Professional Documents
Culture Documents
Project Report
On
Financial Analysis
Of
Presented to
Preface
As a part of our syllabus of BBA programme in Final year, we are assigned some
practical and theoretical project work. In partial fulfillment of the Managerial
Accounting, course we have prepared a comprehensive project report in Financial
Analysis of the company.
Study of management will be immaterial if it is not coupled with study of financial aspect
of the business. It gives the student an opportunity to learn the connection between
comparison & execution to test & verify application of theories & help in the comparison
of management theories and practice. The study gives a chance to know about the
profitability and financial position of the firm.
We have chosen Wipro Limited which is a $3.5 Billion Global company in Information
Technology Services ,R&D Services, Business Process Outsourcing.
This report contains the analysis of the 5 years data of the company. The Financial
statements of the report are analyzed in three different ways such as
Trend Analysis
Horizontal Analysis
Ratio Analysis
Cashflow Analysis
The ratio analysis of the company has been derived for 23 ratios which help to determine
the companys performance. In the Scenario Analysis of the company we have included
the companys industrial GDP, its Market Share, Market Capitalization, Market Growth
etc.
Date: 20th December ,2015
Place: Nagpur
Acknowledgement
With a sense of gratitude and respect, we would like to extend our heartiest thanks
to all of those who provided help and guidance to make this project a big success. No
Project is ever the outcome of single individuals talent or effort. This work is no
exception. This project would not have been possible without the whole hearted
encouragement, support and co-operation of our guide, friends and well-wishers.
Although it is not possible for us to name and thank them all individually, we must make
special mention of some of the personalities and acknowledge our sincere indebtness to
them.
The successful completion of this project rests on the shoulder of many persons who have
helped us directly or indirectly. We wish to take this opportunity to express to all
those, without whose help, completion of this project would have been difficult. We
are indebted and thankful to all the individuals who have guided, advised, inspired
and supported us in making this project a success.
Our gratitude to our honorable guide Prof. Nikunj Patel for giving us the
opportunity for developing the project and his able guidance, inestimable motivation and
constant encouragement throughout our project. Without his help this project would never
have been realized in its entirety.
We are especially thankful to our Head Of Department Prof. Bhavin Pandya for
his valuable support in providing us the facilities and his valuable guidance for the
development of this project.
Date: 20th December ,2008
Place: Kadi
Executive Summary
It is Summarize tin of all report in one or two pages so as to provide an overview of the
company. it is also called synopsis or Abstract. As a partials fulfillment of the
requirement for the Managerial Accounting Cource.We have completed a project report
on financial Analysis of Wipro Ltd.
Net worth of the company is increased in this year because of increase in Reserve
& Surplus
Current Ratio of Wipro limited is showing good position. It is 1.26 Times in 200304 then it is increased to 2.13 Times in 2007-08 this shows Company has achieved
standard Ratio.
The EPS of Share is increased Rs. 7.43 to Rs 20.62 in 2007-08 So Share holder
are benefited.
Companys Total Assets are increased and it trying to expand its business on the
other hand debt are also increased it shows that company trying to Trading on
Equity.
CONTENT
Preface
Acknowledgement
Executive Summary
1. INTRODUCTION
1.1 Introduction to company
1.2 Group of companies
1.3 History
1.4 Company Profile
1.5 Registered office address
1.6 Board of director
1.7 Auditor
2. RATIO ANALYSIS
2.1 Introduction of the ratio analysis
2.2 Liquidity ratio
2.2.1 Current ratio
2.2.2 Quick ratio
2.2.3 Net working capital
2.3 Profitability ratio
2.3.1 Gross profit
2.3.2 Operating ratio
2.3.3 Net profit ratio
2.3.4 Return on investment
2.3.5 Return on equity
2.4 Assets turnover ratio
2.4.1 total asset turn over ratio
2.4.2 net fixed asset turn over
2.4.3 inventory turn over ratio
2.4.4 average age of inventories
2.4.5 debtor turn over ratio
2.5 Finance structure ratio
2.5.1 debt ratio
2.5.2 debt equity
2.5.3 interest coverage ratio
2.6 Valuation ratio
2.6.1 earning per share
2.6.2 divident pay out ratio
2.6.3 P/E ratio
2.6.4 Profit margin ratio
2.7 Du-Pont chart
3 ANNEXURES
5
4 BIBLIOGRAPHY
Chapter 1.
Introduction
Introduction to company
Group Companies
History
Company Profile
Registered Office Address
Board of Directors
6
Auditors
1. INTRODUCTION
1.1. Introduction of company
Wipro Limited (Wipro), together with its subsidiaries and associates (collectively, the
company or the group) is a leading India based provider of IT Services and Products,
including Business Process Outsourcing (BPO) Services, globally. Further,Wipro has
other business such as India and AsiaPac IT Services and products and Consumer
Care and Lighting. Wipro is headquartered in Bangalore, India.Wipro Technologies is
a global services provider delivering technology-driven business solutions that meet
the strategic objectives clients. Wipro has 40+ Centers of Excellence that create
solutions around specific needs of industries. Wipro delivers unmatched business
value to customers through a combination of process excellence, quality frameworks
and service delivery innovation. Wipro is the World's first CMMi Level 5 certified
software services company and the first outside USA to receive the IEEE Software
Process Award.
Wipro is a $3.5 billion Global company in Information Technology Services, R&D
Services, Business process outsourcing. Team wipro is 75,000 Strong from 40
nationalities and growing. Wipro is present across 29 counries,36 Development
canters, Investors across 24 countries.
Largest third party R&D Service provider in the world.
Largest Indian Technology Infrastructure management service provider.
A vendor of choice in the middle east
Among the top 3 Indian BPO Service provider by Revenue (* Nasscom)
Among the top 2 Domestic IT Services companies in India (*IDC India)
Wipro Inc.
cMango Pte Ltd.
Wipro Japan KK
Wipro Shanghai Ltd.
Wipro Trademarks Holding Ltd.
Wipro Travel Services Ltd.
Wipro Cyprus Private Ltd.
Wipro Consumer Care Ltd.
Wipro Health Care Ltd.
Wipro Chandrika Ltd.(a)
Wipro Holdings (Mauritius) Ltd.
Wipro Australia pty Ltd.
WMNETSERV Ltd.(a)
Quantech Global Service Ltd.
3D Network Pte Ltd.
Planet PSG Pte Ltd.
Spectramind Inc.
1.3. History
Wipro started in 1945 with the setting up of an oil factory in Amalner a small town in
Maharashtra in Jalgaon District. The product Sunflower Vanaspati and 787 laundry
soap (largely made from a bi-product of Vanaspati operations) was sold primarily in
Maharashtra and MP. The company was aptly named Western India Products Limited.
The Birth of the name Wipro - As the organization grew and diversified into
operations of Hydraulic Cylinders and Infotech, the name of the organization did not
adequately reflect its operations. Azim Premji himself in 1979 selected the name
"Wipro" largely an acronym of Western India Products. Thus was born the Brand
Wipro. The name Wipro was unique and gave the feel of an 'International" company.
So much so that some dealers even sent their cheques favouring Wipro (India)
Limited. Fortunately, the banks accepted them!!By the early 90s, Wipro had grown
into various products and services. The Wipro product basket had soaps called Wipro
Shikakai, Baby products under Wipro Baby Soft, Hydraulic Cylinders branded Wipro,
PCs under the brand name Wipro, a joint venture company with GE named Wipro GE
and software services branded Wipro. The Wipro logo was a 'W", but it was not
consistently used in the products.It was clearly felt that the organization was not
leveraging its brand name across the various businesses. The main issue remained
whether a diverse organization such as Wipro could be branded under a uniform look
and feel and could there be consistent communication about Wipro as an organization.
1.4.Company Profile
Business-Description
Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services
Company globally. Wipro provides comprehensive IT solutions and services,
including
systems
integration,
Information
10
Systems
outsourcing,
package
The Global IT Services and Products segment accounted for 74% of the Company's
revenues and 89% of its operating income for the year ended March 31, 2007 (fiscal
2007). Of these percentages, the IT Services and Products segment accounted for 68%
of its revenue, and the BPO Services segment accounted for 6% of its revenue during
fiscal 2007.
11
Customized IT solutions
Wipro provides its clients customized IT solutions in the areas of enterprise IT
services, technology infrastructure support services, and research and development
services. The Company provides a range of enterprise solutions primarily to Fortune
1000 and Global 500 companies. Its services extend from enterprise application
services to e-Business solutions. Its enterprise solutions have served clients from a
range of industries, including energy and utilities, finance, telecom, and media and
entertainment. The enterprise solutions division accounted for 63% of its IT Services
and Products revenues for the fiscal 2007.
Technology Infrastructure Service
Wipro offers technology infrastructure support services, such as help desk
management, systems management and migration, network management and
messaging services. The Company provides its IT Services and Products clients with
around-the-clock support services. The technology infrastructure support services
division accounted for 11% of Wipro's IT Services and Products revenues in fiscal
2007.
Research and Development Services
Wipro's research and development services are organized into three areas of focus:
telecommunications and inter-networking, embedded systems and Internet access
devices, and telecommunications and service providers.The Company provides
software and hardware design, development and implementation services in areas,
such as fiber optics communication networks, wireless networks, data networks, voice
switching networks and networking protocols. Wipro's software solution for
embedded systems and Internet access devices is programmed into the hardware
integrated circuit (IC) or application-specific integrated circuit (ASIC) to eliminate
the need for running the software through an external source. The technology is
particularly important to portable computers, hand-held devices, consumer
electronics, computer peripherals, automotive electronics and mobile phones, as well
as other machines, such as process-controlled equipment. The Company provides
software application integration, network integration and maintenance services to
12
13
Azim H . Premji
Chairman
Dr Ashok S Ganguly
B .C. Prabhakar
Practitioner of Law
14
N.Vagual
Bill Owens
Former Chief Ex.Officer,Nortel
P. M. Sinba
Former Chairman Pepsico India Holdings
Azim Premji
Chairmen & Managing Director
15
1.7. Auditors
KPMG
16
Audit committee
N Vaghul
Chairman
P M Sinha
Member
B C Prabhakar
Member
- Member
P M Sinha
- Member
- Chairman
Azim H Premji
- Member
17
Chapter 2.
Ratio Analysis
Introduction To The Ratio Analysis
Liquidity Ratios
Profitability Ratios
Finance Structure Ratios
Valuation Ratios
The Du-Pont Chart
18
2. RATIO ANALYSIS
2.1Introduction Of The Ratio Analysis
Ratio analysis involves establishing a comparative relationship between the
components of financial statements. It presents the financial statements into various
functional areas, which highlight various aspects of the business like liquidity,
profitability and assets turnover, financial structure. It is a powerful tool of financial
analysis, which recognizes a companys strengths as well as its potential trouble
spots.
It can be further classified as in different categories of Ratio.
Liquidity Ratios
Profitability Ratios
Asset Turnover Ratios
Finance Structure Ratios
Valuation Ratios
2.1Liquidity Ratio
Liquidity refers to the existence of the assets in the cash or near cash form. This ratio
indicates the ability of the company to discharge the liabilities as and when they
19
Current Assets
Current Liabilities
Year
Ratios
Current Ratio
2003-04
2004-05 2005--06
1.26
1.58
1.44
20
2006-07
1.67
2007-08
2.13
21
Quick Assets
Current Liabilities
Year
Ratios
Quick Ratio
2003-04
2004-05 2005--06
1.2
1.5
1.4
2006-07
2007-08
1.6
2.0
22
In 2005-06 quick ratio is decreased because the increase in quick assets is less
proportionate to the increased quick liabilities.
The Quick ratio was at its peak in 2007-08, while was lowest in the 2004-05.
2.2.3 Networking Captial
Networking capital = Current Assets Current Liabilities
Net working capital
2003-04
2004-05
2005-06
Year
Trend
4534.3
10497.8
13798.0
2006-07
2007-08
28050.0
61577.0
This ratio represents that part of the long term funds represented by the net
worth and long term debt, which are permanently blocked in the current
assets.
It is Increasing Double than year by year because of assets increasing fast than
liabilities.
23
24
X 100
Sales
Year
Trend
31.7
32.6
33.7
2007-08
33.0
25
COGS+Operating expences
X 100
Sales
Year
Trend
Operating ratio
2003-04
2004-05
2005--06
83.5
80.0
79.0
2006-07
2007-08
77.9
81.7
26
From the graph conclusion is made that company is not on the right track by
efficiently cutting down manufacturing, administrative and selling distribution
expenses.
27
x 100
Net sales
Year
Trend
2003-04
16.3
19.4
2006-07
2007-08
19.8
17.7
19.2
28
EBIT
X 100
Total Assets
Year
Trend
Return On Investment
2003-04
2004-05
2005--06
32.7
39.7
2006-07
2007-08
30.6
18.6
35.7
29
30
Year
Trend %
2003-04
22.2
Rate of return on
equoty
2004-05
2005--06
11.5
7.1
2006-07
2007-08
10.0
5.5
31
Output
Input
Assets are inputs which are deployed to generate production (or sales). The same set
of assets when used intensively produces more output or sales. If the asset turnover is
high, it shows efficient or productive use of input.
The following Assets Turnover Ratios are calculated for the company.
32
Sales
Total Assets
Year
Trend
1.5
1.6
1.5
2007-08
1.2
33
Sales
Net Fixed Assets
Year
Time
2003-04
4.0
4.9
Interpretation
34
4.0
2.4
Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2006
and after that it has strated decline.Because sales as wellas assets boths are equally
increase.
Net Fixed Assets Turnover Ratio is increasing year by year because of Sale is
increasing continuously.
It indicates that the company maximizes the use of its fixed assets to earn profit in
the business so that whatever amount is invested by company in fixed asset, gives
maximum productivity which helps to increase sales as well as profit.
35
COGS
Average stock
Year
Time
30.3
22.6
24.3
19.8
16.0
This ratio indicates the waiting period of the investments in inventories and is measured
in days, weeks or months. Inventory turnover and average age of inventories are inversely
related.
Average age of Inventories Ratio =
360 days
Inventory Turnover
Year
Days
2003-04
11.9
15.9
14.8
2007-08
18.2
22.4
37
Debtor turnover ratio: The debtor turnovers suggest the no. of times the amount of
credit sale is collected during the year.
Debtors Turnover Ratio =
Sales
Average Debtors
Year
Time
2003-04
4.9
3.8
3.7
2007-08
3.7
1.5
38
Finance Structure Ratios indicate the relative mix or blending of owners funds and
outsiders debt funds in the total capital employed in the business. It should be noted that
equity funds are the prime fund which increase progressively through reinvestment of
profits, while outside debt funds are supplementary funds and are added at the discretion
of the management.
The following Finance Ratios are calculated for the company.
Debt Ratio
Debt-Equity Ratio
39
Trend
2003-04
0.0284
Debt Ratio
2004-05 2005-06
0.0165
0.0114
2007-08
2006-07
0.384
0.0383
40
2006-07
0.030
2007-08
0.376
41
EBIT
Interest
Year
Trend
2003-04
3.4
4.5
2006-07
4.2
2007-08
21.9
42
P/E Ratio
Profit Margin
43
Year
Trend(Rs.)
2003-04
7.43
2006-07
20.62
2007-08
22.62
44
2007-08
3.43
45
20003-04
31.36
Year
Trend
P/E Ratio
2004-05
19.91
2005-06
15.85
2006-07
11.30
200708
10.30
In 2004-05 P/E Ratios is high means Share price of company is Stable and Share
holder are interested to invest in the companys share.
But in 2006-07 P/E Ratio is Falling down word So company share price is not as
stable as compare to previous year.
46
Year
Net Sales and Services
PAT
Ratio
PAT/Sales*100
32829
2006-07
149982
29,421
2005-06
106030
20674
2004-05
81605.6
16285.4
2003-04
58400.23
10315
16%
20%
19%
20%
18%
2007-08
199796
The ratio is shows equal for middle three year it means the company has maintain
the equal ratio for year 2005 to 2007.
The ratio shows decline in current year it is bad sign for the company.
47
ROA (IN %)
2007-08
2006-07
2005-06
2004-05
2003-04
30.88
53
63.08
67.8
75.6
2007-08
0.16
2007-08
1.93
2006-07
2005-06
2004-05
2003-04
0.20
0.19
0.20
0.18
2006-07
2005-06
2004-05
2003-04
2.65
3.32
3.39
4.20
Sales
Sales
2007-08 32829
2007-08 199575
2007-08 199575
2007-08 103160
2006-07
2005-06
2004-05
2003-04
2006-07 149751
2005-06 106164
2004-05 81596
2003-04 58648
2006-07
2005-06
2004-05
2003-04
2006-07
2005-06
2004-05
2003-04
29421
20674
16285
10315
48
Figure 5. 24 The Du-Point Chart
149751
106164
81596
58648
Asset
56535
31951
24049
13969
Interpretation
DuPont chart shows that how profitability is there in the business. When profit margin
is multiplied by total Assets turnover ratio that gives ROA. Profit Margin is obtained
by dividing PAT by Total sales. Total Asset Turnover is obtained by the sales divided
total assets.
Total Assets turnover is decreasing in current year because of huge increase in net fix
assets and net current asset which is more than double compare to previous year.
The Chart shows the total assets turnover that indicate the companys efficiency in
utilizing its assets.
49
FIND
INGS
Though the sales has been continuously increased from past 3 years but the
proportionate expenditure is also rising so overall not making any huge effect on net
profit of this company.
Hear the in 2005 company has reinvest profit for business expansion it is good
shine for the company.
Fixed assets are efficiently utilized by the company due to which the profit of the
company is increasing every year.
Company has enough cash in hand so that in any condition company can take
Any Financial decision easily.
All the years has quick ratio exceeding 1, the firm is in position to meet its
immediate obligation in all the years.
GP Ratio shows how much efficient company is in Production.
50
SUG
GESTION
The companys future plans for expansion seem clear due to increased
investment in Fixed Assets .Efficient use of these Assets has enabled the
company to observe an increased profit.
Though the companys sale is continuously rising but the net profit is not so
much increased so management should take some steps to decrease its
expenses.
The profit margin ratio shows decline in current year so that company should
tray to increase profit after tax
Current ratio is very good it is 2.13:1 so company has fully utilize cash
liquidity for business development.
51
Annexure
52
ANNEXURE-1
BALANCE SHEET
Rs (In Million)
2007-08
2006-07
2005--06 2004-05 2003-04
SOURCES OF FUNDS
Share Holder's Funds
Share Capital
2923
2918
2852 1407.14
465.52
Share application money
pending a
40
35
75
12.05
Reserves & Surplus
113991
93042
63202 51407.1
37083.7
Share holder's Equity
116954
95995
66129 52826.3
37549.5
Loan Funds
Secured
2072
1489
451
215.89
947.47
Unsecured
42778
2338
307
405.03
105.88
Total Loan Funds
44850
3827
758
620.92
1053.35
Minority Interest
116
29 265.33
163.84
Total Sources of Funds
161920
99851
66887 53712.6
38766.7
APPLICATION OF FUNDS
Fixed assets
Goodwill
42209
9477
3528 5663.16
5252.36
Gross Block
56280
35287
24816 20899.6
15607.1
Less:
Accumulated Depreciation
28067
18993
12911 9951.77
7599.48
Net Block
28213
18294
11905 10947.9
8007.63
Capital work in progress and
advances
13370
10191
6250 2603.85
1427.28
Total Fixed Assets
83792
37962
21683 19214.9
14687.3
Investments
16022
33249
30812 23504.9
19058.8
Deferred Tax Assets(Net)
529
590
594
495
486.3
Current Assets, Loans & Advances
Inventories
6664
4150
2065 1747.25
1292.02
Sundry Debtors
40453
29391
21272 15518.3
11865.6
Cash & Bank Balances
39270
19822
8858 5713.57
3242.7
Loan & Advances
29610
16387
12818 5562.85
5683.78
Total Current Assets
115997
69750
45013
28542
22084.1
Less:
Current Liabilities & Provisions
Current Liabilities
39890
33667
18527 12742.1
8894.2
Provisions
14530
8033
12688 5302.14
8655.58
53
Total Liabilities
Net Current Assets
Total Application of Funds
54420
61577
41700
28050
54
31215
13798
18044.2
10497.8
17549.8
4534.28
ANNEXURE-2
PROFIT & LOSS ACCOUNT
RS. (In Million)
2007-08
2006-07
2005-06
2004-05
2003-04
201451
203970
151,330
1348
149982
2963
152945
106805
775
106030
1536
107566
82330.3
724.7
81605.6
944.79
82550.3
59161.07
760.84
58400.23
1315.99
59716.22
140224
102420
71484
54081.4
39150.23
14216
9547
7003
5638.13
5401.64
10750
124
7866
119957
32988
3868
35
5265
83787
23779
3391
56.12
3826.91
63602.6
18947.8
2749.59
3097.15
35.07
47684.39
12031.83
1680.56
333
29120
6
295
20388
-1
288
16198.2
88.12
175.33
10351.27
-59.19
22.92
32829
29,421
20674
16285.4
10315
2919
1489
7238
1459
1268
7129
1000
3478.84
493.38
5818.98
931.04
864.85
22575
19456
12545
12313.2
2700.13
22.62
22.51
20.62
20.41
14.7
14.48
11.7
11.6
14.87
14.85
1,451,127,719
1,426,966,318
1,406,505,974
1,391,554,372
693,870,390
1,458,239,060
1441.469,952
1,427,915,724
1,404,334,256
694,545,321
Income
Gross Sales and Services
Less: Excise Duty
Net Sales and Services
Other Income
Total Income
Expenditure
Cost of Sales and Services
Selling and marketing
expenses
General and administrative
expenses
Interest
Total Expenditure
1655
199796
4174
1690
166900
37070
4550
32520
Minority interest
Share in earning of Associates
-24
Appropriations
Interim dividend
Proposed dividend
Tax on dividend
TRANSFERTO GENERAL
RESERVE
5846
55
ANNEXURE-3
CASH FLOW STATEMENT FOR THE YEAR ENDED ON MARCH 31
Rs(In Million)
2008
2007
2006
2005
2004
5359
1166
-595
1690
-2802
-771
-174
3,978
1,078
457
125
-2,118
-588
-10
3,096
688
65
35
-1,069
-238
-8
2,456.24
342.62
92.45
56.12
715.15
35.59
109.8
1971.85
-11885
-5157
-1565
6182
28518
-5459
-3670.41
-359.89
-281.5
2748.13
-594
-1568.36
23059
-2162.36
-132.77
-762.41
-107
-14226
479
56
541
9,458
4,704
2,576.58
40
35
63
12.05
238.6
-1690
-12632
-74970
110641
-125
-8,875
142
1825
-35
56.12
-3,998 7,575.76
-268 -200
432.43
55
35
266.19
21985
2495
266
19476
11013
3154
2469.95
-958.77
19822
-28
8858
-49
5714
-10
3242.7
0.92
4210.08
-8.61
39270
19822
8858
5713.57
3242.7
57
-262.36
463.02
147.53
-5209 12954.48
Bibliography
58
BIBLIOGRAPHY
Books:
Annual Report of Wipro Limited for Financial Year 2004-05, 2006-07,2007-08.
Narayanaswamy R., (1998): Financial Accounting: A Managerial Perspective,
Prentice-Hall of India Private Ltd, New Delhi., Third Edition, Reprint 2003
Khan M.Y. and Jain P.K., (1992):Financial Management, Tata McGraw-Hill
Publishing Co Ltd., New Delhi., Third Edition.
.
Websites
http://www.wipro.com
http://www.bseindia.com//shareholding/shareholding_new.asp
http://www.cmie.com//indutries//gdp.asp
http://www.wipro.com/investors/annual_reports.htm
http://www.wipro.com/investors/pdf_files/AR07_08_first_book_final.pdf
http://www.wipro.com/investors/pdf_files/AR07_08_second_book_final.pdf
http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_1.pdf
http://www.wipro.com/investors/pdf_files/Wipro_AR_2006_07_Part_2.pdf
http://www.wipro.com/investors/pdf_files/Wipro_annual%20report_2005-06.pdf
http://www.wipro.com/investors/pdf_files/Wipro_Annual_Report_2004_2005.pdf
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