SYNOPSIS

Title of the Project: Financial analysis with respect to various ratios (TCS & Infosys) Submitted by: Project guide: Jiten Jain (MMS-2, Finance, 2012197) Prof. Rashmi Jain

Year of submission: 2013-14 INTRODUCTION This project basically would basically start with a brief on what are ratios, the different types of ratios, how are ratios used to analyze financial statements of a company. Ratio Analysis would cover various ratios that Impact the Information Technology sector and give a comparative analysis of different ratios between 2 companies of the same sector. This Project would also deal with Industrial Analysis i.e. of the IT sector and give a brief of the 2 companies which are to be compared.

OBJECTIVE OF STUDY To understand the information contained in financial statements with a view to know the strength or weaknesses of the firm and to make forecast about the future prospects of the firm and thereby enabling the financial analyst to take different decisions regarding the operations of the firm.

Scope of Study The scope is limited to tools of Ratio Analysis The scope of the study is limited to 5 years The analysis will consider only 2 companies of the IT sector

REVIEW OF LITERATURE Application of factor analysis on the Financial Ratios: For saving considerable time and effort of the analyzers, it is necessary to select the most important financial ratios to be used for the financial analysis. To reduce the number of financial ratios and to find out the categories of financial ratios on the basis of empirical evidence, Factor Analysis technique is being used successfully by different researches during the last three decades. In this study Factor Analysis has been applied over audited financial data of selected cement companies of India for a period of 10 years. Initially 44 variables (financial ratios) grouped in 7 categories are selected for the study. Before conducting Factor Analysis, variables having low inter-correlation with the other variables are excluded. Factor Analysis, conducted over remaining variables, identifies 8 underlying categories (factors). Multiple Regression Analysis is conducted taking the factor scores for each such factor as dependent variable and

constituent variables as independent variables. Statically insignificant variables, evident from the regression analysis, are eliminated from the study. Factor Analysis, conducted again over thus remaining 25 variables, resulted in 8 underlying categories with a few changes in their composition. To validate the results of Factor Analysis, Cluster Analysis is performed. Factors are named and representative ratios are identified for each of them.

RESEARCH METHODOLOGY Type of Study: The research has been based on secondary data analysis. The study has been exploratory as it aims at examining the secondary data for analyzing the previous researches that have been done in the area of financial analysis of companies. The knowledge thus gained from this preliminary study forms the basis for the further detailed Descriptive research. Sample Design: The sample of the stocks for the purpose of collecting secondary data has been selected on the basis of Selective Sampling. The companies are chosen in a biased manner and each company is chosen independent of the other company chosen. The companies are chosen from the IT sector. Sample Size: The sample size for the number of companies taken is 'two' for financial analysis of companies as financial analysis is very exhaustive and requires detailed study. Limitations: This study has been conducted purely to understand Ratio analysis for investors. The study is restricted to two companies based on Financial analysis. The study is limited to the companies having equities. Suggestions and conclusions are based on the limited data of five years CONCLUSION:

BIBLIOGRAPHY REFERENCE BOOKS: FINANCIAL MANAGEMENT - Theory, Concepts & problems (R.P.RUSTAGI) FINANCIAL MANAGEMENT - Text and problems (M.Y. KHAN AND P. K. JAIN) MANAGEMENT ACCOUNTING - (AINAPURE ) FINANCIAL MANAGEMENT - (L.N. CHOPDE, D.N. CHOUDHARI, S.L. CHOPDE)

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