Financial Performance Analysis of HCL and Wipro

Abstract

Ratio analysis is a very quick and popular method of doing financial analysis since a long time. In order to properly utilize funds and analyze the company’s financial condition, liquidity, profitability, risk, solvency, efficiency, and operational effectiveness, this analysis is crucial. For shareholders of the company making investment decisions, it also displays a trend or comparison of financial results. In this project, we have chosen two IT sector companies and analyze their performance in the past 5 years. We have chosen Wipro and HCL for this purpose and has conducted the study for the scope of past 5 years. For the past 5 years, Wipro and HCL’s financial sheets and profit and loss accounts were gathered. Then we were required to calculate various financial ratios from the balance sheet for further analysis like operating profit ratio, net profit ratio, current ratio, liquid ratio, stock turnover ratio, and so on. These ratios were crucial data points for evaluating the operation of the businesses. After that, we looked at them to draw conclusions about the businesses’ performance. The line items in the company's financial statements are studied or analysed using ratio analysis. It can be applied to assess a variety of company characteristics, such as profitability, liquidity, solvency, and operational efficiency. Since financial statements are their principal source of information, external analysts are primarily responsible for performing ratio analysis. In order to get crucial information for studying the financial performance of the organization, analysts heavily rely on the current and previous financial statements. The information or data gathered in this way during the study is useful in identifying whether a company’s financial situation is improving or deteriorating.