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. Brisk 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 = absolute obligation/all out 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. All out 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. 3 511| 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. If there should arise an occurrence of TCS in the two years current proportion is practically equivalent to it. It implies organization has recently the satisfactory measure of current resources. If there should arise 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 noteworthy than 1:1. So the organization despite everything has adequate resources for pay its momentary commitments. Fast resources implies current resources †stock †paid ahead of time exp. In this way, it is progressively preservationist measure. Perfect brisk proportion is 1:1. It shows that TCS and Tech Mahindra have less present interests as far as inventories and prepaid costs so the proportions are practically equivalent to the current ratios.Cash proportion is most preservation ist proportion of three as it includes 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 fundamental to assess its drawn out hazard and bring possibilities back. Obligation †resources proportion suggests bit 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 liked to have more measure of value than obligations. For the two TCS and Tech Mahindra, obligation proportion is adequate however TCS has better obligation proportion. Premium inclusion proportion gauges the security accessible to banks as the degree to which income accessible for premium spread premium costs. If there should arise an occurrence of the two organizations in the two years obligation holders are made sure about as enough benefit is accessible with firm however in the event of TCS obligation holders are especially secured.Payment of enthusiasm on debentures is constantly wanted 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 merchandise sold and the benefits expected to continue working activities.The higher the proportion, the more productive the firm’s tasks as generally less resources are required to keep up a given degree of activity. Stock turnover proportion gauges the effectiveness of the firm’s stock administration. A higher proportion implies stock doesn't stay in distribution centers 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. Thus 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 comparative for both the organizations for 2011-12. For 2010-11, Tech Mahindra is marginally ahead in contrast with TCS in this par ameter . It suggests that Tech Mahindra offers credit to its client for lesser timeframe 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 infers the time length 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 somewhat better than that of Tech Mahindra in 2011-12. For 2010-11, Tech Mahindra has preferred payable proportion over TCS as it makes installment to its loan bosses prior. Fixed resources turnover proportion quantifies the proficiency of long haul speculation. 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 increasingly beneficial and proficient are fixed resources or long haul investments.From table unmistakably ventures of TCS are marginally more gainful than of Tech Mahindra for 2011-12 yet it was opposite by nearly a similar sum for 2010-11. All out resources turnover proportion considers complete resources rather than just current resources so; it estimates by and large efficiencies everything being equal (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|