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FINANCIAL RATIOS

A financial ratio is a relative magnitude of two selected

numerical values taken from an enterprise's financial

statements. Financial analysts use financial ratios to compare the

strengths and weaknesses in various companies.

Ratios can be expressed as a decimal value, such as 0.10, or

given as an equivalent percent value, such as 10%.


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Use of Financial ratios

They are relevant in assessing the performance in respect to:

Liquidity Position

Solvency Position

Operating Efficiency

Profitability


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Limitations of Financial Ratios

Calculated from financial statements which are themselves

subject to many limitations

For analysis, many ratios and factors are to be considered

Calculated ratios require comparison

Various terms are to be explained for inter-firm comparison

Price level to be considered while making comparison

Rational analysis is based on judgment of the analyst


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SOLVENCY RATIO

It is used to measure the ability of a company to meet its long

term debts.

Debt Equity Ratio

financial ratio indicating the relative proportion of entity's

equity and debt used to finance an entity's assets.

Interest Coverage RatioICR is a measure of a company's ability to meet its interest

payments.


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ACTIVITY RATIO

It used to measure the relative efficiency of a firm based on its

use of its assets, leverage or other such balance sheet items.

Debtors Turnover Ratio

Inventory Turnover Ratio

Fixed Asset Turnover Ratio

Total Assets Turnover Ratio


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PROFITABILITY RATIO

Profitability ratios measure a companys ability to generate

earnings relative to sales, assets and equity.

Gross Profit Margin

Operating Profit Margin

Net Profit Margin

Return on Capital Employed


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IT Industry

Information Technology is one of the most important

industries in the Indian economy.

In the last ten years the Information Technology industry inIndia has grown at an average annual rate of 30%.

FY2012 is a landmark year


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Key Highlights during FY2012

Aggregate revenues cross the USD 100 billion mark, exports at

USD 69 billion

India was able to increase its market share from 51 per cent in2009, to 58 per cent in 2011.

Net employment generator

The industry exhibited resilience and adaptability in

continually reinventing itself to retain its appeal to clients


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Services and Solutions

Consulting

IT Services

BPO

IT Infrastructure Services

Engineering and Industrial Services

Product Based Solutions

Advertisements


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Financial Ratios of TCS

SL.NO FINANCIAL RATIOS 2011 2012

I) LIQUIDITY RATIO

(a) Current Ratio 2.45 2.41

(a) Quick Ratio 2.43 2.40

II) SOLVENCY/LEVERAGE RATIO

(a) Debt-Equity Ratio 0.01 0.01

(a) Interest Coverage 841.63 435.25

III) ACTIVITY/TURNOVER RATIO

(a) Stock/Inventory Ratio 9386.18 5451.71

(a) Debtors Turnover Ratio 5.59 7.19

(a) Fixed Assets Turnover Ratio 5.39 4.91

(a) Total Assets Turnover Ratio 1.56 1.50


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SL.NO. FINANCIAL RATIOS 2011 2012

IV) PROFITABILITY RATIO

(a) Gross Profit Margin 27.52 28.12

(a) Operating Profit Margin 29.30 29.96

(a) Net Profit Margin 26.15 25.44

(a) Return on Capital Employed 55.31 44.38


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WIPRO

It is a leading Information Technology, consulting and

outsourcing company.

Started in 1981

It has over 130,000 employees and clients across 54 countries

The company operates in four segments: IT products and

services, Consumer care and lighting, Healthcare and

Infrastructure engineering


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