Professional Documents
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Submitted To:
Submitted By:
Biranchi N Panigrahi
Asst. Prof (Finance)
KIIT School of Management
Purnendra Shrivastava
Shivam Kumar Mahto
14202118
14202078
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C E R T I F I C A T E
This is to Certify that the project entitled Analysis of Annual Report on Tata
Consultancy services is being carried out by Name of the Students in partial
fulfilment for the award of degree of Master in Business Administration, KIIT
University, Bhubaneswar during the academic year 2014 2016 under my
supervision. The matter embodied in this project is original and has not been
submitted for the award of any other degree.
Date: 04.01.2015
Place: KSOM, Bhubaneswar
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ACKNOWLEDGEMENT
We thankfully acknowledge the golden guidance given by Asst. Prof. Biranchi N
Panigrahi (Finance) of KSOM, KIIT, without whose enthusiastic support and
blessing, this project would not have taken its shape.
He guided us throughout the project to complete this in the presentable manner.
We would also like to thank our parents for their motivation in making this
project a success. I wish to avail ourselves of this opportunity to express a sense
of gratitude and love to our friends and for their manual support, strength, and
help and for everything.
Date:-04.01.2014
Place: KSOM, Bhubaneswar
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CONTENTS
Introduction5
Companys Balance Sheet, Income and Cash Flow Statements..6-14
Ratio Analysis15-27
Liquidity Ratio...15
Current ratio.15
Quick Ratio..15
Turnover/Activity Ratio16-18
Stock Turnover Ratio...16
Avg. Days to Sell Inventories..17
Days Sales Outstanding....18
Debt Management Ratio..19-20
Debt to Equity Ratio...19
Interest Coverage Ratio...20
Assets Management Ratio....20-21
Fixed Asets Turnover Ratio....20
Total Asset Turnover Ratio.....21
Profitability Ratio..22-24
Operating Margin Ratio...22
Profit Margin Ratio..22
Return on Assets Ratio.....23
Return on Equity Ratio.24
Market Value Ratio....24-27
Earning Per Share.24
Dividend Per Share...25
Dividend Payout Ratio..26
P/ E Ratio..27
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INTRODUCTION
Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service,
consulting and business solutions company headquartered in Mumbai, Maharashtra. TCS operates in 46
countries. It is a subsidiary of the Tata Group and is listed on the Bombay Stock Exchange and the National
Stock Exchange of India. TCS is the largest Indian company by market capitalization and is the largest Indiabased IT services company by 2013 revenues. TCS is now placed among the Big 4 most valuable IT services
brands worldwide. In 2013, TCS is ranked 40th overall in the Forbes World's Most Innovative Companies
ranking, making it both the highest-ranked IT services company and the top Indian company. It is the world's
10th largest IT services provider.
Tata Consultancy Services Ltd., incorporated in the year 1995, is a Large Cap company (having a market cap
of Rs 503559.58 Cr.) operating in Information Technology sector.
Tata Consultancy Services Ltd. key Products/Revenue Segments include Information Technology &
Consultancy Services which contributed Rs 63332.83 Cr to Sales Value (97.92% of Total Sales), Sale of
Equipment & Software Licences which contributed Rs 1340.10 Cr to Sales Value (2.07% of Total Sales), for
the year ending 31-Mar-2014.
For the quarter ended 30-Sep-2014, the company has reported a Standalone sales of Rs. 18405.05 Cr., up
5.54% from last quarter Sales of Rs. 17438.43 Cr. and up 10.82% from last year same quarter Sales of Rs.
16607.72 Cr. Company has reported net profit after tax of Rs. 4991.68 Cr. in latest quarter.
The companys management includes Mr.Suprakash Mukhopadhyay, Mr.Ajoyendra Mukherjee, Mr.Rajesh
Gopinathan, Mr.Suprakash Mukhopadhyay, Dr.Ron Sommer, Dr.Vijay Kelkar, Mr.Aman Mehta, Mr.Cyrus
Mistry, Mr.Ishaat Hussain, Mr.N Chandrasekaran, Mr.O P Bhatt, Mr.Phiroz Vandrevala, Mr.V Thyagarajan,
Prof.Clayton M Christensen.
Company has Deloitte Haskins & Sells as its auditors. As on 30-Sep-2014, the company has a total of
1,958,727,979 shares outstanding.
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RATIO ANALYSIS
A. LIQUIDITY RATIO: Liquidity ratios analyze the ability of a company to pay off both its current
liabilities as they become due as well as their long-term liabilities as they become current.
1. Current Ratio =
Current Assets
Current Liabilities
Crores
RATIO
2013-14
Current Ratio =
Current Assets
Current Liabilities
2012-13
2011-12
= 34834.81
12265.70
= 23330.54
9498.81
= 2.84 : 1
= 2.45 : 1
= 16535.79
8835.48
= 1.87:1
3
1.87
2.5
2
1.5
1
0.5
0
2011-12
2012-13
2013-14
Analysis:
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Crores
RATIO
2013-14
2012-13
2011-12
= 34834.81-8.57-0
= 34826.24
= 23330.54-6.34-0
= 23324.2
= 16535.79 4.14
= 16531.65
= 12265.70-0
= 12265.70
= 9498.81-80.02
= 9418.79
= 8853.48 0
= 8853.48
= 34826.24
12265.70
= 2.84 :1
= 23324.2
9418.79
= 2.48 : 1
16531.65
8853.48
= 1.87:1
3
2.5
1.87
2
1.5
1
0.5
0
2011-12
2012-13
2013-14
Analysis:
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Crores
RATIO
2013-14
2012-13
2011-12
= 64672.93 20453.17
= 48426.14 13503.41
= 38858.54 11335.56
= 44219.76
= 34922.73
= 27522.98
= 0.54+0.61
2
= 0.58
= 0.54+0.54
2
= 0.54
= 0.52+0.53
2
= .53
= 34922.73
0.54
= 64671.72 times
= 27522.98
.53
= 51930.15 times
= 44219.76
Stock Turnover Ratio =
0.58
Cost of Goods Sold
=
76240.97
times
Average Stock / Inventory
80000
70000
51930.15
60000
50000
40000
30000
20000
10000
0
2011-12
2012-13
2013-14
Analysis:
2.
It represents Relative size of inventory and amount of cash available to payoff its certain liabilities.
A less Inventory turnover ratio means a company has less cash tied up in Companys Inventory in
associating with Cost of Goods or services that are to be rendered & Viceversa.
Stock (Inventory) of Company has been increased, and depicting significant cost structure is ensured
in holding Inventory which ultimately reflects companies has build up inventory as compared to
previous years & diluting companies performance.
Average days to sell Inventory = No. Of Days / Months in a Year
Stock Turnover Ratio
Crores
RATIO
2013-14
=
365
76240.97
= 0.0048 days
2012-13
=
365
64671.72
= 0.0056 days
2011-12
=
365
51930.15
= 0.0070 days
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0.007
0.0048
0.006
0.005
0.004
0.003
0.002
0.001
0
2011-12
2012-13
2013-14
3.
X 365
Crores
RATIO
2013-14
2012-13
= 14471.89 X 365
64672.93
= 82 days
= 11202.32
48426.14
2011-12
X 365 = 8936.76
38858.54
= 84 days
365
= 84 days
84
84
83.5
83
82
82.5
82
81.5
81
2011-12
2012-13
2013-14
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Analysis:-
The days sales outstanding formula shows investors and creditors how well companies' can collect
cash from their customers. Obviously, sales don't matter if cash is never collected. This ratio measures
the number of days it takes a company to convert its sales into cash.
A lower ratio is more favorable because it means companies collect cash earlier from customers and
can use this cash for other operations. It also shows that the accounts receivables are good and won't be
written off as bad debts.
Companies with high days sales ratios are unable to convert sales into cash as quickly as firms with
lower ratios.
C. DEBT MANAGEMENT RATIOS: Debt Management Ratios attempt to measure the firm's use
of Financial Leverage and ability to avoid financial distress in the long run. These ratios are also
known as Long-Term Solvency Ratios. Debt is called Financial Leverage because the use of debt can
improve returns to stockholders in good years and increase their losses in bad years. Debt generally
represents a fixed cost of financing to a firm.
1. Debt to Equity Ratio = Debt
Equity
RATIO
2013-14
Shareholders Fund
= 195.87 + 43856.01
= 44051.88
89.69
44051.88
= 0.002 : 1
2012-13
2011-12
= 295.72 + 32266.53
= 32562.25
=
= 295.72 + 24560.91
= 24856.63
83.10
32562.25
= 0.0026 :1
96.23
24856.63
= 0.0039:1
0.0026
0.003
0.002
0.0025
0.002
0.0015
0.001
0.0005
0
2011-12
2012-13
2013-14
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Analysis:
A ratio of 1 or 1 : 1 means that creditors and stockholders equally contribute to the assets of the
business.
Ratio indicates less contribution from its stockholders and significant contribution from equity towards
generating assets & facilitating funds to ensure operations of business concern. & Less Contributions
from Long terms funds & borrowings adhered for fetching revenues and providing business.
RATIO
2013-14
2012-13
23544.47
23.41
= 1005.74 times
15703.18
30.62
= 512.84 times
2011-12
= 13366.33
16.40
= 815.02 times
1200
815.02
1000
800
512.84
600
400
200
0
2011-12
2012-13
2013-14
Analysis:
It determines the debt servicing capacity of a business enterprise keeping in view fixed interest on
long-term debt.
Higher the ratio better it is.
TCS has an increase in ratio by 492.9 times since last year which shows the degree of protection
creditors have from default on the payment of interest by the company.
D. Asset Management Ratios: Asset management (turnover) ratios compare the assets of a
company to its sales revenue. Asset management ratios indicate how successfully a company is
utilizing its assets to generate revenues.
1. Fixed Assets Turnover Ratio =
Net Sales
Fixed assets
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Crores
RATIO
2013-14
2012-13
= 64672.93
8976.72
= 7.20
2011-12
= 48426.14
6868.13
= 7.05
= 38858.54
5463.44
= 7.11
7.11
7.15
7.05
7.1
7.05
7
6.95
2011-12
2012-13
2013-14
Analysis: It is a measure of the companys ability to generate net sales from fixed-assets investments
A higher value of this ratio shows that the company has been more effective in using the investment in
fixed assets to generate revenue.
There is a increase in the value of the ratio in 2013-14 as compared to 2012-13.
It means that the efficiency of the firm to generate revenues from investment in fixed assets has gone
down.
2. Total Asset Turnover Ratio =
Net sales
Total Asset
Crores
RATIO
2013-14
2012-13
= 64672.93
57604.19
= 1.12
= 48426.14
43012.14
= 1.12
2011-12
= 38858.54
34258.81
=1.13
1.12
2011-12
2012-13
1.12
2013-14
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Analysis:
If a company can generate more sales with fewer assets it has a higher turnover ratio which tells it is a good
company because it is using its assets efficiently. A lower turnover ratio tells that the company is not using its
assets optimally.
E. Profitability Ratio:- Measure a companys ability to generate earnings relative to sales, assets and
equity. These ratios assess the ability of a company to generate earnings, profits and cash flows relative
to relative to some metric, often the amount of money invested. They highlight how effectively the
profitability of a company is being managed.
RATIO
2013-14
X 100
2012-13
2011-12
= 23544.47 X 100
64672.93
= 36.40 %
= 32.42%
= 34.39%
34.39%
32.42%
2011-12
2012-13
2013-14
Analysis: The operating profit margin ratio is a key indicator for investors and creditors to see how businesses
are supporting their operations
A higher operating margin is more favorable compared with a lower ratio because this shows that the
company is making enough money from its ongoing operations to pay for its variable costs as well as
its fixed costs.
2. Profit Margin Ratio =
Net Profit X
Revenue
100
Crores
RATIO
2013-14
2012-13
2011-12
= 18474.92 X 100
64672.93
= 12786.34 X 100
48426.14
= 10975.98 X 100
38858.54
= 28.56%
= 26.40%
= 28.24%
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28.24%
29.00%
28.50%
28.00%
27.50%
26.40%
27.00%
26.50%
26.00%
25.50%
25.00%
2011-12
2012-13
2013-14
Analysis:
The profit margin ratio directly measures what percentage of sales is made up of net income. In other
words, it measures how much profits are produced at a certain level of sales.
Profit margin is an indicator of how efficient a company is and how well it controls its costs. The
higher the margin is, the more effective the company is in converting revenue into actual profit.
Net Income
Total Assets
100
Crores
RATIO
2013-14
2012-13
= 18474.92 x100
57604.19
= 12786.34 x 100
43012.14
= 32.07 %
= 29.72%
2011-12
= 10975.98
100
34258.81
= 32.03%
32.03%
32.07%
32.00%
31.00%
29.72%
30.00%
29.00%
28.00%
2011-12
2012-13
2013-14
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Analysis:
It only makes sense that a higher ratio is more favorable to investors because it shows that the
company is more effectively managing its assets to produce greater amounts of net income.
A positive ROA ratio usually indicates an upward profit trend as well. ROA is most useful for
comparing companies in the same industry as different industries use assets differently. For instance,
construction companies use large, expensive equipment while software companies use computers and
servers
Net Income
X 100
Shareholder Equity
RATIO
2013-14
Crores
2012-13
= 18474.92 X 100
44051.88
= 12786.34
32562.25
= 41.89 %
= 39.20 %
2011-12
X 100 = 10975.98
24856.63
100
= 44.15%
41.89%
43.00%
42.00%
41.00%
39.20%
40.00%
39.00%
38.00%
37.00%
36.00%
2011-12
2012-13
2013-14
Analysis:
This ratio indicates the return which the management is realising from shareholder's equity and shows
how effectively it is been utilised.
Higher the ratio the better is Return on equity.
This year TCS' ratio has increased by 2.69 % which is a good sign for the company which indicates co.
Has increased its sahre capital.
F. MARKET VALUE RATIO: An equation that compares the current stock price to
a financial indicator on the company's financial statements. The most often used indicator is a
company's earnings per share.
1. Earning Per Share =
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Crores
RATIO
2013-14
2012-13
2011-12
0.000008
0.000007
0.000005595
0.000006
0.000005
0.000004
0.000003
0.000002
0.000001
0
2011-12
2012-13
2013-14
Analysis:
This ratio indicates per share earning of a Company in a particular year. It also helps in evaluating the
prevailing market share in the light of profit earning capacity.
In this Higher the ratio the better is the EPS of company.
TCS has increased its EPS by 0.03 % which is a good sign for the company.
RATIO
2013-14
= 3608.63
195,87,27,979
2012-13
3608.63
195,72,20,996
2011-12
3608.63
195,72,20,996
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0.000001843
1.843E-06
1.843E-06
0.000001842
1.842E-06
1.842E-06
2011-12
2012-13
2013-14
Analysis: Objective of computing this ratio is to measure the dividend distributed per equity share.
In this Higher the ratio the better is the DPS.
In this Ratio we can analyse, TCS has not able to increase its Equity Dividend but not even reduced it
as almost same no. Of people invested in company , so TCS is in stable position.
3. Dividend Payout Ratio =
RATIO
2013-14
2012-13
2011-12
= 0.000001842 x 100
0.000009422
= 19.55 %
= 28.26 %
x 100
= 32.94%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
19.55%
2011-12
2012-13
2013-14
Analysis : This ratio indicates the percentage of earnings that the company has distributed in the form of
dividends.
As compared to last year TCS' percentage of Dividend Payout ratio has Decreased by 8.71 % .
A low ratio may indicate the company is using much of its earnings to reinvest in the company in order
to grow further.
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Revenue or turnover or top line is income that a company receives from its normal business activities.
Revenue Growth is used to measure how fast a company's business is expanding. The figure shows the annual
rate of increase/decrease in a company's revenue or sales growth in terms of percentage change from the
previous year.
An ideal company should have an steady upward trend. Year-over-year performance is frequently used by
investors seeking to gauge whether a company's financial performance is improving or worsening.
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BIBLIOGRAPHY
Websites:-
on.tcs.com/AnnualReport2014
economictimes.indiatimes.com Markets Stocks
profit.ndtv.com/topic/tcs-annual-report
www.moneycontrol.com
www.tcs.com/.../Annual%20Reports/TCS_Annual_Report_2012-2013
Books:-
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