case studies for financial analysis of indian companies

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Publication date: 24 November 2023

Teaching notes

This short case provides income statements and balance sheets for a recent year for 7 Indian firms from 7 industries in Exhibits 1 and 2. These firms belong to the following industries.1 Airline2. Banking 3. Information Technology Services 4. Liqour Producer 5. Oild Exploration and Development 6. Pharmaceutical 7. Retail. The task before the students is to evaluate the financial statements given in the exhibits and identify the appropriate industry for each firm.

• Financial Statement Analysis
• Ratio Analysis
• Common-Size Analysis
• Industry Analysis

Nagar, N. (2023), "Identifying the Industry – A Short Case on Financial Statement Analysis", . https://doi.org/10.1108/CASE.IIMA.2023.000035

Indian Institute of Management Ahmedabad

Copyright © 2019 by the Indian Institute of Management, Ahmedabad

You do not currently have access to these teaching notes. Teaching notes are available for teaching faculty at subscribing institutions. Teaching notes accompany case studies with suggested learning objectives, classroom methods and potential assignment questions. They support dynamic classroom discussion to help develop student's analytical skills.

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Financial Performance Analysis of Indian Companies in Information Technology Sector

International Journal of Management Studies

Related Papers

Avinash Pawar

The Indian economy is growing and have a huge potential market with ability to garner wide businesses due to unique business environment and reforms from the government. The economic indicator of comparative gross domestic product have indicated the accelerated growth for India from the last decade. Currently, Indian IT firms are targeting newer business domains with wide and newer footprints across the globe with acquiring new subsidiaries and incorporating new partnerships to fuel this growth. Moreover, Indian IT-ITES industry has a lower debt to equity profile and analysis of stocks is considered as safe investment. Therefore, it becomes essential to study and access the state of financial health in the industry. In this paper, the Indian IT-ITES industry is analysed with the help of financial metrics and standard models of Altman Z-score and Piotroski F-score to compare performance, predict solvency of companies, test the strength of the companies and foresee the future of Indian IT-ITES industry.

Shilpa Kulkarni

The purpose of the article is to make an attempt at analyzing the financial accounts of a chosen information technology company in India, mostly using certain ratios. Booming performance has been a significant issue for management due to the fierce worldwide competition in the market. Knowing an IT company's triviality is essential for evaluating its financial success because of its strategic value to the national interest. Due to its significant contribution to the expansion of the economy, the efficiency of the information technology industry has also taken primordial importance in a developing nation like India. With their cutting-edge technology and elevated service standards, newcomers to the information technology sector have played a leading role in India's financial system. Therefore, IT organisations are constantly looking for ways to restructure their operations for improved performance. With the power of financial statement analysis, these potential developments can be explored. Through the use of statistical tools, graphs, and tables, this paper exemplifies an empirical analysis of the financial statements of a top information technology business in India from several angles. It also provides recommendations for improving the sector's competitiveness. According to the report, Wipro Ltd. has continued to excel in the information technology sector over the past six years, with top-notch financial results. The article is effective for managers, stakeholders, and the foundation in general and offers significant springs of dexterity.

TEST Engineering and Management

Dr. Venkateswararao Podile , manchala raju

The term Financial Analysis is composed of every studies and expertise of operational productivity and cash associated state of affairs of the company. Various techniques and techniques are carried out to contemplate the relationship between diverse proclamations. The Financial proclamations will supply the pertinent and strong realities indoors and outer clients like traders, proprietors resulting from organisation, gifted directors, leasers and government and so on are the clients of those factors who are in any other case referred to as companions of a specialty unit. The exam of economic report will check out the matters in Profit and Loss document and articulation of Balance Sheet. On the off hazard that the information is orchestrated in a vital way, it's going to imply the relationship among the associated matters. It will assist to all of the clients of monetary reviews to take a success desire. Indian Information Technology (IT) agency has assumed an imperative technique in putting India on the arena guide. At present, India has grow to be an innovator in IT and ITES section in anywhere at some point of the arena. IT&BPO factor has gotten one of the noteworthy improvement segments for the Indian financial system. Indian IT branch is the tremendous wellspring of triumphing the some distance off cash via programming and administrations. All the IT agencies shrouded right now rousing execution on offers the the front. Henceforth is the scenario with Profit after Tax in overall phrases. Benefit after Tax to Sales Ratio execution of TCS and INFOSYS is on better issue at above 20%, whilst HCL Technologies and Wipro have stayed among 12% to 19%. The fortunes of Tech Mahindra have declined right now. This is fundamentally because of low responsibility content material fabric inside the capital shape of the commercial enterprise organization. Keeping pace with improvement in Sales, Working Capital necessities of all groups have accelerated. Current Ratio and Debtors Ratio have proceeded with OK with huge coins assets. A near investigation of agencies in created nations and developing international locations is probably regarded to enhance the ends. A skip enterprise and cross country have a observe might be required earlier than we sum up consequences.

IOSR Journals

The corporate sector is the strength of character of the Indian economy, so for as it provides a crucial, efficient and planned system for the enlargement of industrial as well as non-industrial sectors of the economy. There were 11,89,826 active companies as on June 30, 2018," the corporate affairs ministry said. Out of the total number of 17.79 lakh registered companies in India, 5.43 lakh were closed as on 30 June and 1,390 were classified as dormant. The financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenue. This research paper analyzes the financial performance of top ten companies in India. The variables viz sales, profit after tax, market capitalization, change of profit and revenue of the companies were examined over a period of two year.. This study covers

Annals of the Bhandarkar Oriental Research Institute

Meenakshi Anand

Electronic commerce is crucial to the development of communication and information technology. Numerous requests have become hastily transnational and competitive in the era of a globalizing economy. A stable financial system is required for an economy to be strong and thriving. The financial performance of the firm determines how successful it is financially, so it is crucial to understand the organization's directors, based on the analysis, businesses collaborate to boost profit, improve cash flow, and improve the capital structure. they also reduce costs. The objective of this study is to evaluate an e-commerce company's financial performance. In order to accomplish the goal, this study applied the DuPont analysis to estimate the financial rates of ROE. The study establishes that Infoedge's financial performance is strong, which is advantageous for investing. The four businesses are important in their fields. In conclusion, ROE is the most thorough indicator of a business's profitability. It takes into account the many operating, investing, and support-and influencerelated viewpoints that may be expressed.

Shrabanti Pal

Electronic commerce plays a crucial role in advancing information technology as well as communication. In the era of globalizing economics, many markets became progressively international and competitive. In covid-19 pandemic further leads industries in heavily impacted areas to insource towards local production as global trade was blocked, and e-commerce can aid the economy on an outsized scale. Capital structure is the most significant discipline of a company's operations. It acts as a financial tool that helps to work out 'how firms choose their capital structure?' The capital structure of a firm is the composition of its liabilities and therefore it influences the behaviour of the company as well as its performance results and also affects its profitability. This article is designed to provide insight to understand the impact of capital structure on the profitability of E-Commerce companies. This study is concentrated on Indian-listed e-commerce companies. The data has been analysed by using descriptive statistics and correlation models. The study reveals that there has been a positive relationship between independent variables and dependent variables. The findings of the study have put forth that capital structure does have a statistically positive impact on the profitability of businesses.

Journal ijmr.net.in(UGC Approved)

The financial performance measurement is a vital part of every business. And the telecom sector is not apart from it. The telecomm companies needs to observe their competitive financial health along with their customer base. The future of the existence of any company depends upon the present financial position. In this article the financial health of major telecom service providers in India has been evaluated by using ratios. Introduction: In the telecom sector, where the main motive is to earn high profits the financial performance of the organization is most important indicator to evaluate the overall health of the organization. In the current research to examine the financial performance of the companies the ratios has been calculated for each of the selected telecom companies. The first ratio is the return on assets which is the one of the profitability ratio. The firm is expected to be in profits if the return on assets is higher than the cost of borrowing. So the return on assets (ROA) will help us to examine whether the telecom companies are earning enough profit or not. The second ratio included to examine the financial performance of the telecom companies is the debt equity ratio, which shows out of the total fund how much is raised through issues of shares and how much have been borrowed. High debt equity ratio shows that the company has been raising fund through debt where the firm has to pay fixed interest rate irrespective of the profits, which is not consider to be appropriate.

Tuan D Hamidon

In this paper an attempt is made to study the relationship and impact of capital structure on firms " financial performance. To achieve the object of the study financial data is collected from the companies listed and represent in SENSEX index of BSE. The sample Companies are selected base on judgmental sampling. The collected data is processed and analysis with the help of SPSS using descriptive and inferential statistics.The results show that there is a significant relationship and impact of debt equity ratio, short-term debt to total assets, and total assets and total debt on return on equity. KEYWORDS Debt equity Ratio,Financial Performance, Long term debt (LTD) to total assets Ratio, Short term debt (STD) to total assets Ratio and Total debt (TD) to total assets Ratio.

GE-International Journal of Management Research (aarf.asia Journals)

Rahul Sarkar

The main objective of this paper has been to analyse and understand the impact of capital structure practices on profitability of top ten Information Technology (IT) companies in India. This paper investigates the relationship between Capital Structure Ratios (Equity Ratio, Long Term Debt Ratio, and Leverage Ratio) and Profitability Measures (Earning Per Share, Return on Equity) for a period from 2011 to 2015. Descriptive Statistics have been used to throw light on the basic features of the data in Sample. From Descriptive Statistics it is found that IT industry in India is Equity Oriented. Correlation and Regression analysis have been performed to show the relationship between Response (Dependent) variables and Independent Variables. The results of both Correlation and Regression analysis have supported Equity Orientation of IT industry by showing positive association between Equity Ratio and EPS.

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A Study on Financial Analysis of Selective Indian IT Companies Based on Specific Ratios – Research Paper

Authored by dr. sachin bhide, founder and strategy designer at eha management consultancy and manali bedekar, akshata latthe and nihal lodha worked as summer interns at eha management consultancy.

First published on 22 June 2020 by Eha Management Consultancy

Copyright © 2020 Eha Management Consultancy

Dr. Sachin Bhide asserts the moral right to be identified as the author of this work

Introduction

Ratio analysis is like litmus test from financial aspect which will improve your understanding of monetary results and trends over time, and supply key indicators of organizational performance. Ratio Analysis plays crucial role for analyzing financial position, liquidity, profitability, risk, solvency, efficiency, and operations effectiveness and proper utilization of funds of the company.

Objectives of the Study

• To analyze financial performance of Indian information technology (IT) Companies.
• To provide basic knowledge about financial analysis.
• To use Ratio Analysis as a major tool for analyzing performance.

Research Methodology

The researchers have taken companies within information technology (IT) industry as information technology (IT) industry is growing rapidly and changing the shape of Indian business standards. So that the process of analysis will be helpful for determining financial strengths and weaknesses of the information technology (IT) companies

• Having at least one office in Pune
• Listed on stock exchange
• Variety in terms of scale
• Hindustan Computers Limited (HCL)
• Tata Consultancy Services (TCS)
• Persistent Systems

Literature Review

Research gap, data analysis and interpretation.

Interpretation

• EBIT: Earnings before interest and tax
• Capital Employed: Total assets − Current liabilities

Return on Equity/Net worth (ROE) is one of the profitability ratios which measures how company is able to generate profits from the shareholders’ investment in the company. Generally, 15-20% ROE is considered good.

The above table shows that the average ROE of Tata Consultancy Services (TCS) is higher as compared to other four Indian IT Companies. It indicates that the company’s management team is able to efficiently utilize resources provided by investors in equity and accumulated profits of company in generating income.

Earnings Per Share (EPS) is calculated to measure profit available to shareholders on per share basis. Increasing EPS indicates increasing income. It does not indicate how much profit out of that is distributed and how much is retained.

Among all selected Indian IT Companies average Earning Per Share (EPS) of Tata Consultancy Services (TCS) is higher as compared to other companies i.e. Infosys, Persistent Systems, HCL Technologies and Wipro. It indicates that the profit of this is on increasing trends. Companies are doing extremely well in their business.

Return on Asset (ROA) is a profitability ratio which indicates relationship between the profits of a firm and investment of a firm. It measures the profitability of investment. Higher ROA is always desirable.

• Profit margin ratio
• Return on capital employed
• Return on Equity
• Earnings Per Share
• Return on Assets

Limitations to the research

• The ratios are based on historical numbers. Therefore, these ratios always remain same even if performance of the company changes.
• If researchers are using the ratios for analyzing trends, during the period inflationary rate has changed then accuracy of the analysis gets affected.
• The data from the financial statement which researchers are using for the study may have been aggregated in different proportion in the past and therefore doing a trend analysis based on that data doesn’t show a true picture.
• Due to the difference in accounting period, evaluation of the companies becomes challenging.
• A business can do drastic changes in its operations due to certain unexpected needs and thus using the data of the past and making a judgment based on that may not always give a fruitful conclusion.
• Ratio analysis may ignore the qualitative view of the firm.
• The study was only limited to information technology IT sector and also to specific companies.
• In this study the researchers has taken specific five companies so the findings and suggestions are limited to only these companies.
• The researchers have taken only those companies which are having their offices in Pune also.
• The researchers may have made a mistake in any of the ratio calculation in spite of double checking.