This document provides an overview and financial analysis of Infosys and TCS through ratio analysis, fund flow analysis, and cash flow analysis. Ratio analysis shows metrics such as liquidity, leverage, activity, profitability, and coverage ratios for 2010-2011 and 2009-2010. Fund flow analysis examines how Infosys and TCS utilized funds from sources like net profit and how they were applied toward uses like dividends, working capital, assets. Cash flow analysis details beginning and ending cash balances and cash from/used in operating, investing and financing activities. Key findings are Infosys has high cash levels that could be better utilized, while TCS focuses on dividends and future growth.

1. Financial Analysis &
Accounting
-presented by:
Rashi Agarwal #118
Kartik Sabharwal #119
Siddhesh Trivedi #121
Manu Shrivastava #211
Radha Thakore #214
Ishan Parekh #315
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2. Infosys – At a glance
• Infosys Technologies Ltd. – started in 1981
• Today, a global leader in IT & consulting
• Infosys defines, designs & delivers technology-
enabled business solutions that help companies
win in a Flat World
• Infosys serves the client globally & is one of the
pioneers in strategic offshore outsourcing of
software services.
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3. TCS – At a glance
• Revenues of $5.7bn
• Employs 1,20,000 staff in over 50 countries
• Founded over 40 years ago
• Customers include 7 of the Global Fortune top
10 companies
• Has partnered with over 750 of the world’s
leading companies
• A top-10 global IT player
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4. Ratio Analysis
• Liquidity Ratios
• Financial Leverage (Debt) Ratios
• Coverage Ratios
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Infosys TCS
2010-2011 2009-2010 2010-2011 2009-2010
Current Ratio 5.22 4.46 2.43 1.49
Acid Test 5.22 4.46 2.43 1.49
Infosys TCS
2010-2011 2009-2010 2010-2011 2009-2010
Debt to Equity Ratio - - - -
Total Debt Ratio - - 0.00 0.00
Debt to Total Assets - - 0.00 0.00
Capital Gearing Ratio - - 1.33 1.86
Long-term Debt to
Total Capitalization
Ratio - - - -
P-E Ratio 31.62 26.98 32.56 30.91
Infosys TCS
2010-2011 2009-2010 2010-2011
2009-
2010
Interest Coverage
Ratio/Time Interval
Earned/Debt Service
Ratio - - - -

5. Ratio Analysis
• Activity/Efficiency/Turnover Ratios
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Infosys TCS
2010-2011 2009-2010 2010-2011 2009-2010
Receivable Turnover Ratio 6.30 6.81 6.19 6.97
Receivable Turnover Ratio in
Days 57.94 53.56 58.93 52.38
Payable Turnover Ratio - - - -
Payable Turnover Ratio in Days - - - -
Inventory Turnover Ratio - - - -
Inventory Turnover Ratio in Days - - - -
Operating Cycle 57.94 53.56 58.93 52.38
Cash Cycle 57.94 53.56 58.93 52.38
Total Asset Turnover 1.08 1.00 1.52 1.53
Fixed Asset Turnover 5.82 5.28 8.70 8.41
Total Capital Turnover 1.32 1.21 2.24 2.93
Working Capital Turnover 1.44 1.68 3.28 6.55

6. Ratio Analysis
• Profitability Ratios
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Infosys TCS
2010-2011 2009-2010 2010-2011 2009-2010
Gross Profit Margin 36.04 37.67 31.03 29.46
Pre-tax Margin 33.25 34.02 29.23 27.43
Net Profit Margin 24.28 26.03 25.23 23.68
Return on Investment 26.30 26.12 38.27 36.29
Return on Equity 26.30 26.12 38.36 36.37
Return on Investment (DuPont) 26.30 26.12 38.27 36.29
Return on Equity (DuPont) 26.30 23.49 38.36 36.37

7. Fund Flow Analysis
• Infosys
• Investments have decreased largely resulting into high liquidity.
This liquid cash is utilized in high dividend payments.
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Sources of funds Uses of funds
net profit before dividend 5910 dividend 3445
Depreciation 300 increase in sundry debtors 968
Decrease in investments 3301
increase in cash and bank
balance
3868
increase in liabilities and
provisions
555 increase in loans and advances 969
increase in deferred tax asset 93
Total 10066
decrease in deferred tax
liabilities
56
increase in capital work in
progress
90
increase in gross block 577
Total 10066

8. Fund Flow Analysis
• TCS
• Most of the surplus is utilized in working capital, issue of dividends, and in
purchase of fixed assets. Since Working Capital of Company is very high,
company is having lot of Current Assets. So we can also say that Funds are
not utilized properly.
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Sources of Funds Uses of funds
Increase in net profit before
dividend
7213.97 Increase in loans and advances 962.77
Depreciation and amortization 497.29
increase in cash and bank
balance
2208.36
Decrease in inventories 1.41 increase in sundry debtors 1474.37
decrease in deffered tax asset 1.1
Decrease in liability and
provisions
886.07
Decrease in investments 2097.9 Decrease in unsecured loans 1.24
Increase Secured loans 6.62
increase in deferred tax liability 29.22
increase in capital work in
progress
404.65
Total 9847.51 Dividend 2751.1
increase in gross block 1158.95
Total 9847.51

9. Cash Flow Analysis
• Infosys
• A large increase in cash and cash equivalent shows that a large
amount of cash is remaining unutilized and serving no purpose to
the company. They are known as dead assets.
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Top of Form (Rs in Crs)
Bottom of Form
Mar-11 Mar-10
Cash Flow Summary
Cash and Cash Equivalents at Beginning of the year 11297 10289
Net Cash from Operating Activities 4275 5787
Net Cash Used in Investing Activities 3235 -3298
Net Cash Used in Financing Activities -3642 -1481
Net Inc/(Dec) in Cash and Cash Equivalent 3868 1008
Cash and Cash Equivalents at End of the year 15165 11297

10. Cash Flow Analysis
• TCS
• High dividend payments indicate that the company is looking forward for
more shareholders and focusing on its future growth and performance.
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Top of Form (Rs in Crs)
Bottom of Form
Mar-11 Mar-10
Cash Flow Summary
Cash and Cash Equivalents at Beginning of the year 293.28 540.65
Net Cash from Operating Activities 5752.67 6278.92
Net Cash Used in Investing Activities -863.16 -4556.64
Net Cash Used in Financing Activities -4605.61 -1969.65
Net Inc/(Dec) in Cash and Cash Equivalent 283.9 -247.37
Cash and Cash Equivalents at End of the year 577.18 293.28

11. Accounts Receivable Management
• Deals with credits & collections policy
• Directly impacts the profitability of the firm
• Credit policy – main influence on accounts
receivable
• Credit policy – two types:
1. Liberal / lenient credit policy
2. Stringent / light credit policy
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12. Accounts Receivable Management
• Now, as calculated
Receivable Turnover in days
• This means that Infosys has a more effective Receivable Collection
Mechanism as compared to that of Tata Consultancy Services.
• Both firms have relaxed their collection policies but Tata Consultancy
Services has shown a more liberal attitude towards receivable collection
as compared to Infosys.
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2010-2011 2009-2010
Infosys 58 Days 54 Days
Tata Consultancy Services 59 Days 53 Days