Z-score model

1. WIPRO Prediction of development and bankruptcy
By using ; Z-score model
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SUBMITTED TO
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Dr. SAIYAD KHWAJA SAFIUDDIN
ASSISTANCE PROFESSOR
DEP. MANAGEMENT STUDIES
MANUU
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PRESENTED BY
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SHAHBAZ ALAM
MBA 2nd SEM
ROLL NO. 17MMBA008HY
SUBJECT . FINANCIAL MANAGEMEN
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2. Z-Score model
The Z-score formula for predicting bankruptcy was published
in 1968 by Edward I. Altman, who was, at the time, an
Assistant Professor of Finance at New York University. The
formula may be used to predict the probability that a firm will
go into bankruptcy within two years.
Z-scores are used to predict corporate defaults and an
easy-to-calculate control measure for the financial
distress status of companies in academic studies. The Z-score
uses multiple corporate income and balance sheet values to
measure the financial health of a company.
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3. Cont….
Z-Score mentions three status of financial
stress of a company.
1. Safe zone :- If the final Z-score generated in this
model is higher than 2.99.
2. Grey zone :- if the final Z-score, generated, is
between 1.81 to 2.99.
3. Distress zone :- If the final Z-score is
less than 1.81.
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4. ABOUT WIPRO
1. The company was incorporated on 29 December 1945 in Amalner,
Maharashtra by Mohamed Hasham Premji as 'Western India Vegetable
Products Limited', later abbreviated to 'Wipro‘ .
2. Wipro Limited (Western India Palm Refined Oils Limited or more
recently, Western India Products Limited).
3. Services : digital strategies, business consulting, BPO and IT services
4. Chairman : Azim premji
5. CEO : Abid Ali Neemuchwala.
6. Number of employees: 166790.
7. It’s headquartered in Bengaluru, India.
8. the company shifted its focus to new business opportunities in the IT
and computing industry 1980s.
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5. Balance sheet
Mar '17 Mar '16 Mar '15 Mar '14 Mar '13
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 486.10 494.10 493.70 493.20 492.60
Equity Share Capital 486.10 494.10 493.70 493.20 492.60
Reserves 46,219.50 40,411.10 34,127.90 28,862.70 23,736.90
Networth 46,705.60 40,905.20 34,621.60 29,355.90 24,229.50
Secured Loans 116.10 120.10 114.30 106.00 50.40
Unsecured Loans 6,048.80 6,575.90 5,919.30 4,404.30 3,995.60
Total Debt 6,164.90 6,696.00 6,033.60 4,510.30 4,046.00
Total Liabilities 52,870.50 47,601.20 40,655.20 33,866.20 28,275.50
Mar '17 Mar '16 Mar '15 Mar '14 Mar '135

6. Application Of Funds
Gross Block 10,970.30 10,297.50 9,451.20 9,034.60 8,312.50
Less: Accum. Depreciation 6,608.10 6,108.80 5,412.80 5,059.60 4,403.10
Net Block 4,362.20 4,188.70 4,038.40 3,975.00 3,909.40
Capital Work in Progress 0.00 0.00 361.20 275.10 378.90
Investments 35,146.10 18,463.00 10,768.50 11,036.00 10,904.20
Inventories 355.90 526.20 479.40 228.30 320.50
Sundry Debtors 8,129.90 8,704.80 8,144.20 8,550.90 8,499.40
Cash and Bank Balance 3,516.60 12,007.80 15,667.50 10,554.90 7,800.40
Total Current Assets 12,002.40 21,238.80 24,291.10 19,334.10 16,620.30
Loans and Advances 10,952.10 14,960.90 13,949.30 11,116.70 8,893.80
Total CA, Loans & Advances 22,954.50 36,199.70 38,240.40 30,450.80 25,514.10
Current Liabilities 8,607.00 8,776.90 8,364.70 7,992.60 8,792.80
Provisions 1,679.40 2,798.40 4,388.60 3,878.10 3,638.30
Total CL & Provisions 10,286.40 11,575.30 12,753.30 11,870.70 12,431.10
Net Current Assets 12,668.10 24,624.40 25,487.10 18,580.10 13,083.00
Total Assets 52,176.40 47,276.10 40,655.20 33,866.20 28,275.50
Contingent Liabilities 3,753.70 4,385.10 3,022.20 2,793.40 2,657.80
Book Value (Rs) 192.13 165.56 140.22 119.03 98.38
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7. Profit & loss
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13
12 mths 12 mths 12 mths 12 mths 12 mths
INCOME
Revenue From Operations
[Gross]
45,639.60 44,684.60 41,210.00 38,765.10 33,229.60
Less: Excise/Sevice
Tax/Other Levies
0.00 0.00 0.20 7.90 3.10
Revenue From Operations
[Net]
45,639.60 44,684.60 41,209.80 38,757.20 33,226.50
Other Operating Revenues 408.20 0.00 0.00 0.00 0.00
Total Operating Revenues 46,047.80 44,684.60 41,209.80 38,757.20 33,226.50
Other Income 2,570.00 2,771.50 2,499.00 1,611.20 1,325.30
Total Revenue 48,617.80 47,456.10 43,708.80 40,368.40 34,551.80
EXPENSES
Cost Of Materials Consumed 0.00 0.20 3.40 205.30 354.20
Purchase Of Stock-In Trade 2,186.90 2,655.50 2,456.40 2,285.80 2,347.20
Changes In Inventories Of
FG,WIP And Stock-In Trade
164.00 -53.10 -254.30 0.90 -18.20
Employee Benefit Expenses 21,854.40 21,379.70 19,726.30 18,337.50 15,904.20
Finance Costs 392.10 527.80 362.90 374.70 352.40
Depreciation And
Amortisation Expenses
1,047.70 868.80 778.40 736.70 701.30
Other Expenses 12,285.60 11,595.10 10,078.70 8,819.30 7,705.60
Total Expenses 37,930.70 36,974.00 33,151.80 30,760.20 27,346.70
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8. Profit/Loss Before
Exceptional, ExtraOrdinary
Items And Tax
10,687.10 10,482.10 10,557.00 9,608.20 7,205.10
Profit/Loss Before Tax 10,687.10 10,482.10 10,557.00 9,608.20 7,205.10
Tax Expenses-Continued Operations
Current Tax 2,430.40 2,452.30 2,376.60 2,056.30 1,530.00
Less: MAT Credit
Entitlement
0.00 0.00 0.00 0.00 71.90
Deferred Tax 95.00 -69.20 -12.70 52.40 10.00
Tax For Earlier Years 0.00 0.00 0.00 112.10 86.80
Total Tax Expenses 2,525.40 2,383.10 2,363.90 2,220.80 1,554.90
Profit/Loss After Tax And
Before ExtraOrdinary
Items
8,161.70 8,099.00 8,193.10 7,387.40 5,650.20
Profit/Loss From
Continuing Operations
8,161.70 8,099.00 8,193.10 7,387.40 5,650.20
Profit/Loss For The Period 8,161.70 8,099.00 8,193.10 7,387.40 5,650.20
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13
12 mths 12 mths 12 mths 12 mths 12 mths
OTHER ADDITIONAL INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 33.61 32.97 33.00 30.09 23.03
Diluted EPS (Rs.) 33.51 32.91 33.00 30.01 22.99
VALUE OF IMPORTED AND INDIGENIOUS RAW
MATERIALS
Imported Raw Materials 0.00 0.00 2.60 141.60 242.60
Indigenous Raw Materials 0.00 0.00 0.80 63.70 111.60
STORES, SPARES AND LOOSE TOOLS
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 729.10 1,482.30 2,963.60 1,973.60 1,724.70
Tax On Dividend 148.50 308.50 592.40 335.30 289.20
Equity Dividend Rate (%) 200.00 300.00 600.00 400.00 350.00
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9. FINANCIAL HELTH(2017)
Particular Amount (in cror)
Retain earning
Rs 44910.50
Working capital Rs 4061.10
EBIT Rs 10687.10
Net worth Rs 46705.60
Total assets Rs 63156.90
Sales Rs 46047.80
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10. Calculation of Z- score
1. X1=working capital/Total assets
=4061.10/63156.90
=0.643
3. X3 =EBIT/total assets
=10687.10/63156.90
=0.169
5. X5 =Sales/total assets
=46047.80/63156.90
=0.729
2. X2 =Retain earning/total assets
=44910/63156.90
=0.711
4. X4 =Net worth/total liabilities
=46705.60/52870.50
=0.883
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11. Cont…..
Z-Score = 1.2*X1 + 1.4*X2 + 3.3*X3 + 0.6*X4 + 1.0*X5
= 1.2*0.643 + 1.4*0.711 + 3.3*0.169 + 0.6*0.883 + 1.0*0.729
= 0.7716 + 0.5577 + 0.9954 + 0.5298 + 0.729
= 3.58
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12. Conclusion
The Z-score value of wipro limited is 3.58,
which is higher than 2.99. so the company is
in Safe zone for the year of 2017.
and this is a secure situation for investment in
wipro limited .
there is very less chance of company going
bankrupt in the next two year.
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13. From deep of my heart
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