Solvency Ratio (Infosys)

Long term solvancy ratio of Infosys

1. Submitted By :- Submitted To :- Pulkit Bordia Mrs. Divya Agarwal Rahul Sharma Arpit Sharma Narayan Singh Sandeep Kumar

2. Long-Term Solvency Ratio ; Infosys

3. Ratio Analysis @ Glance “Ratio analysis is a study of relationship among various financial factors in a business.” Classification of Ratios : Liquidity Ratios Solvency Ratios Activity or Turnover Ratios Profitability or Income Ratios

4. Solvency Ratio “Solvency Ratios convey an enterprise’s ability to meet its long-term obligations.” Debt-Equity Ratio = Debt/Equity Total assets to Debt Ratio = Total Assets/ Debt Proprietary Ratio = Equity/Total Assets

5. Debt-Equity Ratio (2013) Debt-Equity Ratio = Debt/Equity Debt= 238 Equity= (Share capital + Reserves and Surplus) = 286 + 37,708 = 37,994 Debt- Equity ratio= 238/37,994 = 0.0063:1 All fig. are in crores

6. Debt-Equity Ratio (2014) Debt-Equity Ratio = Debt/Equity Debt= 405 Equity= (Share capital + Reserves and Surplus) = 286 +44,244 = 44,530 Debt- Equity ratio= 405/44,530 = 0.0091:1 All fig. are in crores

7. Total Assets to Debt Ratio (2013) Total assets to Debt Ratio = Total Assets/ Debt Total Debt = 238 Total Assets = 46,331 Total assets to Debt Ratio = 46,331/238 = 194.66:1 All fig. are in crores

8. Total Assets to Debt Ratio (2014) Total assets to Debt Ratio = Total Assets/ Debt Total Debt = 405 Total Assets = 56,966 Total assets to Debt Ratio = 56,966/405 = 140.66:1 All fig. are in crores

9. Proprietary Ratio (2013) Proprietary Ratio = Equity/Total Assets Equity = ( Share capital + Reserves & surplus) = 286 +37,708 = 37,994 Total Assets = 46,331 Proprietary Ratio = 37,994/46,331 = 0.82 or 82% All fig. are in crores

10. Proprietary Ratio (2014) Proprietary Ratio = Equity/Total Assets Equity= (Share capital + Reserves and Surplus) = 286 +44,244 = 44,530 Total Assets = 56,966 Proprietary Ratio = 44,530/56,966 = 0.78 or 78% All fig. are in crores

11. Analysis Of Ratios

12. Low Debt-Equity Ratio implies the use of more equity than debt which means a larger safety margin for creditors since owner’s equity is considered as a margin of safety by creditors and vice versa. Year Debt- Equity Ratio 2013 0.0063:1 2014 0.0091:1

13. A Higher Total Assets to Debt Ratio represents higher securities to lenders for extending long-term loans to the business. Year Total Assets to Debt Ratio 2013 194.66:1 2014 140.66:1

14. A High Proprietary Ratio indicates adequate safety for creditors. But a very high ratio indicates improper mix of proprietor’s funds results in lower return on investment. Year Proprietary Ratio 2013 0.82 or 82% 2014 0.78 or 78%