.

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COMPARATIVE INCOME STATEMENT
For the Year 2018 & 2019
In comparison to Absolute Change
Rs. in Crores
Particulars Absolute Absolute Absolute %
Amount 2019 Amount 2018 Change Change
I. Revenue from Operations
Sale of products 5005.66 4230.59 775.07 18.32
Less: Excise Duty (58.62) (32.27) (26.35)
81.65
Net sale of products 4947.04 4198.32 748.72
17.83
Other operating revenues 27.15 25.20 1.95
7.74
4974.19 4223.52 750.67
17.77
II. Other Income 58.53 48.92 9.61
19.64
III. Total Revenue (I+II) 5032.72 4272.44 760.28
17.79
IV. EXPENSES
(a) Raw materials including packaging
materials consumed 2655.01 2371.92 283.09
11.94
(b) Purchases of Stock in trade 529.53 410.31 119.22
29.06
(c) Changes in Inventory of Finished
Goods, Work in progress and stock in trade (4.79) (17.89) 13.10
(73.23)
(d) Employee benefit expenses 145.87 119.93 25.94
21.63
(e) Finance costs 38.07 37.75 0.32
0.85
(f) Depreciation and amortisation expense 47.32 44.59 2.73
6.12
(g) Other Expenses 1369.34 1107.77 261.57
23.61
TOTAL EXPENSES 4780.35 4074.38 705.97
17.33
V. PROFIT BEFORE TAX (III-IV) 252.37 198.06 54.31
27.42
VI. TAX EXPENSES:
(1) Current tax
Income tax 63.71 41.52 22.19
53.44
Minimum alternative tax for earlier years (13.91) 13.91
(100.00)
Income tax for earlier years 12.34 (12.34)
(100.00)
(2) Deferred tax 1.92 12.82 (10.90)
(85.02)
VII. Profit/(Loss) for the year (V-VI) 186.74 145.29 41.45
28.53
VIII. Earnings per equity share:- [Refer note 38]
(a) Basic [Nomial value of Rs. 2 each] 15.63 12.16 3.47
28.54
(b) Diluted [Nominal value of Rs. 2 each] 15.62 12.16 3.46
28.45
Weighted average number of equity share
used in computing earnings per share:
Basic 119450815.00 119450815.00
Diluted 119560465.00 119512374.00

Roll No.: 8003U16378 25

 Session: 2017-20
COMPARATIVE BALANCE SHEET

A comparative balance sheet presents side-by-side information about an entity's

assets, liabilities, and shareholders' equity as of multiple points in time. For example, a

comparative balance sheet could present the balance sheet as of the end of each year for the

past three years. Another variation is to present the balance sheet as of the end of each month

for the past 12 months on a rolling basis. In both cases, the intent is to provide the reader with

a series of snapshots of a company's financial condition over a period of time, which is useful

for developing trend line analyses (though this works better when the reader has the entire set

of financial statements to work with and not just the balance sheet).

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 Session: 2017-20
COMPARATIVE BALANCE SHEET
For the Year 2018 & 2019
In comparison to Absolute Change
Rs. In Crores
Particulars Amount Amount Absolute %
2019 2018 Change Change
SOURCES OF FUNDS
I. EQUITY AND LIABILITIES
1. Shareholder's funds
(a) Share Capital 23.89 23.89 0.00 0.00
(b) Reserves and surplus 496.15 427.41 68.74 16.08
520.04 451.30 68.74 15.23
Non-current liabilities
(a) Long term borrowings 28.15 430.57 (402.42) (93.46)
(b) Deferred tax liabilities (net) 8.16 6.24 1.92 30.77
(c) Other long-term liabilities 19.91 15.99 3.92 24.52
(d) Long term Provisions 116.82 122.68 (5.86) (4.78)
173.04 575.48 (402.44) (69.93)
Current Liabilities
(a) Trade payables 336.20 239.68 96.52 40.27
(b) Other current liabilities 518.26 119.38 398.88 334.13
(c) Short term provisions 124.80 96.65 28.15 29.13
979.26 455.71 523.55 114.89
TOTAL 1672.34 1482.49
II. ASSETS
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets 370.63 298.68 71.95 24.09
(ii) Intangible assets 8.46 5.02 3.44 68.53
(iii) Capital work-in-progress 79.73 11.70 68.03 581.45
458.82 315.40 143.42 45.47
(b) Non-current investments 218.40 308.94 (90.54) (29.31)
(C) Long term loans and advances 125.02 142.13 (17.11) (12.04)
(d) Other non-current assets 12.12 12.12 0.00 0.00
Current assets
(a) Current investments 210.54 236.06 (25.52) (10.81)
(b) Inventories 382.28 311.20 71.08 22.84
(c) Trade receivables 52.14 57.26 (5.12) (8.94)
(d) Cash and bank balances 30.94 28.75 2.19 7.62
(e) Short term loans and advances 182.08 70.63 111.45 157.79
TOTAL Current assets 857.98 703.90 154.08 21.89
TOTAL 1672.34 1482.49

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 Session: 2017-20

COMMON SIZE INCOME STATEMENT

Common size income statements are basically used for analysis purposes where each

item on the face of income statement is expressed in relation to revenue so that users can

easily understand that how different expenses and other incomes and gains adds up to gross

profit and net profit. This is widely used in ratio analysis and serve as a vital tool start up a

financial analysis of the key areas of performance and then detailed ratios are applied on each

item afterwards.

Although common size income statements do not provide a detailed financial

analysis of income statement and its items but it does help in comparing the financial

performance of the company with the preceding accounting periods known as trend-analysis

or time-series analysis. We can also compare financial information of one company with

other companies in the industry which is known as cross-sectional analysis. The good thing

about common-size analysis is that it is really easily to do and also interpreting the results is

not so difficult. Even the users who are not proficient in analysis techniques can gain insight

of company’s financial performance to some extent from common size financial statements

i.e. income statement and statement of financial position.

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 Session: 2017-20

COMMON SIZE INCOME STATEMENT

FOR YEAR 2018 & 2019

Rs. in Crores.
Amount Amount % of % of %

2019 2018 Sales Sales Change

2019 2018

Income from operation 4974.19 4223.52 100 100 0

(-) Operating Expenses 3325.62 2884.27 66.86 68.29 (1.43)

Operating Profit 1648.57 1339.25 33.14 31.71 1.43

(-) Non Operating

Expenses 1407.41 1145.52 28.29 27.12 1.17

(+) Non Operating Income 58.53 48.92 1.18 1.16 0.02

Net Profit Before Tax &

Depreciation 299.69 242.65 6.02 5.75 0.28

(-) Depreciation 47.32 44.59 0.95 1.06 (0.10)

Net profit before tax and

extraordinary item 252.37 198.06 5.07 4.69 0.38

(-) Extraordinary item 0.00 0.00 0.00

Net Profit Before Tax 252.37 198.06 5.07 4.69 0.38

(-) Tax expenses 65.63 52.77 1.32 1.25 0.07

PAT 186.74 145.29 3.75 3.44 0.31

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 Session: 2017-20

COMMON SIZE BALANCE SHEET

A common size balance sheet presents not only the standard information contained in

a balance sheet, but also a column that notes the same information as a percentage of the total

assets (for asset line items) or as a percentage of total liabilities and shareholders' equity (for

liability or shareholders' equity line items).

It is extremely useful to construct a common size balance sheet that itemizes the

results as of the end of multiple time periods, so that you can construct trend lines to ascertain

changes over longer time periods. The common size balance sheet is also useful for

comparing the proportions of assets, liabilities, and equity between different companies,

particularly as part of an industry analysis or an acquisition analysis.

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 Session: 2017-20
COMMON SIZE BALANCE SHEET
For the Year 2018 & 2019
In comparison to Capital Employed
Rs. in Crores
Particulars Amount Amount % of Capital % of Capital %
2019 2018 Employed 2019 Employed 2018 Change
1. SHAREHOLDERS' FUNDS
(a) Share Capital 23.89 23.89 3.45 2.33 1.12
(b) Reserves and Surplus 496.15 427.41 71.59 41.63 29.96

NON CURRENT LIABILITIES

LOAN FUND 28.15 430.57 4.06 41.93 (37.87)
OTHER LONG TERM
LIABILITIES 144.89 144.91 20.91 14.11 6.79

Capital Employed 693.08 1026.78

CURRENT LIABILITIES
TRADE PAYABLES 336.2 239.68 48.51 23.34 25.17
OTHER CURRENT LIABILITIES 643.06 216.03 92.78 21.04 71.74

TOTAL Sources of funds 1672.34 1482.49

APLICATION OF FUNDS 1672.34 1482.49
NON CURRENT ASSETS
(a) Fixed Assets
(i) Tangible Assets 370.63 298.68 53.48 29.09 24.39
(ii) Intangible assets 8.46 5.02 1.22 0.49 0.73
(iii) Capital work-in-progress 79.73 11.70 11.50 1.14 10.36
458.82 315.40 66.20 30.72 35.48

(b) Non-current investments 218.40 308.94 31.51 30.09 1.42

( C ) Deffered Tax Assets 0.00 0.00 0.00 0.00 0.00
(d) Long-term loans and advances 125.02 142.13 18.04 13.84 4.20
(e) Other non-current assets 12.12 12.12 1.75 1.18 0.57
814.36 778.59 117.50 75.83 41.67
2. CURRENT ASSETS
(a) Current investments 210.54 236.06 30.38 22.99 7.39
(b) Inventories 382.28 311.20 55.16 30.31 24.85
(d) Trade receivables 52.14 57.26 7.52 5.58 1.95
(e) Cash and bank balances 30.94 28.75 4.46 2.80 1.66
(f) Short term loans and advances 182.08 70.63 26.27 6.88 19.39
TOTAL Current assets 857.98 703.90 123.79 68.55 55.24
Total Application of Funds 1672.34 1482.49

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 Session: 2017-20
RATIO ANALYSIS:
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as ‘the indicated

quotient of two mathematical expressions’ and “The relationship between two or more

things.”

In financial analysis, a ratio is used as a benchmark for evaluating the financial position and

performance of a firm. The absolute accounting figures reported in the financial statements

do not provide a meaningful understanding of the performance and financial position of firm.

A. Short term Solvency:-

Current Ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and

long-term obligations. To gauge this ability, the current ratio considers the current total assets

of a company (both liquid and illiquid) relative to that company’s current total liabilities. The

formula for calculating a company’s current ratio is:

Current Ratio = Current Assets / Current Liabilities

The current ratio is called “current” because, unlike some other liquidity ratios, it

incorporates all current assets and liabilities.

The current ratio is also known as the working capital ratio.

It is an indicator used to measure the Short term Solvency of a company. The ideal
ratio is 2:1
Current ratio =
Current Asset/ Current Liability = 2019 2018
0.876151 1.544689

The current ratio is not good the industry average being 1.5 to 2. The same has also

decreased in the current year as compared to previous Year. The short term liquidity has

therefore been impaired during the current financial year.

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 Session: 2017-20

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 Session: 2017-20

B. Long Term Solvency:

Debt equity Ratio:

Debt/Equity (D/E) Ratio, calculated by dividing a company’s total liabilities by its

stockholders' equity, is a debt ratio used to measure a company's financial leverage. The D/E

ratio indicates how much debt a company is using to finance its assets relative to the value of

shareholders’ equity. The formula for calculating D/E ratios is:

Debt/Equity Ratio = Total Liabilities / Shareholders' Equity

The result can be expressed either as a number or as a percentage.

The debt/equity ratio is also referred to as a risk or gearing ratio.

It is a measure to ascertain the long term financial policies of Company. The ideal

ratio is 1:1

Debt equity ratio=

Long Term Debt/Share Holders Funds

2019 2018

0.092416 0.989497

The debt equity position is strong enough as the industry average is 1:1 The debt position has

decreased as the Loan figure has decreased from by 402.42 Crores.

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 Session: 2017-20
C. Capital Turnover Ratio:

Working capital turnover is a measurement comparing the depletion of working

capital used to fund operations and purchase inventory, which is then converted into sales

revenue for the company. The working capital turnover ratio is used to analyze the

relationship between the money that funds operations and the sales generated from these

operations. A high working capital turnover ratio shows a company is running smoothly and

has limited need for additional funding. Money is coming in and flowing out on a regular

basis, giving the business flexibility to spend capital on expansion or inventory. A high ratio

may also give the business a competitive edge over similar companies.

Working Capital Turnover= Sales/ Capital Employed

It shows whether the capital utilization leads to higher profit or not.

Capital Turnover Ratio=
Sales / Capital Employed
2019 2018
713.7762 408.8821
There has been a huge increase in the ratio because of the repayment of the Loan in the
current year..

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 Session: 2017-20
D. Fixed asset Turnover ratio:

The fixed-asset turnover ratio is, in general, used by analysts to measure operating

performance. It is a ratio of net sales to fixed assets. This ratio specifically measures how able

a company is to generate net sales from fixed-asset investments, namely property, plant and

equipment (PP&E), net of depreciation. In a general sense, a higher fixed-asset turnover ratio

indicates that a company has more effectively utilized investment in fixed assets to generate

revenue.

The fixed-asset turnover ratio is calculated as:

Fixed Asset Turnover Ratio: Net Sales/ Net Fixed Assets

It shows the extent to which the investment of the fixed assets contributes to words sales:
Fixed asset turnover ratio:
Net Sales/Net Fixed Assets
2019 2018

1078.209 651.2825

The same has increased in the current year and is very healthy one.

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 Session: 2017-20
E. Net profit Ratio:

The net profit percentage is the ratio of after-tax profits to net sales. It reveals the

remaining profit after all costs of production, administration, and financing have been

deducted from sales, and income taxes recognized. As such, it is one of the best

measures of the overall results of a firm, especially when combined with an evaluation of

how well it is using its working capital. The measure is commonly reported on a trend

line, to judge performance over time. It is also used to compare the results of a business

with its competitors.

Net profit is not an indicator of cash flows, since net profit incorporates a number of

non-cash expenses, such as accrued expenses, amortization, and depreciation.

The formula for the net profit ratio is to divide net profit by net sales, and then multiply

by 100. The formula is:

(Net profit ÷ Net sales) x 100

The measure could be modified for use by a nonprofit entity, if the change in net assets

were to be used in the formula instead of net profit.

Net Profit/ Sales

2019 2018
3.77 3.46
The net profit as a % of sales has increased by 0.31 % only. The same needs to be enhanced.

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 Session: 2017-20

CHAPTER-IV

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 Session: 2017-20
FINDINGS:

Analysis of Comparative Income Statement

From the above it is observed that the turnover of the company has increased by 17.77 over

previous Year. Other incomes have also increased by 19.64 %. Total revenue of the company

has been increased by Rs.17.79% over previous Year. Total expenses have also increased by

17.33 % over previous year. Profit before tax has shown a increase of 27.42% over previous

year and net profit after tax has shown a rise of 28.53% over previous year. The earnings per

share has also increased by Rs. 3.47 per share. Over all the result of the company has been

favourable when compared to previous year.

Analysis of Comparative Balance Sheet

From the above it is observed that the Fixed assets of the company has increased by 68.03

crores over previous year. There has been a major decrease in the Loans of the company. The

same has decreased by 402.44 crores over previous Year. However the current Liabilities

have also increased by 523.55 crores over previous year. Non-current investments have been

liquidated to the tune of Rs.90.28 Crores. The current assets have also increased by 21.89%.

However the increase in liabilities have not been compensated equally, as a result the current.

Overall the Short term solvency of the company has degraded and needs to be enhanced. The

company needs funds to operate the company,

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 Session: 2017-20
Analysis of Common Size Income Statement

From the above it is evident that the company has almost faired in the same way as in the

previous year. The operating expenses in relation to sales has decreased by a mere 1.43%

which has resulted the increase in operating profit by 1.43% in relation to sales of previous

year. The net PBDT has increased by 0.28% in relation to sales over the previous year. PBT

has also increased in relation to sales by a mere 0.38%. PAT has also increased by 0.31 over

previous year in relation to sales. Although the profit has increased in absolute terms the

same in relation to sales has been stable.

Analysis of Common Size Balance Sheet

From the above it is evident that the capital employed of the company has decreased by

333.7 crores over previous year. The major change being due to repayment of long term

borrowings. The non-current assets(Fixed assets) have increased by 35.48 % in relation to

capital employed over previous year. Borrowed funds have decreased by 31.08 % in relation

to capital employed as compared to previous year figures. Reserves have increased in relation

to capital employed by 29.96% over previous year. Current assets of the company has

increased in absolute terms and the same as % of capital employed has increased by 110.48

% over previous year. Current Liabilities have also shown similar trend . The same increased

in absolute terms and also as a % Capital employed by 89.47% Over previous Year. The

major change in the financial position is the decrease of borrowed funds replaced by short

term liabilities and thus putting the short term liquidity into jeopardy.

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 Session: 2017-20
SUGGESTIONS

From the analysis at the previous pages it is evident that the current ratio of the

company has fallen to a large extend. The company has repaid outside loan to a large

extend by liquidating the current assts. The capital employed has therefore fallen by 32.5 %

against previous year. The company urgently needs funds in order to honour the short term

liabilities and operate the company properly. The company has also invested Rs.79.73

crores in capital work in progress which needs to be completed and put to use at an earliest.

The operational profit of the company has been achieved at almost par with the previous

year, The same needs to be strengthened further.

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 Session: 2017-20

CONCLUSION

On the basis of the study of the financial results of the company and its comparison

to the previous year figures it is evident that the volume of operations of the company has

increased in the current period, however the profitability has been just about the same level.

There was a cash crunch in the current year which has resulted the Current ratio to fall

below 1:1. Notwithstanding that the profitability of the company has been maintained the

company urgently needs to raise funds to support the working capital requirement. Overall

the company is still in profits and expansions programmes are in progress, it can be said the

long terms goals of the company would be achieved.

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 Session: 2017-20
BIBLIOGRAPHY

Books:

1. General Accountancy
by Gupta and Agarwal
2. Fundamental of Accounting
by S PAUL
3. Advanced Accounting
by Paul M. Fischer, William J. Taylor, Rita H. Cheng,
4. Accounting Information Systems
by Marshall B. Romney, Paul John Steinbart
5. Management Accounting
by Tata McGraw Hill – Khan & Jain

Newspapers & Magazines:

1. Economics Times

2. Times of India

3. India Today

4. Business Times

Websites:

1. www.Infosys.com

2. www.equitymaster.com

3. www.moneycontrol.com

4. www.google.com

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