K.C.

COLLEGE

WIPRO
INTRODUCTION TO THE 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.

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K.C. COLLEGE

1.Largest third party R&D Service provider in the world.

2. Largest Indian Technology Infrastructure management service
provider.
3. A vendor of choice in the middle east.
4. Among the top 3 Indian BPO Service provider by Revenue .
5. Among the top 2 Domestic IT Services companies in India.

GROUP COMPANIES
Wipro Infrastructure Engineering Ltd.
Wipro Inc.
Mango 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.

Internal analysis of financial statement Page 2

K.C. COLLEGE

TATA CONSULTANCY SERVICES LTD.

INTRODUCTION TO THE COMPANY
Tata Consultancy Services (TCS) is a Software services consulting
company headquartered in Mumbai, India. TCS is the largest provider of
information technology and business process outsourcing services in
Asia. TCS has offices in 42 countries with more than 142 branches
across the globe. The company is listed on the National Stock Exchange
and Bombay Stock Exchange of India.
TCS is a flagship subsidiary of one of India's largest and oldest
conglomerate company, the Tata Group, which has interests in areas
such as energy, telecommunications, financial services, manufacturing,
chemicals, engineering, materials, government and healthcare.
Tata Consultancy Services was established in the year 1968 and is a
pioneer in Information Technology Outsourcing and Management
Industry. Despite unfavourable government regulations the company
succeeded in establishing the Indian IT Industry.
It began as the "Tata Computer Centre", for the company Tata Group
whose main business was to provide computer services to other group
companies. F C Kohli was the first general manager. JRD Tata was the
first chairman, followed by Nani Palkhivala.
One of TCS' first assignments was to provide punched card services to a
sister concern, Tata Steel (then TISCO). It later bagged the country's first
software project, the Inter-Branch Reconciliation System (IBRS) for the
Central Bank of India[5]. It also provided bureau services to Unit Trust of
India, thus becoming one of the first companies to offer BPO services.
Internal analysis of financial statement Page 3

K.C. COLLEGE

COMPARATIVE STATEMENT ANALYSIS

Comparative statements are financial statements that cover a different

time frame, but are formatted in a manner that makes comparing line
items from one period to those of a different period an easy process.
This quality means that the comparative statement is a financial
statement that lends itself well to the process of comparative analysis.
Many companies make use of standardized formats in accounting
functions that make the generation of a comparative statement quick
and easy.
The benefits of a comparative statement are varied for a corporation.
Because of the uniform format of the statement, it is a simple process to
compare the gross sales of a given product or all products of the
company with the gross sales generated in a previous month, quarter, or
year. Comparing generated revenue from one period to a different period
can add another dimension to analyzing the effectiveness of the sales
effort, as the process makes it possible to identify trends such as a drop
in revenue in spite of an increase in units sold.
Along with being an excellent way to broaden the understanding of the
success of the sales effort, a comparative statement can also help
address changes in production costs. By comparing line items that
catalogue the expense for raw materials in one quarter with another
quarter where the number of units produced is similar can make it
possible to spot trends in expense increases, and thus help isolate the
origin of those increases. This type of data can prove helpful to allowing
the company to find raw materials from another source before the
increased price for materials cuts into the overall profitability of the
company.

Internal analysis of financial statement Page 4

K.C. COLLEGE

A comparative statement can be helpful for just about any organization

that has to deal with finances in some manner. Even non-profit
organizations can use the comparative statement method to ascertain
trends in annual fund raising efforts. By making use of the comparative
statement for the most recent effort and comparing the figures with those
of the previous years event, it is possible to determine where expenses
increased or decreased, and provide some insight in how to plan the
following years event.

COMPARATIVE INCOME STATEMENT:

WIPRO:

gross sales
excise duty

less

2009
21,612.8
0
105.5
21,507.
30

2010
23,006.3
0
84.3
22,922.
00

3,438.80

4,140.40

chang
e in
amoun
t
1,393.
50
-21.20
1,414.
70

%
6.448
-20.095

Add

net sales
Cogs
opening stock
Purchases

Add
Add
Add

Wages
power and fuel cost
Patenets

9,249.80
154
230.22

9,062.80
141.4
200.2

Add
Less

commision on purchases
closing stock

108.65
520.23
12,661.
24
8,846.0
6

345.23
545.43
13,344.
60
9,577.4
0

236.58
25.20
683.36
731.3
4

5.397

1200.2
2010.9
3211.1

1183.3
2005.5
3188.8

-16.90
-5.40
-22.30

-1.408
-0.269
-0.694

489.5
340.7

500.4
376.2

10.90
35.50

2.227
10.420

Less

cost of sales

Less
1

gross profit
operating expenses
Administration
Salaries
rent and rates
total administrative exp
selling and distribution
expenses
carriage outwards
delivery expenses

Internal analysis of financial statement Page 5

701.60
187.00
-12.60
-30.02

6.578

20.402
-2.022
-8.182
-13.040
217.74
5
4.844

8.267

K.C. COLLEGE
advertisement exp
total s/d exp
total operating expenses

692.8
1,523.00

598.5
1,475.10

-94.30
-47.90

Ebit

4,278.30

6,376.80

2,098.
50

-480.40
4,758.70

875.30
5,501.50

1,355.
70
742.80

Add

interest on loan
operating net profit
non operating income

220.8

1009.5

Less

interest received
non operating expenses
loss on sale of asset

898

242.6

Less

npB D&T
Depreciation

4,081.50
533.6

6,268.40
579.6

Less

Npbt
Tax

3,547.90
574.1

Npat

2,973.80

5,688.80
790.8
4,898.0
0

Less

788.70
0.00
655.40
2,186.
90
46.00
2,140.
90
216.70
1,924.
20

-13.611
-3.145

49.050
282.20
2
15.609
357.20
1

-72.984
53.581
8.621
60.343
37.746
64.705

COMPARATIVE BALANCE SHEET:

WIPRO

2009

2010
293.6

0.6

0.20478

general reserve

293
12,220.5
0

17,396.80

5176.3

42.3575

profit & loss a/c

2,973.80

4,898.00

1924.2

64.7051

preliminary expenses

155.56
15,331.7
4

172.33

16.77

10.7804

22,416.07

7084.33

46.207

SOURCES OF FUNDS:

Owned Funds:
Equity share capital

Add
Add
Less

Net Worth

%
(change
)

Amount
(change)

Borrowed funds:
secured: mortgage loan (secured
on plant)

0
2,197.16

806.33

total loan funds

TOTAL CAPITAL EMPLOYED

-1390.8

-63.301

0
17,528.9
0

Internal analysis of financial statement Page 6

23,222.40

5693.5

32.4806

K.C. COLLEGE
APPLICATION OF FUNDS:

FIXED ASSETS:

2
3

Land and building

1059.867

1218.767

158.9

14.9924

plant and machinery

1168.432

1342.333

173.901

14.8833

furniture and fittings

951.301

1095.2

143.899

15.1265

NET FIXED ASSETS

3,179.60

3,656.30

476.7

14.9925

INVESTMENTS

6,895.30

8,966.50

2071.2

30.0379

sundry debtors

4,446.40

4,754.70

308.3

6.9337

Cash

1,902.10

1,938.30

36.2

1.90316

bills receivable

360.60

2,552.40

2191.8

607.82

Total quick assets

6,348.50

6,693.00

344.5

5.42648

Stock

459.6

606.9

147.3

32.0496

Total non quick assets

459.6
13,517.2
0

606.9

147.3

32.0496

16,545.30

3028.1

22.4018

provision for tax

1,810.70

2,230.80

420.1

23.201

Creditors

1,892.22

799.4

-1092.8

-57.753

bills payable

1,164.98

201.6

-963.38

-82.695

Total quick liabilities

4,867.90

3,231.80

-1636.1

-33.61

Bank overdraft

2,507.10

3,726.00

1218.9

48.6179

Total non quick liabilities

2,507.10

3,726.00

1218.9

48.6179

Total current liabilities

7,375.00

6,936.80

-438.2

-5.9417

WORKING CAPITAL (CA-CL)

6,142.20
17,528.9
0

9,608.50

3466.3

56.4342

23,222.40

5693.5

32.4806

WORKING CAPITAL
CURRENT ASSETS:
Quick assets:

Non-quick assets:

Total current assets

Less

CURRENT LIABILITIES:
Quick liabilities:

Non-quick liabilities:

TOTAL NET ASSETS OWNED

INTERPRETATION:
Internal analysis of financial statement Page 7

K.C. COLLEGE

1. Wipro ended the financial year 2009-10 on a strong note and

perform better than the year 2008-2009 despite challenging
economic conditions as can be seen from the balance sheet and
income statements. The first two quarters result was affected due
to recession which had their investments in some core markets
coming to a standstill. However the result for the second quarter
was much more positive.
2. Total funds available has increased by 32% which is due to an
increase in net worth of the company by Rs. 7084 and also
increase in borrowed funds by Rs. 5693.
3. The gross profit has increased by 8% which is due to an increase
in sales by 6% and is mainly due to a sharp decrease in the excise
duty (20%).
4. Investments have increased by 30% as Wipro continues to invest
strongly in its customers in mature markets of US and Europe.
These investments are directed in the areas of domain and
technology innovation as well as business process innovation.mes,
we have been unflinching in our commitment to building
5. Non-linear initiatives (which focus on profitable growth in revenues
without proportionate increase in people and through automation
and standardized shared service platforms) contributed to 7% of
the revenue earned.
6. During the year 2009-2010, net profit increased. However, there
was an increase in depreciation and tax also.
7. The application infrastructure cost was reduced by 50% for a large
energy major by integrating a hybrid cloud solution.

Internal analysis of financial statement Page 8

K.C. COLLEGE

COMPARATIVE INCOME STATEMENT:

TCS:

less

Less
Add
Add
Add
Add
Add
Less

Less
1

Particulars

2009

Gross sales
excise duty

22,404.00
2.08

net sales
Cogs
opening stock
Purchases
Wages
power and fuel cost
Patenets
commision on purchases
closing stock
cost of sales

22,401.92

53.67
7,370.09
164.34
300.44
118.98
520.23
7,487.29

gross profit
14,914.63
operating expenses
Administration
Salaries
8002.33
rent and rates
2446.7
total
administrative
exp
10449.03
selling and distribution expenses
carriage outwards
297.3
delivery expenses
220.12
advertisement exp
700.99
total s/d exp
1,218.41

Internal analysis of financial statement Page 9

Change (in
amount)

Change (in
%)

640.84
-1.69

2.860
-81.250

642.53

2.868

23.75
7,882.43
183.62
323.22
136.86
545.43
8,004.45
15,040.0
0

-29.92
512.34
19.28
22.78
17.88
25.20
517.16

-55.748
6.952
11.732
7.582
15.028
4.844
6.907

125.37

0.841

8232.93
2345.58

230.60
-101.12

2.882
-4.133

10578.51

129.48

1.239

371.96
230.31
665.76
1,268.03

74.66
10.19
-35.23
49.62

25.113
4.629
-5.026
4.073

2010
23,044.8
4
0.39
23,044.4
5

K.C. COLLEGE

Less
Add

Less

Less
Less

total operating expenses

Ebit
interest on loan
operating net profit
non operating income
interest received
non
operating
expenses
loss on sale of asset
npB D&T
Depreciation
Npbt
Tax
Npat

5,564.59
456.24
6,020.83

6,849.27
182.10
6,667.17

1,284.68
-274.14
646.34

23.087
-60.087
10.735

283.2

1184.43

901.23

318.231

782
5,557.15
417.46
5,139.69
340.37
4,696.21

238.43
6,839.73
469.35
6,370.38
737.89
5,618.51

-543.57
1,282.58
51.89
1,230.69
397.52
922.30

-69.510
23.080
12.430
23.945
116.791
19.639

COMPARATIVE BALANCE SHEET:

TCS

1
Add
Add
Less

2
3

SOURCES OF FUNDS:
Owned Funds:
Equity share capital
general reserve
profit & loss a/c
preliminary expenses
Net Worth
Borrowed funds:
secured:
mortgage
loan (secured on plant)
total loan funds
TOTAL
CAPITAL
EMPLOYED
APPLICATION
OF
FUNDS:
FIXED ASSETS:
Land and building
plant and machinery
furniture and fittings
NET FIXED ASSETS
INVESTMENTS
WORKING CAPITAL

change in
(amount)

Change in
(%)

97.86
1572.51
922.3
59.325

49.46
11.87
19.64
172.36

2533.345

13.99

15,152.36

1665.74

12.35

982.44
984.22
793.86
2,760.52
8,966.50

0
22.22
69.22
91.44
2071.2

0.00
2.31
9.55
3.43
30.04

2009

2010

197.86
13,248.39
4,696.21
34.42
18,108.0
4

295.72
14,820.90
5,618.51
93.75
20,641.3
9

-4621.42

-5,489.03

13,486.62

982.44
962
724.64
2,669.08
6,895.30

Internal analysis of financial statement Page 10

K.C. COLLEGE

Less

CURRENT ASSETS:
Quick assets:
sundry debtors
Cash
bills receivable
Total quick assets
Non-quick assets:
Stock
Total non quick assets
Total current assets
CURRENT
LIABILITIES:
Quick liabilities:
provision for tax
Creditors
bills payable
Total quick liabilities
Non-quick liabilities:
Bank overdraft
Total
non
quick
liabilities
Total
current
liabilities
WORKING
CAPITAL
(CA-CL)
TOTAL NET ASSETS
OWNED

3,717.73
479.93
342.52
4,540.18

3,332.30
212.31
1,853.67
5,398.28

-385.43
-267.62
1511.15
858.1

-10.37
-55.76
441.19
18.90

16.95
16.95
4,557.13

6.78
6.78
5,405.06

-10.17
-10.17
847.93

-60.00
-60.00
18.61

1,450.23
1,590.24
1,164.98
4,205.45

3,926.61
1143.22
681.72
5,751.55

2476.38
-447.02
-483.26
1546.1

170.76
-28.11
-41.48
36.76

1,125.33

3,183.85

2058.52

182.93

1,125.33

3,183.85

2058.52

182.93

634.89

3,425.34

2790.45

439.52

3,922.24

1,979.72

-1942.52

-49.53

13,486.62

15,152.36

1665.74

12.35

INTERPRETATION:
1. TCS ended on a positive note in 2009-2010 and made a progress
of 19% with respect to the profit earned compared to the financial
year 2008-2009.
2. On an Unconsolidated basis, in 2009-10 TCS revenues were at
Rs.23044.45 crore, a growth of 2.86% over 2008-09. Operating
margin (Profit before taxes excluding other income) 23% and net
margin grew 342 to 23.95%.unflinching in our commitment to
building.
Internal analysis of financial statement Page 11

K.C. COLLEGE

3. The revenues of the company increased due to product business

(contributing 33% of the revenue grew by 23.3% during the
year), new services (25%) like BPO, Infrastructure, Assurance and
Asset Leveraged Solution.
4. The Companys business grew even in those sectors affected by
the economic meltdown, mainly because the customers
appreciated the Companys value proposition. Banking, Financial
Services, Retail, Life Sciences & Health Care and Government
sectors registered positive growth in FY10. However, sectors like
Manufacturing, Telecom, Hi-Tech and Insurance all declined on an
annual basis. The Company sees improvement in its order position
in these industry segments as well as growth in almost all
geographical markets.
5. The companys PAT increased significantly compared to the
previous year by 19% due to strategic acquisitions.

Internal analysis of financial statement Page 12

K.C. COLLEGE

COMMON SIZE STATEMENT

The common-size statement is a financial document that is often utilized

as a quick and easy reference for the finances of a corporation or
business. Unlike balance sheets and other financial statements, the
common-size statement does not reflect exact figures for each line item.
Instead, the structure of the common size statement uses a common
base figure, and assigns a percentage of that figure to each line item or
category reflected on the document.
A company may choose to utilize financial statements of this type to
present a quick snapshot of how much of the companys collected or
generated revenue is going toward each operational function within the
organization. The use of a common-size statement can make it possible
to quickly identify areas that may be utilizing more of the operating
capital than is practical at the time, and allow budgetary changes to be
implemented to correct the situation.
The common size statement can also be a helpful tool in comparing the
financial structures and operation strategies of two different companies.
The use of percentages in the common size statements removes the
issue of which company generates more revenue, and brings the focus
on how the revenue is utilized within each of the two businesses. Often,
the use of a common-size statement in this manner can help to identify
areas where each company is utilizing resources efficiently, as well as
areas where there is room for improvement.
Common-size statements can be prepared for any review period
desired. Companies that choose to make use of financial statements of
Internal analysis of financial statement Page 13

K.C. COLLEGE

this type may choose to utilize this format for quarterly, semi-annual, or
annual reviews. When there is concern about operational costs, the
common-size statement may be prepared on a more frequent basis,
such as monthly. Because the common-size statement is very easy to
read and does not necessarily contain information that would be
considered proprietary, the format can often be employed as part of
general information that is released to the public.

COMMON SIZE INCOME STATEMENT

WIPRO:
PARTICULARS

2009
(Amount)
21,507.3
0

2009
(%)
100

2010
(Amou
nt)
22,922.
00

3,438.80

15.99

4,140.40

2010
(%)

Add

Net sales
Cogs
opening stock
Purchases

Add

Wages

9,249.80

43.01

9,062.80

Add

power and fuel cost

154

0.72

141.4

Add

Patenets

230.22

1.07

200.2

Add

commision on purchases

108.65

0.51

345.23

Less

closing stock

520.23
12,661.2
4

2.42

8,846.06

41.13

545.43
13,344.
60
9,577.4
0

18.063
39.537
56
0.6168
75
0.8733
97
1.5061
08
2.3795
04
58.217
43
41.782
57

14.9302
79

3188.8

13.911
53

Less

cost of sales

Less
1

gross profit
operating expenses
Administration

total administrative exp

3211.1
selling and distribution
expenses

Less

58.87

100

total s/d exp

total operating expenses

1,523.00

7.08

1,475.10

6.4353
02

Ebit
interest on loan

4,278.30
-480.40

19.89
-2.23

6,376.80
875.30

27.819
56
3.8186

Internal analysis of financial statement Page 14

K.C. COLLEGE

5,501.50

02
24.000
96

220.8

1.02662
82

1009.5

4.4040
66

loss on sale of asset

898

4.17532
65

242.6

NpB D&T

4,081.50

18.98

6,268.40

Depreciation

533.6

2.481018

579.6

Npbt

3,547.90

16.50

5,688.80

Tax

574.1

2.669326

Npat

2,973.80

13.83

790.8
4,898.0
0

operating net profit

non operating income

Add

Less

Less

Less

4,758.70

22.13

interest received
non operating expenses

1.0583
72
27.346
65
2.5285
75
24.818
08
3.4499
61
21.368
12

COMMON SIZE BALANCE SHEET

WIPRO:

2009

2010

1.671525

16.97
0.88744
87

293.6
17,396.8
0
4,898.0
0

1.2642
97
74.913
88
21.091
7

87.47

172.33
22,416.
07

0.74
96.527
79

12.53

806.33

3.4722
08

SOURCES OF FUNDS:
Owned Funds:
Equity share capital

Add

general reserve

293
12,220.5
0

Add

profit & loss a/c

2,973.80

Less

preliminary expenses

155.56
15,331.
74

Net Worth
Borrowed funds:
secured:
mortgage
(secured on plant)

loan

2,197.1
6

Internal analysis of financial statement Page 15

69.72

K.C. COLLEGE
total loan funds
TOTAL CAPITAL EMPLOYED

23,222.4
0

plant and machinery

1059.86
7
1168.43
2

furniture and fittings

951.301

6.04639
77
6.66574
63
5.42704
33

NET FIXED ASSETS

3,179.60

18.14

3,656.30

INVESTMENTS
WORKING CAPITAL
CURRENT ASSETS:
Quick assets:

6,895.30

39.34

8,966.50

sundry debtors

4,446.40

25.37

4,754.70

Cash

1,902.10

10.85

1,938.30

bills receivable

360.60
6,348.5
0

2.06

2,552.40
6,693.0
0

459.6
459.6
13,517.2
0

2.621956

77.11

606.9
606.9
16,545.3
0

provision for tax

1,810.70

10.33

2,230.80

Creditors

1,892.22

10.79

799.4

bills payable

1,164.98
4,867.9
0

6.65

201.6
3,231.8
0

Bank overdraft
Total non quick liabilities

2,507.10
2,507.10

14.30

3,726.00
3,726.00

Total current liabilities

WORKING CAPITAL (CA-CL)

7,375.00
6,142.2

42.07
35.04

6,936.80
9,608.5

Total quick assets

Non-quick assets:
Stock
Total non quick assets

Less

100.00

100

APPLICATION OF FUNDS:
FIXED ASSETS:
Land and building

2
3

17,528.9
0

Total current assets

CURRENT LIABILITIES:
Quick liabilities:

Total quick liabilities

Non-quick liabilities:

Internal analysis of financial statement Page 16

36.22

27.77

1218.76
7
1342.33
3
1095.2

5.2482
39
5.7803
37
4.7161
36
15.744
71
38.611
43

20.474
63
8.3466
83
10.991
11
28.821
31
2.6134
25

71.25

9.6062
42
3.4423
66
0.8681
27
13.916
74
16.044
85
29.871
16
41.376

K.C. COLLEGE

TOTAL
OWNED

NET

ASSETS

0
17,528.9
0

100.00

0
23,222.4
0

100

INTERPRETATION:
1. The total capital employed increased sharply in 2009-2010.
2. As a result the working capital increased. It was 35% in 2008-2009
and is 41% presently in 2009-2010
3. The current liabilities decreased.
4. However, the gross profit was almost the same in both the years
which is 41%

COMMON SIZE INCOME STATEMENT

TCS:
PARTICULARS
net sales

2009
22,401.9

Internal analysis of financial statement Page 17

%
100.00

2010
23,044.4

%
100

K.C. COLLEGE
2

Less

Cogs
opening stock

Add

Purchases

53.67

0.239578

23.75

Add

Wages

7,370.09

32.90

7,882.43

Add

power and fuel cost

164.34

183.62

Add

Patenets

300.44

Add

commision on purchases

118.98

Less

closing stock

520.23

0.733598
1.34113
5
0.53111
52
2.32225
63

cost of sales

7,487.29
14,914.6
3

33.42

8,004.45
15,040.0
0

0.10306
2
34.2053
3
0.79680
8
1.40259
4
0.59389
6
2.36686
1
34.7348
3
65.2651
7

10449.03

46.6434
57

10578.51

45.9048
1

1,218.41

5.44

1,268.03

5.50254

Less
1

gross profit
operating expenses
Administration
total administrative exp
selling and distribution
expenses
total s/d exp
total operating expenses

66.58

323.22
136.86
545.43

Ebit

5,564.59

24.84

6,849.27

Sless

interest on loan

456.24

2.04

182.10

6,020.83

26.88

6,667.17

Add

operating net profit

non operating income

29.7219
9
0.79021
2
28.9317
8

283.2

1.26417
74

1184.43

5.13976
3

Less

interest received
non operating expenses
loss on sale of asset
npB D&T

782
5,557.15

3.49077
22
24.81

238.43
6,839.73

Depreciation

417.46

1.863501

469.35

Npbt

5,139.69

22.94

6,370.38

Tax

340.37

1.519379

737.89

Npat

4,696.21

20.96

5,618.51

Less

Less

Internal analysis of financial statement Page 18

1.03465
3
29.6806
2.03671
6
27.6438
8
3.20202
9
24.3811
9

K.C. COLLEGE

COMMON SIZE BALANCE SHEET

TCS
1

PARTICULARS
SOURCES OF FUNDS:
Owned Funds:

2009

2010

Equity share capital

1.467084

295.72
14,820.9
0

34.82
0.25521
59

Add

general reserve

197.86
13,248.3
9

Add

profit & loss a/c

4,696.21

Less

preliminary expenses

Net Worth
Borrowed funds:

34.42
18,108.
04

secured: mortgage loan (secured

on plant)
total loan funds
TOTAL CAPITAL EMPLOYED

2
3

98.23

134.27

5,618.51

1.9516
43
97.812
49
37.080
1

93.75
20,641.
39

0.62
136.22
55

4621.42

34.2667

-5,489.03

36.225
6

13,486.6
2

100.00

15,152.3
6

100

APPLICATION OF FUNDS:
FIXED ASSETS:
Land and building

982.44

plant and machinery

962

furniture and fittings

724.64

7.28455
31
7.13299
55
5.37302
9

NET FIXED ASSETS

2,669.08

19.79

2,760.52

INVESTMENTS
WORKING CAPITAL
CURRENT ASSETS:
Quick assets:
sundry debtors

6,895.30

51.13

8,966.50

6.4837
42
6.4954
9
5.2391
84
18.218
42
59.175
6

3,717.73

27.57

3,332.30

21.991

Internal analysis of financial statement Page 19

982.44
984.22
793.86

K.C. COLLEGE

Cash

479.93

3.558564

212.31

bills receivable

342.52
4,540.1
8

2.54

1,853.67
5,398.2
8

Stock
Total non quick assets
Total current assets
CURRENT LIABILITIES:
Quick liabilities:

16.95
16.95
4,557.13

0.12568
33.79

6.78
6.78
5,405.06

provision for tax

1,450.23

10.75

3,926.61

Creditors

1,590.24

11.79

1143.22

bills payable

1,164.98
4,205.4
5

8.64

681.72
5,751.5
5

Bank overdraft
Total non quick liabilities

1,125.33
1,125.33

8.34

3,183.85
3,183.85

Total current liabilities

634.89
3,922.2
4
13,486.6
2

4.71

3,425.34
1,979.7
2
15,152.3
6

Total quick assets

Non-quick assets:

Less

Total quick liabilities

Non-quick liabilities:

WORKING CAPITAL (CA-CL)

TOTAL NET ASSETS OWNED

33.66

31.18

29.08
100.00

95
1.4011
68
12.233
54
35.626
66
0.0447
46
35.67

25.914
18
7.5448
31
4.4991
01
37.958
11
21.012
24
22.605
98
13.065
42
100.00

INTERPRETATION:
1. The working capital of the company decreased in the succeeding
year.
2. The gross profit fell down a bit from 66% to 65% but is not very
significant.

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K.C. COLLEGE

CASH FLOW STATEMENT

Cash flow statement is prepared to explain the cash movements
between two points of time. A cash flow statement shows inflow and outflow
of cash including bank balances and cash equivalents of an enterprise
during a particular period.
A cash flow statement is used for making short term future plans which
will assist the management to assess their ability to meet immediate
requirements like paying creditors, paying dividends etc.Cash flow
statement is used to answer questions such as How did this company get
into so much trouble? Unfortunately, the vast majority of time the answer
is, Because the company lacked relatively simple cash-flow management
techniques.Hence cash flow is an important determinant in the financial
health of the company.
UTILITY OF CASH FLOW:
Analysing the actual position in the past year.

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K.C. COLLEGE

Indicates the cash profit generated due to the operating, investing

and financing activities.
Indicates opening and closing cash and bank balances.
It supplements the income statement and balance sheet of the
firm.
It can be prepared from the projected final accounts which can
later be used as a controlling device.

CASH FLOW STATEMENT

WIPRO:
Mar ' 10

Mar ' 09

Profit before tax

5,688.80

3,547.90

Net cash flow-operating activity

4,477.40

4,344.50

Net cash used in investing activity

-3,064.60

-3,662.70

Net cash used in fin. Activity

-96.2

-70.7

Net increase/decrease in cash and

equivalent

1,316.60

611.1

Cash and equivalents at the beginning

of the year

4,347.70

3,798.10

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K.C. COLLEGE

Cash and equivalents at the end of the

year

5,664.30

4,409.20

INTERPRETATION:
1. As compared to 2008-2009, the net profit before calculating
tax of Wipro was greater.
2. The information obtained from Cash from investing accounts
for cash used to make new investments, as well as proceeds
gained from previous investments. In case of Wipro, this
number in 2009 was -3662.60 and increased in 2010 which
summed up to -3662.7, which shows the company spent
significant cash investing in projects it hopes will lead to
future growth.

CASH FLOW STATEMENT:

TCS

March 09

March 10

Net Profit Before Tax

5139.68

6370.38

Net Cash From Operating Activities

4874.12

6264.74

Net Cash (used in)/from

Investing Activities

-3162.2

-4556.6

-1588.3

-1969.7

123.65

-261.55

Net Cash
Activities

(used

in)/from

Financing

Net (decrease)/increase In Cash and Cash

Equivalents

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K.C. COLLEGE

Opening Cash & Cash Equivalents

417

554.83

Closing Cash & Cash Equivalents

540.65

293.28

INTERPRETATION:
1. The net profit before tax for TCS was 5139.68 in 2008-2009
and increased to 6370.38 in 2009-2010.
2. The company increased its cash from operating activities
and investing activities significantly.

RATIO ANALYSIS

Ratio analysis is a widely used tool of financial analysis. It is defined as

the systematic use of ratio to interpret the financial statements so that
the strength and weaknesses of a firm as well as its historical
performance and current financial condition can be determined. The
term ratio refers to the numerical or quantitative relationship between
two variables.

Significance or Importance of ratio analysis:

1. It helps in evaluating the firms performance

With the help of ratio analysis conclusion can be drawn regarding
several aspects such as financial health, profitability and operational
efficiency of the undertaking. Ratio points out the operating efficiency of
the firm i.e. whether the management has utilized the firms assets
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K.C. COLLEGE

correctly, to increase the investors wealth. It ensures a fair return to its

owners and secures optimum utilization of firms assets

2. It helps in inter-firm comparison:

Ratio analysis helps in inter-firm comparison by providing necessary
data. An interfirm comparison indicates relative position.It provides the
relevant data for the comparison of the performance of different
departments. If comparison shows a variance, the possible reasons of
variations may be identified and if results are negative, the action may
be intiated immediately to bring them in line.

3. It simplifies financial statement:

The information given in the basic financial statements serves no useful
Purpose unless it s interrupted and analyzed in some comparable terms.
The ratio analysis is one of the tools in the hands of those who want to
know something more from the financial statements in the simplified
manner.

4. It helps in determining the financial position of the concern:

Ratio analysis facilitates the management to know whether the firms
financial position is improving or deteriorating or is constant over the
years by setting a trend with the help of ratios The analysis with the help
of ratio analysis can know the direction of the trend of strategic ratio may
help the management
in the task of planning, forecasting and
controlling.

5. It is helpful in budgeting and forecasting:

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K.C. COLLEGE

Accounting ratios provide a reliable data, which can be compared,

studied And analyzed.These ratios provide sound footing for future
prospectus. The ratios can also serve as a basis for preparing budgeting
future line of action.

6. Liquidity position:
With help of ratio analysis conclusions can be drawn regarding the
Liquidity position of a firm. The liquidity positon of a firm would be
satisfactory if it is able to meet its current obligation when they become
due. The ability to met short term liabilities is reflected in the liquidity
ratio of a firm.

7. Long term solvency:

Ratio analysis is equally for assessing the long term financial ability of
the Firm. The long term solvency s measured by the leverage or capital
structure and profitability ratio which shows the earning power and
operating efficiency, Solvency ratio shows relationship between total
liability and total assets.

8. Operating efficieny:
Yet another dimension of usefulness or ratio analysis, relevant from the
View point of management is that it throws light on the degree efficiency
in the various activity ratios measures this kind of operational efficiency.

Classification of ratios:
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K.C. COLLEGE

Different ratios are used for different purpose these ratios can be
grouped into various classes according to the financial activity. Ratios
are classified into four broad categories.
1.
2.
3.
4.

Liquidity Ratio
Leverage Ratio
Profitability Ratio
Activity Ratio

1. CURRENT RATIO
The current ratio is the ratio of total current assets to total current
liabilities it is calculated by dividing current assets by current liabilities.
Current assets include cash an bank balances, marketable securities,
inventory of raw materials, semi-finished and finished goods, bills
receivable and prepaid expenses. The current liabilities which are shortterm obligations to be met it consist of trade creditors, bills payable, bank
credit, provision for taxation and outstanding expenses.
Current ratio = Current assets / Current liabilities
WIPRO:
for the year 2008-2009 = 1.10
for the year 2009 -2010 = 1.34
TCS:
for the year 2008-2009 = 1.83
for the year 2009 -2010 = 1.49
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K.C. COLLEGE

Interpretation:
WIPRO:
The current ratio for the year 2008-2009 is 1.10:1.An ideal ratio is the
one ranging anywhere between 1: 1 to 2:1. When compared to the
standard ratio the company shows perfect short term liquidity efficiency
at the same time holding sufficient current assets means efficient use of
resources. However the company must aim at achieving a current ratio
close to 2.The ratio for the year 2004-2005 is 1.34:1 which is still better
than the financial year 2008-09.
The current ratio in 2009-10 increased due to an increase in sundry
debtors ( 7%) and cash.

TCS:
The current ratio for the year 2008-2009 is 1.83:1 which is almost equal
to the standard ratio 2:1.Hence the company is faring well. Compared to
standard ratio 2:1 this ratio is lower in 2009-2010 which shows low short
term liquidity efficiency at the same time holding less than sufficient
current assets means efficient use of resources but at the risk of low
liquidity. The ratio decreased over subsequent years due to increase in
liabilities and provisions.

2. QUICK RATIO
This ratio is designed to show the amount of cash available to meet
immediate payments. It is obtained by dividing the quick assets by quick
liabilities. Quick Assets are obtained by deducting stocks from current
assets. Quick liabilities are obtained by deducting bank over draft from
current liabilities.
Quick ratio = quick assets / quick liabilities
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K.C. COLLEGE

WIPRO:
for the year 2008-2009 = 1.76
for the year 2009 -2010 = 2.29
TCS:
for the year 2008-2009 = 1.83
for the year 2009 -2010 = 1.48
Interpretation
WIPRO
The Standard Ratio is 1:1. However, Companys Quick Assets are more
than Quick Liabilities in both the years. In 2009-10 the ratio is high
because of high in bank and cash balance.So since the quick ratio is
exceeding 1, the firm is in position to meet its immediate obligation in all
the years.
TCS
Quick ratio is decreased because the increase in quick assets is less
proportionate to the increased quick liabilities.

3. OPERATING PROFIT MARGIN

This ratio shows the relation between Cost of Goods Sold + Operating
Expenses and Net Sales. It shows the efficiency of the company in
managing the operating costs base with respect to Sales. The higher the
ratio, the less will be the margin available to proprietors.
Operating Profit Ratio = (COGS + Operating expenses) X 100 / Sales
WIPRO:
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K.C. COLLEGE

For the year 2008-2009 = 22.12

For the year 2009-2010 = 24
TCS:
For the year 2008-2009 = 26.87
For the year 2009- 2010 = 28.93
Interpretation
WIPRO
The operating profit of Wipro over the years has been increasing and it is
close to the ideal ratio which means that the business is able to stand in
the market.
TCS
The operating profit ratio of TCS is also good and is better than Wipro
which means that the company is making enough profits. The expenses
incurred to earn profit were less in 2009- 2010 compared to 2008-2009
which reflects in the operating profit as it increases from 26.87 to 28.93.
4. TOTAL ASSET TURNOVER
The amounts invested in business are invested in all assets jointly and
sales are affected through them to earn profits. Thus it is the ratio of
Sales to Total Assets. .It is the ratio which measures the efficiency with
which assets were turned over a period.
Total Asset Turnover Ratio = Sales / Total Assets
WIPRO:
For the year 2008-2009 = 1.24
For the year 2009-2010 = 0.99
TCS:
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K.C. COLLEGE

For the year 2008-2009 = 5.15

For the year 2009-2010 = 4.74
Interpretation
WIPRO
The total asset turnover in 2008-2009 is 1.24 and is decreasing in the
year 2009-2010 which implies lesser sales have been generated using
the assets. It shows inefficient management of Wipro as it is a volume
indicator of measure of efficiency from time to time.
TCS
Assets turnover is 5.15 for TCS in 2008-2009 which is very good and
implies that the firm is efficient in the utilisation of its assets.

5. INVENTORY TURNOVER RATIO

Inventory Turnover Ratio: The no. of times the average stock is turned
over during the year is known as stock turnover ratio.
Inventory Turnover Ratio = COGS /Average stock
WIPRO:
For the year 2008-2009 = 56.15
For the year 2009-2010 = 49.40
TCS
For the year 2008-2009 =1321.77
For the year 2009-2010 = 3398.94

Interpretation
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K.C. COLLEGE

WIPRO
From the above calculation we can say that the ratio is decreasing over
the two years. It means inventory is not speedly converted in to sales.
So that it is bad for the company. The ratio is decreasing from 56.15 to
49.40 and hence the company must devise a systematic operational
plan for inventory control.
TCS
The ratios of TCS are very high and increasing enormously over years
which indicate that the operating efficiency of TCS is positive. Since
inventory that remains in place produces no revenue and increases the
cost associated with maintaining those inventories, Higher inventory
turnover ratio is desirable which is certain in case of TCS which shows
an increase from 1321.77 to 3398.94 over the years 2008-2009 t0 20092010.

6. DEBTOR TURNOVER RATIO

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
WIPRO:
For the year 2008 - 2009 = 5.32
For the year 2009 - 2010 = 4.98
TCS:
For the year 2008 -2009 = 6.00
For the year 2009 -2010 = 6.54

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K.C. COLLEGE

Interpretation
WIPRO
Debtor turnover indicates how quickly the company can collect its credit
sales revenue. Here the ratio is continuously decreasing, so that the
companys collection of credit sales is efficient. Management has
improved its collection period every year so it shows that the
management have an ability to collect its money from his debtors. So
they can invest that money on Assets, HRD and other investments.
It implies that Wipro can collect money from its debtors in 4.98 weeks in
2009-2010 as compared to 5.32 in 2008-2009.
TCS
As for TCS, it took 6 weeks for TCS to get the payment from the debtors
in 2008-2009 as compared to 6.54 weeks in 2009-2010. Here the ratio
is increasing which is not a good sign for the company and indicates
blocking of fund.

7. DEBT EQUITY RATIO

This ratio is only another form of proprietary ratio and establishes
relationship between the outside long term liabilities and owner funds. It
shows the proportion of long term external equity and internal equity
funds.
Debt Equity Ratio = Total Long Term debt / Share holder equity
WIPRO:
For the year 2008-2009 = 0.40
For the year 2009-2010 = 0.31

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K.C. COLLEGE

TCS:
For the year 2008-2009 = 0.01
For the year 2009-2010 = 0.01
Interpretation
WIPRO:
The debt equity ratio of Wipro is ideal for both the years which is 0.40
and 0.31 and indicates that it is still doing better which implies that the
company has 40% been financed with debt and the rest with equity for
2008-2009 as against 31% in 2009-2010.
TCS:
The proportion of debt is very low which is 0.01 and consistent in both
the years 2008-2009 and 2009-2010. This means that the company is
not realising the full potential of its business and has accumulated more
equity than required. Company has to refocus on its strategic policies
and plans and try to accumulate more debt funds in future so as to make
the balance between debt and equity.

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K.C. COLLEGE

Other methods for the Internal analysis of financial statement include:

PAYBACK PERIOD:
Payback Period is a financial metric that answer the question: How long
does it take for an investment to pay for itself? Or, how long does it take
for incoming returns to cover costs? Or, put still another way: How
long does it take for the investment to break even?
Like other financial metrics such as internal rate of return (IRR) and
return on investment (ROI), payback period takes essentially an
"Investment" view of the action, plan, or scenario and its estimated cash
flow stream. Each of these metrics companies investment costs to
investment returns in one way or another. Payback period is the length
of time required for cumulative incoming returns to equal the cumulative
costs of an investment (e.g. purchase of computer software or hardware,
training expenses, or new product development), usually measured in
years.
Other things being equal, the investment with the shorter payback period
is considered the better investment. The shorter payback period is
preferred because:

The investment costs are recovered sooner and are available

again for further use.

A shorter payback period is viewed as less risky. It is usually

assumed that the longer the payback period, the more uncertain are
the positive returns. For this reason, payback period is often used as
a measure of risk, or a risk-related criterion that must be met before

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K.C. COLLEGE

funds are spent. A company might decide, for instance, to undertake

no major investments or expenditures that have a payback period
over, say, 3 years.

TREND ANALYSIS
Trend Analysis of Balance Sheet involves calculation of percentage
changes in the Balance Sheet items for a no. of successive years. This
is carried out by taking the items of the past financial year used as base
year and items of other years are expressed as percentage of the base
year.
Trend analysis is a form of comparative analysis that is often employed
to identify current and future movements of an investment or group of
investments. The process may involve comparing past and current
financial ratios as they related to various institutions in order to project
how long the current trend will continue. This type of information is
extremely helpful to investors who wish to make the most from their
investments.
After identifying past and present factors that are maintaining a current
trend in performance, the investor can analyze each factor and project
which factors are likely to continue exerting influence on the direction of
the investment. Assuming that all or most of the factors will continue to
exert an influence for the foreseeable future, the investor can make an
informed decision on whether to buy or sell a given asset.
A trend analysis may be used to identify and project upswings in the
performance of a stock or commodity, or to identify the potential for an
upcoming downturn in value. By comparing the financial ratio of the past
with the present and identifying key factors that helped the investment to
arrive at the current point, it is possible to use the process of trend
analysis to project future worth and adjust the components of the
financial portfolio accordingly.
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K.C. COLLEGE

DEBTORS AGEING ANALYSIS

Debtor age analysis reports allows you to select the options to analyse
your transactions with each of your debtor accounts according to
specified accounting periods. This could be a useful tool to manage
outstanding amounts owed by debtors. The term debtors analysis is a
wider term and includes a lots of techniques & methodologies of
calculating debtors position at a specific point of time.eg.debtors
turnover
ratio,debtors
velocity,debtors
collection
period.
It includes aging debtors analysis also as one of the calculation
techniques.
Meaning of the term "aging debtors analysis":It is a list which analyses a
companys debtors, showing the number of days their payments are
outstanding.

This report will display a break down of your debtor account balances for
each of the specified periods for a selected debtor account, or a range of

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K.C. COLLEGE

selected

debtor

accounts.

This report consists of eight (8) columns, reflecting the following

information:
1. Column 1 - Reference No. - Template:En-This is the reference
number of the transaction as entered into the reference field of the
Batch Entry screen. If you generate sales documents (i.e. Invoices
and Credit Notes), the document number will be displayed in this
column. If the Show Transactions field is not selected on the
Debtor Age Analysis Options screen, the reference number will not
be displayed.

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K.C. COLLEGE

2. Column 2 - Date - Template:This is the date of the transaction. If

the Show Transactions field is not selected on the Debtor Age
Analysis Options screen, the date will not be displayed.
3. Column 3 - Batch Type - The name of the selected batch type in
which the transaction was entered and posted (updated) to the
Ledger. If the Show Transactions field is not selected on the
Debtor Age Analysis Options screen, the batch type will not be
displayed.
4. Column 4 - Transaction Total - The total outstanding balance for
the debtor as at the selected date of ageing.
5. Column 5 - Current to - The outstanding balances as at the end
of the specified accounting period (e.g. the selected current
accounting period).
6. Column 6 - 30 Days to - The outstanding balances as at the end
of the specified accounting period (e.g. 1 accounting period or
month back).
7. Column 7 - 60 Days to - The outstanding balances as at the end
of the specified accounting period (e.g. 2 accounting periods or
months back).
8. Column 8 - 90 Days to - The outstanding balances as at the end
of the specified accounting period (e.g. 3 accounting periods or
months back).
At the end of each of the selected debtor accounts, a total will be
displayed for each ageing period. At the end of the report, a grand total
for all of the selected debtor accounts will be displayed.

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K.C. COLLEGE

INTERNAL AND EXTERNAL ANALYSIS

SWOT analysis is a simple framework for evaluating the internal and
external environments affecting a company. These environmental factors
can be divided into four categories, from which SWOT analysis derives
its name. The categories are: strengths, weaknesses, opportunities and
threats. Strengths and weaknesses represent the internal environment,
whereas opportunities and threats represent the external environment.
In SWOT, strengths and weaknesses are internal factors.
For example:
A strength could be:
Your specialist marketing expertise.
A new, innovative product or service.
Location of your business.
Quality processes and procedures.
Any other aspect of your business that adds value to your product
or service.
A weakness could be:
Lack of marketing expertise.
Undifferentiated products or services (i.e. in relation to your
competitors).
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Location of your business.

Poor quality goods or services.
Damaged reputation.
In SWOT, opportunities and threats are external factors.
For example:
An opportunity could be:
A developing market such as the Internet.
Mergers, joint ventures or strategic alliances.
Moving into new market segments that offer improved profits.
A new international market.
A market vacated by an ineffective competitor.
A threat could be:
A new competitor in your home market.
Price wars with competitors.
A competitor has a new, innovative product or service.
Competitors have superior access to channels of distribution.
Taxation is introduced on your product or service.
Internal factors that affect businesses come from within the business
itself, without regard to any outside factors like customers and other
businesses. External factors would be opposite.
Internal factors:
1) Employee Turnover/Employee Satisfaction
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2) Management of Resources
3) Research and Development
External Factors:
1) Advertising
2) Quality of business reputation, or quality of products business
produces
3) Competition by other businesses

DIFFERENCE BETWEEN INTERNAL AND EXTERNAL FACTORS

ASSOCIATED WITH SWOT ANALYSIS

Internal factors (strengths and weaknesses) are much more under the
control of the organization. The organization can move people around,
provide training, change how it uses other resources, and do other
things internally to strengthen its ability to achieve objectives.
External factors (opportunities and threats) are far less under the
organization's control and can have an impact on the internal factors.
Keep in mind that a threat to one organization is often an opportunity for
another organization.

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For example, the current economy is a threat to many organizations.

How do you motivate employees when you are laying them off because
consumers cannot afford to buy your products? It is an opportunity for
organizations that can position themselves to provide services for people
who are laid off or can outsource services to organizations that have
undergone a layoff.

Examples of External Uses of Statement Analysis:

Trade Creditors -- Focus on the liquidity of the firm.
Bondholders -- Focus on the long-term cash flow of the firm.
Shareholders -- Focus on the profitability and long-term health of
the firm.
Trade Creditors -- Focus on the liquidity of the firm.
Bondholders -- Focus on the long-term cash flow of the firm.
Shareholders -- Focus on the profitability and long-term health of
the firm.

Examples of Internal Uses of Statement Analysis:

Plan -- Focus on assessing the current financial position and
evaluating
potential firm opportunities.
Control -- Focus on return on investment for various assets and
asset efficiency.
Understand -- Focus on understanding how suppliers of funds
analyze the firm.
Plan -- Focus on assessing the current financial position and
evaluating
potential firm opportunities.

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CONCLUSION
Thus it can be concluded that Internal analysis of Financial statement
forms an important part in the management of the company. It helps the
firm to determine whether its capital position is correct or no and is a
determinant of a healthy financial status of a company.
WHY TO ANALYSE FINANCIAL STATEMENTS? :

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1. It gives true and fair picture of a company.

2. It helps in Investment decision.
3. It is used by government for taxation purposes.

BIBLIOGRAPHY

The information on the project has been obtained from the following
sources:
BOOKS REFERRED:
INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
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BY: PRASANNA CHANDRA

INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
BY: DR R.P.RUSTAGI

WEBSITES REFERRED:

www.wipro.com

http://www.tcs.com

www.universalteacher4u.com/cbse/xii/acctheory/.../page1.htm

http://www.netmba.com/finance/statements/common-size/

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