Abstract

Tata Consultancy Services Limited (TCS) is a global Indian IT company and a leading company in the Indian IT space. TCS enjoys a high net profit margin and has a liquid and debt-free balance sheet. This case study covers the background of TCS and highlights its financial performance. The case provides sufficient information for a ratio analysis to be done of TCS. Additionally, it helps to analyze the financial performance of TCS through common size analysis, common base analysis, and DuPont analysis. This case helps students to understand the financials of Information Technology companies.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To understand financial statements of an information technology (IT) company
• To analyze and interpret the financial ratios of an IT company
• To analyze and interpret the common size and common base statements of an IT company
• To understand the various challenges in doing ratio analysis for an IT company

Keywords

TCS; Financial Statement Analysis; DuPont Analysis; Common Size Analysis; Common Base Analysis; Ratio Analysis; Balance Sheet; Income Statement; Liquidity Ratio; Turnover Ratio; Leverage Ratio; Profitability Ratio; IT Industry; Assets; Liabilities