www.ijpub.

org © 2018 IJCRT | Volume 6, Issue 1 January 2018 | ISSN: 2320-2882

A STUDY ON WORKING CAPITAL MANAGEMENT

OF INFOSYS LTD
1
M.Dhanabhakyam, 2K.Bharanidevi
1
Associate professor, 2M.Phil Scholar
School of commerce, Bharathiar University.

ABSTRACT: For a successful working of a business organization fixed and current assets play a vital role as organization
generally invests in these options. An attempt has been made in this paper to study the working capital components and
the analysis of working capital management of Infosys companies. The study is based on secondary data collected from
annual reports of Infosys companies for the period 2007 to 2017The various components for measuring the working
capital management include the Current ratio and Quick ratio on the Net profitability position of the Indian companies.

INTRODUCTION:
Working capital management commonly involves monitoring cash flow, assets and liabilities through ratio analysis of key
elements of operating expenses, including the working capital. Current assets include cash, marketable securities, inventory,
accounts receivable and other short-term assets to be used within the year. Current liabilities include accounts payable and the
current portion of long-term debt. These are debts that are due within the year. From the technical point of view there continues to
be difference of opinion about definition of working capital. Gross working capital concept and net working capital concept are
two different concepts. Gross working capital concept emphasises on the quantitative aspect, while net working concept
highlights upon qualitative aspect.
REVIEW OF LITERATURE
Chandra Bihas, Chouhan Vineet and Goswami Shubham Chandra Bihas, (2012)analyse the trends and profitability vis-à-vis
working capital of some selected information technology organizations in India. The author concludes with the observation that
the increased requirement of working capital in IT companies is significantly established. The positive direction of relationship
indicates that increase in working capital leads to increase in profitability.
Joshi Lalitkumar and Ghosh Sudipta (2012) study the working capital performance of Cipla Ltd during the period 2004-05 to
2008-09. Financial ratios have been applied in measuring the working capital performance, and statistical as well as econometric
techniques have been used. It was observed that the selected ratios show satisfactory performance, and significant negative
relationship between liquidity and profitability is found to exist.
Singh Moirangthem B. and Singh Tejmani N. (2013) emphasize on the efficient management of working capital. According to
them it means proper management of various components of working capital due to which adequate amount of working capital
and liquidity is maintained in the larger interest of successful running of an enterpriseThe industry should also try to maintain
balance between liquidity and profitability position by improving current ratio and quick ratio.
Kaur Harsh V. and Singh Sukhdev (2013) analyse empirically BSE 200 manufacturing companies spread over 19 industries for
the period 2000 to 2010. The study tests the relationship between the working capital score and profitability measured by income
to current assets and income to average total assets. At the end, the study emphasizes that efficient management of working
capital significantly affects profitability.
Joseph Jisha (2014) closely examines the study of working capital management in Ashok Leyland and points out that the liquidity
and profitability position of the company is not satisfactory, and needed to be strengthened in order to be able to meet its
obligations in time.

OBJECTIVES OF THE STUDY.

 Using the score to evaluate the liquidity position of Infosys IT companies by using Altman Z score.
METHODOLOGY:
For evaluating Working Capital Management of infosysIT companies in 10 year’s data from 2007 to 2017 have been collected.
COLLECTION OF DATA
Secondary data are used for the study. The data required are collected through the published financial statements such as
profit and loss accounts & balance sheet, additional information were obtained from the executives of company.

IJPUB1801097 International Journal of Creative Research Thoughts (IJCRT) www.ijpub.org 597

www.ijpub.org © 2018 IJCRT | Volume 6, Issue 1 January 2018 | ISSN: 2320-2882

ANALYSIS OF CURRENT RATIO OF INFOSYS LTD. (Rs. In Cr.)

Year Current Assets Current Current

Liabilities Ratio

2007-08 37.50 14.83 2.53

2008-09 41.95 15.44 2.72
2009-10 41.73 19.95 2.09
2010-11 178.77 18.80 9.51
2011-12 234.461 24.54 9.55
2012-13 267.66 31.81 8.41
2013-14 314.36 45.03 6.98
2014-15 363.49 57.00 6.38
2015-16 389.74 68.01 5.73
2016-17 301.13 115.18 2.61
Average 5.65
Standard Deviation 131.75
Correlation 0.68

Sources: Annual Reports.

INTERPRETATIONS
The above table lime lights that the current ratio of selected company was highest during the year 2011-12 (9.55) and
lowest in 2009-10 (2.09). A higher ratio indicates that there sufficient assets available with the organization which can be
converted in cash, without reduction in the value. During the study period the average of current ratio is 5.65 and the standard
deviation is 131.75.there is a positive correlation in current ratio.
ANALYSISOFLIQUIDRATIOOFINFOSYSLT (Rs. In Cr.)

Year Current Inventory Liquid Current Liquid Ratio

Assets Assets Liabilities

2007-08 37.50 12.60 24.90 14.83 1.68

2008-09 41.95 61.50 -19.55 15.44 -1.27
2009-10 41.73 40.90 0.83 19.95 0.04
2010-11 178.77 24.90 153.87 18.80 8.18
2011-12 234.461 58.80 175.66 24.54 7.16
2012-13 267.66 11.35 256.31 31.81 8.06
2013-14 314.36 95.40 218.96 45.03 4.86
2014-15 363.49 76.90 286.59 57.00 5.03
2015-16 389.74 93.40 296.34 68.01 4.36
2016-17 301.13 12.47 288.66 115.18 2.51
Average 4.06
Standard Deviation 109.87
Correlation 0.73

Sources: Annual Reports.

IJPUB1801097 International Journal of Creative Research Thoughts (IJCRT) www.ijpub.org 598

www.ijpub.org © 2018 IJCRT | Volume 6, Issue 1 January 2018 | ISSN: 2320-2882

INTERPRETATIONS
The above table shows that, the liquid ratio was satisfactory during the study period except in the year 2008-09 and
2009-10. In the year 2012-13, the ratio was 8.06 which was the highest ratio during the study period and the lowest ratio was (-)
1.27 in the year 2008-09. During the study period the average of liquid ratio is 4.06 and the standard deviation is 109.87.there is a
positive correlation in liquid ratio.
ANALYSIS OF CURRENT ASSETS TURNOVER RATIO (CATO Ratio) OF INFOSYS LTD.
Rs. In Cr.

Year Net Sales Current Assets CATO Ratio

Rs In Times
2007-08 166.92 37.50 0.22
2008-09 216.93 41.95 0.19
2009-10 227.42 41.73 0.18
2010-11 275.01 178.77 0.65
2011-12 337.34 234.461 0.70
2012-13 403.52 267.66 0.66
2013-14 501.33 314.36 0.63
2014-15 533.19 363.49 0.68
2015-16 624.41 389.74 0.62
2016-17 684.84 301.13 0.44
Average 0.50
Standard Deviation 181.28
Correlation 0.90

Sources: Annual Reports.

INTERPRETATIONS
The above table reveal that the Current Assets Turnover Ratio of selected company was varied between the highest of
0.70 times in the year 2011-12 and the lowest of 0.18 times in the year 2009-10. Hence, it is satisfactory position during the study
period. During the study period the average of current assets turnover ratio is 0.50 and the standard deviation is 181.28.there is a
positive correlation in current asset turnover ratio.
ANALYSIS OF WORKING CAPITAL TURNOVER RATIO (WCTO Ratio) OF INFOSYS LTD.
Rs. In Cr.

Year Net Sales Net Working WCTO Ratio

Capital
Rs In Times
2007-08 166.92 22.67 0.14
2008-09 216.93 26.51 0.12
2009-10 227.42 21.78 0.10
2010-11 275.01 159.97 0.58
2011-12 337.34 209.92 0.62
2012-13 403.52 235.85 0.58
2013-14 501.33 269.33 0.54
2014-15 533.19 306.49 0.57
2015-16 624.41 321.73 0.52

IJPUB1801097 International Journal of Creative Research Thoughts (IJCRT) www.ijpub.org 599

www.ijpub.org © 2018 IJCRT | Volume 6, Issue 1 January 2018 | ISSN: 2320-2882

2016-17 684.84 185.95 0.27

Average 0.40
Standard Deviation 186.75
Correlation 0.80

Sources: Annual Reports.

INTERPRETATIONS
The above table reveal that the Working Capital Turnover Ratio of selected company was varied between the highest of 0.62
times in the year 2011-12 and the lowest of 0.10 times in the year 2009-10. A higher ratio indicates efficient utilization of
working capital and a low ratio indicates otherwise. During the study period the average of working capital turnover ratio is 0.40
and the standard deviation is 186.75. there is a positive correlation in working capital turnover ratio
ANALYSIS OF INVENTORY TURNOVER RATIO (ITO Ratio) OF INFOSYS LTD.
Rs. In Cr.

Year Net Sales Inventory ITO Ratio

Rs In Times
2007-08 166.92 12.60 0.08
2008-09 216.93 61.50 0.28
2009-10 227.42 40.90 0.18
2010-11 275.01 24.90 0.09
2011-12 337.34 58.80 0.17
2012-13 403.52 11.35 0.03
2013-14 501.33 95.40 0.19
2014-15 533.19 76.90 0.14
2015-16 624.41 93.40 0.15
2016-17 684.84 12.47 0.02
Average 0.13
Standard Deviation 219.20
Correlation 0.33

Sources: Annual Reports.

INTERPRETATIONS
The above table reveals that the Inventory Turnover Ratio was satisfactory during the study period. In the year 2008-09,
the highest ratio was 0.28 times and the lowest ratio was 0.02 times in the year 2016-17. The low inventory implies over-
investment in inventories, dull business, poor quality of goods, etc., A high inventory Turnover may be the results of demand, a
position of stock-out, conservative method of valuing inventories at lowest values. During the study period the average of
inventory turnover ratio is 0.13 and the standard deviation is 219.20.there is a positive correlation in inventory turnover ratio.

IJPUB1801097 International Journal of Creative Research Thoughts (IJCRT) www.ijpub.org 600

www.ijpub.org © 2018 IJCRT | Volume 6, Issue 1 January 2018 | ISSN: 2320-2882

ANALYSIS OF DEBTORS TURNOVER RATIO (DTO Ratio) OF INFOSYS LTD.

Rs. In Cr.

Year Net Sales Debtors DTO Ratio

Rs In Times
2007-08 166.92 30.93 0.19
2008-09 216.93 33.90 0.16
2009-10 227.42 32.44 0.14
2010-11 275.01 42.12 0.15
2011-12 337.34 54.04 0.16
2012-13 403.52 63.65 0.16
2013-14 501.33 73.36 0.15
2014-15 533.19 86.27 0.16
2015-16 624.41 97.98 0.16
2016-17 684.84 109.60 0.16
Average 0.16
Standard Deviation 213.24
Correlation 0.99

Sources: Annual Reports.

INTERPRETATIONS
The above table indicates that Debtors Turnover Ratio of selected company was satisfactory. It was highest during the
year 2007-08 which was 0.19 times and lowest in the year 2009-10 which was 0.14 times. The higher value of Debtors Turnover
Ratio indicates that the debtors are maximized efficiency. The low ratio implies inefficient management of debtors and less liquid
debtors. During the study period the average of debtor’s turnover ratio is 0.16 and the standard deviation is 213.24.there is a
positive correlation in debtors’ turnover ratio.
ANALYSIS OF ALTMAN Z- SCORE OF THE INFOSYS COMPANY DURING THE YEAR 2007 -17

X1 X2 X3 X4 X5 Z

0.41 0.48 1.50 0.03 1.68 4.09

0.38 0.39 1.26 0.02 1.66 3.71

0.28 0.31 1.39 0.02 1.52 3.52

0.27 0.34 1.46 0.03 1.49 3.60

0.37 0.51 1.77 0.02 1.56 4.23

0.51 0.48 1.58 0.02 1.48 4.07

0.61 0.46 1.75 0.01 1.46 4.28

0.63 0.52 1.77 0.01 1.61 4.54

0.72 0.45 1.63 0.01 1.45 4.26

0.89 0.37 1.29 0.01 1.18 3.75

IJPUB1801097 International Journal of Creative Research Thoughts (IJCRT) www.ijpub.org 601

www.ijpub.org © 2018 IJCRT | Volume 6, Issue 1 January 2018 | ISSN: 2320-2882

The above table indicates that the INFOSYS Company reported 4.09, 3.71, 3.52, 3.60, 4.23, 4.07, 4.28, 4.54, 4.26 and 3.75 as
Altman Z Score value. It can be concluded that Company has a good status and it has a healthy financial position during the study
period.It is a safe zone.

CONCLUSION:
It is concluded from the study, though the working capital and the liquidity position and profitability position of the company was
lower at initial stages, it has been maintain at optimum level at present. Now the liquidity position and profitability position of the
company is maintained at a desired level in order to meet day-to-day affairs of the company. Therefore, the major objectives of
the study are fulfilled by measuring various ratios to check the liquidity position and profitability position of the company is more
helpful to measure the wealth of the company

REFERENCE:
[1] Chandra H. and Selvaraj A., (2012), Working Capital Management in Selected Indian Steel Companies, Indian
Journal of Finance, Vol. 6, No. 11, pp.5-15
[2] Joshi Lalitkumar and Ghosh Sudipta, (2012), Working Capital Management of Cipla Limited: An Empirical Study,
International Journal of Marketing, Financial Services and Management Research, Vol. 1, No. 8, p. 170-186
[3] Singh Moirangthem B. and Singh Tejmani N., (2013), Working Capital Management: An Essential Tool of Business
Finance – A Case Study of National Plastic Industries Limited, IOSR Journal of Business and Management, Vol. 12, No. 2, pp. 1-
7
[4] Kaur Harsh V., and Singh Sukhdev, (2013), Managing Efficiency and Profitability Through Working Capital: An
Empirical Analysis of BSE 200 Companies, Asian Journal of Business Management, Vol. 5, No. 2, pp. 197-207
[5] Joseph Jisha, (2014), Impact of Working Capital Management on Firm‟s Profitability and Liquidity: An Empirical
Study of Ashok Leyland Ltd., International Journal of Research in Commerce and Management, Vol. 5, No. 2, pp. 32-38

IJPUB1801097 International Journal of Creative Research Thoughts (IJCRT) www.ijpub.org 602