NAME:- BATHIJA JHARNA SONU

CLASS:- M. COM ADVANCED ACCOUNTANCY

ROLLNO:- HFPMCAA005

SEMESTER:- 4

PROJECT TITLE- A COMPARATIVE STUDY ON THE FINANCIAL

POSITION OF TCS AND WIPRO LTD.
 ACKNOWLEDGEMENT

I would like to extend my sincere and heartfelt gratitude to my professor bhakti mulchandani

Who has helped me in this endeavor and has always been very cooperative and without her help,
cooperation, guidance and encouragement the project couldn’t have been what it evolved to be.

DATE

20/02/23

SYMCOM ACCONTANCY

JHARNA
CONTENTS OF THE PROJECT

• INTRODUCTION
• REVIEW OF LITERATURE
• RESEARCH METHODOLOGY
• DATA REPRESENTATION AND ANALYSIS
• RESULTS AND DISCUSSION
• REFERENCES
• ANNEXURE
 INTRODUCTION
1.1Rationale of the study

Financial analysis nowadays is an important instrument for the critical review of the performance

of a business. It helps the concern to analyze the financial data and provide information which is

required to take decisions regarding investments and also help to understand financial position

better. The financial analysis portrays the financial health of a company and helps the companies

to improve their financial resources and manage generated funds efficiently.

1.2Introduction to the industry

IT services in India was established in Mumbai in 1967 with the creation of TATA Consultancy
services who was partnered with Burroughs in 1977 which beggar export of IT services. IT
industry consist of two components i.e. IT services and business process outsourcing. This sector
is consist of software development consultancies, software management online services and
BPO.IT industry achieved its breakthrough from 1990’s and it is one of the important industries
in India. The main reason for rapid development of IT industry is the vast reservoir of technically
skilled manpower which has transformed India into software super power.

According to an article in the Times of India, India's liberalization was possible due to its IT
industry. In the 1990s, the industry started off with an export of nearly $100 million with around
5,000 employees. Now it is an industry that thrives globally and India's IT exports are now
around $70 billion with 2.8 million employees working in this sector. The article states that the
IT sector is one of the top two industries in the country today. (wikipedia, n.d.)

The sector has Increased its contribution to India’s GDP from 1.2% in 1998 to 7.7% in 2017.
According to NASSCOM, the sector aggregated revenues of US$180 billion in 2019, with
Export revenue standing at US$99 billion and domestic revenue at US$48 billion, growing by
over 13%. As of 2020, India’s IT workforce accounts for 4.36 million employees. The United
States accounts for two-thirds of India’s IT services exports. (wikipedia, n.d.)

India’s IT industry is expected to grow at a rate of 12-14% during 2016-2017 as per a report by
India’s software industry body national association of software and services companies
(wikipedia, n.d.).This severely states that information technology is a sector which will make an
appearance in the coming days as India’s economy require more hardware software and IT
services. One of the biggest benefit of IT industry is the employment it can generate in India.
There are many other benefits like export and foreign direct Investments (FDI). IT industry is
not limited to only software development. Technology is used in libraries, hospitals, banks,
shops, airports and many more other places through database. Management systems. Among
other sectors, IT sector in India is driving growth for the last decade and more, India is now a
major destination for IT outsourcing. The top IT companies that offer job opportunities in India
are TCS, Wipro Technologies, Cognizant Yahoo, Google, Tech Mahindra, Infosys Technologies
and many more.

1.3Introduction of the companies

Tata Consultancy Services is a multinational technology company which has its specialty in IT
Services and consulting its headquarters in Mumbai Maharashtra India. TCS is the largest IT
sector Company in the world by its market capitalization of $169.2 billion. It is established in
1968, it Was founded by Jamsethji Tata 1848 and it is the India’s most reverence institutions
today. TCS is one of the largest employers of women with 35.3% of women employees. TCS
became the First Indian IT company to reach $100 billion market capitalization with a value of
$102.6 billion

In Bombay Stock Exchange and a second Indian company ever after the Reliance industries that
Achieved the same in 2007. TCS is ranked 10th on the Fortune India 500 list in 2018.It is the
World’s 9th largest IT service provider by revenue. TCS is ranked 64th overall in Forbes World’s
Most innovative company ranking, making it the highest-ranked IT services company ever. In
the Latest, TCS, the biggest software services company, has added 12,000 jobs in the first
quarter of 2019 and sent offer letters to 30,000 fresh graduates building the employment level in
the country. (conduira online, n.d.).
Their mission is to help customer achieve their business objectives by providing innovative, best-
in-class consulting, IT solutions and services. Tata Consultancy Services (TCS) achieved annual
sales of about 1.57 trillion Indian rupees in its 2020 fiscal year, which is the equivalent of around
21 billion U.S. dollars. The annual revenue of TCS has seen rapid growth in the last seven years:
the FY2020 revenue more than doubled that from the FY2013. ( Statista Research Department,
2021).

TCS continually enhances its human capital by recruiting the best talent which are available in
each of the markets it operates in, TCS providing a supportive and energetic workplace to hold
that talent, TCS invests in up skilling individuals with the newest technology skills, and giving
them career paths matching their ambitions.

The company’s industry-aligned, customer-centric organization structure has resulted in every

commercial enterprise unit acquiring huge area depth, and the account teams within these
devices constructing up great customer-specific contextual knowledge. This domain expertise,
contextual knowledge, task administration experience and technology expertise received on the
job represents a conversion of human capital into intellectual capital.

TCS applies some of its intellectual capital in the direction of investments in research and
innovation, exploring the innovative use of new applied technologies to solve business problems
across different industry verticals. In addition to its own intellectual capital, TCS also
companions with superior technology providers, start-ups and academic researchers to leverage
their intellectual capital and to generate solutions.

Some of the creative software solutions tested by R&I that are evaluated to have a material
market potential are productized, adding to TCS’ large portfolio of products and platforms.
These expands the enterprise, intelligence capital create new revenue streams, adding to the
financial capital and enhance its brand positioning that is relationship capital. TCS uses its
intellectual capital and human assets to build effective, customized technology and business
solutions that address the customer’s business problems. Further, its ability to stitch together
complex, integrated solutions that address the needs of all stakeholders in the enterprise, along
with the high levels of trust engendered in customer relationships, helps it win large
transformation deals. These deals bring in high quality revenues, powering industry-leading
organic growth and margins, boosting the company’s financial capital.
These solutions create immense value for our customers by helping them embrace new business
models, pursue new revenue streams, deliver superior customer experiences or build resilience
and efficiency into their operations, and gain competitive differentiation.

TCS constantly invests in building newer capabilities and expanding its offerings. By cross-
selling and up-selling these new offerings, customer engagements continually expand over the
years,

covering newer and newer areas of the enterprise’s operations. This further broadens and
deepens the contextual knowledge of customers’ business and IT landscapes, further enhancing
TCS’ intellectual capital. (india education, n.d.)

This combination of business knowledge, contextual knowledge, technology depth, and

intellectual property has become a steadily deepening moat around the company’s business
model and sharpened its differentiated positioning. (tcs, n.d.)

The investments in people, research and innovation, and intellectual property creation are all
charged off and not capitalized. The company’s capital expenditure to support its growth –
manufacturing capital – towards building campuses, agile workspaces, innovation centers, and
Pace Ports is modest relative to its size. (tcs, n.d.)

TCS’ physical operations consume social capital in the form of license to operate in each of the
communities, and natural capital in terms of its environmental footprint. TCS enhances its social
capital with local communities across the world by investing in areas such as education, skill
development, employability, health and wellness, and the environment, mapped to UN
Development Goals. On the environmental front, TCS has a systematic program to reduce its
carbon and resource consumption footprint – including the use of green IT, green buildings,
intelligent energy management using its own IT-based solution and water and waste recycling.
(tcs, n.d.)

TCS’ business model and strategy have resulted in deep and enduring consumer relationships, a
brilliant and engaged workforce, a balanced expansion of its addressable market, a strong
reputation as a responsible corporate citizen and a proven track record in carry longer term
stakeholder value. All of this has significantly increased the company’s brand value, which is a
computable measure of its social and relationship capital with stakeholders. Customer-centricity
is at the heart of TCS policy, organization structure and investment decisions. TCS customer-
centric worldview helps spot trends early, embrace business opportunities by making the right
investments and reduce risks while do its social and environmental responsibilities.

TCS invests in broadening and deepening customer relationships by continually looking for new
areas in their value chain where it can add value, proactively investing in building newer
capabilities, reskilling its workforce and launching newer services, solutions, products
andplatforms. In addition to the IT budgets, TCS is now benefiting from the departmental
budgets of other stakeholders within the customers’ organizations – business heads, CMOs,
CROs, COOs, CFOs and even CEOs. This has not only embedded TCS deeper into their
businesses but has also resulted in higher quality revenues, stronger revenue growth and
enhanced share of wallet, as evidenced by the client metrics reported every quarter and every
year. (tcs, n.d.)

The products and platforms, coupled with business model innovations, represent new, high
quality revenue streams that are growing very fast. At an aggregate level, this strategy has
resulted in deep and enduring customer relationships, and a steady expansion of the addressable
market.

Wipro Limited is an Indian multinational corporation that provides information technology,

consulting and business process services. It is headquartered in Bangalore, Karnataka, India. The
company was incorporated on 29 December 1945 in Amalner, Maharashtra by Mohamed Premji
as "Western India Palm Refined Oil Limited", later abbreviated to "Wipro". It was initially set up
as a manufacturer of vegetable and refined oils in Amalner, Maharashtra, British India, under the
trade names of Kisan, Sunflower, and Camel .In 1966, after Mohamed Premji's death, his son
Azim Premji took over Wipro as its chairman at the age of 21. (wikipedia, n.d.)

In the Indian market, Wipro is a leader in providing IT solutions and services for the corporate
segment in India offering system integration, network integration, software solutions and IT
services. Wipro also has profitable presence in niche market segments of consumer products and
lighting. In the Asia Pacific and Middle East markets, Wipro provides IT solutions and services
Or global corporations. (NDTV, 2012)
Wipro ltd contributes 7.5%to India’s GDP in 2012. The sector aggregate revenue of US$31.76
Billion and seventh largest IT services firm in the world. To focus on core IT business, it
demerged Its non-IT business into a separate company named Wipro Enterprises Limited with
effect from 31st March 2013.

Wipro ltd is a leader in providing IT solutions and services for the corporate segment in India
Offering system integration, network integration software solutions and IT services, Wipro also
Has profitable presence in niche market segments of consumer products and lighting. In the Asia
Pacific and Middle East markets, Wipro provides IT solutions and services for global
corporations.

1.4 Justification

This project is an attempt to facilitate the investors and the management to assess the financial

Position of a firm from the proprietor’s point of view. In order to identify the financial
management Efficiency this paper will analyze management efficiencies shareholders fund in IT
companies of India, especially for TCS and Wipro ltd.
 REVIEW OF LITERATURE

According to (Dusan Baran, 2016), their study is to give the knowledge about financial analysis
and business process in the area of activity like liquidity, profitability and indebtness and to
know the strength and opportunities of the companies.

(Adedeji, 2014) This study is done to analyze the ratios of the organization. This study confirms
that there is a relationship between ratio analyze and organizational performance. It states that
ratio highlights the effective management of the organization.

(Kumbhaj, 2014) Analyzed and compared the financial position of TCS and WIPRO Ltd and
found WIPRO is performing better than TCS.

(Singh, 2016) Concluded in his study that Return on Equity of TCS is better than return on
equity of WIPRO and return on investment of TCS is better than the return on investment of
WIPRO. He also analyzed that there is significant difference between ROE and ROI of TCS and
ROE and ROI of WIPRO.

(A.S, 2014) Analyzed that financial position of TCS and concluded that the both short term and
long term liquidity position of TCS is good. The company has managed efficiently its net worth
and total assets was satisfactory.

(Ganesamoorthy, 2017) Conducted to study the profitability of Information Technology (IT)

companies in India. They applied ratios analysis, mean, standard deviation and co-efficient of
variation as the tools for analysis. Their study found that profitability in terms of net profit ratio
and operating profit ratio is good in case of three companies and low in case of two companies.

(S. Sabarinathan) The study includes profitability, cost of goods sold and other overall financial
performance of the company. The study has major concentration on ratio analysis from the 5-
year balance sheets and profit and loss A/C. Based on the findings, the study says that it will help
the management to interpret its weaknesses and problems and certainly help the management in
taking financial decisions.

“Financial Performance Analysis of Selected Software Companies”, examined liquidity,

profitability and leverage position of thirty four software companies during the period 1999-1998
to 2001-2002 by using ratios, correlation and multiple regression analysis. The study revealed
favorable liquidity and working capital position. They concluded that the companies rely on the
internal financing and overall profitability position of the software companies showed a
moderately increasing trend. ((Sarangi, 2010)

(Sarangi, 2010) Study analyzed the financial performance of leading software companies like
TCS, Infosys, Wipro and Satyam. The study being an external analyst, had to depend mainly
upon secondary data for the purpose of studying the financing performance of software
Industries in India from the top 10 software companies in India which is enlisted by NASSCOM,
the four selected companies for the study are Tata Consultancy, Wipro ltd, Infosys ltd, and
Satyam Computer Service. The data and information required for the study have been collected
mostly from the annual reports of the unit for the period from 2000-2001 to 2008-2009. In order
to evaluate the financial performance, tools like Anova, mean, standard deviation and correlation
test have been used.

Debt ratios show how effectively the organization uses other people’s money and whether it is
using a lot of borrowed money. (Lasher, 2005)

(al, 2007)Expressed the concern that most researchers divide financial ratios into four groups, i.e
profitability, solvency, liquidity and activity ratios.

(Lermack, 2003)Showed the benefits of financial ratios analysis. He showed that financial ratios

Are an important and well-established technique of financial analysis.

(Ehrhardt, 2010)Stated that financial ratios are designed to help evaluate financial statements.
Financial ratios are used as a planning and control tool, and financial ratios analysis is used to
Evaluate the performance of an organization.

(R., 2008)Said that financial analysis is the process of identifying the strengths and weakness of

The firm with the help of accounting information provided in the Profit and Loss Account and

Balance Sheet.
(George, 2003 )Identified that financial analysis of companies is usually undertaken so that
Investors, creditors, and other stakeholders can make decisions regarding their companies. The
Focus of this paper is on the financial analysis of companies who trade freely and therefore make
The data and information public needed by stakeholders.

(. Altman, 1968)In this study author talks about relationship among various financial factors in a
Business as disclosed by a single set of statements and a study of trend of those factors as shown
In a series of statements.”

(Kannappan, 2015)In his research paper titled “A study on financial position and performance
Analysis with special reference to Tata Consultancy Services” analyzed the financial ratio in
term Of profitability and asset position found that there was high profitability and absolute
liquidity ratio Year by year from 2011 to 2015. The return on net worth of the company also
showed steady Progress. The technique used in study were ANOVA and coefficient of
correlation & regression.

(Bhatt, 2018)Studied in his research paper about profitability ratio analysis with specific
reference To Indian Petroleum Industry including BPCL, HPCL, ONGC and RIL. It is found that
ONGC‟s Profitability is the highest among other petroleum companies in India.

(Yuvraj)Analyzed thee Financial Performance of TCS and Wipro with respect to Ratio Analysis
For financial year 2011-12. The financial analysis implies that the current and future financial
Health of TCS is better than that of Wipro Ltd.

Ratio analysis is such a significant technique for financial analysis. It indicates relation of two
Mathematical expressions and the relationship between two or more things. Financial ratio is a
Ratio of selected values on an enterprise’s financial statement. (Osamah)
 RESEARCH METHODOLOGY

3.1 Objectives of the study

The present research paper aims to measure the financial performance of Indian IT companies
Like TCS and Wipro ltd using comparative financial ratios. The financial information necessary
For financial ratios was derived from these financial statements. The information was then
Summarized and processed to come up with comparative financial ratios that were used in the
Analysis.

Thus, the study specifically aims to meet the following objectives.

1. It is used to analyze the short terms fund of companies.

2. The use of ratio in accounting and financial management to know the profitability
Financial position and operating efficiency of an enterprise.
3. It is used to analyze the liquidity position of both the companies.

3.2 Research Hypothesis

Hypothesis testing is a technique through which some claims can be proved or disproved. It is a
Logical test of finding and conclusions.

For the present study present hypothesis is formulated

Null hypothesis (Ho)-There is no significant difference between financial performance of TCS

And Wipro ltd

Alternative Hypothesis (H1)-There is significant relationship between financial performance of

TCS and Wipro ltd.

3.3 Scope of the study

The aim of this research is to compare and evaluate the financial performance of TCS and Wipro
Ltd. Over the last five years using ratio analysis. The project would also assist in determining the
Causes or factors that lead to the good or bad. Financial performance of both firms. This analysis
Would help the companies and the comparison will help the management to make the
Management decisions. This research would be useful to investors who are new to market. It will
The investors to identify risk before investing.

3.4 Secondary Method

Research design = the research design is used for this study is descriptive research design.

Research gap= this study mainly concentrated on selected IT companies and it analyzed short

Term as well as long term financial position.

Universe= Indian IT industry

Sample Size= IT companies

• TCS
• Wipro ltd

Time period of study= 2-3 months

Data collection Period= Secondary data has been used to collect the data for this research like
Annual reports of five years of the companies, previous research papers, magazines, journals and
Internet.

Tools and Techniques

Ratio analysis technique which includes gross profit, operating profit, return on Equity, Return
on long term fund, current ratio, quick ratio, net profit ratio, cash profit margin, debt to equity
ratio, return on capital employed ratio, inventory turnover ratio, debtors turnover ratio is used to
find out profitability, liquidity position of the companies.

3.5 Limitations

The project is based on secondary data and the secondary data was taken from the annual reports
Of the companies and financial data websites. It may be possible that the data shown in the
annual Reports or on the websites may be window dressed which does not show the actual
position of the companies.
 DATA REPRESENTATION AND ANALYSIS
4.1Data Interpretation and representation
Liquidity Ratio
Liquidity Ratio is a financial ratio which is used to determine the company’s
abilities to pay its short-term debt. When it comes to financing, liquidity is a
necessary thing to consider about and liquidity ratio is an essential accounting tool
that is used to decide the current debt repaying ability of a borrower this ratio
shows. Whether and individual or enterprise can pay off its short term dues besides
any exterior financial help.
Current Ratio
Current Ratio suggests the financial capability of an enterprise to set off the current
obligations by utilizing its current assets.
Formula
Current Ratio= Current Assets/Current Liabilities
Interpretation
From the above table and graph, I have concluded that the current ratio of TCS is highest in
Comparison with Wipro ltd. High current ratio indicates that the firm will able to pay their short
Term dues without any exterior financial help. The idle current ratio is 2:1 and Wipro ltd is also
in a good position to pay its short term dues without any exterior financial help. In 2019 both the
Companies TCS and Wipro has the highest current ratio with 6.4:1 and 3.5:1.
Quick Ratio
This ratio test the short term liquidity of the firm in its strict meaning because it compares
current Liabilities with quick assets and not with current assets. Quick ratio measures the
capability of a Firm to pay its short term liabilities by having assets that are easily convertible
into cash.
Formula Quick Assets/ Current Liabilities
Year TCS WIPRO
2016 3.3 2.8
2017 4.2 2.9
2018 4.8 2.8
2019 6.4 3.5
2020 4.7 2.9
Mean 4.68 2.96
Standard deviation 1.130044 0.294958
Coefficient of variance 0.241 0.099
Growth 0.42 0.035
Interpretation
The ideal quick ratio is 1, if the quick ratio is 1:1 then it indicates that the company can pay its
Current debts by without selling its long term assets. If a company has a quick ratio higher than
the 1:1 this means company owns more quick assets than current liabilities. From the above table
it Can be concluded that by comparing between the two companies TCS has more quick assets
than WIPRO and TCS can pay its currents debts without selling its long term assets. In the year
2016, 2017, 2018 the quick ratio of TCS is increasing in the year 2019 the quick ratio of TCS
was the highest with 6.4:1 this means that the in the 2019 TCS has the more quick assets and in
the year 2020 the company’s quick ratio reduced from 6.4 to 4.7 it means TCS must have sold its
quick Assets to pay off its debt. WIPRO ltd quick ratio is increasing and decreasing from 2.8 to
2.9 and Again in 2019 WIPRO ltd has its highest quick ratio of 3.5 and in the year 2020 WIPRO
ltd must Have sold its quick assets to pay off its current debts.
Gross Profit Ratio
Gross Profit Ratio is ratio which has the relationship between gross profit and Net revenue of the
Companies. It is used to measure a company’s financial health, the amount left from sales after
Subtracting the cost of goods sold.
Formula

Gross Profit/Net Sales*100

Year TCS ltd WIPRO ltd
2016 29.80% 18.14%
2017 27.52% 16.25%
2018 26.86% 15.18%
 2019 26.99% 16.38%
2020 26.39% 16.77%
Mean 27.51 16.544
Standard deviation 1.340 1.0691
Coefficient of variance 0.0487 0.0646
Growrh 11.4 -7.5

Interpretation
The higher the gross profit margin the better it is. A higher gross profit margin indicates the
company did it well in managing its cost of sales. From the above table it can be conclude that
comparing between the two companies TCs and Wipro ltd. TCS has the higher the gross profit
margin and it is performing well. In the year 2016 TCS has the highest gross profit ratio. In the
year 2016 Wipro ltd also had the highest gross profit margin and it drop down in 2017 but after
2017 it starts increasing.
Net Profit Ratio
Net Profit ratio, calculates how much net income or profit it generates as percentage of revenue.
It is the most important indicators of company’s financial health. It is a popular profitability ratio
that shows relationship between net profit after tax and net sales.
Formulae
Net Profit/Net Sales*100
Year TCS ltd WIPRO ltd
2016 26.87% 17.22%
2017 25.51% 15.82%
2018 25.92% 17.27%
2019 24.4% 17.72%
2020 25.33% 18.35%
Mean 25.606 17.276
Standard deviation 0.89994 0.9318
 Coefficient of variance 0.0351 0.0539
Growth -5.73% 6.56%

Interpretation
Net Profit Ratio calculates the overall profitability of company considering all direct as well as
indirect cost. A high ratio represents a positive return in the company and better the company is.
From above table by comparing between the companies TCS ltd and WIPRO ltd. It can be
concluded that TCS ltd has the highest Net Profit ratio. In the year 2016 TCS ltd has the highest
Net Profit ratio by 26.87% it means that the company’s financial health and the overall profit
after deducting the taxes is good. Wipro ltd also have a convincing profit after the deduction of
tax. After 2017 the profit of Wipro ltd starts increasing.
Operating Ratio
Operating Ratio shows the efficiency of company’s management by comparing the total
operating Expense of a company to net sales. It shows how efficiently company is keeping its
cost low while Generating revenue. The smaller the ratio the more efficient the company is at
generating revenue.
Formulae=Cost of Goods Sold + Operating Expense/Net Sales *100
Year TCS LTD WIPRO LTS
2016 31.50 18.91
2017 29.22 17.06
2018 28.56 15.47
2019 28.38 17.04
2020 28.44 17.32
Mean 29.22 17.16
Standard deviation 1.3179 1.2215
Coefficient of variance 0.0451 0.0711
Growth -9.71 -9.25
 Interpretation
It shows the efficiency of company’s management by comparing the total operating expense of a
Company to net sales. Its shows how efficiently company’s is keeping its cost low while
generating Revenue. The smaller the ratio the more efficient the company is at generating
revenue. In the Above the table it can be concluded that between both the companies Wipro ltd
operating expenses are low.
Cash Profit Margin
Some Researchers used Earnings before Interest and Tax and Depreciation and Amortization, to
Sales ratio called cash profit margin, to calculate operating performance. It is cash flow ratio
which Measures cash of operating activities as a percentage of sales revenue in a given period. It
measures How efficiently a company’s convert sales into cash. It is indicator of earnings quality,
because it includes transaction that involve actual transfer of money.
Formula= Cash flow from operating activities /Net sales*100
Year TCS WIPRO
2016 23.47 19.35
2017 23.19 18. 64
2018 22.00 17.73
2019 22.29 17.79
2020 22.27 18.56
Mean 22.64 18.41
Standard deviation 0.644 0.671
Coefficient of variance 0.0284 0.0364
Growth 3.53% 4.25%
INTERPRETATION

Interpretation
The higher the ratio the more cash available from sales. From the above table It can be concluded
That from comparing both the companies TCS has the highest cash profit margin ratio, which
means there is more cash available from the sales. In the year 2016 TCS has the highest cash
profit margin.
However Wipro ltd also has the highest cash profit margin in the year 2016 and after 2019 it start
increasing.
Debt to Equity Ratio
This ratio reflects the long term financial position of a firm and is calculated in the form of
Relationship between outsider’s funds and internal equities. Debt includes debentures, loans
from Financial institutions and other long term liabilities while equity covers equity share
capital, preference share capital and reserves and surplus.
 Interpretation
A low amount of debt indicates that the company is getting financing more from funding from
shareholders. A higher ratio indicates that the company is getting finance by more borrowing
money, which subjects the company to potential risk if debt levels are too high. From the above
table it can be concluded that TCS is getting finance more from borrowing debts and from the
last five years the ratio starts decreasing and this is satisfactory, and Wipro ltd debt to equity
ratio is low which means the company is getting financing from shareholders and over the last
five year the ratio starts decreasing which is satisfactory.
Return on Equity capital
It is used to measure financial performance of the companies. It is considered to measure of the
profitability of a company in relation to shareholders equity. It is calculated by dividing net
income by shareholders equity. Because shareholders equity is equal to a company’s assets
minus its debt, ROE is considered the return on net assets.
Formula= Net Profit after Interest, Tax and Preference Dividend)/ Paid-up Equity
Interpretation
If the ratio is higher the return will be more and it is good for the company and it indicates that
the return to the shareholders are getting are satisfactory. From the above table it can be
concluded that from both the companies TCS has the higher return on equity capital in the year
2016 with 22.33 and its growth all over the year is decreasing
Return on capital Employed
Return on Capital Employed, it is a profitability ratio which measures how efficiently a company
Is using its capital to generate profits. It is considered one of the best profitability ratios and it is
Used by investors to determine whether a company is suitable to invest in or not.

Formula= Earnings before Interest and Tax/Capital Employed*100

Interpretation
Higher the return on capital employed is always more favorable as it indicates that more profits
are generated of capital employed. From the above table it can be concluded that comparing the
two companies TCS has the higher return on its capital employed which indicates that more
profits are generated from the capital employed. Wipro ltd had the highest return on capital
employees is in the year 2016 it drop down in the year 2017 and 2018 after 2018 it starts get
increasing.
Inventory turnover ratio
This ratio establishes a relationship between the cost of goods sold during a given period and the
average amount of inventory carried during that period. The main objectives of this ratio is to
find out whether stock has been used efficiently or not and to check up whether only the required
Minimum amount has been invested in stock.
Interpretation
A low turnover ratio implies that weak sales and possibly excess inventory, also known as
Overstocking. A high ratio on the other hand implies either strong sales or insufficient inventory.
From the above table it can be conclude that TCS has the highest inventory ratio with 31389.3
Times it implies that the TCS ltd has the highest sales in comparison to Wipro ltd.
Return on long term fund
Long term return is a calculation which provides investors with a return estimate they can target
Over a long period of time in a company. This measure can be comparable to a savings account
Rate.
Formula:-Earnings before Interest and Tax /Net Capital Employed

Year TCS WIPRO

2016 44.79 25.17
2017 40.03 21.69
2018 40.08 20.63
2019 46.66 20.72
 2020 51.31 23.26
Mean 44.57 22.29
Standard deviation 4.759 1.924
Coefficient of variance 0.106 0.086
Growth 14.55 -7.5

Interpretation
Higher the rate of return the more will it will good to invest in a company. From the above table
it is depicted that TCS has the more rate of return in the year 2020 and it indicates that the
lenders And creditors are in safe margin and the returns can be used for future.
Debtors Turnover Ratio
This is also called the Trade Receivables Ratio. It establishes a relationship between net credit
Sales and average debtors of the year and indicates the speed with which the amount is collected

From debtors. (gupta, 2020).

Interpretation
The higher the ratio, the better it is, since it indicate that to the firm but also reduces the amount
of bad debt. From the above table it can be concluded that comparing both of the companies
clearly Wipro ltd has the highest debt turnover ratio in the year 2020 with 5.97 times which
indicates that it reduces the amount of bad debts.
4.2 Hypothesis Testing
For the analysis of financial position, of the companies under study, an inter comparison of firms
has done from ratio analysis. Here are the following observations and conclusions.
1. Current Ratio
The ideal ratio for current ratio is 2:1 and from the above data of five years for both the
companies It has been concluded that the ratios of both the companies is higher than the ideal
ratio 2:1 and it Indicates that the companies are in the position to pay off its short term dues.
In the above case null hypothesis is rejected there is a significant relationship between the
financial Positions of both the companies.
2. Quick Ratio
The ideal ratio for quick ratio is 1:1 and from the above data of five years for both the companies
it has been concluded that the ratios of both the companies is higher than the ideal ratio of
1:1which Shows that the company has quick assets more than the current liabilities and its assets
are easily Convertible into cash.In the above case null hypothesis is rejected there is a significant
relationship between the financial Position of both the companies.

3. Gross profit ratio

The ideal percentage of gross profit ratio is 65% it is considered to be healthy from the above
data Of five years for both the companies it has been concluded that the ratios of both the
companies TCS and Wipro ltd the gross profit ratio is lower than the ideal ratio which means
companies need to increase their profits.
In the above case null hypothesis has been rejected there is a significant relationship between the
Financial position of both the companies.
4. Net Profit ratio
The good percentage of net profit which is considered is 20%. From the above data of all five
years For both the companies TCS and Wipro is has been concluded that TCS net profit margin
is higher than the ideal percentage it shows that TCS is in good position and the net profit margin
of Wipro Ltd is less than 20%.
In the above case alternative hypothesis has been rejected there is a significant difference
between The financial position of both the companies,
5. Operating Ratio
The ideal percentage of operating ratio should be less than 60%. From the above data of all the
Five years for both the companies TCS and Wipro ltd. It has been concluded that the operating
Margin of both the companies is lower than the 60% which means the companies operation
expense Are lower which is good.
In the above ratio the null hypothesis has been rejected there is a significant relationship between
The financial positions of both the companies.
6. Cash profit margin
The ideal percentage of cash profit margin is 60%. From the above data of all the five years for
Both the companies TCS and Wipro ltd it has been concluded that the cash profit margin of both
The companies is lower than the ideal percentage 60% and it indicated that both the companies
has Lower level of profitability.
In the above ratio null hypothesis has been rejected there is a significant relationship between the
Financial position of the companies.
7. Debt to Equity Ratio
The ideal ratio for debt to equity ratio is 2:1. From the above data of all the five years for both
the Companies TCS and Wipro ltd it has been concluded that the debt to equity ratio of both the
Companies is lower than the ideal ratio 2:1 which is good it indicated that both the companies
does Not totally depend on debt.
In the above ratio null hypothesis has been rejected there is a significant relationship between
financial position of the companies.
8. Return on Equity Capital
The ideal percentage for ROE is 20%. From the above data of all the five years for both the
Companies TCS and Wipro ltd it has been concluded that the TCS has the higher percentage of
ROE which is good. Wipro ltd ROE percentage is less than 20%.
In the above ratio alternative hypothesis has been rejected there is a significant difference
between The financial position of both the companies.
9. Return on Capital Employed
The ideal percentage for return on capital is up to 10%. From the above data of all the five years
For both the companies TCS and Wipro ltd it has been concluded that both the companies have
Higher percentage than 10% which is good.
In the above ratio alternative hypothesis has been rejected there is a significant difference
between The financial position of both the companies.
10. Inventory Turnover Ratio
The ideal ratio for inventory turnover ratio is between 5 to 10 times. From the above data of all
the Five years for both the companies TCS and Wipro ltd it has been concluded that both the
companies Have much more higher percentage than 10% which indicates there sales are more.
In the above ratio alternative hypothesis has been rejected there is a significant difference
between
 RESULTS AND DISCUSSION
5.1 Major Findings
Current ratio of both the companies are very good which mean its liquidity position
of both the Companies are good. Especially of TCS, net profit ratio of TCS is good
it is more than ideal ratio Wipro ltd. Net profit ratio is also good it is less than ideal
ratio bit it is more than average ratio Which is good. Operating ratio is low which
is good both the companies especially Wipro is Keeping its operating expenses
low. Debt to equity ratio is very good both the companies are less Depended on
debt specially TCS it more depends on equity then debt. The return on equity are
Good more than ideal ratio of TCS. Return on capital employed are very good of
both the Companies it indicates the profits are generated more from capital
employed. Inventory turnover Of both the companies indicates the good sales, less
stock. The return on long term funds are good Which shows that lenders and
creditors are at safety margins.
5.2 Discussions and Suggestions
Both the companies TCS and Wipro ltd need to increase their gross profit ratio by
reducing cost Of goods sold without changing your selling price. A decrease in
cost of goods sold will cause an Increase in gross profit margin. Net profit ratio,
Wipro ltd has less profit margin then the ideal Percentage. It can get better by
increasing revenues through selling more goods and services or by Increasing
prices. In comparison to TCS Inventory turnover ratio of Wipro ltd is need to be
Increased from proper forecasting and effective marketing and bye negotiating
price rates Regularly.
5.3 Conclusion
TCS and Wipro ltd are leading companies in the information and technology
industry. Both the Companies have and important role to play for the economy as
well as investors. With references To the above analysis the financial position of
TCS can be said as better than that of Wipro ltd. As Seen in the above analysis,
almost on every parameter the performance of TCS suppressed the Wipro ltd.
Although it is not an alarm warning situation for Wipro ltd but in comparison to
TCS Ltd it should improve its management efficiency in utilizing the shareholders
fund and it should work on its marketing skills
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ANNEXURE