AMITY BUSINESS SCHOOL, MUMBAI

ACCOUNTS ASSIGNMENT 1

SUBMITTED BY – DHANISHA NITIN LOLAM

ENROLLMENT NUMBER – A70050220006

COURSE – MBA BANKING AND FINANCE

BATCH 2020 – 2022

TOPIC – ACCOUNTING LIFE CYCLE &

FINANCIAL STATEMENT ANALYSIS OF
TATA CONSULTANCY SERVICES

MID SEMESTER ASSIGNMENT OCT 2020

DATE – 20.11.2020

SR Question Questions Max Page

 No. No. Marks No.
1 Journal, Ledger & Trial Balance for 15 15
Question 1 major Monetary transactions (2019-20).
2 Question 2 Short-term and Long-term Solvency 10
Ratios (2018-19 & 2019-20).
3 Question 3 Profitability & Activity ratios (2018-19 10
& 2019-20).
4 Question 4 Horizontal Analysis (Comparison of 10
2018-19 & 2019-20 Financial
Statements).

Question 1
JOURNAL ENTERIES
Sr Statement Amou Journal Enteries Amou Amou
No. nt in nt nt
Crore
1 Purchased goods on 6740 Purchase A/c Dr 6740 6740
credit To, Creditors A/c
(Being Goods
purchased on
credit)
2 Goods sold on credit 30532 Sales A/C Dr 30532 30532
To, Purchase A/C
(Being, Goods
sold on Credit)
3 Raw materials 5 Inventories A/C 5 5
purchased Dr
To, Bank A/C
(Being, Raw
Materials
Purchased)
4 Purchases on building 2443 Building A/C Dr 2443 2443
To, Bank A/C
(Being, Building
Purchased)
5 Depreciation Charged 15 Depreciation A/C 15 15
on Asset Dr To, Cash A/C
(Being,
Depreciation
charged on
 Assets)
6 Paid for Consultancy 15429 Consultancy 15429 15429
services service A/C Dr
To, Bank A/c
(Being,
consultancy
services paid)
7 Transferred to statutory 27 Statutory reserve 27 27
reserve A/C Dr
To, Bank (Being,
Statutory Reserve
Transferred)
8 Invested in Philippine 1 Philippine A/c Dr 1 1
dealing system holding To, Bank A/C
corporation (Being, Money
invested in
Philippine
company)
9 Sold equipment and 2120 Bank A/C Dr 2120 2120
licence To, Sale of
equipment and
licence (Being,
Equipment and
license sold)
10 Salaries Paid 77660 Salaries A/C Dr 77660 77660
To, Bank A/C
(Being, Salaries
paid)

TRIAL BALANCE
 Trial Balance as on

Debit Credit
Sr No Name of the A/c Balance Balance
(Crore) (Crore)

1 Bank 93445  
2 Philippine   1
3 Sale   30532
4 Purchase 23792  
5 Creditor 6740  
6 Building   2443
7 Depreciation   15
8 Assets 15  
9 Reserve   27
10 Consultancy   15429
11 Sale equipment 2120  
12 salary   77660
13 Inventories 5
  Total 126112 126112

LEDGER
Dr Philippine A/c Cr
Dat Dat
Particulars Rs Particulars Rs
e e

  To, Bank A/c 1   By, Balance b/d 1

    1     1

Dr Bank A/c Cr
Dat Dat
Particulars Rs Particulars Rs
e e
To, Sale of Equipment &
  2120   By, Philippine A/c 2
License
9344
  To, Balance   By, Building A/c 2443
5
        By, Statutory Reserve 27
By, Consultancy Services 1542
       
A/c 9
7766
        By, Salary A/c
0
        By, Inventory 5
9556 9556
       
5 5

Dr Sale A/c Cr
Dat Dat
Particulars Rs Particulars Rs
e e
3053 3053
  To, Purchase A/c   Balance
2 2
3053 3053
       
2 2

Dr Purchase A/c Cr
Dat Dat
Particulars Rs Particulars Rs
e e
3053
  To, Creditor A/c 6740   By, Sale A/c
2
2379
  balance      
2
3053 3053
       
2 2
 Dr Creditor A/c Cr
Dat Dat
Particulars Rs Particulars Rs
e e
  To, Balance bd A/c 6740   By, Purchase A/C 6740
    6740     6740

Dr Building A/c Cr
Dat
Particulars Rs Date Particulars Rs
e
  To, Bank A/c 2443   Balance 2443
    2443     2443

Dr Deprecation A/c Cr
Dat
Particulars Rs Date Particulars Rs
e
  To, Asset A/c 15   Balance 15
    15     15

Dr Asset A/c Cr
Dat
Particulars Rs Date Particulars Rs
e
  To, Balance bd A/c 15   By, Depreciation A/c 15
    15     15

Dr Statutory Reserve A/c Cr

Dat
Particulars Rs Date Particulars Rs
e
  To, Bank A/c 27   By, Balance b/d 27
    27     27

Dr Consultancy Services A/c Cr

Dat
Particulars Rs Date Particulars Rs
e
  To, Bank A/c 15429   By, Balance b/d 15429
    15429     15429

Dr Sale of Equipment & License A/c Cr

Dat
Particulars Rs Date Particulars Rs
e
   Balance 2120   By, Bank A/c 2120
    2120     2120

Dr Salary A/c Cr
Dat
Particulars Rs Date Particulars Rs
e
  To, Bank A/c 77660   By, Balance b/d 77660
    77660     77660

Dr Inventories A/C Cr
Dat
e Particulars Rs Date Particulars Rs
  To, Bank A/C 5   By, Balance b/d 5
    5     5

Question 2
Sr Ratio Formula Annexure Calculation (Rough) Ratio
N
o
  Numerato Denominato
r r
Short Term Solvency Ratios (2019-20)
1 Current Current   90237 30662 2.94
Ratio Assets
Current
Liabilities
Analysis: Measures the ability of the company to repay the short-term debts
which are due within the period of the next one year. Current ratio equivalent
to 2.94 > 1.0, indicates that the company more than enough resources to pay
for its short-term obligations.
 
2 Quick (Current   88851 30662 2.90
Ratio Assets-
Inventory
+Prepaid
expense)
Current
Liabilities
Analysis: It is an indicator of a company’s short-term liquidity position. As a
rule of thumb, Quick ratio of 1: 1 is considered satisfactory. Quick ratio
equivalent to 2.90, indicates that the firm is in a good position to pay off its
current obligations immediately.
 
3 Cash Cash &   8646 30662 0.28
Ratio Cash
equivalent
Current
Liabilities
Analysis: It is a liquidity measure that shows a company's ability to cover its
short-term obligations using only cash and cash equivalents. Cash ratio
equivalent to 0.28, indicates that insufficient cash on hand exists to pay off
short-term debt.
 
Long Term Solvency Ratios (2019-20)
 
1 Debt Total   120899 120899 1.00
Ratio Liabilities or
Total 100%
Assets
Analysis: It measures the amount of leverage used by a company in terms of
Total Debt to Total Assets. Debt ratio equal to 100% indicates that a company
has equal assets through which the debts can be paid off. Each industry has its
own benchmarks for debt, 1.00 is reasonable ratio. Debt ratio equivalent to
100%, indicates that the company has equal number of Assets to pay off its
Debt.
 
2 Proprie Proprietor' Proprietor' 84126 120899 0.70
tary s/ s/
Ratio Shareholde Shareholde
r's Funds r's funds =
Total Share
Assets Capital +
Reserves
and
Surplus
Share
Capital =
375
Reserves
and
Surplus =
83751
Proprietor'
 s/
Shareholde
r's funds =
Analysis: The proprietary ratio shows the contribution of stockholders in the
total capital of the company. Proprietary ratio equivalent to 0.70 indicates that
the company is depending on Other sources of funds
heavily compared to Stockholders funds.
 
3 Financi Total Debt Total Debt 36150 93839 0.39
al Shareholde = Short
Levera rs Equity (SD) +
ge Long Term
Debt (LD)
SD = 9090
LD =
27060
Shareholde
r equity =
TA - TL
TA =
120899
TL =
27060
Analysis: Financial leverage ratio helps in determining the effect of Debt on
the overall profitability of the company – high ratio means the fixed cost of
running the business are high, whereas, lower ratio implies lower
fixed cost investment in the business. Financial Leverage ratio equivalent to
0.39 indicates that the firm more particularly uses its Shareholders funds
rather than Debt funds.

Question 3
Sr Ratio Formula Annexure Calculation Ratio
N
o
  Numerator Denominat
or
Profitability Ratios (2019-20)
1 Gross Gross Gross 659195 659205 1.00
Profit Profit Profit
Ratio Sales (GP) =
Sales –
Cost of
 Goods
sold
(COGS)
COGS =
Opening +
Purchase –
Closing
Inventory
Purchase =
Cost of
Material
Consumed
+ Purchase
of Stock in
Trade
sales =
659205
op
inventory
= 10
cl
inventory
=5
purchase =
5
COGS =
10+5-
5=10
GP=Sales-
COGS =
659205-10
 
2 Net Net profit   32447 659205 0.05
Profit Sales
Ratio
 
3 Operatin Operating Operating -53378 659205 0.08
g Profit Profit Profit =
Ratio Sales GP –
Operating
Expense
GP=65919
5
 Operating
Expense =
119293
 
Activity Ratios (2019-20)
1 Inventor   10 7.5 1.33
y Assets COGS
Turnove Average
r Ratio Inventory
Cost
 
2 Total Sales   659205 178370.5 3.70
Assets Average
Turnove Total
r Ratio Assets
 
3 Fixed Sales   156949 42068 3.73
Assets Average
Turnove Fixed
r Ratio Assets

Analysis
I. Profitability Ratios

1. Gross Profit Ratio

The gross profit margin shows the amount of profit made before
deducting Sales, General, and Administrative costs. As a general
rule, lower the GP margin ratio of a business, higher the sales
volume that will be required to maintain the overall profitability
and vice versa. GP ratio equivalent to 1.00 indicates that for every
Rs. 1 of sale costs the business Rs. 1 in terms of Production
expenditure and generates Rs. 1 Profit before accounting for any
non-production costs

2. Net Profit Ratio

Net Profit Ratio: It indicates the remaining Profit after costs of
Production, Administration, and Finance have been deducted from
Sales, and Income taxes have been recognized. Net Profit ratio
equivalent to 0.05 indicates 5% margin after deductions as
discussed.
 3. Operation Profit Ratio
Operating Profit Ratio: This ratio helps in determining the ability of
the management in running the business by being in a better
position to pay for their fixed costs, and interest on debt, survive
economic downturns and being more competitive by offering lower
prices than the competition. Operating Profit equivalent to 0.08
indicates 8% margin on Operating revenue.

II. Activity Ratios

1. Inventory Assets Turnover Ratio

It indicates that inventories are turned over in the form of sales
more number of times. A high inventory turnover ratio indicates
that maximum sales turnover is achieved with the minimum
investment in the inventory. High turnover ratio is desirable.
Inventory ratio equivalent to 1.33 indicates that the inventory has
been sold out 1.33 times in a fiscal year.

2. Total Assets Turnover Ratio

Total Assets Turnover ratio: The Total Assets Turnover ratio is an
efficiency ratio that measures a company’s ability to generate Sales
from its Assets. Total Assets Turnover ratio equivalent to 3.70
indicates that the company is generating 3.70 rupee of sales for
every rupee invested in Assets.

3. Fixed Assets Turnover Ratio

Fixed Assets Turnover Ratio: The Fixed asset turnover ratio reveals
how efficient a company is at generating sales from its existing
Fixed assets. Fixed asset turnover ratio equivalent to 3.73 indicates
that the company is using its Fixed Assets (Property, Plant &
Equipment) efficiently to generate sales.

Question 4
Balance Sheet
    (in Rs      
Crores
)
Particulars As at As at Differe Horiz Horiz
31 31 nce ontal ontal
Marc Marc (Comp Anal Analy
h h arison ysis sis
2020 2019 Year - %
Base
Year)
Assets          
Non-Current Assets          
Property, Plant & Equipment 10941 10411 530 0.05 5.09
Capital Work in Progress 906 963 -57 0.06 5.92
Write off use assets 7994 0 7994 #DIV #DIV/
/0! 0!
Goodwill 1710 1700 10 0.01 0.59
Other tangible assets 283 179 104 0.58 58.10
Financial Assets          
Investments 416 239 177 0.74 74.06
trade receivables 74 95 -21 0.22 22.11
unbilled receivables 324 391 -67 0.17 17.14
loan receivables 29 16 13 0.81 81.25
other financial assets 1184 738 446 0.60 60.43
income tax asset (net) 2462 4017 -1555 0.39 38.71
deferred tax asset 2858 2656 202 0.08 7.61
other asset 1711 1353 358 0.26 26.46
total non-current asset 30662 20812 9850 0.47 47.33
current asset 19656 30089 -10433 0.35 34.67
Inventory 5 10 -5 0.50 50.00
financial assets 669 545 124 0.23 22.75
investments 26140 29091 -2951 0.10 10.14
trade receivables 30532 27346 3186 0.12 11.65
unbilled receivables 5732 5157 575 0.11 11.15
cash n cash equivalent 8646 7224 1422 0.20 19.68
other balances with bank 1020 3624 -2604 0.72 71.85
loan receivables 8475 8029 446 0.06 5.55
Other financial asset 1473 1769 -296 0.17 16.73
income tax asset 8 1853 -1845 1.00 99.57
other asset 8206 6028 2178 0.36 36.13
total current asset 90237 92131 -1894 0.02 2.06
total assets 20899 11494 -94044 0.82 81.82
3
equity and liability          
equity and liability          
share capital 375 375      
other equity 83751 89071 -5320 0.06 5.97
equity attributable to shareholder 84126 89446 -5320 0.06 5.95
of the company
Non-controlling interest -623 -453 -170 0.38 37.53
Total Equity 84749 88899 -4150 0.05 4.67
           
Liabilities          
Non-Current Liabilities 25200 26696 -14960 0.06 5.60
3 3
Financial Liabilities          
Lease Liabilities 6906 44      
Other Financial Liabilities 291 287 4 0.01 1.39
unearned n deferred revenue 697 844 -147 0.17 17.42
employee benefit obligation 417 340 77 0.23 22.65
deferred tax liability 779 1042 -263 0.25 25.24
other liability 0 413 -413 1.00 100.0
0
Total Current Liabilities 9090 2960 6130 2.07 207.0
9
current liabilities          
financial liabilities          
Lease Liabilities 1268 0 1268 #DIV #DIV/
/0! 0!
Trade payable 6740 64692 -57952 0.90 89.58
Other Financial Liabilities 6100 4903 1197 0.24 24.41
unearned and deferred revenue 2950 2392 558 0.23 23.33
provisions 293 239 54 0.23 22.59
employee benefit obligation 2749 2356 393 0.17 16.68
income tax liabilities (net) 3712 2667 1045 0.39 39.18
other liabilities 3283 3235 48 0.01 1.48
total current liabilities 27060 22084 4976 0.23 22.53
total equity and liabilities 12089 11494 5956 0.05 5.18
9 3
           
           
           
           
Notes:          
1) Base Year = 2019          
2) Horizontal Analysis Formula = ((Comparison Year    
Amount – Base Year Amount) Base Year Amount) * 100
 Income Statement
  (in Rs  
Crores
)
Particulars As at As at Differe Horiz Horiz
31 31 nce ontal ontal
Marc Marc (Comp Anal Analy
h h arison ysis sis
2020 2019 Year - %
Base
Year)
Revenue 15694 14646 10486 0.07 7.16
9 3
other income 4592 4311 281 0.07 6.52
total income 16154 15077 10767 0.07 7.14
1 4
expenses          
employee befit expenses 85952 78246 7706 0.10 9.85
cost of equipment and software 1905 2270 -365 0.16 16.08
licenses
depreciation and amortisation 3529 2056 1473 0.72 71.64
expense
other expenses 26983 26441 542 0.02 2.05
Finance Costs 924 198 726 3.67 366.6
7
total expenses 11929 10921 10082 0.09 9.23
3 1
profit before tax 42248 41563 685 0.02 1.65
Tax Expenses          
current tax 10378 9502 876 0.09 9.22
deferred tax -577 499 -1076 2.16 215.6
3
total tax expense          
profit for the year 32447 31562 885 0.03 2.80
other comprehensive income          
Total Expenses items that will          
not be reclassified subsequently
to
profit or loss
Remeasurement of defined          
employee benefit plans
Net change in fair values of 958 425 533 1.25 125.4
investments in equity 1
shares carried at fair value
through OCI
Net change in intrinsic value of -94 153 -247 1.61 161.4
derivatives designated 4
as cash flow hedges
Net change in time value of -52 44 -96 2.18 218.1
derivatives designated as 8
cash flow hedges
Exchange differences on 326 -86 412 4.79 479.0
translation of financial statements 7
of foreign operations
Income tax on items that will be -315 -171 -144 0.84 84.21
reclassified subsequently to profit
or loss
TOTAL OTHER 464 324 140 0.43 43.21
COMPREHENSIVE INCOME /
(LOSSES)
TOTAL COMPREHENSIVE 32911 31886 1025 0.03 3.21
INCOME FOR THE YEAR
Profit for the year attributable to: 868 0.03 2.76
Shareholders of the Company 32340 31472 17 0.19 18.89
Non-controlling interests 107 90 885 0.03 2.80
Total comprehensive income for 32447 31562 885 0.03 2.80
the year attributable to:
Shareholders of the Company 32764 31787 977 0.03 3.07
Non-controlling interests 147 99 48 0.48 48.48
32911 31886 1025 0.03 3.21
Earnings per equity share: - Basic 86.19 83.05 3.14 0.04 3.78
and diluted (`)
Weighted average number of 37523 37897 - 0.01 0.99
equity shares 84706 49350 373646
44
Notes:
1) Base Year = 2019
2) Horizontal Analysis Formula = ((Comparison Year Amount - Base Year
Amount) Base Year Amount) * 100