Year-to-Year Change Analysis
This technique involves the comparison of absolute figures over the years. It involves analysis of year-to-year changes in individual line-to-line items. In this analysis, generally financial statements are compared over relatively short period such as two or three years. This technique of comparison is straightforward, manageable and understandable. The mandatory requirement under the Companies Act to provide at least two consecutive years of figures of financial statements is in line with the idea of making a simple comparison. This simple comparison is sometimes made in percentages, the percentage changes being expressed in terms of previous year figures.
Year-to-Year Change Analysis Infosys Technologies Ltd.,
Important Data for the Years Ended March 31
(Amount in Rs. in crore)
|
Particulars of Item
|
Mar-07
|
Mar-06
|
Increase
/decrease
|
|
|
|
|
|
in Amount
|
in %
|
|
|
|
|
|
|
|
Income from Software services & Products
|
13,149
|
9,028
|
4,121
|
45.6
|
|
Software development expenses
|
7,278
|
4,887
|
2,391
|
48.92
|
|
Gross profit
|
5,871
|
4,141
|
1,730
|
41.8
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
719
|
499
|
220
|
44.08
|
|
General and Administrative Expenses
|
927
|
653
|
274
|
41.96
|
|
Operating profit (PBIDTA)
|
4,225
|
2,989
|
1,236
|
41.4
|
|
Interest
|
-
|
-
|
|
|
|
Depreciation
|
469
|
409
|
60
|
14.67
|
|
Operating profit before tax
|
3,756
|
2,580
|
1,176
|
45.58
|
|
Other income
|
375
|
144
|
231
|
160.42
|
|
Provision for investment
|
2
|
-
|
|
|
|
Net profit before tax and exceptional items
|
4,129
|
2,724
|
1,405
|
51.57
|
|
Provision for taxation
|
352
|
303
|
49
|
14.17
|
|
Profit after tax Before exceptional items
|
3,777
|
2,421
|
1,356
|
56
|
|
Exceptional items
|
6
|
-
|
|
|
|
After exceptional items
|
3,783
|
2,421
|
1,362
|
56.3
|
|
|
|
|
|
|
|
EPS before exceptional item*
(par value of Rs.5 each)
|
|
|
|
|
|
Basic
|
67.82
|
44.34
|
23.48
|
53
|
|
Diluted
|
66.33
|
43.1
|
23.23
|
53.9
|
|
Capital expenditure
|
1,443
|
1,048
|
395
|
37.7
|
In the above table, it can be seen that the income increased by 45.6%. But due to an increase in the development expenses by 48.92%, the Gross profit increase was only 41.8%. The increase in Operating profit of the company witnessed an increase of 45.58%. Since, the other income increased by almost 160% as against 2005-06, the overall Net profit of the company grew by 51.57%. The Operating profit of the company (PBIDTA) increased from Rs.2,989 crore in 2005-06 to Rs.4,225 crore in 2006-07, an increase of 41.4%. Even though the operating income and net income are increasing, percentage increase in selling and marketing expenses is more than percentage increase in income. This may not be a positive sign if this trend continuous.
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