RATIO ANALYSIS

PROJECT
NAME OF STUDENT : AAYAAN SURI
CLASS & SEC : 12 – C
NAME OF COMPANY : WIPRO Ltd.
 Objective Of Ratio Analysis

 To simplify the accounting information.

 To assess the operating efficiency of the business.
 To help in comparative analysis.
 To analyze the profitability of the business.
Advantages Of Ratio Analysis

 It is useful in analysis of financial statements.

 Helps in simplifying accounting figures.
 Useful in judging the operating efficiency of
business.
 Helps in identification of problem areas.
 Helpful in comparative analysis.
Limitations Of Ratio
Analysis
 Accounting ratios ignore qualitative factors.
 Absence of universally accepted terminology.
 Ratios are affected by window – dressing.
 Effects of inherent limitations of accounting.
 Misleading results in the absence of absolute data.
 Price level changes ignored.
 Affected by personal bias and ability of the analyst.
Types Of Accounting Ratios

LIQUIDITY SOLVENCY
RATIO RATIO

PROFITABILITY
TURNOVER
RATIO
RATIO
Wipro Ltd.
Wipro Limited, also known as
Western India Products Limited is an
integrated corporation that offers a
diverse range of products, software,
consumer care, healthcare, lighting,
infrastructure technology and
consulting and business process
services. Its the third largest
company in India and has over
1,60,000 dedicated employees
serving together and building a bold
and new future. Its headquarter is on
SarjapurRoad,Bengaluru,Karnataka,
India.
LIQUIDITY RATIO
CURRENT RATIO
Formula: Current assets / Current Liabilities
Components
Current Assets:
Current Liabilities:
Comment / Interpretation: The company”s current ratio has decreased slightly but has a strong short term financial position as the current
Ratio is more than 2:1. {ideal ratio }

Year Ended 31st March 2020 Year Ended 31st March 2021
Current Assets
519851 523186
Current Liabilities
216395 230040
Current Ratio= Current
Assets/ Current liabilities 2.4:1 2.27:1
 QUICK RATIO
 Formula : Liquid Assets/ Current Liabilities
 Components
 Liquid Assets =current assets - inventories
 Current Liabilities =
 Comment/Interpretation – the companies Quick Ratio has constantly remained higher than the ideal ratio{1:1} they
are in good financial position but there can be a position of overstocking.

Year Ended 31st March 2020 Year Ended 31st March 2021

Liquid Assets 517986 522122

Current Liabilities 216393 230040

Quick Ratio=Liquid Assets/ Current
Liabilities 2.3:1 2.2:1
 SOLVENCY RATIOS
DEBT TO EQUITY RATIO
Formula = Debt/Equity
Components
Debt = non-current liabilities [long term loans+ long term provisions+ deferred tax liabilities + other non-
current liabilities]
Equity = share capital + reserves and surplus
Comments / Interpretation – as the debt equitity ratio lowers than the ideal ratio [2:1] for the company, it does
not depend much on borrowed funds, thus has a good long term financial position.

Year Ended 31st March 2020 Year Ended 31st March 2021

Debt 41303 46774

Equity 555092 550508

Debt Equity Ratio=Debt/Equity
0.07:1 0.08:1
 TOTAL ASSET TO DEBT RATIO
 Formula = Total Assets / Debt
 Components
 Total Assets = current assets + non- current assets
 Debt = non-current liabilities [long term loans + long term provisions+ deferred tax liabilities+other non-
current liabilities]
 Comment / Interpretation – the high total assets to debt ratio signifies higher safety for creditors.

Year Ended 31st March 2020 Year Ended 31st March 2021

Total Assets 812789 827322

Debt 41303 46774

Total Assets= Total Assets/ Debt
to Debt Ratio 19.7:1 17.6:1
 PROFITABILITY RATIO
 GROSS PROFIT RATIO.
 Formula = Gross Profit / Revenue From Operations x 100
 Components
 Revenue From Operations [ Net Sales]
 Gross Profit – revenue from operation- cost of revenue from operations
 Comments / Interpretation – the gross profit ratio of the company has marginally decreased over the period
of one year but the high gross profit ratio shows that the company is able to meet its operating expenses,
the marginal fall in the ratio shows inefficiency in meeting the operating expenses

Year Ended 31st March 2020 Year Ended 31st March 2021
Revenue From Operations
610232 619430
Gross Profit
139029 122519
Gross Profit Ratio
22% 20%
 NET PROFIT RATIO
 Formula = Net Profit After Tax / Revenue from Operations x 100
 Components
 Net Profit After Tax [ Gross Profit+ Non Operating Income – Operating Expenses – Non Operating
 Expenses – Tax]
 Revenue From Operations[Net Sales]
 Comments/ Interpretation – the net profit ratio has increased over the period of one year, it can be said that the
overall efficiency of the business is high.
Year Ended 31st March 2020 Year Ended 31st March 2021

Net Profit After Tax 97718 108680

Revenue From Operations 610232 619430

Net Profit Ratio 16% 17%

 RETURN ON INVESTMENT
 Formula = Net Profit Before Interest, Tax And Dividend / Capital Employed x 100
 Components -
 Net Profit Before Interest, Tax And Dividend =
 Capital Employed = share holders fund + non current liability
 Comments/ Interpretation – the ratio has increased in one financial year, it shows that the company was able to
generate more retuns on its investments i.e it was using its resources in efficient and satisfactory manner.

Year Ended 31st March 2020 Year Ended 31st March 2021
Net Profit Before Interest, Tax And
Dividend 97718 108680
Capital Employed
596396 597282
Return on Investment
16% 18%
 TURNOVER RATIO
 INVENTORY TURNOVER RATIO
 Formula = Cost of Revenue from Operations/ Average Inventory Components
 Cost of Revenue from Operations- cost of material consumed + purchase od stock in trade+ change in
inventories / work in progress/ stock in trade+ direct expense
 Average Inventory – opening inventory + closing inventory / 2
 Comments / Interpretations – inventory turnover ratio has increased, thus it indicates better and more efficient
inventory management.
Year Ended 31st March 2020 Year Ended 31st March 2021

Cost of Revenue from Operations 9582 7272

Opening Inventory 3403 1064
Closing Inventory 1741 1865
Average Inventory 2572 1465
Inventory Turnover Ratio 3.72 4.96