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    Corporate Finance: Topic: Company Analysis "Infosys"

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    Anuradha Singh
    The document analyzes various financial metrics of Infosys including leverage, profitability, liquidity, and capital structure. It finds that Infosys has low operating leverage but higher financial leverage in earlier years. Profitability ratios like ROA and ROE are highest in 2019, while interest coverage is lowest. The company's debt ratio is consistently 1 and dividend yield was highest in 2019 despite lower earnings per share that year. Overall, the analysis provides insights into Infosys' financial performance and position over recent years based on standard metrics.

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    Corporate Finance: Topic: Company Analysis "Infosys"

    Uploaded by

    Anuradha Singh
    65 views6 pages
    The document analyzes various financial metrics of Infosys including leverage, profitability, liquidity, and capital structure. It finds that Infosys has low operating leverage but higher financial leverage in earlier years. Profitability ratios like ROA and ROE are highest in 2019, while interest coverage is lowest. The company's debt ratio is consistently 1 and dividend yield was highest in 2019 despite lower earnings per share that year. Overall, the analysis provides insights into Infosys' financial performance and position over recent years based on standard metrics.

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    CORPORATE FINANCE

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    The document analyzes various financial metrics of Infosys including leverage, profitability, liquidity, and capital structure. It finds that Infosys has low operating leverage but higher financial leverage in earlier years. Profitability ratios like ROA and ROE are highest in 2019, while interest coverage is lowest. The company's debt ratio is consistently 1 and dividend yield was highest in 2019 despite lower earnings per share that year. Overall, the analysis provides insights into Infosys' financial performance and position over recent years based on standard metrics.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    65 views6 pages

    Corporate Finance: Topic: Company Analysis "Infosys"

    Uploaded by

    Anuradha Singh
    The document analyzes various financial metrics of Infosys including leverage, profitability, liquidity, and capital structure. It finds that Infosys has low operating leverage but higher financial leverage in earlier years. Profitability ratios like ROA and ROE are highest in 2019, while interest coverage is lowest. The company's debt ratio is consistently 1 and dividend yield was highest in 2019 despite lower earnings per share that year. Overall, the analysis provides insights into Infosys' financial performance and position over recent years based on standard metrics.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 6

    CORPORATE FINANCE

    TOPIC: COMPANY ANALYSIS


    “INFOSYS”
    SUBMITTED TO: SUBMITTED BY:
    PROF. PUNEET DUBLISH ANURADHA SINGH
    (PGSF1910)
    PGDM(SM)
    INDUSTRY OF IT
    INFOSYS
    capital structure
    1. leverage
    DOL=%change in EBIT/% change in sales
    SALES PBDIT DEP. EBIT % CHANGE IN SALES %CHANGE IN EBIT DOL
    73,107.00 21,526.00 1,599.00 19,927.00 11,166.00 19.00 0.001702
    61,941.00 21,316.00 1,408.00 19,908.00 2,652.00 970.00 0.365762
    59,289.00 20,269.00 1,331.00 18,938.00 5,306.00 1,338.00 0.252167
    53,983.00 18,715.00 1,115.00 17,600.00 6,683.00 802.00 0.120006
    47,300.00 17,711.00 913 16,798.00 47,300.00 16,798.00 0.355137

    DEGREE OF OPERATING LEVERAGE:


    The operating leverage states about the high portion of the fixed operating costs with the
    comparison of variable operating costs. It likewise implies that the organization can get
    more cash-flow from each extra deal while keeping its fixed costs unblemished.
    The low operating leverage states that the company uses less fixed assets to support the
    core business of the company. Infosys is having the low operating leverage in the year 2019
    where as from 2016 to 2018 it was consistently rising.

    DFL= %CHANGE IN NET INCOME / %CHANGE IN EBIT


    NET INCOME = TOTAL REVENUE / TOTAL EXPENSE

    REVENUE EXPENSE NET INCOME %CHANGE IN NET INCOME


    EBIT %CHANGE IN EBIT DFL
    73,107.00 54,433.00 1.34306395 -0.044378931 19,927.00 19.00 -0.002335733
    61,941.00 44,644.00 1.387442881 -0.021449281 19,908.00 970.00 -2.21127E-05
    59,289.00 42,082.00 1.408892163 -0.00154312 18,938.00 1,338.00 -1.1533E-06
    53,983.00 38,274.00 1.410435282 -0.008366085 17,600.00 802.00 -1.04315E-05
    47,300.00 33,338.00 1.418801368 1.418801368 16,798.00 16,798.00 8.44625E-05

    DEGREE OF FINANCIAL LEVERAGE:


    A high level of financial leverage indicates that the small change in the company might bring
    the heavy fluctuation in the company’s profitability.
    In 2015 the company is in having the highest degree of financial leverage in 2018 it went at
    -2.21 the lowest degree of financial leverage. More over a high leverage results into the high
    volatile stock price as the company’s high volatility of the company.
    DEBT EQUITY= total liability /total equity
    total liability total equity debt equity
    62,711.00 2,178.00 28.792929
    63,502.00 1,092.00 58.152015
    68,017.00 1,148.00 59.248258
    61,082.00 1,148.00 53.207317
    48,068.00 574 83.74216

    DEBT EQUITY:
    The higher debt to equity states that the investors haven’t funded the operations as much
    as the company. Till 2018 the company had the more debt equity than the present year.
    The company is more towards high debt in the year 2015 and slowly and consistently its
    debt equity drop down.

    Solvency ratio= Profit after tax+ depriciation)/ total liabilities


    profit after tax
    depriciation total liabilities solvency ratio
    14,702.00 1,599.00 16,301.00 62711 0.259938
    16,155.00 1,408.00 17,563.00 63502 0.276574
    13,818.00 1,331.00 15,149.00 68017 0.222724
    12,693.00 1,115.00 13,808.00 61082 0.226057
    12,164.00 913 13,077.00 48068 0.272052

    SOLVENCY RATIO:
    Solvency ratio is more stating about the company investments. It is used to measure the
    company’s ability to meet the long term obligations.
    The company is having highest solvency in the year 2018 with 0.276574 as the company has
    its highest profit earned in that year. Therefore the company is having the ability to meet its
    current year obligations also as the drop in the solvency ratio is not too high.

    Times interest earned= EBIT / interest earned


    EBIT INTEREST TIMES INTEREST EARNED
    19927 21,526.00 0.925717737
    19908 21,316.00 0.933946331
    18938 20,269.00 0.934333218
    17600 18,715.00 0.940422121
    16798 17,711.00 0.948450116

    TIMES INTEREST EARNED:


    The ratio demonstrates how many times a corporation has been able to pay the interest
    with its pre-tax income, so the greater proportions are naturally considered more beneficial
    than the smaller ones. The company has highest interest times earned in the year 2018 and
    small difference is changed in the year 2019.

    BASIC EARNING POWER= EBIT / TOTAL ASSETS


    EBIT TOTAL ASSETS BEP
    19927 62711 0.317759245
    19908 63502 0.313501937
    18938 68017 0.278430392
    17600 61082 0.288137258
    16798 48068 0.34946326

    BASIC EARNING POWER :


    The company highest basic earning power in the year 2019 and followed by in the year 2018
    the company has more f its earning power this year due to the highest EBIT in present year.
    It states about the company is capable of the assets to meets its EBIT.

    ROA= NET INCOME / TOTAL ASSETS


    NET INCOME TOTAL ASSETS ROA
    75,959.00 62711 1.211254804
    65,960.00 63502 1.038707442
    62,351.00 68017 0.916697296
    56,989.00 61082 0.932991716
    51,049.00 48068 1.06201631

    RETURN ON ASSETS:
    States about the company efficiency that how effectively they can convert there assets into
    the net income or profit of the company.
    The company is having more of the ROA in the year 2019 as the company has more of its net
    income in the that year. The company’s return on assets vary because of the net income
    earned by the company.

    ROE= NET INCOME / SHAREHOLDERS EQUITY


    NET INCOME SHAREHOLDERS EQUITY ROE
    75959 2,178.00 34.87557392
    65960 1,092.00 60.4029304
    62351 1,148.00 54.31271777
    56989 1,148.00 49.64198606
    51049 574 88.93554007

    RETURN ON EQUITY:
    Used to see how efficiently a company can make its shareholders to use there money to
    expand the size of the company and to generate its profits.
    The company is having a higher return on equity is the year 2017 even though the
    shareholders invested highest in the year 2019.

    DIVIDEND DECISION
    1. DEBT = TOTAL LIABILITIES / TOTAL ASSETS
    TOTAL LIABILITIES TOTAL ASSETS DEBT
    62,711.00 62,711.00 1
    63,502.00 63,502.00 1
    68,017.00 68,017.00 1
    61,082.00 61,082.00 1
    48,068.00 48,068.00 1

    DEBT ANALYSIS:
    The debt of the industry has a benchmark which is directly stating about the devts used in
    the company. The Infosys company is one of the company who creates a benchmark in
    entire industry. Therefore the debt of the company is equal to 1.

    2. INTEREST COVERAGE RATIO= EBIT / INTEREST EXPENSE


    EBIT INTEREST EXPENSE ICR
    19927 54,433.00 0.366083075
    19908 44,644.00 0.445927784
    18938 42,082.00 0.450026139
    17600 38,274.00 0.459842191
    16798 33,338.00 0.503869458

    INTEREST COVERAGE RATIO:


    Low interest coverage ratio means the company has low amount of profits available in the
    company to meet its interest expense on the debt. The company has lowest ICR in the year
    2019 as the interest expense of the company is higher than in other year.
    3.DIVIDEND YIELD= ANNUAL DIVIDEND / EPS
    ANNUAL DIVIDEND EARNINGS PER SHARE DIVIDEND YIELD
    13,768.00 33.75 407.9407407
    7,500.00 73.97 101.3924564
    6,980.00 60.16 116.0239362
    5,570.00 55.26 100.796236
    5,111.00 105.91 48.25795487

    DIVIDEND YIELD:
    Investors are interested in the dividend yield ratio as they wants to have a outlook towards
    the cashflow of the company. The company has the highest yield in the year 2019 as the
    company has the highest annual dividend in 2019. The company had the earning per share
    quite low because to its profits earned this year was low than the last year which made the
    fall in there earnings per share.

    WORKING CAPITAL MANAGEMENT


    1.WORKING CAPITAL= CURRENT ASSETS-CURRENT LIABILITIES
    CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL
    32,863.00 62,711.00 -29,848.00
    35,004.00 63,502.00 -28,498.00
    33,188.00 68,017.00 -34,829.00
    40,822.00 61,082.00 -20,260.00
    33,095.00 48,068.00 -14,973.00

    WORKING CAPITAL MANAGEMENT:


    The working capital management analysis is taken in the view with the concept of
    company’s determined liquidity and sufficiency of current assets in comparison with its
    current liability. The company has more of working capital in 2015 as the company’s liability
    were less in comparison with all the other years.

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