“Comparative Ratio analysis

With reference to WIPRO and ITC Ltd.”

Dissertation Submitted to the
Padmashree Dr. D.Y. Patil University
In partial fulfillment of the requirements for the award of
the Degree of
MASTERS IN BUSINESS ADMINISTRATION
Submitted by:
Sai Ratna Dara
(Roll No.09043)

Research Guide:
Rupali Patil

Department of Business Management

Padmashree Dr. D.Y. Patil University
CBD Belapur, Navi Mumbai
 DECLARATION

I hereby declare that the dissertation “Comparative Ratio analysis

With reference to WIPRO and ITC Ltd.” submitted for the MBA
Degree at Padmashree Dr. D.Y. Patil University’s Department of
Business Management is my original work and the dissertation has not
formed the basis for the award of any degree, associate ship, fellowship
or any other similar titles.

Place: Mumbai

Date:

Signature of the
Student
 CERTIFICATE

This is to certify that the dissertation entitled “Comparative Ratio

analysis With reference to WIPRO and ITC Ltd.” is the bona fide
research work carried out by Ms. Sai Ratna Dora student of MBA,
at Padmashree Dr. D.Y. Patil University’s Department of Business
Management during the year 2009 -2011, in partial fulfillment of
the requirements for the award of the Degree of Master in
Business Management and that the dissertation has not formed
the basis for the award previously of any degree, diploma,
associateship, fellowship or any other similar title.

(Mrs. Rupali Patil)

(Dr. R. Gopal,

Director,

Department of Business Mgt,

Padmashree Dr. D.Y. Patil University)

Place: Mumbai

Date:
 ACKNOWLEDGEMENTS
In the first place, I thank the Padmashree Dr. D. Y. Patil University,
Department of Business Management, Navi Mumbai for giving me an
opportunity to work on this project. I would also like to thank Mrs. Rupali
Patil , Lecturer, Department of Business Management, Padmashree Dr.
D.Y. Patil University, Navi Mumbai for having given me her valuable
guidance for the project. Without her help it would have been impossible
for me to complete the project.

I would be failing in my duty if I do not acknowledge with a deep sense of

gratitude the sacrifices made by my parents and thus have helped me in
completing the project work successfully.

Place: Mumbai

Date:

Signature of the student.

Table of contents
Chapter No. Title Page No.

1. Executive Summary

2. Objective of the study

3. Research Methodology

4. Literature Review

5. Ratio Analysis
5.1 Introduction
5.2 Objective of ratio
analysis
5.3 Significance of ratio
analysis
5.4 Use and users of ratio
analysis
5.5 Standards of
comparison under ratio
analysis
5.6 Cautions on the use
and interpretation of
financial ratio
5.7 Classification of ratio
5.8 Advantages of ratio
analysis
5.9 Limitation of ratio
analysis

6. WIPRO
6.1 Introduction
6.2 Group of company
6.3 History
6.4 Company profile
6.5 Registered office
address
7. Ratio analysis and
interpretation
 List of table

Serial no. Title Page no.

A. WIPRO ltd.

1. Liquidity ratios
1.1 Current ratio
1.2 Quick ratio
1.3 Networking capital
2. Profitability ratio
2.1 Gross profit ratio
2.2 Operating ratio
2.3 Net profit ratio
2.4 Return on Investment
3. Assets turnover ratio
3.1 Total asset turnover
ratio
3.2 Inventory turnover
ratio
3.3 Debtors turnover ratio
4. Finance structure ratio
4.1 Debt ratio
4.2 Debt equity ratio
4.3 Interest coverage ratio

5. Valuation ratio
5.1 Earnings per share
 5.2 Dividend pay-out ratio
5.3 Profit margin ratio
B. ITC ltd.
1. Liquidity ratios
1.1 Current ratio
1.2 Quick ratio
2. Profitability ratio
2.1 Gross profit ratio
2.2 Operating ratio
2.3 Net profit ratio
2.4 Return on Investment
3. Assets turnover ratio
3.1 Total asset turnover
ratio
3.2 Inventory turnover
ratio
3.3 Debtors turnover ratio
4. Finance structure ratio
4.1 Debt equity ratio
4.2 Debt ratio
4.3 Interest coverage ratio

5. Valuation ratio
5.1 Earnings per share
5.2 Dividend pay-out ratio
5.3 Profit margin ratio
c. Comparative ratio
analysis with reference
to WIPRO & ITC ltd
1. Current ratio
2. Net profit ratio
3. Return on investment
4. Earnings per share
5. Share price
 CHAPTER-1

EXECUTIVE SUMMARY
 Executive Summary

The term “ratio” refers to the numerical and quantitative

relationship between two items and variables. Ratio analysis is the
systematic use of the ratio to interpret the financial statement. So
that the strength and weaknesses of a firm, as well as its historical
performance and current financial condition can be determined.

Financial ratios are a relatively easy way to get a basic

understanding of the financial health of an organization. They
range from the very simple to the complex, and the relevance of
many of the ratios depends on the nature of the organization and
therefore should only be compared with similar companies. This
project will help to understand the liquidity, profitability and
efficiency position of the company during the study period. To
evaluate and analyze various facts of the financial performance of
the company.

This document first explains some of the most general financial

health ratios and their relevance. Next is an action explaining how
the financial health of Wipro and Reliance limited can be analyzed
by the help of financial ratio.

This project will help to identify a critical indicator of financial

performance of the business and how it can be used for strategy
and decision-making.
 CHAPTER-2

OBJECTIVES OF THE STUDY

 Objectives of the study

• To know the profitability and earning of the WIPRO and ITC.

• Credit analysis: Company’s ability to pay its debt.

(Or)Measure the solvency position of the business.

• To know the operating efficiency of the WIPRO and ITC.

• Comparative study of WIPRO and ITC performance to the previous

years to find out strength and weakness.

• Compare the WIPRO with ITC’s financial position weather they are
improving or deteriorating over time.
 CHAPTER-3

RESEARCH METHODOLOGY

Research methodology
 Research Design:
The research design for this study is basically analytical because it
utilizes the large number of data of the company.

Data analysis tools:

Ratio analysis
for data representation tables and graphs will be used.

Primary Data:
Ratio calculation graphical representation

Secondary Data:
Magazines, journals, newspapers
Different books
Reference to the existing work done in the area.
Reference to the various report, material, published by the
company.
Internet

Limitation of the study

• This study is limited to two financial institutions i.e. WIPRO and
ITC ltd.

• The study is limited to time, cost and effort of the investigator. In a

few span of period it is not possible to collect all the information.

• There may be some vital information which the organization may

feel reluctant to share. They may give some incorrect information.
 CHAPTER-4

LITERATURE REVIEW

Literature review

Book Name: Financial Management

 Author Name: M pandey

Publisher Name:

Year of publication:

According to author financial analysis is the process of identifying

the financial strength and weakness of the firm by properly
establishing the relationship between the item or balance sheet
and profit and loss account.

Author States:

• A financial ratio is the relationship between financial variable it

helps to ascertain the financial condition of the firm.
• Ratio analysis is very use full tool to raise relevant question on a
number of management issues it provide clues to investigate those
issues in details.
• With the help of ratio analysis of conclusion can be drawn
regarding several aspects such as financial help profitability and
operational efficiency of the undertaking. Ratio point out the operating
efficiency of the firm that is whether the management has utilized the
firm’s assets correctly, to increase the investor’s wealth. It ensures a fair
return to its owners and secures optimum utilization of firm assets.

Book Name: Financial statement Analysis

Author name: John J. Wild, K.R.Subramanyam, Robert F.Hasley

Publisher Name: TATA MAACRAW-HILL, Pubilishing Company ltd.

Year of publication: 2007

They examine the processes and methods of financial analysis. They
stress the objective of different users and describe the analytical tools
and techniques to meet these objectives. The means of analysis range
from computation of ratio and cash flow measures to earning prediction
and equity valuation. To apply analysis tools that enable one to
reconstruct the economic reality embedded in financial statements. They
demonstrate hoe analysis tools and technique’s enhance user’s decision
including company valuation lending decision. They show how financial
statements analysis reduces uncertainty and increase confidents in
business decisions. Analysis of financial statement is exciting and
dynamic. Financial statements are relevant to decision of many
individuals including investors, creditors, consultants, mangers, auditors,
debtors, analyst, regulators and employees.

Book Name: Analysis of financial statements

Author name: Leopard A. Bernstein and John J.Wild

Publisher Name: TATA MACRAW-HILL, Publishing company ltd

Year of publication: 2006

To emphasize and understand the business activities –planning,
financing, investing and operating. They describe strategies underlying
business activities and their effects on financial statements, and we
discuss the objectives of analysis. They demonstrate popular tools and
techniques in analyzing and interpreting financial statements. Their
attention is directed at users of financial statements whose well-being
depends on reliable and relevant analysis. An important and unique
feature is to use of adapter’s annual report as a means to in still both
relevant and interesting nature of analysis. These stress the objectives
of users of users and describe analytical tools and techniques to meeting
these objectives. The means of analysis range from computation of ratio
and cash flow measures to earning prediction and valuation.

Book Name: Financial ratio analysis: A Handy Guide book

Author name: Charles K.Vandyck

Publisher Name:

Year of publication:

According to author financial ratio analysis is the selection

evaluation and interpretation of financial data in easier to
understand ratio, which have been identified as critical indicator of
financial performance of the business and can be used to make
inferences about a company’s financial condition and its operation
and attractiveness as an investment.

Financial ratios are calculated from one or pieces of information

from companies’ financial statements.
 CHAPTER-5

RATIO ANALYSIS

INTRODUCTION

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 company’s strengths as well as its
potential trouble spots.
 The most prevalent method of analyzing a balance sheet is
through ratio analysis. The ratio analysis can be for a single year
or it may extend to more than one year. The ratios can also be
compared with similar ratios of others concerns to make a
comparative study.

• First, all ratios will be worked out for each year and each set of
comparable items.
• The ratios worked out will be put in the context of a trend over
several years.
• They will be compared with similar companies/ standard ratios:

i) For the year concerned, and

ii) Over a period of time.

Any number of ratios can be prepared by comparing any two

figures available in the balance sheet or profits and loss account or
both. But to serve its purpose, the figures compared should be
meaningful, having a link between them, and should satisfy the
needs of the person who analysis the financial statements.

A tool used by individuals to conduct a quantitative analysis of

information in a company's financial statements. Ratios
are calculated from current year numbers and are then compared
to previous years, other companies, the industry, or even the
economy to judge the performance of the company. Ratio analysis
is predominately used by proponents of fundamental analysis.

A financial ratio (or accounting ratio) is a relative magnitude of

two selected numerical values taken from an enterprise's financial
statements. Often used in accounting, there are many standard
ratios used to try to evaluate the overall financial condition of a
corporation or other organization. Financial ratios may be used by
managers within a firm, by current and potential shareholders
(owners) of a firm, and by a firm's creditors. Security analysts use
financial ratios to compare the strengths and weaknesses in
various companies. If shares in a company are traded in a financial
market, the market price of the shares is used in certain financial
ratios.

Ratios can be expressed as a decimal value, such as 0.10, or

given as an equivalent percent value, such as 10%. Some ratios
are usually quoted as percentages, especially ratios that are
usually or always less than 1, such as earnings yield, while others
are usually quoted as decimal numbers, especially ratios that are
usually more than 1, such as P/E ratio; these latter are also called
multiples. Given any ratio, one can take its reciprocal; if the ratio
was above 1, the reciprocal will be below 1, and conversely. The
reciprocal expresses the same information, but may be more
understandable: for instance, the earnings yield can be compared
with bond yields, while the P/E ratio cannot be: for example, a P/E
ratio of 20 corresponds to an earnings yield of 5%.

Ratio analysis is one of the techniques of financial analysis to

evaluate the financial condition and performance of a business
concern. Simply, ratio means the comparison of one figure to other
relevant figure or figures.

According to Myers, “Ratio analysis of financial statements is a

study of relationship among various financial factors in a business
as disclosed by a single set of statements and a study of trend of
these factors as shown in a series of statements."

Sources of data for financial ratios

Values used in calculating financial ratios are taken from the

balance sheet, income statement, statement of cash flows or
(sometimes) the statement of retained earnings. These comprise
the firm's "accounting statements" or financial statements. The
statements' data is based on the accounting method and
accounting standards used by the organization.
 Purpose and types of ratios

Financial ratios quantify many aspects of a business and are an

integral part of the financial statement analysis. Financial ratios are
categorized according to the financial aspect of the business which
the ratio measures. Liquidity ratios measure the availability of cash
to pay debt. Activity ratios measure how quickly a firm converts
non-cash assets to cash assets. Debt ratios measure the firm's
ability to repay long-term debt. Profitability ratios measure the
firm's use of its assets and control of its expenses to generate an
acceptable rate of return Market ratios measure investor response
to owning a company's stock and also the cost of issuing stock.

Financial ratios allow for comparisons:

• between companies
• between industries
• between different time periods for one company
• between a single company and its industry average

Ratios generally hold no meaning unless they are benchmarked

against something else, like past performance or another
company. Thus, the ratios of firms in different industries, which
 face different risks, capital requirements, and competition, are
usually hard to compare.

Objectives of ratio analysis

The measure objectives of the recent study are to know about the
financial strength and weaknesses of WIPRO and ITC Ltd through
financial ratio analysis.

The main objective of recent study aimed at:

To evaluate the performance of the company by using ratio as a

yardstick to measure the efficiency of the company. To understand the
liquidity, profitability and efficiency position of the company during the
study period. To evaluate and analyze various facts of the financial
position of the company. To make comparison between the ratio during
the different periods.

1. To study the present financial system of the WIPRO And ITC Ltd.

2. To determine the profitability, liquidity ratio.

3. To analyze the capital structure of the company with help of leverage

ratio.

4. To offer appropriate suggestions for the better performance of the

organization.

5. Standardize financial information for comparisons

6. Compare performance with past performance

Significance of Ratio Analysis

1. It helps in evaluating the firm’s performance:

With the help of ratio analysis the 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 that is whether the management has utilized the firm’s assets
correctly, to increase the investor’s wealth. It ensures a fair return to its
owners and secures optimum utilization of firm’s assets.
2. It helps in inter-firm’s comparison:

Ratio analysis helps in inter-firm’s comparison by providing necessary

data. An inter-firm 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 reason of the
variation may be identified and its result is negative, the action may be
initiated immediately to bring them in line.

3. It simplifies financial statement:

The information given in the basis financial statements serves no useful

purpose unless it is interrupted and analyze in some comparable terms.

The ratio analyze is one of the tools in the hands of those who wants to
know something more from the financial statements in the simplified
manner.

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

Ratio analyze facilitates the management to know whether the firm’s

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:

Accounting ratios provide a reliable data which can be comparing,
studied and analyzed. These rations 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 positions of a firm. The liquidity position 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 Operating efficiency:

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.

Use and Users of Ratio Analysis

There are basically two uses of financial ratio analysis: to track

individual firm performance over time, and to make comparative
judgments regarding firm performance. Firm performance is
evaluated using trend analysis—calculating individual ratios on a
per-period basis, and tracking their values over time. This analysis
can be used to spot trends that may be cause for concern, such as
an increasing average collection period for outstanding receivables
or a decline in the firm's liquidity status. In this role, ratios serve as
red flags for troublesome issues, or as benchmarks for
performance measurement.

Another common usage of ratios is to make relative performance

comparisons. For example, comparing a firm's profitability to that of
a major competitor or observing how the firm stacks up versus
industry averages enables the user to form judgments concerning
key areas such as profitability or management effectiveness. Users
of financial ratios include parties both internal and external to the
firm. External users include security analysts, current and potential
investors, creditors, competitors, and other industry observers.
Internally, managers use ratio analysis to monitor performance and
pinpoint strengths and weaknesses from which specific goals,
objectives, and policy initiatives may be formed.

Standards for Comparison under Ratio Analysis

A number of financial tools have come into existence for the

analysis of financial statements. Financial statement analysis
means a meaningful study of the financial statements, the balance
sheet and the profit and loss account, relating to a period of an
industry, to ascertain the prevailing state of affairs and reasons
therefore. It is not enough to say that firm A is more profitable than
firm B; one must also be able to say the causes and factors that
are probably responsible for this. The object of the financial
 statement analysis is of great importance; for example, one’s
approach to comparison of two firms will be different from the
approach of assessing profitability of investment in a firm.
Standards are creatures of experiences, which are modified from
time to time to meet changing conditions; they are an ideal or an
average or normal results to be attained under certain conditions.
Because of the changing nature of standards, constant
acquaintance with the conditions under which they are set up is
essential so that causes of variations from the standard can be
intelligently appreciated. Standard ratios provide a bench – mark
against which actual ratios can be compared. The significance of a
ratio calculated can be grasped only after it is compared with the
ratio. For this purpose four types of standards are employed:-

(a) Absolute standards: - These ratios are determined by the rule of

thumb. For example, in the case of current ratio 2:1 is considered
to be desirable. This type of standards are those which become
generally recognised as being desirable regardless of the
company, its type, the time, stage of the business cycles, or the
objectives of the analyst. “The absolute standard is the weakest of
all, for it suggests the existence of some inherent trait common to
all business, which is generally far from the case.

(b)Historical standards: - These are the past ratios of the

company. Present performance can be judged on the basis of past
performance and the persons concerned can draw inferences
about the improvement or otherwise of the particular aspect.
Comparison with historical standards is also known as “Trend
Analysis”. For this purpose, the trends rather than the actual ratios
are important. Hence the behaviour of the ratios over a period is
observed. By presenting a picture of operations over an extended
time, trend – analysis of ratios becomes a valuable tool for the
financial manager. The trend of the ratios indicates whether the
concern has been moving in the direction in which it is tending to
go, e. g., for measuring the rate of turnover, the ratio may be
computed weekly or monthly and the points plotted on a graph to
show the trend of the rate of turnover. However, it is not
satisfactory from the standard point of view. It can merely compare
the present efficiency with the efficiency of the past.

(c)Horizontal standards: - These are the average ratios calculated

for the entire industry or the ratios of some other firm engaged in
the same line, i. e., Inter–Firm Comparison “Comparison can also
be made against the achievements of other business where
available. It is difficult to be sure that such comparison are on a like
for like basis, even if operating in a similar market or industry,
partly as to the comparison of profit, but more
Particularly concerning the scope of the business under
comparison. However, the difficulty in using such ratios is that no
two firms are similar in size, accounting policies and corporate
objectives. So, naturally there will be significant difference between
the standard opted and the actual ratio. The ratios calculated for
the industry as a whole provide a satisfactory standard to judge
and interpret the ratios of the individual firm.

(d)Budgeted standards: - These standards are based on

budgeted figures. The actual ratios are compared with budgeted
ratios and are, therefore, useful for the internal management as a
tool of performance and evaluation and control. The utility even for
the internal analyst depends much upon the care with which
budgets are drawn up. Sometimes the assumptions made at the
time of preparing the budget may go wrong because of abnormal
developments. External analysts usually look to historical and / or
horizontal standards. It can be concluded that ratios themselves do
not directly answer the important questions about the firm. Instead
they simply are relationship that, when compared to a standard of
performance, identify difference or variations. Such difference can
lead to understanding that brings forth changed performance.
Again as a matter of perspective, remember that
The manager uses financial statements mainly to locate problems
and issues that need managerial attention. And the alert manager
is interested in developing and establishing valuable and realistic
standards against which ratios can be measured
CAUTIONS ON THE USE AND INTERPRETATION OF FINANCIAL
RATIOS

Financial ratios represent tools for insight into the performance,

efficiency, and profitability of a firm. Two noteworthy issues on this
subject involve ratio calculation and interpretation. For example, if
someone refers to a firm's "profit margin" of 18 percent, are they
referring to gross profit margin, operating margin, or net profit
margin? Similarly, is a quotation of a "debt ratio" a reference to the
total debt ratio, the long-term debt ratio, or the debt-to-equity ratio?
These types of confusions can make the use of ratio analysis a
frustrating experience.

Interpreting financial ratios should also be undertaken with care. A

net profit margin of 12 percent may be outstanding for one type of
industry and mediocre to poor for another. This highlights the fact
that individual ratios should not be interpreted in isolation. Trend
analyses should include a series of identical calculations, such as
following the current ratio on a quarterly basis for two consecutive
years. Ratios used for performance evaluation should always be
compared to some benchmark, either an industry average or
perhaps the identical ratio for the industry leader.

Another factor in ratio interpretation is for users to identify whether

individual components, such as net income or current assets,
originate from the firm's income statement or balance sheet. The
income statement reports performance over a specified period of
time, while the balance sheet gives static measurement at a single
point in time. These issues should be recognized when one
attempts to interpret the results of ratio calculations.

Despite these issues, financial ratios remain useful tools for both
internal and external evaluations of key aspects of a firm's
performance. A working knowledge and ability to use and interpret
ratios remains a fundamental aspect of effective financial
management. The value of financial ratios to investors became
even more apparent during the stock market decline of 2000, when
the bottom dropped out of the soaring "dot.com" economy.
Throughout the long run-up, some financial analysts warned that
the stock prices of many technology companies—particularly
 Internet start-up businesses—were overvalued based on the
traditional rules of ratio analysis. Yet investors largely ignored such
warnings and continued to flock to these companies in hopes of
making a quick return. In the end, however, it became clear that
the old rules still applied, and that financial ratios remained an
important means of measuring, comparing, and predicting firm
performance.

The interpretation of ratios is an important factor. The inherent

limitations of ratio analysis should be kept in mind while interpreting
them. The impact of factors such as pri9ce level changes, change in
accounting policies, window dressing etc., should also be kept in mind
when attempting to interpret ratios. The interpretation of ratios can be
made in the following ways.

1 single absolute ratio

2 group of ratios
3 historical comparison
4 projected ratios
5 inter-firm comparison
GUIDELINES OR PRECAUTION FOR USE OF RATIOS

The calculation of ratios may not be a difficult task but their use is not
easy.

Following guidelines or factors may be kept in mind while interpreting

various ratios are:

1 accuracy of financial statements

2 objective or purpose of analysis
3 selection of ratios
4 use of standards
5 calibre of the analysis
 Classification of Ratio

PROFITABILITY RATIOS

These ratios tell us whether a business is making profits - and if so

whether at an acceptable rate. The key ratios are:

Ratio Calculation Co Comments

Gross Profit [Gross Profit / This ratio tells us something about
Margin Revenue] x 100 the business's ability consistently to
(expressed as a control its production costs or to
percentage) manage the margins its makes on
products its buys and sells. Whilst
sales value and volumes may
move up and down significantly,
the gross profit margin is usually
quite stable (in percentage terms).
However, a small increase (or
decrease) in profit margin, however
caused can produce a substantial
change in overall profits.
Operating [Operating Assuming a constant gross profit
Profit Margin Profit/ margin, the operating profit margin
tells us something about a
Revenue] x
company's ability to control its
100 other operating costs or overheads.
Return on Net profit before ROCE is sometimes referred to as
capital tax, interest and the "primary ratio"; it tells us what
employed dividends returns management has made on
("ROCE") ("EBIT") / total the resources made available to
assets (or total them before making any
assets less distribution of those returns.
current liabilities

EFFICIENCY RATIOS

These ratios give us an insight into how efficiently the business is

Classification of Turnover/Activity/Performance Ratios: -

Capital Turnover Ratio

Fixed Assets Turnover Ratio
Working Capital Turnover Ratio
Stock Turnover Ratio
Debtors Turnover Ratio
Debt Collection Period

Meaning, Objective and Method of Calculation: -

Capital Turnover Ratio: Capital turnover ratio establishes a

relationship between net sales and capital employed. The ratio indicates
the times by which the capital employed is used to generate sales. It is
calculated as follows: -
 Capital Turnover Ratio = Net Sales/Capital Employed

Where Net Sales = Sales – Sales Return

Capital Employed = Share Capital (Equity + Preference) + Reserves

and Surplus + Long-term Loans – Fictitious Assets.

Objective and Significance: The objective of capital turnover ratio

is to calculate how efficiently the capital invested in the business is
being used and how many times the capital is turned into sales.
Higher the ratio, better the efficiency of utilisation of capital and it
would lead to higher profitability.

Fixed Assets Turnover Ratio: Fixed assets turnover ratio

establishes a relationship between net sales and net fixed assets. This
ratio indicates how well the fixed assets are being utilised.

Fixed Assets Turnover Ratio = Net Sales/Net Fixed Assets

In case Net Sales are not given in the question cost of goods sold
may also be used in place of net sales. Net fixed assets are
considered cost less depreciation.

Objective and Significance: This ratio expresses the number to

times the fixed assets are being turned over in a stated period. It
measures the efficiency with which fixed assets are employed. A
high ratio means a high rate of efficiency of utilisation of fixed asset
and low ratio means improper use of the assets.

Working Capital Turnover Ratio: Working capital turnover ratio

establishes a relationship between net sales and working capital. This
ratio measures the efficiency of utilisation of working capital.

Working Capital Turnover Ratio = Net Sales or Cost of Goods

Sold/Net Working Capital

Where Net Working Capital = Current Assets – Current Liabilities

Objective and Significance: This ratio indicates the number of

times the utilisation of working capital in the process of doing
business. The higher is the ratio, the lower is the investment in
working capital and the greater are the profits. However, a very high
turnover indicates a sign of over-trading and puts the firm in
financial difficulties. A low working capital turnover ratio indicates
that the working capital has not been used efficiently.

Stock Turnover Ratio: Stock turnover ratio is a ratio between costs

of goods sold and average stock. This ratio is also known as stock
velocity or inventory turnover ratio.

Stock Turnover Ratio = Cost of Goods Sold/Average Stock

Where Average Stock = [Opening Stock + Closing Stock]/2

Cost of Goods Sold = Opening Stock + Net Purchases + Direct

Expenses – Closing Stock

Objective and Significance: Stock is a most important component

of working capital. This ratio provides guidelines to the management
while framing stock policy. It measures how fast the stock is moving
through the firm and generating sales. It helps to maintain a proper
 amount of stock to fulfil the requirements of the concern. A proper
inventory turnover makes the business to earn a reasonable margin
of profit.

Debtors’ Turnover Ratio: Debtors turnover ratio indicates the

relation between net credit sales and average accounts receivables of the
year. This ratio is also known as Debtors’ Velocity.
Debtors Turnover Ratio = Net Credit Sales/Average Accounts
Receivables
Where Average Accounts Receivables = [Opening Debtors and B/R +
Closing Debtors and B/R]/2
Credit Sales = Total Sales – Cash Sales

Objective and Significance: This ratio indicates the efficiency of

the concern to collect the amount due from debtors. It determines
the efficiency with which the trade debtors are managed. Higher the
ratio, better it is as it proves that the debts are being collected very
quickly.

Debt Collection Period: Debt collection period is the period over

which the debtors are collected on an average basis. It indicates the
rapidity or slowness with which the money is collected from debtors.

Debt Collection Period = 12 Months or 365 Days/Debtors Turnover

Ratio
Or
Debt Collection Period = Average Trade Debtors/Average Net
Credit Sales per day
Or
 365 days or 12 months x Average Debtors/Credit Sales
It may be noted that some authors prefer to use 360 days instead
of 365 days for the sake of convenience.

Objective and Significance: This ratio indicates how quickly and

efficiently the debts are collected. The shorter the period the better it
is and longer the period more the chances of bad debts. Although
no standard period is prescribed anywhere, it depends on the
nature of the industry.

Classification of Liquidity Ratios:

Current Ratio
Liquid Ratio

Meaning, Objective and Method of Calculation:

Current Ratio: Current ratio is calculated in order to work out firm’s

ability to pay off its short-term liabilities. This ratio is also called working
capital ratio. This ratio explains the relationship between current assets
and current liabilities of a business. Where current assets are those
assets which are either in the form of cash or easily convertible into cash
within a year. Similarly, liabilities, which are to be paid within an
accounting year, are called current liabilities.

Current Ratio = Current Assets/Current Liabilities

Current Assets include Cash in hand, Cash at Bank, Sundry
Debtors, Bills Receivable, Stock of Goods, Short-term Investments,
 Prepaid Expenses, Accrued Incomes etc.

Current Liabilities include Sundry Creditors, Bills Payable, Bank

Overdraft, Outstanding Expenses etc.

Objective and Significance: Current ratio shows the short-term

financial position of the business. This ratio measures the ability of
the business to pay its current liabilities. The ideal current ratio is
supposed to be 2:1 i.e. current assets must be twice the current
liabilities. In case, this ratio is less than 2:1, the short-term financial
position is not supposed to be very sound and in case, it is more
than 2:1, it indicates idleness of working capital.

Liquid Ratio: Liquid ratio shows short-term solvency of a business

in a true manner. It is also called acid-test ratio and quick ratio. It is
calculated in order to know how quickly current liabilities can be paid with
the help of quick assets. Quick assets mean those assets, which are
quickly convertible into cash.

Liquid Ratio = Liquid Assets/Current Liabilities

Where liquid assets include Cash in hand, Cash at Bank, Sundry
Debtors, Bills Receivable, Short-term Investments etc. In other
words, all current assets are liquid assets except stock and prepaid
expenses.

Current liabilities include Sundry Creditors, Bills Payable, Bank

Overdraft, Outstanding Expenses etc.

Objective and Significance: Liquid ratio is calculated to work out

the liquidity of a business. This ratio measures the ability of the
 business to pay its current liabilities in a real way. The ideal liquid
ratio is supposed to be 1:1 i.e. liquid assets must be equal to the
current liabilities. In case, this ratio is less than 1:1, it shows a very
weak short-term financial position and in case, it is more than 1:1, it
shows a better short-term financial position.

Classification of Solvency Ratios:

Debt-Equity Ratio
Debt to Total Funds Ratio
Fixed Assets Ratio
Proprietary Ratio
Interest Coverage Ratio

Meaning, Objective and Method of Calculation: -

Debt-Equity Ratio: Debt equity ratio shows the relationship

between long-term debts and shareholders funds’. It is also known as
‘External-Internal’ equity ratio.

Debt Equity Ratio = Debt/Equity

Where Debt (long term loans) include Debentures, Mortgage Loan,
 Bank Loan, Public Deposits, Loan from financial institution etc.

Equity (Shareholders’ Funds) = Share Capital (Equity + Preference)

+ Reserves and Surplus – Fictitious Assets

Objective and Significance: This ratio is a measure of owner’s

stock in the business. Proprietors are always keen to have more
funds from borrowings because:

(i) Their stake in the business is reduced and subsequently their risk
too

(ii) Interest on loans or borrowings is a deductible expenditure while

computing taxable profits. Dividend on shares is not so allowed by
Income Tax Authorities.

The normally acceptable debt-equity ratio is 2:1.

Debt to Total Funds Ratio: This ratio gives same indication as the
debt-equity ratio as this is a variation of debt-equity ratio. This ratio is also
known as solvency ratio. This is a ratio between long-term debt and total
long-term funds.

Debt to Total Funds Ratio = Debt/Total Funds

Where Debt (long term loans) include Debentures, Mortgage Loan,
Bank Loan, Public Deposits, Loan from financial institution etc.

Total Funds = Equity + Debt = Capital Employed

Equity (Shareholders’ Funds) = Share Capital (Equity + Preference)

+ Reserves and Surplus – Fictitious Assets
 Objective and Significance: - Debt to Total Funds Ratios shows
the proportion of long-term funds, which have been raised by way of
loans. This ratio measures the long-term financial position and
soundness of long-term financial policies. In India debt to total funds
ratio of 2:3 or 0.67 is considered satisfactory. A higher proportion is
not considered good and treated an indicator of risky long-term
financial position of the business. It indicates that the business
depends too much upon outsiders’ loans.

Fixed Assets Ratio: Fixed Assets Ratio establishes the

relationship of Fixed Assets to Long-term Funds.

Fixed Assets Ratio = Long-term Funds/Net Fixed Assets

Where Long-term Funds = Share Capital (Equity + Preference) +

Reserves and Surplus + Long- term Loans – Fictitious Assets

Net Fixed Assets means Fixed Assets at cost less depreciation. It

will also include trade investments.

Objective and Significance: This ratio indicates as to what extent

fixed assets are financed out of long-term funds. It is well
established that fixed assets should be financed only out of long-
term funds. This ratio workout the proportion of investment of funds
from the point of view of long-term financial soundness. This ratio
should be equal to 1. If the ratio is less than 1, it means the firm has
adopted the impudent policy of using short-term funds for acquiring
fixed assets. On the other hand, a very high ratio would indicate that
long-term funds are being used for short-term purposes, i.e. for
 financing working capital.

Proprietary Ratio: Proprietary Ratio establishes the relationship

between proprietors’ funds and total tangible assets. This ratio is also
termed as ‘Net Worth to Total Assets’ or ‘Equity-Assets Ratio’.

Proprietary Ratio = Proprietors’ Funds/Total Assets

Where Proprietors’ Funds = Shareholders’ Funds = Share Capital

(Equity + Preference) + Reserves and Surplus – Fictitious Assets

Total Assets include only Fixed Assets and Current Assets. Any
intangible assets without any market value and fictitious assets are
not included.

Objective and Significance: This ratio indicates the general

financial position of the business concern. This ratio has a particular
importance for the creditors who can ascertain the proportion of
shareholder’s funds in the total assets of the business. Higher the
ratio, greater the satisfaction for creditors of all types.

Interest Coverage Ratio: Interest Coverage Ratio is a ratio

between ‘net profit before interest and tax’ and ‘interest on long-term
loans’. This ratio is also termed as ‘Debt Service Ratio’.

Interest Coverage Ratio = Net Profit before Interest and Tax/Interest

on Long-term Loans

Objective and Significance: This ratio expresses the satisfaction to the

lenders of the concern whether the business will be able to earn sufficient
profits to pay interest on long-term loans. This ratio indicates that how
many times the profit covers the interest. It measures the margin of safety
 for the lenders. The higher the number, more secure the lender is in respect
of periodical interest.

Advantages and Uses of Ratio Analysis

There are various groups of people who are interested in analysis of

financial position of a company. They use the ratio analysis to workout a
particular financial characteristic of the company in which they are
interested. Ratio analysis helps the various groups in the following
manner: -

1. To workout the profitability: Accounting ratio help to measure

the profitability of the business by calculating the various
profitability ratios. It helps the management to know about the
earning capacity of the business concern. In this way profitability
ratios show the actual performance of the business.
2. To workout the solvency: With the help of solvency ratios,
solvency of the company can be measured. These ratios show the
relationship between the liabilities and assets. In case external
 liabilities are more than that of the assets of the company, it shows
the unsound position of the business. In this case the business has
to make it possible to repay its loans.
3. Helpful in analysis of financial statement: Ratio analysis help
the outsiders just like creditors, shareholders, debenture-holders,
bankers to know about the profitability and ability of the company
to pay them interest and dividend etc.
4. Helpful in comparative analysis of the performance: With the
help of ratio analysis a company may have comparative study of its
performance to the previous years. In this way company comes to
know about its weak point and be able to improve them.
5. To simplify the accounting information: Accounting ratios are
very useful as they briefly summarise the result of detailed and
complicated computations.
6. To workout the operating efficiency: Ratio analysis helps to
workout the operating efficiency of the company with the help of
various turnover ratios. All turnover ratios are worked out to
evaluate the performance of the business in utilising the resources.
7. To workout short-term financial position: Ratio analysis helps
to workout the short-term financial position of the company with the
help of liquidity ratios. In case short-term financial position is not
healthy efforts are made to improve it.
8. Helpful for forecasting purposes: Accounting ratios indicate the
trend of the business. The trend is useful for estimating future.
With the help of previous years’ ratios, estimates for future can be
made. In this way these ratios provide the basis for preparing
budgets and also determine future line of action.
 Limitations of Ratio Analysis

In spite of many advantages, there are certain limitations of the

ratio analysis techniques and they should be kept in mind while
using them in interpreting financial statements. The following are
the main limitations of accounting ratios:

1. Limited Comparability: Different firms apply different accounting

policies. Therefore the ratio of one firm can not always be
compared with the ratio of other firm. Some firms may value the
closing stock on LIFO basis while some other firms may value on
FIFO basis. Similarly there may be difference in providing
depreciation of fixed assets or certain of provision for doubtful
debts etc.
2. False Results: Accounting ratios are based on data drawn from
accounting records. In case that data is correct, then only the
ratios will be correct. For example, valuation of stock is based on
very high price, the profits of the concern will be inflated and it will
 indicate a wrong financial position. The data therefore must be
absolutely correct.
3. Effect of Price Level Changes: Price level changes often make
the comparison of figures difficult over a period of time. Changes in
price affects the cost of production, sales and also the value of
assets. Therefore, it is necessary to make proper adjustment for
price-level changes before any comparison.
4. Qualitative factors are ignored: Ratio analysis is a technique of
quantitative analysis and thus, ignores qualitative factors, which
may be important in decision making. For example, average
collection period may be equal to standard credit period, but some
debtors may be in the list of doubtful debts, which is not disclosed
by ratio analysis.
5. Effect of window-dressing: In order to cover up their bad
financial position some companies resort to window dressing. They
may record the accounting data according to the convenience to
show the financial position of the company in a better way.
6. Costly Technique: Ratio analysis is a costly technique and can be
used by big business houses. Small business units are not able to
afford it.
7. Misleading Results: In the absence of absolute data, the result
may be misleading. For example, the gross profit of two firms is
25%. Whereas the profit earned by one is just Rs. 5,000 and sales
are Rs. 20,000 and profit earned by the other one is Rs. 10,00,000
and sales are Rs. 40,00,000. Even the profitability of the two firms
is same but the magnitude of their business is quite different.
8. Absence of standard university accepted terminology: There
are no standard ratios, which are universally accepted for
comparison purposes. As such, the significance of ratio analysis
technique is reduced.

CHAPTER-6

WIPRO
 INTRODUCTION

Introduction to company

Group of companies

History

Company Profile

Registered office address

Board of director

Auditors
 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 Asia Pac 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+ ‘Centres 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
provides. 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
(IDCIndia).
Group Companies
Wipro infrastructure Engineering Ltd.
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.
 Wipro Holdings (Mauritius) Ltd.
Wipro Australia pvt Ltd.
WMNETSERV Ltd.
Quantech Global Service Ltd.
3D Network Pte Ltd.
Planet PSG Pte Ltd.
Spectra mind Inc.

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.

Going High-Tech: Mid-1970s to Late1980s

The company's first departure from its main cooking oil business came
about in 1975. Drawing Azim Premji's his engineering background, and
at the suggestion of one of the new IIM recruits, M. Seethapathy Rao,
Premji launched Wipro Fluid Power, an operation that manufactured
hydraulic and pneumatic cylinders. And under the direction of P.S. Pai,
Wipro's consumer care division expanded beyond oil in 1979,
establishing operations in soaps, toiletries, and baby care products.
Along with major expansions in distribution, Wipro's consumer care
division gained so much financial strength for the company that the
company was able to further diversify into IT and healthcare instruments.
Going Global in the 21st Century
Wipro seemed to have survived the effects of the U.S. economic
slowdown of 2000, with massive layoffs and profit warnings, and raced
ahead in 2001 amid its own soaring growth rates and a huge expansion
in its operating margins. Given that 60 percent of India's IT-related
services and software exports though Wipro came out of 2000 quite well,
India's IT industry quickly became flanked with growing competition from
countries such as Ireland, China, Vietnam, and the Philippines. And
even though 60 percent of Indian software exports were absorbed by
businesses in the U.S. in 1999 that accounted for only 2 percent of the
global total.

Chronology

Key Dates:

• 1945: Wipro Limited is incorporated.

• 1947: An oil mill and hydrogenated cooking medium plant is built;
Wipro goes public in India, for roughly $30,000.
• 1966: Founder M.H. Hasham Premji dies.
• 1968: Founder's son, Azim Hasham Premji assumes leadership of
company.
• 1975: Wipro begins to manufacture hydraulic and pneumatic
cylinders.
• 1980: Wipro employs information technology services.
• 1985: Wipro begins to manufacture toilet soaps, PCs, and dot-
matrix printers.
• 1989: General Electric and Wipro create a joint venture for medical
systems.
• 1990: Product software business is discontinued; software
services begin.
• 1992: Lighting business is established.
• 1999: Wipro's software business receives prestigious SEI Level 5
Certification; company restructures to address the Internet market.
• 2000: Wipro debuts on the New York Stock Exchange.

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 Systems outsourcing, package
implementation, software application development and
maintenance, and research and development services to
corporations globally. The Group's principal activity is to offer
information technology services. The services include integrated
business, technology and process solutions including systems
integration, package implementation, software application
development and maintenance and transaction processing. These
services also comprise of information technology consulting,
personal computing and enterprise products, information
technology infrastructure management and systems integration
services. The Group also offers products related to personal care,
baby care and wellness products. The operations of the Group are
conducted in India, the United States of America and
Other countries. During fiscal 2007, the Group acquired Wipro
Cyprus Pvt Ltd, Retail box Bv, Enabler Informatics SA, Enabler
France SAS, Enabler Uk Ltd, Enabler Brazil Ltd, Enabler and
Retail Consult GmbH, Cmango Inc, Cmango (India) Pvt Ltd,
Saraware Oy, Quantech Global Services and Hydro auto Group
AB.

Global IT Services and Products

The Company's Global IT Services and Products segment provides
IT services to customers in the Americas, Europe and Japan. The
range of its services includes IT consulting, custom application
design, development, re-engineering and maintenance, systems
integration, package implementation, technology infrastructure
outsourcing, BPO services and research and development
services in the areas of hardware and software design. Its service
offerings in BPO services include customer interaction services,
finance and accounting services and process improvement
services for repetitive processes.
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.

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 application integration, network integration and
maintenance services to telecommunications service providers,
Internet service providers, application service providers and
Internet data centres.

Business Process Outsourcing Service

Wipro BPO's service offerings include customer interaction
services, such as IT enabled customer services, marketing
services, technical support services and IT helpdesks; finance and
accounting services, such as accounts payable and accounts
receivable processing, and process improvement services for
repetitive processes, such as claims processing, mortgage
processing and document management.

Wipro's system integration services

Include integration of computing platforms, networks, storage, and
data centre and enterprise management software. These services
are typically bundled with sales of the Company's technology
products. Wipro's infrastructure management and total outsourcing
services include management and operations of customer's IT
infrastructure on a day-to-day basis. The Company's technology
support services include upgrades, system migrations, messaging,
network audits and new system implementation.
Consumer Care and Lighting
Wipro's Consumer Care and Lighting business segment accounted
for 5% of its revenue in fiscal 2007. The Company's product lines
include hydrogenated cooking oil, soaps and toiletries, wellness
products, light bulbs and fluorescent tubes, and lighting
accessories. Its product lines include soaps and toiletries, as well
as baby products, using ethnic ingredients. Brands include
Santoor, Chandrika and Wipro Active. The Wipro Baby Soft line of
infant and child care products includes soap, talcum powder, oil,
diapers and feeding bottles and Wipro Sanjeevani line of wellness
products. The Company's product line includes incandescent light
bulbs, compact fluorescent lamps and luminaries. It operates both
in commercial and retail markets. The Company has also
developed commercial lighting solutions for pharmaceutical
production centres, retail stores, software development centres
and other industries. Its product line consists of hydrogenated
cooking oils, a cooking medium used in homes, and bulk
consumption points like bakeries and restaurants. It sells this
product under the brand name Wipro Sunflower.
Registered Office Address

WIPRO LIMITED
Doddakannelli, Sarjapur Road,
Bangalore – 560 035, India.
Tel : +91-80-28440011
Fax : +91-80-2844054
1.6. Board of Directors
Azim H . Premji Chairman
Dr Ashok S Ganguly Former Chief Ex.Officer Nortel
B .C. Prabhakar Practitioner of Law
Dr. Jagdish N. Sheth Professor Of Marketing-Emory Uni.Usa.
N.Vagual Chairman-ICICI Bank Ltd
Bill Owens
Former Chief Ex.Officer,Nortel
P. M. Sinba
Former Chairman Pepsico India Holdings
Azim Premji.
CHAIRMAN
Auditors
KPMG
BSR & Co.
Audit committee
N Vaghul - Chairman
P M Sinha - Member
B C Prabhakar - Member
Board Governance and Compensation Committee
Ashok S Ganguly - Chairman
N Vaghul - Member
P M Sinha - Member
Shareholders’ Grievance and Administrative Committee
B C Prabhakar - Chairman
Azim H Premji – Member
 CHAPTER-8

RATIO ANALYSIS AND INTERPRETATION

 Liquidity Ratio

Liquidity ratios concerned with the short term solvency of the

concern or its ability to meet financial obligation on their due
dates.

Current Ratio

Quick Ratio

Net working capital Ratio

 Current ratio:

This ratio shows the proportion of Current Assets to Current

Liabilities. It is also known as “Working Capital Ratio” as it is a
measure of working capital available at a particular time. It’s a
measure of short term financial strength of the business. The ideal
current ratio is 2:1 i.e. Current Assets should be equal to Current
Liabilities.

Current Ratio = Current Assets/

Current Liabilities

year 2010 2009 2008 2007 2006

Current 2.39 1.83 2.54 1.68
1.46
ratio
 Interpretation:
• Current ratio is always 2:1,it means the current assest is two time of
current liability.
• After observing the figure the current ratio is fluctuating.
• Here ratio is increased from 2006 to 2008 and after that there is slight
decrease in 2009 but in 2010 it goes increase to 2.39 which shows that
in 2010 company is able to meet its current liability.
• Company is no where ideal ratio in every year but every company can
not acheive this ratio.
• Current ratio increases in 2008 and 2010 because of increase in current
assest and decrease in current liability in these years.
Quick ratio:

Quick assets represent current assets excluding stock and prepaid

expenses. Stock is excluded because it is not immediately realizable in
cash. Prepaid expenses are excluded because they cannot be realized
in cash.

One of the defects of current ratio is that it does not measure accurately
to meet financial commitments as and when they arise. This is because
the current assets include also items that are not easily realizable, such
as stock. The acid test ratio is a refinement of current ratio and is
calculated to measure the ability of the company to meet the liquidity
requirements in the immediate future. A minimum of 1: 1 is expected
which indicates that the concern can fully meet its financial obligations.
This also called as Liquid ratio or Quick ratio.

Year 2010 2009 2008 2007 2006

Quick
2.29 1.76 2.44 1.61 1.40
ratio
 Interpretation:
• Standard ratio is 1:1
• Companys qiuck assest is more than its quick liability for all these five
years.
• In 2008 and 2010 the ratio is increasing because of increase in cash and
bank balance.
• So all the years quick ratio exceeding 1,the firm is in position to meets its
immediate obligation in all the years.
• The quick ratio was at its peak in 2008 while it was lowest in 2006.
Net working capital:

Networking capital = Current Assets – Current Liabilities

Year 2010 2009 2008 2007 2006

Networkingcapital 9608.50 6142.20 61577.00 28050.00 13798.00
Ratio

Interpretation:
• 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 from 2006 to 2008 because
of assets increasing fast than liabilities but in 2009 to 2010 there is a
slight increase.

Profitability Ratio

A company should earn profits to survive and grow over a long

period of time. It would be wrong to assume that every action
initiated by management of company should be aimed at
maximizing profits, irrespective of social as well as economical
Consequences. It is a fact that sufficient must be earned to sustain
the operation of the business to be able to obtain funds from
investors for expansion and growth and to contribute towards the
responsibility for the welfare of the society in business environment
and globalization.
The profitability ratios are calculated to measure the operating
efficiency of the company.
The following Profitability Ratios are calculated for the company:

Gross profit ratio

Operating ratio

Net profit ratio

 Rate of return on investment

Rate of return on equity

Gross profit ratio:

This is the ratio expressing relationship between gross profits

earned to net sales. It is a useful indication of the profitability of
business. This ratio is usually expressed as percentage. The ratio
shows whether the mark-up obtained on cost of production is
Sufficient however it must cover its operating expenses.
Gross Profit Ratio = Gross Profit X 100
Sales

Year 2010 2009 2008 2007 2006

Grossprofit
ratio 21.47 19.64 18.63 21.15 21.42
 Interpretation:
• GP Ratio shows how much efficient company is in Production.
• GP is decreasing 2008 and 2009 due to higher production cost.
• Gross sales and services are increasing in 2006, 2007 and 2010
so in effect Gross profit ratio is increase.
 Operating ratio:

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 expences X 100

Sales

year 2010 2009 2008 2007 2006

Operating
ratio 24.00 22.12 21.24 23.78 24.28
 Interpretation:
• Operating ratio is lowest during current 2008.
• This shows that the expenses incurred to earn profit were less
compared to the previous two years.
• Operating ratio is decreases in 2008 and 2009 which shows
that company is not on the right track by efficiently cutting down
manufacturing, administrative and selling distribution expenses.
Net profit ratio:
This ratio serves a similar purpose as, and is used in conjunction with,
the gross profit ratio.

Net profit x 100

Net sales

year 2010 2009 2008 2007 2006

Net profit
ratio 20.97 13.53 17.19 20.34 19.53
Interpretation:
• After observing the figure the ratio is fluctuating.
• Company has rise in its net profit in 2010 as compared to the
previous years because the company has increased its sales.
• Though the company’s sale is continuously rising but the net profit
is not so much increased so management should take some steps
to decrease its expenses.
• The overall ratio is showing good position of the company.

Return on Investment:

Rate of Return on Investment indicates the profitability of business

and is very much in use among financial analysts.

ROI= EBIT X 100

Total Assets

Year 2010 2009 2008 2007 2006

Return on
inves 25.19 31.34 26.51 30.50 31.39
tment
Interpretation:
• From the above observation it can be seen that ratio is fluctuating.
• In the year 2009 Rate of Return on Investment is slightly increase
as compared to previous year.
• Ratio is decreasing in 2006 to 2008 at decreasing rate because of
assets increase compare to sales.
• The company’s Total Assets is increased so ROI is decreased
therefore Conclusion made that company is not utilizing its assets
and investment efficiently.
 Assets Turnover Ratio

Asset Turnover Ratio are basically productivity ratios which

measure the output produced from the given input deployed. This
relationship is shown as under
Productivity = 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:
 Total Asset Turnover Ratio

Inventory Turnover Ratio

Debtors Turnover Ratio

Total Asset Turnover Ratio:

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

Year 2010 2009 2008 2007 2006

Total Asset 0.99 1.24 1.14 1.43 1.58
Turnover
Ratio
Interpretation:

• The total assets turnover ratio is almost same in all years.

• The Assets turnover Ratio is between 1 to 1.5 in all 5 years which
shows effective utilization of assets from the company’s view point.
• In the year 2005-06 ratio is increased because of company’s total
assets is increased and sales are also increased. So the ratio is
increase.
 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

Year 2010 2009 2008 2007 2006

Inventoryturnover
Ratio 45.40 56.15 39.41 57.23 78.23
Interpretation:

• From the above calculation we can say that the ratio is decreasing.
It means Inventory cannot quickly convert in to sales. So that it is
bad for the company.
• In 2006, ratio is increased as compared to other all year so
management should take care about good efficiency of stock
management.
• But in 2006 onward ratio is decreasing because of increase in
COGS. So company should devise a systematic operational plan
for inventory control.
 Debtor Turnover Ratio:
Debtor turnover ratio: The debtor turnovers suggest the no. of
times the amount of credit sale is collected during the year.

Debtor’s Turnover Ratio = Sales

Average Debtors

Year 2010 2009 2008 2007 2006

Debtor 4.98 5.32 5.62 6.01 6.06
Tur
nov
er
Rati
o
 Interpretation:

• Debtor turnover indicates how quickly the company can collect its
credit sales revenue.
• Here the ratio is continuously decreasing, so that the company’s
collection of credit sales is efficient management is improved its
collection period every year so it Shows that the management
have an ability to collect its money from his debtors. Therefore,
they can invest that money on Assets, HRD and other investments.
 Finance structure ratio
Finance Structure Ratios indicate the relative mix or blending of
owner’s 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

Interest coverage Ratio

Debt equity ratio:

This ratio is only another form proprietary ratio and establishes
relation between the outside long term liabilities and owner funds.
It shows the proportion of long term external equity & internal
Equities.
Debt Equity Ratio = Total Long Term debt
Share holder equity

Year 2010 2009 2008 2007 2006

Debt 0.33 0.03 0.01
equi
0.31 0.40
ty
ratio
 Interpretation:
• The normally acceptable debt equity ratio is 2:1.
• This ratio is a measure of owner’s stock in the business.
• It shows companies accumulated more equity than required company
has to refocus to its strategic policies and plans and try to accumulate
more debt funds in future so as to make the balance between debt and
equity.
• In the year 2010, 2009 and 2008, the company is some what sufficient to
discharge its debts.
Debt Ratio:

Debt ratio indicates the long term debt out of the total capital employed.
Debt Ratio = Long Term Debt
Total Capital Employed

Year 2010 2009 2008 2007 2006

Debt Ratio 0.01 0.01 0.33 0.03 _
Interpretation:

• From the above calculation it seems that the ratio is fluctuating.

• In 2008 the ratio is increased as compared to the previous year
because the total loan funds are increased.
• In 2006 Company has issued equity Share and also loan is
decreased.
• Its means that now company trying to increasing Trading on equity.
 Interest coverage Ratio:
Interest Coverage Ratio: The ratio indicates as to how many times
the profit covers the payment of interest on debentures and other
long term loans hence it is also known as times interest earned
ratio. It measures the debt service capacity of the firm
In respect of fixed interest on long term debts.

Interest Coverage Ratio = EBIT

Interest

Year 2010 2009 2008 2007 2006

Interestcoverage 49.41 23.85 30.71 442.14 735.79
Ratio
 Interpretation:

• After observing the figure it shows that the ratio has mix trend from the
year 2008 to 2010.
• In the year 2007 and 2006 ,company has not much debt compare to
EBIT so interest coverage ratio is high but in 2007 and 2006,company
increasing its external debt so company have pay more interest among
its earnings therefore, interest coverage ratio falling down compare to
previous years.
 Valuation Ratio
Valuation ratios are the result of the management of above four
categories of the functional ratios. Valuation ratios are generally
presented on a per share basis and thus are more useful to the
equity investors.
The following Valuation Ratios are calculated for the company:

Earnings per share

Dividend pay-out Ratio

Profit Margin
 Earnings per share:

This ratio measures profit available to equity share holders on per

share basis. It is not the actual amount paid to the share holders
as dividend but is the maximum that can be paid to them.

Earnings per Share = Net Profits for Equity Shares

No. of Equity Shares

year 2010 2009 2008 2007 2006

Earningper
share
33.36 20.30 20.96 19.48 14.17
Interpretation:

• Earnings per share is increasing as an increasing rate it is good for

investor and share holder.
• In 2010, Profit is increasing and Number of Equity share Holder is
also increased.
Therefore, EPS Ratio is increasing in Current year.
 Dividend payout Ratio:

This ratio indicate split of EPS between Cash Dividends and

reinvestment of Profit. If the Company has Profitable projects than
it will prefer to keep dividend payout ratio lower.

Dividend pay-out Ratio = Dividend per Share in Rs.

Earnings per share in Rupees

year 2010 2009 2008 2007 2006

Dividendpayout
Ratio 20.60 23.05 33.47 35.20 40.23
 aInterpretation:

• In all years there is fluctuation in ratio.

• If the company wants to prosper in future with flying colours then
ideally more amounts should be reinvested in the business rather
than distributing as dividend.
• In 2005-06 company has reinvested in business for expansion.
Profit margin Ratio:

Profit margin ratio= PAT/Sales*100

year 2010 2009 2008 2007 2006

Profitmargin 20.97 13.53 17.19 20.34 19.53
Ratio
Interpretation:

• The ratios shows almost equal from 2006 to 2008 it means the
company has maintain the equal ratio in these years.
• The ratio is increase in current year it is good sign for the
company.
ITC LTD.
 Vision, Mission, Core Values
ITC's Vision :
Sustain ITC's position as one of India's most valuable corporations
through world class performance, creating growing value for the
Indian economy and the Company's stakeholders.

ITC's Mission:
To enhance the wealth generating capability of the enterprise in a
globalising environment, delivering superior and sustainable
stakeholder value.

ITC's Core Values :

ITC's Core Values are aimed at developing a customer-focused,
high-performance organisation which creates values for all its
stakeholders.

Trusteeship:
As professional managers, we are conscious that ITC has been given to
us in 'trust' by all our stakeholders.
They will actualise stakeholder value and interest on a long term
sustainable basis.

Customer Focus:
They are always customer focused and will deliver what the customer
needs in terms of value, quality and satisfaction.

Respect for People:

They are result oriented, setting high performance standards for
ourselves as individuals and teams. We will simultaneously respect and
value people and uphold humanness and human dignity.
They acknowledge that every individual brings different perspectives and
capabilities to the team and that a strong team is founded on a variety of
perspectives.

They want individuals to dream, value differences, create and

experiment in pursuit of opportunities and achieve leadership through
teamwork.

Excellence:
They do what is right, do it well and win. We will strive for excellence in
whatever we do.

Innovation:
They will constantly pursue newer and better processes, products,
services and management practices.

Nation Orientation:
They are aware of our responsibility to generate economic value for the
Nation. In pursuit of our goals, we will make no compromise in complying
with applicable laws and regulations at all levels.
 Company Profile of ITC ltd.

ITC Ltd is one of India's premier private sector companies with

diversified presence in businesses such as Cigarettes, Hotels,
Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged
Foods & Confectionery, Information Technology, Branded Apparel,
Greeting Cards, Safety Matches and other FMCG products. Presently,
ITC has a market capitalisation of nearly US $ 15 billion and a turnover
of over US $ 4.75 billion. It employs over 21,000 people at more than 60
locations across India. ITC has been rated among the World's Best Big
Companies, Asia's 'Fab 50' and the World's Most Reputable Companies
by Forbes magazine, among India's Most Respected Companies by
Business World and among India's Most Valuable Companies by
Business Today.

ITC was incorporated on August 24, 1910 under the name of 'Imperial
Tobacco Company of India Limited'. ITC had a humble beginning and in
the initial days it used to operate from a leased office on Radha Bazar
Lane, Kolkata. On its 16th birthday on August 24, 1926, ITC purchased
the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru
Road) Kolkata. Two years later company's headquarter building, 'Virginia
House' came on that plot. Progressively the ownership of the company
Indianised, and the name of the Company was changed to I.T.C. Limited
in 1974. In recognition of the Company's multi-business portfolio
encompassing a wide range of businesses, the full stops in the
Company's name were removed effective September 18, 2001 and the
Company was rechristened as 'ITC Limited'.
 ITC is involved in following businesses

Cigarettes: ITC is the market leader in cigarettes in India and has a

wide range of popular brands such as Insignia, India Kings, Classic,
Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and
Flake in its portfolio.

Packaging: ITC's Packaging & Printing Business is the country's largest

convertor of paperboard into packaging. It was set up in 1925 as a
strategic backward integration for ITC's Cigarettes business. It offers a
variety of value-added packaging solutions for the food & beverage,
personal products, cigarette, liquor, cellular phone and IT packaging
industries.

Hotels: ITC entered the hotels business in 1975 with the acquisition of a
hotel in Chennai which was rechristened Hotel Chola. Today ITC-
Welcomgroup with over 70 hotels is one of the foremost hotel chains in
India.

Paperboards: In 1979, ITC entered the Paperboards business by

promoting ITC Bhadrachalam Paperboards. ITC's Paperboards business
has a manufacturing capacity of over 360,000 tonnes per year and is a
market leader in India across all carton-consuming segments.

Greeting, Gifting & Stationery: ITC's stationery brands "Paper Kraft" &
"Classmate" are widely distributed brands across India. The Paperkraft
designer stationery range consists of notepads & multi subject
notebooks in hard, soft covers & multiple binding formats including
spirals, wiros etc. ITC's Greeting & Gifting products include Expressions
range of greeting cards and gifting products.

Safety Matches: ITC's brands of safety matches include iKno,

Mangaldeep, VaxLit, Delite and Aim. The Aim is the largest selling brand
of Safety Matches in India. ITC also exports premium brands to markets
such as Europe, Africa and the USA.

Aggarbattis: ITC has launched Mangaldeep brand of Aggarbattis with a

wide range of fragrances like Rose, Jasmine, Bouquet, Sandalwood,
Madhur, Durbar, Tarangini, Anushri, Ananth and Mogra. Mangaldeep is
also being exported to USA, UAE, Bahrain, Nepal, Singapore, Malaysia,
Oman and South Africa.

Lifestyle Retailing: ITC entered the Lifestyle Retailing business with the
Wills Sport range of international quality relaxed wear for men and
women in 2000. The Wills Lifestyle chain of exclusive stores later
expanded its range to include Wills Classic formal wear (2002) and Wills
Clublife evening wear (2003). In 2002, ITC entered into the popular
segment with its men's wear brand, John Players. In 2005, ITC
introduced Essenza Di Wills, an exclusive line of prestige fragrance
products.

Food: ITC made its entry into the branded & packaged Foods business
in August 2001 with the launch of the "Kitchens of India" brand. In 2002 it
expanded into Confectionery, Staples and Snack Foods segments. ITC's
brand in Food category include: Kitchens of India, Aashirvaad, Sunfeast,
Mint-O, Candyman, and Bingo!.
Agri Exports: ITC's International Business Division (IBD) is the
country's second largest exporter of agri-products. ITC exports Feed
Ingredients (Soyameal), Foodgrains (Rice, Wheat, Pulses), Coffee &
Spices, Edible Nuts, Marine Products, and Processed Fruits.

e-choupal: The e-Choupal model of ITC has been very effective in

tackling the challenges posed by the unique features of Indian
agriculture, characterised by fragmented farms, weak infrastructure and
the involvement of numerous intermediaries, among others. ITC's e-
Choupal won the Stockholm Challenge 2006 award is for using
information technology for the economic development of rural
communities.
HISTORY OF ITC LTD.
HISTORY OF ITC LTD.
ITC was incorporated on August 24, 1910 under the name Imperial
Tobacco Company of India Limited. As the Company's ownership
progressively Indianised, the name of the Company was change
dfr omIm per ia lT oba c co Company of India Limited to India Tobacco
Company Limited in 1970 and then to I.T.C. Limited in 1974. In
recognition of the Company's multi- business portfolio encompassing a
wide range of businesses -Cigarettes & Tobacco, Hotels, Information
Technology, Packaging, Paperboards & Specialty Papers, Agri-
business, Foods, Lifestyle Retailing, Education & Stationery and
Personal Care - the full stops in the Company's name were removed
effective September 18, 2001. The Company now stands

rechristened 'ITC Limited'. The Companies beginnings were humble. A

leased office on Radha Bazar Lane, Kolkata, was the centre of the
Company's existence. The Company celebrated its 16th birthday on
August 24, 1926, by purchasing the plot of land situated at 37,C
howringhee, (now renamed J.L. Nehru Road) Kolkata,
for the sum of Rupees 310,000.
1910 -Cigarettes and LeafTobacco businesses
1925 - Packaging & Printing Business
1975 - Hotels business
1979 - Paperboards business
1990 - Paperboards & Specialty Papers Division & Agri Business
Division
2000 -Greeting, Gifting and Stationery products business & Lifestyle
retailing business & IT Business
2001 -Foods business
2005 - Personal Care
 Chapter-11
RATIO ANALYSIS AND INTERPRETATION
Liquidity Ratio:
Current Ratio
Quick Ratio
Current ratio:

This ratio shows the proportion of Current Assets to Current

Liabilities. Itis also known as “Working Capital Ratio” as it is a
measure of working capital available at a particular time. It’s a
measure of short term financial strength of the business. The ideal
current ratio is 2:1 i.e. Current Assets should be equal to Current
Liabilities.
Current Ratio = Current Assets/
Current Liabilities

year 2010 2009 2008 2007 2006

Current 0.92 1.42 1.36 1.33 1.25
ratio
 Interpretation:
• Current ratio is always 2:1,it means the current assest is two time of
current liability.
• After observing the figure the current ratio is fluctuating and which shows
below the standard ratio.
• Here ratio is increased from 2006 to 2009 and after that there is slight
decrease in 2010 which indicates that the company is not able to meet
its current liability.
• The information shows that company’s current liabilities are increasing
over its current assets in the year 2010. Before the year 2010,
company’s current assets gradually increased over its current liabilities in
the last four years, which is a good sign for making investments in the
stock. In the year 20010 the current assets didn’t increased in the same
proportion as current liabilities increased. Company is no where ideal
ratio in every year .

Quick Ratio:

Quick Asset/ Quick Liability

year 2010 2009 2008 2007 2006

Quick 0.39 0.61 0.56 0.58 0.57
Ratio
Interpretation:
• Standard ratio is 1:1
• Companys qiuck assest is less than its quick liability for all these
five years.
• The quick ratio indicates the short-term liquidity position of a
company. The data shows that company holds a good amount of
stock in its balance-sheet and there is no role of stock in the steep
fall of quick ratio in the year 20010.

• All the years quick ratio less then 1,the firm is not in position to
meets its immediate obligation in all the year.
Profitability Ratio:

A company should earn profits to survive and grow over a long

period of time. It would be wrong to assume that every action
initiated by management of company should be aimed at
maximizing profits, irrespective of social as well as economical
consequences. It is a fact that sufficient must be earned to sustain
the operation of the business to be able to obtain funds from
investors for expansion and growth and to contribute towards the
responsibility for the welfare of the society in business environment
and globalization. The profitability ratios are calculated to measure
the operating efficiency of the company. The following Profitability
Ratios are calculated for the company.
Gross profit ratio

Operating ratio

Net profit ratio

Rate of return on investment

Rate of return on equity

Gross profit ratio:

This is the ratio expressing relationship between gross profit

earned to net sales. It is a useful indication of the profitability of
business. This ratio is usually expressed as percentage. The ratio
shows whether the mark-up obtained on cost of production is
sufficient however it must cover its operating expenses.

Gross Profit Ratio = Gross Profit X 100

Sales

year 2010 2009 2008 2007 2006

Networking
29.74 29.17 28.44 29.56 30.97
capital
Interpretation:
• GP Ratio shows how much efficient company is in Production.
• GP is decreasing from 2006 to 2008 due to higher production cost.
As the recession stuck the markets in the year 2007, companies
started to realize heavy operational expenses which brought down
their operational profits gross profit margins. Companies like
Reliance Industries Ltd., Hindustan Unliver Ltd. faced 60 to 70% of
their operational margins. So, here we can see that suddenly in the
year 2007 there was a downfall in the gross profit margin but the
company has started to overcome it.

Operating ratio:
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 expences X 100
Sales

year 2010 2009 2008 2007 2006

Operating
33.02 32.84 31.57 32.51 34.36
Ratio

Interpretation:
• Operating ratio is lowest during the year 2008.
• This shows that the expenses incurred to earn profit were less
compared to the previous two years.
• Operating ratio is decreases from 2008 to 2009 which shows that
company is not on the right track by efficiently cutting down
manufacturing, administrative and selling distribution expenses.
Net profit ratio:

Net profit x 100

 Net sales

year 2010 2009 2008 2007 2006

Netprofit
Ratio 21.30 21.18 21.50 21.40 22.19

Interpretation:
• After observing the figure the ratio is fluctuating.
• Company has high in its net profit in 2010 as compared to the
other years because the company has increased its sales.
• There was a downfall in profit margin in 2009 because of
amendments in the tobacco norms by Indian Government. Net
profits also reflect the same picture as of gross profits in the later
years.
• Though the company’s sale is continuously rising but the net profit
is not so much increased so management should take some steps
to decrease its expenses.

Return on Investment:
 Rate of Return on Investment indicates the profitability of business
and is very much in use among financial analysts.

ROI= EBIT X 100

Total Assets

year 2010 2009 2008 2007 2006

Return on
28.98 23.85 25.99 26.01 24.83
investment

Interpretation:
• From the above observation it can be seen that ratio is fluctuating.
• In the year 2009 Rate of Return on Investment is slightly decrease
as compared to other years.
• The company’s Total Assets is increased so ROI is decreased
therefore Conclusion made that company is not utilizing its assets
and investment efficiently.
Assets Turnover Ratio:
Asset Turnover Ratio are basically productivity ratios which
measure the output produced from the given input deployed. This
relationship is shown as under
Productivity = 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.
Total Asset Turnover Ratio
Inventory Turnover Ratio
Debtors Turnover Ratio
 Total Asset Turnover Ratio:
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
year 2010 2009 2008 2007 2006
Total Asset 1.33 1.09 1.16 1.17 1.08
Turnover
Ratio

Interpretation:
• The total assets turnover ratio is almost same in all years.
• The Assets turnover Ratio is between 1 to 1.5 in all 5 years which
shows effective Utilization of assets from the company’s view
point.
• In the year 2010 ratio is increased because of company’s total
assets is increased and sales is also increased. So the ratio is
increase.

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
year 2010 2009 2008 2007 2006
Inventory 6.04 5.26 5.51 3.76 3.82
turnover
Ratio

Interpretation:

• From the above calculation we can say that the ratio is increasing
It Means Inventory can quickly convert in to sales. So that it is bad
for the company.
• In 2010, ratio is increased as compared to other all year so
management is taking care of good efficiency of stock
management. So company have a systematic operational plan for
inventory control.

Debtor Turnover Ratio:

Debtor turnover ratio: The debtor turnovers suggest the no. of
times the amount of credit sale is collected during the year.
Debtor’s Turnover Ratio = Sales
Average Debtors
year 2010 2009 2008 2007 2006
Debtor 24.31 21.32 20.43 20.79 18.22
Turnover
Ratio

Interpretation:
• Debtor turnover indicates how quickly the company can collect its
credit sales revenue.
• Which shows how quickly debtors are converted into cash. A
higher Ratio is better since it would indicate that debts are being
collected more quickly. A ratio lower than the standard would
indicate the inefficiency. The picture is quite positive over here.

Finance structure ratio:

Finance Structure Ratios indicate the relative mix or blending of

owner’s 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
Interest coverage Ratio
 Debt equity ratio:
This ratio is only another form proprietary ratio and establishes
relation between the outside long term liabilities and owner funds.
It shows the proportion of long term external equity & internal
Equities.

Debt Equity Ratio = Total Long Term debt

Share holder equity

year 2010 2009 2008 2007 2006

DebtEquity
0.01 0.01 0.01 0.01 0.01
Ratio

Interpretation:
• The normally acceptable debt equity ratio is 2:1.
• This ratio is a measure of owner’s stock in the business.
• Company has same debt equity ratio from 2006 to 2010 which
shows that the company is less risky to invest in as more funding is
done through internal sources.
 Debt Ratio:

Debt ratio indicates the long term debt out of the total capital
employed.
Debt Ratio = Long Term Debt
Total Capital Employed

year 2010 2009 2008 2007 2006

Debt
0.01 0.01 0.01 0.01 0.01
Ratio

Interpretation:
• From the above calculation it seems that the ratio is constant in all
the 5 years.
• The company has not relied much on out side sources for raising
long term funds. There is enough scope for the company to raise
long term loans from outsiders.
.
Interest coverage Ratio:
The ratio indicates as to how many times the profit covers the
payment of interest on debentures and other long term loans
hence it is also known as times interest earned ratio. It measures
the debt service capacity of the firm in respect of fixed interest on
long term debts.
Interest Coverage Ratio = EBIT
Interest

Year 2010 2009 2008 2007 2006

Interest 82.46 168.97 258.92 456.67 209.63
coverage
Ratio

Interpretation:
• After observing the figure it shows that the ratio has mix trend from the
year 2006 to 2010.
• In the year 2008 and 2007 ,company has not much debt compare to
EBIT so interest coverage ratio is high but in 2008 and 2007,company
increasing its external debt so company have pay more interest among
its earnings therefore, interest coverage ratio falling down compare to
other years.
Valuation Ratio:

Valuation ratios are the result of the management of above four

categories of the functional ratios. Valuation ratios are generally
presented on a per share basis and thus are more useful to the
equity investors.
The following Valuation Ratios are calculated for the company.

Earning per share

Dividend pay-out Ratio

Profit Margin
 Earning per share:

This ratio measures profit available to equity share holders on per

share basis. It is not the actual amount paid to the share holders
as dividend but is the maximum that can be paid to them.
Earnings per Share = Net Profits for Equity Shares
No. of Equity Shares

Year 2010 2009 2008 2007 2006

Earning 10.64 8.65 8.28 7.18 5.95
Pershare

Interpretation:
• Earnings per share is increasing as a increasing rate it is good for
investor and share holder.
• In 2010, Profit is increasing and Number of Equity share Holder is
also increased. Therefore EPS Ratio is increasing in Current year.

Dividend payout Ratio:

 This ratio indicate split of EPS between Cash Dividends and
reinvestment of Profit. If the Company has Profitable projects than
it will prefer to keep dividend pay out ratio lower.
Dividend pay-out Ratio = Dividend per Share in Rs.
Earnings per share in Rupees

Year 2010 2009 2008 2007 2006

Dividend
payout 109.63 50.06 49.45 50.53 50.76
Ratio

Interpretation:
• There is a drastic increase in dividend payout in 2010..
• As the economies cooled down after a big meltdown company
started distributing huge dividends so as to attract the investors to
invest in. As the company created huge reserves in the previous
two years, so they aimed to distribute more and more dividends in
the year 2009-10

Profit margin Ratio:

 Profit margin ratio= PAT/Sales*100

Year 2010 2009 2008 2007 2006

Profit 21.30 21.18 21.50 21.40 22.19
margin
Ratio

Interpretation:
• After observing the figure it shows that the ratio has mix trend from
the year 2006 to 2010.

• The ratio is increase in current year it is good sign for the

company.
 Chapter-12

Comparative Ratio analysis

With reference to WIPRO and ITC Ltd.
 Current ratio:
Current Ratio = Current Assets/
Current Liabilities

year 2010 2009 2008 2007 2006

WIPRO 2.39 1.83 2.54 1.68 1.46
ITCLtd. 0.92 1.42 1.36 1.33 1.25

Interpretation:
The figure shows comparison of current ratio of WIPRO and ITC
ltd.
• WIPRO maintains a standard current ratio in 2008 and 2010 which
shows that company is able to meet its current liability. While ITC ltd.
Have always below standard current ratio that is 2:1 which shows
company have not sufficient cash to manage its current debts.
 Net profit ratio:

Net profit x 100

Net sales

year 2010 2009 2008 2007 2006

WIPRO 20.97 13.53 17.19 20.34 19.53
ITC Ltd. 21.30 21.18 21.50 21.40 22.19

Interpretation:
The figure shows comparison of net profit ratio of WIPRO and ITC
ltd
• WIPRO shows a fluctating figure in all the 5 years but in the other
hand ITC ltd. has maintain almost same profit in all the years.
Which shows a good condition of company’s performance.
Return on Investment:
ROI= EBIT X 100
Total Assets

year 2010 2009 2008 2007 2006

WIPRO 25.19 31.34 26.51 30.50 31.39
ITC Ltd. 28.98 23.85 25.99 26.01 24.83

Interpretation:
The figure shows comparison of Return on investment of WIPRO
and ITC ltd.
In the current year ITC ltd. Shows a good return on investment as
compare to WIPRO. But in the previous years WIPRO shows a
high return on investment as compare to ITC ltd.
 Earning per share:

Year 2010 2009 2008 2007 2006

WIPRO 33.36 20.30 20.96 19.48 14.17
ITC Ltd. 10.64 8.65 8.28 7.18 5.95

Interpretation:
The figure shows comparison of Return on investment of WIPRO
and ITC ltd.
• It shows that WIPRO has high earning per share as compare to
ITC ltd In all the years. Therefore ITC should take care of their
investor by paying more devidend by which company will increase
their EPS.

Share Price:

Year 2010 2009 2008 2007 2006

WIPRO 120.49 85.42 79.05 63.86 45.03
ITC Ltd. 36.69 36.24 31.85 27.59 23.97

Interpretation:
The figure shows comparison of Return on investment of WIPRO
and ITC ltd.
• WIPRO has a higher share price as compare to ITC ltd in all the
years. Which shows WIPRO maintain a higher position in the
market.

Findings of the study

• WIPRO shows the ideal current ratio in the 2 year 2008 and 2010
i.e. is 2.54, 2.39 which shows company have sufficient cash to
manage its current debts in these years. While in the case of ITC
 ltd Company is no where ideal ratio in any years i.e 2:1. .

• The quick ratio is too high as per the standard in the case of
WIPRO. In last 5 years it was 2.29, 1.76, 2.44, 1.61, and 1.40
which says cash conversion cycle is higher than its requirement.

In ITC the quick ratio is below the standard in every year i.e. 0.39,
0.61, 0.56, 0.58, 0.57 which says their cash conversion cycle is not
higher than its requirement.

• In the year 2007 and 2006 ,WIPRO has not much debt compare to
EBIT so interest coverage ratio is high but in 2007 and
2006,company increasing its external debt so company have pay
more interest among its earnings therefore, interest coverage ratio
falling down compare to previous years. In the year 2008 and 2007
ITC has not much debt compare to EBIT so interest coverage ratio
is high

• In WIPRO, after observing the figure the net profit ratio is

fluctuating. Company has rise in its net profit in 2010 as compared
to the previous years because the company has increased its
sales. Though the ITC ltd sale is continuously rising but the net
profit is not so much increased so management should take some
steps to decrease its expenses.

• WIPRO, debt ratio is fluctuating; In 2008 the ratio is increased as

compared to the previous year because the total loan funds are
increased. From the above calculation it seems that the ratio of
ITC ltd is constant in all the 5 years. The company has not relied
 much on outside sources for raising long term funds. There is
enough scope for the company to raise long term loans from
outsiders.
• From the above calculation we can say that the inventory turnover
ratio of WIPRO is decreasing from 2006 to 2010. It means
Inventory cannot quickly convert in to sales. So that it is bad for the
company. But in the case of ITC ltd in 2010, ratio is increased as
compared to other all year so management is taking care of good
efficiency of stock management. So company have a systematic
operational plan for inventory control.
• There are many other groups also who want and interested in
company’s ratio like shareholder, investor, creditors, customer,
government etc.
• Company was preparing ratio analysis every year after releasing
their financial statement.

Suggestion and conclusion

WIPRO
• The company future plan of expansion seen clear due to
increase investment in fixed assets. Efficient use of these
 assets has enabled the company to observed an increased
profit.
• Though the company’s sale is continuously rising but the net
profit is not so much increased. So management should take
some steps to decrease its expenses.
• Company should try its best to increase sales and profit.
• Current ratio is very good in all the year that is above the
standard so company has fully utilized cash liquidity for
business development.
• At a time when performance can be the only real indicator of
a company’s credentials, Wipro’s results speak for
themselves. Ranked India's most valuable company by
Business Today and 16th among the software services
companies in the world by Business Week, Wipro has had a
Cumulative Annual Growth Rate (CAGR) of 50% over the
last five years, exhibiting stability, profitability and growth
right from inception.

• Strong fundamentals like quality, integrity, and supreme

customer service have been the drivers of Wipro’s growth.
Wipro is convinced about the long-term value proposition of
the company - which is based on their technical depth,
quality leadership and an attractive value for money
proposition.

Suggestion and conclusion

ITC ltd.

• The company maintains a high amount of fixed assets that

accounts for the high depreciation. This is reflected here by the
 small value of Sales/Fixed Asset as reflected by the company’s
balance sheet.

• The company also has a policy of maintaining a larger stock of

inventories than its other competitors. This is reflected in the low
amount of Sales/Inventories that the company possesses.

• The company maintains a low figure for Sales/Debtors which is a

good sign. The company should make sure that such kind of an
advantage over others is maintained.

• Sales/Other Assets for the company is at a medium level. The

company should try and take measures to overtake the leader by
reducing the amount of other assets maintained or conversely
increasing the sales of the company if such levels of assets are to
be maintained.

• Reserves are the liability of the company. ITC Limited maintains a

low level for the Total Assets to Reserves ratio thereby implying a
larger reserve than required. The company should pay off the
reserves to the shareholders so as to move towards the better
circle of companies performing the best in the industry.

• The higher the figure for the Total Assets to Debt, the better is the
company. A larger debt implies a larger inability on part of the
company to pay off its debtors. A larger level of fixed assets can
fund the payment of debt if the current assets of the company
cannot help in funding the same.
 Chapter-13

Appendix
 Appendix

Financial statement of WIPRO

Balance Sheet of ------------------- in Rs. Cr. -------------------

Wipro
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 12
m m
12 mths 12 mths 12 mths
th th
s s

Sources Of Funds
Total Share Capital 285.15 291.80 292.30 293.00 293.60
Equity Share Capital 285.15 291.80 292.30 293.00 293.60
Share Application Money 7.49 3.50 58.00 1.50 1.80
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 6,135.30 9,025.10 11,260.40 12,220.50 17,396.80
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 6,427.94 9,320.40 11,610.70 12,515.00 17,692.20
Secured Loans 45.06 23.20 4.00 0.00 0.00
Unsecured Loans 5.10 214.80 3,818.40 5,013.90 5,530.20
Total Debt 50.16 238.00 3,822.40 5,013.90 5,530.20
Total Liabilities 6,478.10 9,558.40 15,433.10 17,528.90 23,222.40
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 2,364.53 1,645.90 2,282.20 5,743.30 6,761.30
Less: Accum. Depreciation 1,246.27 0.00 0.00 2,563.70 3,105.00
Net Block 1,118.26 1,645.90 2,282.20 3,179.60 3,656.30
Capital Work in Progress 612.36 989.50 1,335.00 1,311.80 991.10
Investments 3,459.20 4,348.70 4,500.10 6,895.30 8,966.50
Inventories 148.65 240.40 448.10 459.60 606.90
Sundry Debtors 1,968.07 2,582.30 3,646.60 4,446.40 4,754.70
Cash and Bank Balance 822.42 1,849.20 3,732.10 1,902.10 1,938.30
Total Current Assets 2,939.14 4,671.90 7,826.80 6,808.10 7,299.90
Loans and Advances 1,136.96 1,666.50 4,231.30 4,202.00 5,519.40
Fixed Deposits 0.58 0.00 0.00 2,507.10 3,726.00
Total CA, Loans & Advances 4,076.68 6,338.40 12,058.10 13,517.20 16,545.30
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,776.83 2,998.90 3,361.60 5,564.30 4,706.00
Provisions 1,011.56 765.20 1,380.70 1,810.70 2,230.80
Total CL & Provisions 2,788.39 3,764.10 4,742.30 7,375.00 6,936.80
Net Current Assets 1,288.29 2,574.30 7,315.80 6,142.20 9,608.50
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 6,478.11 9,558.40 15,433.10 17,528.90 23,222.40

Contingent Liabilities 509.18 661.60 749.90 1,045.40 778.00

Book Value (Rs) 45.03 63.86 79.05 85.42 120.49

Profit & Loss

account of ------------------- in Rs. Cr. -------------------
Wipro
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Income
10,264.
17,658.1
Sales Turnover 0 13,758.50 21,612.80 23,006.30
0
9
Excise Duty 36.97 74.60 165.50 105.50 84.30
10,227.
17,492.6
Net Sales 1 13,683.90 21,507.30 22,922.00
0
2
Other Income 151.92 288.70 326.90 -480.40 875.30
Stock Adjustments 24.21 86.30 187.00 -3.80 111.00
10,403.
18,006.5
Total Income 2 14,058.90 21,023.10 23,908.30
0
5
Expenditure
1,391.8
Raw Materials 1,975.30 3,139.30 3,438.80 4,140.40
8
Power & Fuel Cost 86.46 0.00 0.00 154.00 141.40
4,279.0
Employee Cost 5,768.20 7,409.10 9,249.80 9,062.80
3
Other Manufacturing Expenses 934.24 120.50 299.80 1,687.80 2,071.80
Selling and Admin Expenses 801.07 27.60 557.80 1,523.00 1,475.10
Miscellaneous Expenses 274.76 2,624.10 2,558.00 691.40 640.00
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
7,767.4 13,964.0
Total Expenses 10,515.70 16,744.80 17,531.50
4 0

Mar
Mar '06 Mar '08 Mar '09 Mar '10
'07

12 mths 12 mths 12 mths 12 mths 12 mths

2,483.8
Operating Profit 3,254.50 3,715.60 4,758.70 5,501.50
9
2,635.8
PBDIT 3,543.20 4,042.50 4,278.30 6,376.80
1
Interest 3.13 7.20 116.80 196.80 108.40
2,632.6
PBDT 3,536.00 3,925.70 4,081.50 6,268.40
8
Depreciation 292.26 359.80 456.00 533.60 579.60
Other Written Off 0.00 0.00 0.00 0.00 0.00
2,340.4
Profit Before Tax 3,176.20 3,469.70 3,547.90 5,688.80
2
Extra-ordinary items -33.85 0.00 0.00 0.00 0.00
2,306.5
PBT (Post Extra-ord Items) 3,176.20 3,469.70 3,547.90 5,688.80
7
Tax 286.10 334.10 406.40 574.10 790.80
2,020.4
Reported Net Profit 2,842.10 3,063.30 2,973.80 4,898.00
8
6,375.5
Total Value Addition 8,540.40 10,824.70 13,306.00 13,391.10
5
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 712.88 873.70 876.50 586.00 880.90
Corporate Dividend Tax 99.98 126.80 148.90 99.60 128.30
Per share data (annualised)
14,257.
Shares in issue (lakhs) 5 14,590.00 14,615.00 14,649.81 14,682.11
4
Earning Per Share (Rs) 14.17 19.48 20.96 20.30 33.36
Equity Dividend (%) 250.00 300.00 300.00 200.00 300.00
Book Value (Rs) 45.03 63.86 79.05 85.42 120.49
 Financial statement of ITC ltd.

------------------- in Rs. Cr. -------------------

Balance Sheet of ITC
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 375.52 376.22 376.86 377.44 381.82

Equity Share Capital 375.52 376.22 376.86 377.44 381.82

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 8,626.79 10,003.78 11,624.69 13,302.55 13,628.17

Revaluation Reserves 59.17 57.08 56.12 55.09 54.39

Networth 9,061.48 10,437.08 12,057.67 13,735.08 14,064.38

Secured Loans 25.91 60.78 5.57 11.63 0.00

Unsecured Loans 93.82 140.10 208.86 165.92 107.71

Total Debt 119.73 200.88 214.43 177.55 107.71

Total Liabilities 9,181.21 10,637.96 12,272.10 13,912.63 14,172.09

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 6,227.17 7,134.31 8,959.70 10,558.65 11,967.86

Less: Accum. Depreciation 2,065.44 2,389.54 2,790.87 3,286.74 3,825.46

Net Block 4,161.73 4,744.77 6,168.83 7,271.91 8,142.40

Capital Work in Progress 399.97 1,130.20 1,126.82 1,214.06 1,008.99

Investments 3,517.01 3,067.77 2,934.55 2,837.75 5,726.87

Inventories 2,636.29 3,354.03 4,050.52 4,599.72 4,549.07

Sundry Debtors 547.96 636.69 736.93 668.67 858.80

Cash and Bank Balance 67.47 103.54 153.34 68.73 120.16

Total Current Assets 3,251.72 4,094.26 4,940.79 5,337.12 5,528.03

Loans and Advances 1,188.42 1,390.19 1,949.29 2,150.21 1,929.16

Fixed Deposits 788.35 796.62 416.91 963.66 1,006.12

Total CA, Loans & Advances 5,228.49 6,281.07 7,306.99 8,450.99 8,463.31

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 2,736.95 3,113.01 3,619.76 4,121.59 4,619.54

Provisions 1,389.04 1,472.84 1,645.33 1,740.49 4,549.94

Total CL & Provisions 4,125.99 4,585.85 5,265.09 5,862.08 9,169.48

Net Current Assets 1,102.50 1,695.22 2,041.90 2,588.91 -706.17

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 9,181.21 10,637.96 12,272.10 13,912.63 14,172

contingent Liabilities 98.72 129.56 308.08 261.36 258.73

Book Value (Rs) 23.97 27.59 31.85 36.24 36.69

Profit & Loss account of ------------------- in Rs. Cr. -------------------
ITC
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 16,236.42 19,519.99 21,467.38 23,247.84 26,399.63

Excise Duty 6,438.09 7,206.16 7,435.18 8,262.03 7,832.18

Net Sales 9,798.33 12,313.83 14,032.20 14,985.81 18,567.45

Other Income 203.20 276.22 516.50 426.21 545.05

Stock Adjustments 135.68 322.96 32.46 630.30 -447.54

Total Income 10,137.21 12,913.01 14,581.16 16,042.32 18,664.96

Expenditure

Raw Materials 4,265.72 5,807.48 6,307.79 6,864.96 7,140.69

Power & Fuel Cost 245.17 253.00 309.90 394.12 387.34

Employee Cost 541.40 630.15 745.00 903.37 1,014.87

Other Manufacturing
50.08 65.32 73.52 402.88 413.79
Expenses

Selling and Admin Expenses 1,042.51 1,299.17 1,609.33 1,684.41 2,093.87

Miscellaneous Expenses 416.54 601.28 682.72 516.90 1,008.91

Preoperative Exp Capitalised -15.78 -42.52 -112.75 -72.55 -71.88

Total Expenses 6,545.64 8,613.88 9,615.51 10,694.09 11,987.59

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 3,388.37 4,022.91 4,449.15 4,922.02 6,132.32

PBDIT 3,591.57 4,299.13 4,965.65 5,348.23 6,677.37

Interest 21.10 16.04 24.61 47.65 90.28

PBDT 3,570.47 4,283.09 4,941.04 5,300.58 6,587.09

Depreciation 332.34 362.92 438.46 549.41 608.71

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 3,238.13 3,920.17 4,502.58 4,751.17 5,978.38

Extra-ordinary items 46.13 61.94 117.41 81.52 48.65

PBT (Post Extra-ord Items) 3,284.26 3,982.11 4,619.99 4,832.69 6,027.03

Tax 1,027.57 1,263.07 1,480.97 1,565.13 1,965.43

Reported Net Profit 2,235.35 2,699.97 3,120.10 3,263.59 4,061.00

Total Value Addition 2,279.92 2,806.40 3,307.72 3,829.13 4,846.90

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 995.12 1,166.29 1,319.01 1,396.53 3,818.18

Corporate Dividend Tax 139.58 198.21 224.17 237.34 634.15

Per share data (annualised)

Shares in issue (lakhs) 37,551.79 37,622.23 37,686.10 37,744.00 38,181.77

Earning Per Share (Rs) 5.95 7.18 8.28 8.65 10.64

Equity Dividend (%) 265.00 310.00 350.00 370.00 1,000.00

Book Value (Rs) 23.97 27.59 31.85 36.24 36.69

 Chapter-14

Bibliography
 BIBLIOGRPHY

Reference books:

• Financial statement Analysis- John J. Wild, K.R.Subramanyam,

Robert F.Hasley

• Financial management-I M Pandey

Financial management(theory and practice)-Eugene F.Brighar,
Michel C. Ehardt
• Financial management-Shashi K.Gupta,R.K.Sharma
• Analysis of financial statements-Leopard A. Bernstein and John
J.Wild

• Financial ratio analysis: A Handy Guide book- Charles K.Vandyck

Website:

• www. wipro.com
• www.itcportal.com
• www.myiris.com
• www.itc.com
• www.moneycontrol.com
• Daily News Papers – Economic Times, Business Line, Business
Standard.