Hexaware Technologies: Financial Statement Analysis

Topics: Balance sheet, Inventory, Financial ratio Pages: 6 (1640 words) Published: October 6, 2011
Base Data3
Financial Data Analysis3
Trend and Growth Analysis3
Common Size Analysis3
Ratio Analysis4
Profitability ratios,4
Solvency ratios4
Activity Ratios4
Du-Pont Analysis5
Qualitative details of the financial report data5
Chairman’s letter highlights5
Directors’ report highlights5
Management Discussion and Analysis5
Auditor’s report highlights6
Significant Accounting Policies6
Revenue Recognition6
Foreign Currency Transaction /Translation6
Key Observations7

Hexaware Technologies’ is engaged in the business of providing software application, development, maintenance, re-engineering, consultancy, business process outsourcing services and software testing. For analysis of “Hexaware Technologies Ltd. India” financial reports between years 2004-09, consolidated results (which consist of Indian and Global operations including all its subsidiaries), rather than standalone results (India operations only) results have been considered due the following reasons:- •Hexaware Technologies Ltd. India has 100% holding in all its local and global subsidiaries and all of these are in the same core business. •The company derives ~60% of its total revenue from onsite/global operations. •In company’s annual report addressed to share holders, the Directors’ Report primary refers to the overall consolidated results. Base Data

Put data table here.
Financial Data Analysis
Trend and Growth Analysis
Item (Fig in million Rs)200920082007200620052004Analysis Total Assets8670.366820.187066.747447.993543.242639.47 Total Income10760.411755.110686.78763.816932.342664.51 Capital Employed5961.53109.064274.085882.382373.352128.85 Net Working Capital2922.662238.651427.982280.761920.381043.81 Net Worth8496.8666257059.117394.853474.022669.64

Common Size Analysis
Item (as % of total funds)200920082007200620052004Analysis Share Holders Funds3.34%4.21%4.08%23.73%6.76%9.04%In 2006, there were 1055570 preference shares of Rs 1421 each because of which the % is higher. Reserve and Surplus94.66%92.92%95.81%75.56%91.29%92.10%The preference shares were redeemed in 2007 and amount transferred to Securities premium account which led to increase in %age

Loans1.88%2.86%0.00%0.00%1.74%1.98%Loans are almost negligible part of company's assets

Fixed Assets50.26%65.94%46.37%33.58%26.34%36.75%
Investments14.64%0.00%32.68%35.13%18.43%14.89%In 2008, company redeemed its MF investments and invested in fixed deposits which led to reduced %age Deferred tax asset1.39%1.23%0.74%0.66%1.04%2.55%

Net Current Assets33.71%32.82%20.21%30.63%54.20%39.55% Ratio Analysis
Profitability ratios,
ROE (%)15.79%8.90%1.02%16.80%26.31%16.40%
ROA (%)15.48%8.65%1.02%16.68%25.79%16.58%RoE is almost same as RoA because company's debt is very small as a %age of equity Asset Turnover Ratio1.241.721.511.181.961.01
Profit Margin (%)12.47%5.02%0.68%14.18%13.18%16.43%Operating margin was lowest in 2007 due to reduced PAT EPS (basic)9.344.110.349.467.7618.9
EPS (diluted)94.070.348.997.5217.24
Rev/Emp (Rs)20946842090905151198915034841901355861186 Profit/Emp (Rs)26119910491510228213129250645141467148% increase in Profit/Emp y-o-y Solvency ratios
Debt/Equity (D/E) to 0 as company's debts are insignificant when compared to equity Financial Leverage (Assets/Equity i.e. A/E)

Activity Ratios
Current Ratio2.081.601.512.462.643.04Value > 1.5 which indicates good amount of liquidity and net working capital for company Debtor Turnover Ratio7.055.694.953.923.781.96124% increase in Debtor turnover ratio. Increased...
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