Financial Analysis of Tcs and Tech Mahindra

Records PROJECT Submitted By: Kriti Singh Roll No: 236 Section-D, LBSIM, Delhi 1. ) Calculation of Ratios: (All figures utilized For estimation are in Rs crores) Liquidity Ratios: 1. Current Ratio Formula: Current Ratio=Current Assets/Current Liability Current Ratio of TCS : For 2012: 23275. 09/10465. 01 = 2. 224 For 2011: 17036. 41/7246. 03 = 2. 3511| | Current Ratio of Tech Mahindra: For 2012: 19809/17007 = 1. 16475 For 2011: 18412/15295 = 1. 20379 2. Fast Ratio Formula: Quick Ratio= Quick Current Assets/Current Liability Quick Ratio of TCS:For 2012: 23257. 32/10465. 01 = 2. 223 For 2011: 17013. 59/7246. 03 = 2. 347 Quick Ratio of Tech Mahindra: For 2012: 19807/17007 = 1. 16463 For 2011: 18406/15295 = 1. 20339 3. Money proportion: Formula: | Cash Ratio of TCS: For 2012: 6003. 37/10465. 01 =0. 5736 For 2011: 4700. 85/7246. 03 =0. 648 Cash Ratio of Tech Mahindra: For 2012: 1389/17007 = 0. 081 For 2011: 1938/15295 = 0. 126 Leverage Ratios: 1. Obligation Assets Ratio: Formula: Debt to Assets = complete obligation/absolute resources Debt-Assets Ratio of TCS: For 2012: 116. 26/41394. 49 =0. 0028 For 2011: 69. 27/32681. 04 =0. 0021Debt-Assets Ratio of Tech Mahindra: For 2012: 11266/63454 = 0. 177 For 2011: 11827/60804 =0. 194 2. Obligation Equity Ratio: Formula: Debt to Equity Ratio = (Short Term Debt + Long Term Debt)/Tangible N. W. Obligation to Equity Ratio of TCS:For 2012: 116. 26/29840. 13 =0. 003 For 2011: 69. 27/24651. 22 =0. 002 Debt to Equity Ratio of Tech Mahindra: For 2012: 11266/34369 = 0. 327 For 2011: 11827/33810 =0. 349 3. Intrigue inclusion Ratio Formula: Interest Coverage Ratio = (EBIT)/interest.Interest inclusion Ratio of TCS: For 2012: 13945. 54/22. 23 =627. 32 For 2011: 11047. 1/26. 48 =417. 18 Interest inclusion Ratio of Tech Mahindra: For 2012: 7494/1025 =7. 3112 For 2011: 9173/1113 =8. 2416 4. Absolute Debt Ratio: Formula: Total Debt Ratio = Total Debt/Capital Employed Total Debt Ratio of TCS: For 2012: 116. 26/30929. 48 =0. 00375 For 2011 : 69. 27/25435. 01 =0. 0027 Total Debt Ratio of Tech Mahindra: For 2012: 11266/46447 = 0. 425 For 2011: 11827/45509 =0. 259 Activity Ratios: 1. Stock turnover Ratio: Formula: Inventory Turnover Ratio = Cost of Goods Sold/Inventory Cost Inventory turnover Ratio of TCS:For 2012: 35398. 69/17. 77 =1992. 04 For 2011: 26907. 89/22. 82 =1179. 132 Inventory turnover Ratio of Tech Mahindra:For 2012: 46638/2 =23319 For 2011: 42861/6 =7143. 5 2. Receivable’s turnover Ratios: Formula: Receivable Turnover Ratio = Sales/Accounts Receivable Receivable’s turnover Ratio of TCS:For 2012: 48893. 83/11520. 35 =4. 244 For 2011: 37324. 1/8194. 97 =4. 554 Receivable’s turnover Ratio of Tech Mahindra:For 2012: 52430/12431 =4. 217 For 2011: 49655/9643 =5. 149 3. Payable turnover Ratios: Formula: Payable Turnover Ratio = Cost/Average Payables Payable turnover Ratio of TCS:For 2012: 35398. 69/3247. 87 =10. 89 For 2011: 26907. 89/2572. 33 =10. 46 Payable turnover Ratio of Tech Mahindra:Fo r 2012: 46638/4684 =9. 956 For 2011: 42861/3034 =14. 126 4. Fixed resources turnover Ratios: Formula: Fixed resources turnover Ratios = Sales/Fixed Assets Fixed resources turnover Ratios of TCS: For 2012: 48893. 83/6564. 97 =7. 4 For 2011: 37324. 51/5440. 98 =6. 85 Fixed resources turnover Ratios of Tech Mahindra: For 2012: 52430/8153 =6. 430 For 2011: 49655/6608 =7. 5143 5. Absolute resources turnover Ratios: Formula: Total resources turnover Ratios = Sales/Total Assets Total resources turnover Ratios of TCS: For 2012: 48893. 83/11520. 35 =4. 244 For 2011: 37324. 51/8194. 97 =4. 554 Total resources turnover Ratios of Tech Mahindra: For 2012: 52430/63454 =0. 826 For 2011: 49655/60804 =0. 816 Profitability Ratios: 1. PBIT Ratio Formula: PBIT Ratio = EBIT/Sales PBIT Ratio of TCS: For 2012: 13945. 54/48893. 83 =0. 285 For 2011: 11047. 1/37324. 51 =0. 959 PBIT Ratio of Tech Mahindra: For 2012: 7494/52430 =0. 1429 For 2011: 9173/49655 =0. 1847 2. PBT Ratio: Formula: PBT Ratio = EBT/Sales PBT Ratio of TCS: For 2012: 13923. 31/48893. 83 =0. 284 For 2011: 11020. 62/37324. 51 =0. 2952 PBT Ratio of Tech Mahindra: For 2012: 5790/52430 =0. 1104 For 2011: 8060/49655 =0. 1623 3. PAT Ratio: Formula: PAT Ratio= EAT/Sales PAT Ratio of TCS: For 2012: 10413. 4/48893. 83 =0. 212 For 2011: 9068. 04/37324. 51 =0. 242 PAT Ratio of Tech Mahindra: For 2012: 4606/52430 =0. 0878 For 2011: 6967/49655 =0. 1403 4. ROA Ratio: Formula: ROA Ratio= EBIT/Total Asset ROA Ratio of TCS: For 2012: 13945. 4/41394. 49 =0. 336 For 2011: 11047. 1/32681. 04 =0. 338 ROA Ratio of Tech Mahindra: For 2012: 7494/63454 =0. 118 For 2011: 9173/60804 =0. 15 5. ROE Ratio: Formula: ROE Ratio= EAT/Stockholder’s Equity ROE Ratio of TCS: For 2012: 10413. 4/29840. 13 =0. 348 For 2011: 9068. 04/24651. 22 =0. 367 ROE Ratio of Tech Mahindra: For 2012: 4606/34369 =0. 134 For 2011: 6967/33810 =0. 206 Analysis of Ratios: Liquidity Ratios: Ratio| TCS| Tech Mahindra| | 2012| 2011| 2012| 2011| Current Ratio| 2. 224| 2. 3511| 1. 16475| 1. 20379| Quick Ratio| 2. 2223| 2. 347| 1. 16463| 1. 20339| Cash Ratio| 0. 5736| 0. 648| 0. 081| 0. 126|Ideal current proportion is 2:1. In the event of TCS in the two years current proportion is practically equivalent to it. It implies organization has quite recently the satisfactory measure of current resources. If there should be an occurrence of Tech Mahindra, Current proportion is short of what it in both the years. Be that as it may, it is as yet more prominent than 1:1. So the organization despite everything has adequate advantages for pay its momentary commitments. Snappy resources implies current resources †stock †paid ahead of time exp. Along these lines, it is progressively traditionalist measure. Perfect fast proportion is 1:1. It shows that TCS and Tech Mahindra have extremely less present interests as far as inventories and prepaid costs so the proportions are practically equivalent to the current ratios.Cash proportion is most preservationist proportion of three as it contains just money and attractive protections. TCS keeps more present resources in real money than Tech Mahindra. Influence Ratios: Ratio| TCS| Tech Mahindra| | 2012| 2011| 2012| 2011| Debt †Assets ratio| 0. 0028| 0. 0021| 0. 177| 0. 194| Debt To Equity Ratio| 0. 003| 0. 002| 0. 327| 0. 349| Interest Coverage Ratio| 627. 32| 417. 18| 7. 3112| 8. 2416| Total Debt Ratio| 0. 00375| 0. 0027| 0. 2425| 0. 259| Analysis of a firm’s capital structure is basic to assess its drawn out hazard and bring possibilities back. Obligation †resources proportion suggests part of complete obligation in capital structure of a company.The more this proportion is the more hazardous organization is on the grounds that cost of obligation is constantly more noteworthy than cost of value. Along these lines, it is wanted to have more measure of value than obligations. For the two TCS and Tech Mahindra, obligation proportion is adequate however TCS has better obligat ion proportion. Premium inclusion proportion quantifies the insurance accessible to leasers as the degree to which profit accessible for intrigue spread intrigue costs. If there should be an occurrence of the two organizations in the two years obligation holders are made sure about as enough benefit is accessible with firm yet if there should be an occurrence of TCS obligation holders are especially secured.Payment of enthusiasm on debentures is constantly liked to installment of profits on value and inclination shares. Action proportions: Ratio| TCS| Tech Mahindra| | 2012| 2011| 2012| 2011| Inventory Turnover Ratio| 1992. 04| 1179. 132| 23319| 7143. 5| Receivable’s Turnover Ratio| 4. 244| 4. 554| 4. 217| 5. 149| Payable Turnover Ratio| 10. 89| 10. 46| 9. 956| 14. 126| Fixed Assets turnover Ratio| 7. 44| 6. 85| 6. 430| 7. 5143| Total Assets Turnover ratio| 1. 18| 1. 142| 0. 826| 0. 816| Activity proportions portray the connection between the firm’s deals/cost of produc ts sold and the advantages expected to support working activities.The higher the proportion, the more effective the firm’s tasks as moderately less resources are required to keep up a given degree of activity. Stock turnover proportion gauges the proficiency of the firm’s stock administration. A higher proportion implies stock doesn't stay in stockrooms for long time. In the two years Tech Mahindra has higher proportion than TCS has. Since both are programming organizations, requirement for stock is extremely less. Subsequently the proportions are so high. Receivable turnover proportion gauges the efficiencies of the organizations credit approaches and demonstrate the degree of interest in receivables expected to keep up the firm’s deals level.The higher this proportion, the lesser the period where account holders pays cash. Its practically comparable for both the organizations for 2011-12. For 2010-11, Tech Mahindra is marginally ahead in contrast with TCS in t his parameter . It infers that Tech Mahindra offers credit to its client for lesser timespan than TCS does. In 2010-11 normal credit time given by TCS is 365/4. 554=80 days approx. while by Tech Mahindra is 365/5. 149=70 days. Payable turnover proportion suggests the time term after which organization makes installments to its lenders. The higher ayable turnover proportion, the previous organization makes installments to its leasers. TCS’s payable turnover proportion is marginally better than that of Tech Mahindra in 2011-12. For 2010-11, Tech Mahindra has preferable payable proportion over TCS as it makes installment to its lenders prior. Fixed resources turnover proportion gauges the effectiveness of long haul venture. This proportion mirrors the degree of deals created by interest underway limit and shows the productivity level of fixed resources. The higher this proportion implies progressively gainful and effective are fixed resources or long haul investments.From table unmistakably ventures of TCS are somewhat more profitable than of Tech Mahindra for 2011-12 however it was opposite by nearly a similar sum for 2010-11. All out resources turnover proportion considers absolute resources rather than just current resources so; it estimates in general efficiencies all things considered (current fixed). TCS has a superior proportion than Tech Mahindra has. Gainfulness Ratios: Ratio| TCS| Tech Mahindra| | 2012| 2011| 2012| 2011| PBIT Ratio| 2. 224| 2. 3511| 0. 1429| 0. 1847| PBT Ratio| 0. 284| 0. 2952| 0. 1104| 0. 1623| PAT Ratio| 0. 212| 0. 242| 0. 0878| 0. 1403| ROA| 0. 336| 0. 338| 0. 118| 0. 150| ROE| 0. 48|