Chapter - 1: Introduction and Design of The Study

CHAPTER – 1
INTRODUCTION AND DESIGN OF THE STUDY
Financial Analysis is a tool to find out current and future position of companies on
the basis of historical data gathered from annual reports. Financial performance analysis
involves analysing liquidity position, solvency position and profitability position in terms of
financial ratios like current ratio, capital structure ratio, return on equity, return on capital
employed, gross profit ratio and operating profit ratio. A significant role has been played by
IT industry in giving India a global position not only this it has positive influence over the
lives of people by contributing directly and indirectly towards diversified business services,
world class technology, employability and standard of living
The Information Technology (IT) sector has been playing a vital role in
strengthening the Indian economy. Its contribution was 7.2% to India’s GDP in 2012. In
order to compare and set benchmark, a financial statement analysis should be made of all
companies. A financial statement is a collection of data organized according to logical and
consistent accounting procedures. Its purpose is to convey an understanding of some financial
aspects of a business firm. Financial analysis (also referred to as financial statement analysis
or accounting analysis) refers to an assessment of the viability, stability and profitability of a
business, sub-business or project. The present paper attempts to measure the financial and
accounting performances of leading Indian IT companies for the period 2010-2014. The
paper is structured as follows: it presents a brief review of the literature dealing with the
accounting and financial performance of the IT sector, followed by a description of the
objectives, data and methodology. Subsequently, it discusses the results, and finally, offers
the conclusion.
The Financial articulations will deliver the pertinent and dependable realities indoors
and outer clients like traders, proprietors attributable to commercial enterprise company,
gifted chiefs, leasers and government and so forth are the customers of those elements who
are otherwise known as companions of a distinctiveness unit. The research of price range
precis will look at the matters in Profit and Loss record and clarification of Balance Sheet. On
the off threat that the records is masterminded in a vital way, it'.
1.2 STATEMENT OF THE PROBLEM
The efficiency of the business is measured by the amount of profit earned.
The greater the profit the more efficient is the business. The profit of a business may be
measured by studying the profitability of investment in it. Probability is a relative term and its
relation with the other factors by which the profit is affected. In the financial statement
analysis literature, more importance is given to financial ratios for assessing a firm’s financial
performance and condition. Item of the income statement alone or along with the item’ s of
balance sheet also can generate a number of profitability ratios the analysists is always at a
loss to find which ratios to use to determine the profitability of firm. An attempt is made to
find out the interrelationship between among the financial ratio between years to year of a
company.
1.3 SCOPE OF STUDY
 The scope pertains the financial performance of Infosys limited.
 The study has been conducted with the help of the financial statement obtained
from the financial data base.
 The financial statement are the company balance sheets and profit and loss
accounts pertaining to four years from 2015-2020.
 The researcher tries to measure the performance of the organization and its
profitability.
 In the course of the analysis certain conclusions were made and the result
there on would be of substantial use to the planners and policy maker. These
findings and the suggestion help the re-orient their policy towards better
financial performance so as to the industries in the higher growth.
1.4 OBJECTIVES OF STUDY
 To analyze the financial growth of the company.
 To analyze the profitability position of the company.
 To measure the liquidity position of the company.
 To analyze the operational efficiency of the company.
 To assess and evaluate earning capacity of the business.
 To compare the liquidity, profitability and efficiency of the business.
1.5 RESEARCH METHODOLOGY
Source of Data:
For the purpose of study the data is collected preferably from
the secondary sources. Financial statements of the companies as well as annual
reports are taken into consideration. In addition to this a number of financial
journals and magazines are also used for the study.
Duration of the study:

For the purpose of in-depth study financial data for a period of
five years commencing from the year 2015-16 to the year 2017-18 is taken into
consideration.
Tools and techniques:

1. Ratio analysis
2. Comparative statement of balance sheet.
1.6 LIMITATIONS OF THE STUDY
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CHAPTER – 1

INTRODUCTION AND DESIGN OF THE STUDY

1.2 STATEMENT OF THE PROBLEM

The efficiency of the business is measured by the amount of profit earned.

1.3 SCOPE OF STUDY

 The scope pertains the financial performance of Infosys limited.

1.4 OBJECTIVES OF STUDY

 To analyze the financial growth of the company.

 To analyze the profitability position of the company.

 To measure the liquidity position of the company.

 To analyze the operational efficiency of the company.

 To assess and evaluate earning capacity of the business.

 To compare the liquidity, profitability and efficiency of the business.

1.5 RESEARCH METHODOLOGY

Duration of the study:

Tools and techniques:

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