RESEARCH PAPER

STUDY ON COMPARATIVE ANALYSIS BETWEEN INFOSYS AND

Tata Consultancy Services
SAAKSHI ARVIND TRIPATHI

STUDENT OF SYBAF

KES SHROFF COLLEGE, MUMBAI

ABSTRACT:

The total financial performance of a firm can be measured using historical financial facts as well as the company's future
soundness and health. Finance is a critical part of business that must be considered when deciding how capable, stable,
liquid, and solvent a firm or organisation is. On the other hand, an investigator could analyse or compare the company's
prior performance and trend in order to ensure that the analysis' results are credible. Ratio analysis is a management tool
that can help you better comprehend financial performance. Ratio analysis provides a common reference point for key
measures of organizational effectiveness. For the two-year period, the information derived from these financial
statements was summarized and used to compute financial ratios.

The goal of this examine turned into to research Financial overall performance of India’s pinnacle IT corporations
victimization precise ratios. The examine turned into comparative inside the nature and turned into accomplished the
use of secondary information. The examine located that profitability in phrases of internet income ratio and Liquidity
ratio of Tata exercise Services (TCS) have been good. This examine makes a specialty of comparing and contrast the
Financial overall performance of two IT giants, TCS & Infosys.

Key words - Financial Performance, Solvent, Ratio Analysis, Liquidity, profitableness and Risk

INTRODUCTION:

Comparative analysis is the process of comparing objects to each other and distinguishing between their similarities and
differences. If a company wants to analyze an idea, problem, theory, or question, comparative analysis can help them
better understand the problem and develop strategies to address it. Comparative analysis has been added as a technique
to check for problems and investment opportunities. The Indian economy is evolving from a slow economy to a fast
economy by having innovative entrepreneurs and meeting the international demand for technology and business
services. In India today, all types of business or non-business transactions, or tasks such as income tax filing, e-tickets,
passport services, etc., are carried out over the Internet. The IT industry plays an important role in leading India to the
international arena and is a very important growth factor for the Indian economy. IT is an important factor in determining
the progress of countries, communities and individuals, and is a powerful tool that enables developing countries.

Infosys Limited is an Indian multinational information technology company that provides business consulting,
information technology, and outsourcing services. The company was founded in Pune and is headquartered in
Bangalore. Infosys is the second largest Indian IT company in 2020 sales after Tata Consultancy Services and the 602nd
largest public company in the world according to the Forbes Global 2000 ranking. As of 2016, it has offices in 22
countries, sales development centers in India, Japan, China, the United Kingdom, Australia and Canada, and is
headquartered in Bangalore, India. Infosys Technologies, Inc. We develop technology-enabled business solutions and
provide them to overseas customers. It provides a wide range of solutions to its international clients and a wide range
of organizations. it has well renowned clients such as Accenture, IBM, US navy, US army and the New York city board
of education.

TCS was founded by the Tata group, a large company, in 1986, a major subsidiary. Tata Consultancy Services (TCS) is
an Indian multinational information technology (IT) services and consulting company headquartered in Mumbai. It is
part of the Tata Group and operates in 149 locations in 46 countries. TCS is the second largest Indian company by
market capitalization and one of the most valuable IT service brands in the world. In April 2018, TCS became the first
Indian IT company to reach a market capitalization of US $ 100 billion and the second in history after a market
capitalization of £ 6. 793 trillion (equivalent to £ 7. 7 trillion or US $ 100). TCS is strengthening its presence in Japan
with local employees, relationships with new clients, and partners who share strategic visions and values. Its potential
customers include CISCO, VODAFONE, SBI, BRITISH TELECOM, TATA McGraw Hill, CITIBANK, WALMART
and NOKIA.

REVIEW OF LITERATURE:

Finance performance was compared to the performance of future potentials. The company's liquidity position was
further examined, and the quick ratio indicated the company's rapid liabilities and creditors, as well as its assets.

did a study employing ratio analysis to investigate financial performance and position. It entails examining the
balance sheet and profit and loss account for a Two-year

OBJECTIVES:

1) To analysis and compare financial performance of Infosys and tcs.

2) To judge the earning capacity, financial soundness and operating efficiency of a business organization.

3) To compare liquidity and profitability of the company.

HYPOTHESIS:

Null: there is no growth in Infosys and tcs.

Alternate: there is growth in Infosys and tcs.

Null: the liquidity, profitability and solvency ratio of Infosys and tcs is less than industrial ratio.

Alternate: the liquidity, profitability and solvency ratio of Infosys and tcs is more than industrial ratio.

RESEARCH METHODLOGY:

Current study is quantitative in nature because researcher obtains the audited financial statement to draw a conclusion.
Sample size taken from two companies viz. Infosys Technologies limited and Tata Consultancy Limited. Collection of
data in this research is secondary source, has been collected through Annual reports of Infosys and TCS industries,
Research papers and another government and private websites. Data analysis of the study done through comparative
analysis and ratio analysis tools such as Liquidity ratio, Current ratio, quick ratio, profitability ratio, net profit ratio,
return on equity, proprietary ratio.

1)COMPARATIVE ANALYSIS OF INFOSYS AND TCS FOR THE YEAR 2020-2021

Income statement for 2021-2020 OF INFOSYS and TCS

PARTICULARS INFOSYS TCS

2021 2020 ABSOLUTE PERCENTAGE 2021 2020 ABSOLUTE PERCENTAGE
CHANGE CHANGE CHANGE CHANGE
INCOME
Revenue From 1,00,472 90,791 9681 10.66 1,64,177 1,56,949 7228 4.61
Operations [Net]
Other Income 2201 2803 -602 -21.48 3,134 4,592 -1458 -31.75

Total revenue 102673 93594 9079 9.70 1,67,311 1,61,541 5770 3.57

Expenses
Operating and direct 13756 13981 -225 -1.61 1,462 1,905 -443 -23.25
expenses
Employee benefit 55541 50887 4654 9.15 91,814 85,952 5862 6.82
expenses
Finance cost 195 170 25 14.71 637 924 -287 -31.06

Depreciation and 3267 2893 374 12.93 4,065 3,529 536 15.19
Amortization
Expenses
Other expenses 3286 3656 -370 -10.12 24,355 26,983 -2628 -9.74

Total expenses 76045 71587 4458 6.23 1,22,333 1,19,293 3040 2.55

Profit and loss before 26628 22007 4621 21.00 43,760 42,248 1512 3.58
tax
Total tax expenses 7205 5368 1837 34.22 11,198 9,801 1397 14.25

Profit and loss for 19423 16639 2784 16.73 32,562 32,447 115 0.35
period

BALANCE SHEET OF 2021-2020 FOR INFOSYS AND TCS

PARTICULARS INFOSYS TCS

2021 2020 ABSOLUTE PERCENTAGE 2021 2020 ABSOLUTE PERCENTAGE
CHANGE CHANGE CHANGE CHANGE
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS

Equity Share Capital 2124 2122 2 0.09 370 375 -5 -1.33

Reserves and Surplus 73855 63031 10824 17.17 86063
83,751 2,312 2.76

Total Shareholders’ 76351 65450 10901 16.66 86433

Funds 84,126 2,307 2.74

Minority Interest 431 394 37 9.39 675

623 52 8.347

NON-CURRENT
LIABILITIES

Deferred Tax 875 968 -93 -9.61 767

Liabilities [Net] 779 -12 -1.54

Other Long Term 6864 5100 1764 34.59 8729

Liabilities 8,311 418 5.03
 Total Non-Current 7739 6068 1671 27.54 9496
Liabilities 9,090 406 4.47

CURRENT
LIABILITIES

Trade Payables 2645

2,852 -207 -7.26 7,860 6,740 1,120 16.62

Other Current 20507

Liabilities 17,432 3,075 17.64 24,901 20,027 4,874 24.34

Short Term Provisions 713

572 141 24.65 1,394 293 1,101 24.34

Total Current 23865

20,856 3,009 14.43 34,155 27,060 7,095 26.22
Liabilities

Total Capital and 108386 130759

Liabilities 92768 15618 16.84 1,20,899 9,860 8.16

ASSETS

NON-CURRENT
ASSETS

Tangible Assets 17354

16,603 751 4.52 18,743 18,935 -192 -1.01
Intangible Assets 2072
1,900 172 9.05 480 283 197 69.61
Capital Work-In- 922
954
Progress -32 -3.35 926 906 20 2.21

Fixed Assets 20348

19,457 891 4.58 20,149 20124 25 0.12
Non-Current 11863
Investments 4,137 7,726 186.75 213 216 -3 -1.39

Deferred Tax Assets 1098

[Net] 1,744 -646 -37.04 3,931 2828 1,103 39.00

32
Long Term Loans and
21 11 52.36 29 29 0 0.00
Advances

Other Non-Current 8233

Assets 7,547 686 9.09 5,359 5755 -396 -6.88

Total Non-Current 47653

Assets 38,192 9,461 24.77 31,479 30662 817 2.66

CURRENT ASSETS
-
Current Investments 2342
4655 -2313 -49.69 29,160 26140 3,020 2,997
Trade Receivables 19294
18,487 807 4.37 30,079 30532 -453 2,997
Cash and Cash 24714
Equivalents 18,649 6,065 32.52 9,329 9666 -337 -3.49

Short Term Loans and 159

Advances 239 -80 -33.47 11,472 8475 2,997 35.36

OtherCurrentAssets 14224
12,546 1,678 13.37 19,232 15419 3,813 24.73
Total Current Assets 60733
54,576 6,157 11.28 99,280 90237 9,043 10.02
Total Assets 108386 92768 15618 16.84
1,30,759 120899 9,860
8.16

2) Liquidity Position of Infosys and TCS: Current ratio and working capital indicates the short term solvency position
of the company. Ideal current ratio is 2:1. A higher value of current ratio shows the sound solvency position of the
company. It implies company can easily pay their short term obligations but it always not good for a company to
maintain higher value of CR as it implies money is blocked into stock.
 INFOSYS TCS
year Current Current Current WC year Current Current Current WC
asset Liabilities ratio (CA- asset Liabilities ratio CA-CL)
CL)
2021 60733 23865 2.74 36868 2021 99,280 34,155 2.92 65125
2020 54,576 20,856 2.88 33720 2020 90237 27,060 3.30 63177
WC=WORKING CAPITAL, CA=CURRENT ASSET, CL=CURRENT LIABILITIES.

Thus, current ratio of Infosys is much better than tcs which means that Infosys has a sound liquidity position in
comparison to TCS as presented by greater value of current ratio in all years.

3)profitability of Infosys and tcs

INFOSYS TCS
YEAR CE EBIT ROCE= Year CE EBIT ROCE=
EBIT/CE
EBIT/CE
2021 36868 26628 0.72 2021 65125 43,760 0.67

2020 33720 22007 0.65 2020 63177 42,248 0.67

CE = Capital Employed, EBIT = Earnings before Interest and Tax and ROCE = Return on capital employed

Return on capital employed of Infosys is high in 2021 and lower in 2020. The results present that there is a consistency in the value
of ROCE of TCS as compare to value of ROCE Infosys in different years as in 2021-2020, the value of ROCE is 0.65 and became
0.72 in 2020 while in case of TCS, it was constant for both the years i.e. 2021 and 2020.average value of Infosys is (1.045) and TCS
is (0.67). which represents the good profitability position of Infosys.

CONCLUSION:

The performance of Infosys and TCS is examined in this study for the years 2021-2020. Many various ratios were
employed to calculate the performance of Infosys versus TCS, and all of the calculated ratios showed that Infosys
outperformed TCS. The higher the liquidity rate, the bigger the company's margin to cover short-term loans, hence
Infosys is in a better position to cover short-term debt than TCS. TCS has maintained its leadership position in terms of
liquidity, profitability, and solvency analyses.