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A STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF
BROADRIDGE FINANCIAL SOLUTIONS LTD.
CHAPTER-I
INTRODUCTION :-
Financial Management is that managerial activity which is concerned with the planning and
controlling of the firms financial resources. Though it was a branch of economics till1890 as a
separate or discipline it is of recent origin. Financial Management is concerned with the duties of
the finance manager in a business firm. He performs such varied tasks as budgeting, financial
forecasting, cash management, credit administration, investment analysis and funds
procurement. The recent trend towards globalization of business activity has created new
demands and opportunities in managerial finance.
Financial statements are prepared and presented for the external users of accounting information.
As these statements are used by investors and financial analysts to examine the firms
performance in order to make investment decisions, they should be prepared very carefully and
contain as much investment decisions; they should be prepared very carefully and contain as
much information as possible. Preparation of the financial statement is the responsibility of top
management. The financial statements are generally prepared from the accounting records
maintained by the firm.
Ratio analysis is an important aspect which influences the long term stability, profitability and
liquidity of an organization. Usually, financial ratios are said to be the parameters of the
financial performance. The Evaluation of financial performance had been taken up for the study
with Broadridge financial solution ltd as the project. Analysis of Financial performances is of
greater assistance in locating the weak spots at the Broadridge financial solution Ltd even
though the overall performance may be satisfactory.
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NEED FOR THE STUDY :-
Ratio analysis is the process of identifying the financial strength and weakness of the firm by
properly establishing relationship between the items of the balance sheet and profit and loss
accounts. Financial analysis can be undertaken by management of firm or by parties of outside
the firm, viz own as creditors, investors, and others. The nature of analysis will differ depending
on the purpose of analysis.
OBJECTIVES OF THE STUDY :-
To Analysis the financial position of the Broadridge financial solutions.
To know the liquidity position of the Broadridge financial solutions through Liquidity ratios.
To study the Earning capacity of the Broadridge financial solutions through Efficiency ratios.
To know the profitability performance of the Broadridge financial solutions through
profitability ratios.
To know the capability of payment of interest & dividends.
RESEARCH METHODOLOGY :-
Methods of Data Collection :-
Primary data:
Primary data is the first hand information that is collected during the period of research. Primary
data has been collected through discussions held with the staffs in the accounts department.
Some types of information were gathered through oral conversations with the cashier, taxation
officer etc.
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Secondary data:
Secondary data studies whole company records and companys balance sheet and profit and loss
account statements in which the project work has been done. In addition, a number of reference
books, journals and reports were also used to formulate the theoretical model for the study. And
some information was also drawn from the websites.
SCOPE OF THE STUDY :-
The study Ratio Analysis of Broadridge financial solutions mainly focuses on profitability
performance and capacity of payment of interest and dividends and also liquidity and solvency
position of the Broadridge financial solutions. The study is based on Balance sheet and Profit
and Loss Statements and cash flow statement.
LIMITATIONS OF TE STUDY :-
Time was an important limiting factor .
The study takes into consideration only past 5 years.
Further, the study is based on secondary data.
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CHAPTERISATION :-
OBJECTIVES OF FINANCIAL MANAGEMENT :-
Financial management is concerned with procurement and use of funds. Its main aim is to use
business funds in such a way that the firms value/earnings are maximized. There are various
alternatives available for using business funds. Each alternative course has to be evaluated in
detail.
The pros and cons of various decisions have to look into before making a final selection. The
decisions will have take into consideration the commercial strategy of the business. Financial
management provides a framework for selecting a proper course of action and deciding a viable
commercial strategy. The main objective of a business is to maximize the owners economic
welfare. This objective can be achieved by:
1. Profit Maximization
2. Wealth maximization
1. Profit maximization :
Profit earning is the main aim of every economic activity. A business being an economic
institution must earn profit to cover its costs and provide funds for growth. No business can
service without earning profit. Profits are a measure of efficiency of a business enterprise. Profits
also serve as a protection against risks which cannot be ensured. The accumulated profits enable
a business to face risks like fall in prices, competition from other units, adverse government
policies etc. Thus, profit maximization is considered as the main objective of business:
(i) When profit earning is the aim of business then profit maximization should be the obviousobjective.
(ii) Profitability is a barometer for measuring efficiency and economic prosperity of a business
enterprise, thus, profit maximization is justified on the grounds of rationality.
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(iii) Economic and business conditions do not remain same at all the times. There may be
adverse business conditions like recession, depression, severe competition etc. A business will
be able to service under unfavorable situation only if it has some past earnings to rely upon.
Therefore a business should try to earn more and more when situation is favorable.
(iv) Profits are the main sources of finance for the growth of a business. So, a business should
aim at maximization of profits for enabling its growth and development.
(v) Profitability is essential for fulfilling social goals also. A firm by pursuing the objective of
profit maximization also maximizes socio- economic welfare.
2. Wealth maximization :
Wealth maximization is the appropriate objective of an enterprise financial theory asserts that
wealth maximization is the single substitute for stockholders utility. When the firm maximizes
the stockholders wealth, the individual stockholder can use this wealth to maximize his
individual utility. It means that by maximizing stockholders wealth firm is operating
consistently towards maximizing stockholders utility.
About Financial Management :-
Financial management may refer to Managerial finance, a branch of finance that concernsitself with the managerial significance of finance techniques.
Corporate finance, a type of finance dealing with monetary decisions that business
enterprises make and the tools and analysis used to make these decisions.
Financial management for IT services, financial management of IT assets and resources
Methods of Financial Analysis :
The analysis and interpretation of financial statements is used to determine the financial position
and results of operations as well. A number of methods or devices are used to study the
relationship between different statements. An effort is made to use those devices which clearly
analyze the position of the enterprise. The following are the methods of analysis are generally
used:
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1. Comparative statements;
2. Common-size statements;
3. Funds flow analysis;
4. Ratio analysis;
1. Comparative Statements :
The Comparative financial statements are statements of financial position at different periods; of
time. The elements of financial position are shown in comparative form so as to give an idea of
financial position at two or more periods. Any statement prepared in comparative form will be
converted into comparative statements. From practical point of view, generally, two financial
statements (balance sheet and income statement) are prepared in comparative form for financial
analysis purpose. Not only the comparison of the figures of two periods but also be relationship
between balance sheet and income statement enables an in depth study of financial position and
operative results.
i) Comparative Income Statement:
The income statement gives the results of the operations of business. The comparative income
statement gives an idea of the progress of a business over a period of time. The changes in
absolute data in money values and percentage can be determined to analyze the profitability of
the business.
ii) Comparative Balance Sheet:
The comparative balance sheet analysis is the study of the trend of the same items, group of
items and computed items in two or more balance sheets of the same business enterprise on
different dates. The changes in periodic balance sheet items reflect the conduct of a business.
The changes can be observed by comparison of the balance sheet at the beginning and at the end
of a period and these changes can help in forming an opinion about the progress of an enterprise.
2. Common-size Statements :
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The common-size statements, balance sheet and income statement are shown analytical
percentages. The figures are shown as percentages of total assets, total liabilities and total sales.
The total assets are taken as 100 and different assets are expressed as percentage of the total.
Similarly, various liabilities are taken as part of total liabilities, these statements also known as
component percentage because every individual item is stated as percentage of the total 100.The
short comings in comparative statements and trend percentages where changes in items could not
be compared with the totals have been covered up. The analyst is able to assess the figures in
relation to total values.
i) Common-size Income Statement:
The items in income statement can be shown as percentages of sales to show the relation of each
item to sales. A significant relationship can be established between items of income statement
and volume of sales. The increase in sales will certainly increase selling expenses and not
administrative and financial expenses. In case the volume of sales increases to considerable
extent, administrative and financial expenses may go up. In case total sales are declining, the
selling expenses should be reduced at once. So, a relationship is established between sales and
other items in income statement and this relationship is helpful in evaluating operational
activities of the enterprise.
ii) Common-size Balance Sheet:
A statement in which balance sheet items are expressed as the ratio of each asset to total assets
and the ratio of each liability is expressed as a ratio of total liabilities is called common size
balance sheet. The common size balance sheet can be used to compare companies of different
size. The comparison of figures in different periods is not useful because total figures may be
affected by a number of factors. It is not possible to establish standard norms for various assets.
3. Funds flow analysis :
Funds flow statement shows the movement of funds and is a report of the financial operations of
the business undertaking. It indicates various means by which funds were obtained during a
particular period and the ways in which these funds were employed. The flow of funds occur
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when a transaction changes on the one hand and non-current account and on the other a current
account & vice- versa.
4. Ratio analysis :
Ratio analysis is a powerful tool of financial analysis. It is used as benchmark for calculating the
financial position and performance of a firm. The absolute accounting figure reported in the
financial statements does not provide the meaningful performance of financial position in the
firm, ratio helps to summarize the large quantity of data to make qualitative judgment about the
firms performance.
Importance and Advantages of Ratio Analysis :-
Importance And Advantages of Ratio Analysis Ratio analysis is an important tool for analyzing
the company's financial performance. The following are the important advantages of the
accounting ratios.
RATIO ANALYSIS :-
Introduction :
Ratio analysis is the universally used technique for analysis of financial statements. Ratio
analysis is a very powerful analytical tool useful for measuring performance of an organization.
A ratio is a statistical yardstick that provides a measure of relationship between the variables or
figures.
Ratio analysis is a widely used too of financial analysis. It is defined as the systematic use ratio
to interpret the financial statements so that the strengths and weaknesses if a firm as well as its
historical performance and current financial condition can be determined. The term ratio refers to
the numerical or quantitative relationship between two items/variables.
The ratio analysis helps the management to analyze the past performance of the firm and to make
further projections. Ratio analysis allows interested parties like shareholders, investors, creditors,
Government and analysis to make an evaluation certain aspects of a firms performance.
Definitions of Ratio Analysis :
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1) A Ratio is defined as: -
The indicated quotient of the mathematical expression and the relationship between two or
more things.
In financial analysis, a ratio is used as an index of yardstick for evaluating position and
performance of a firm.
2) A Ratio is defined, as: -
Ratio analysis is a process of analysis of the ratios in such a manner, so that management can
take actions on of Standard performances.
Importance of Ratio Analysis :
The importance of the ratio analysis lines in the fact that it presents facts on a comparative basis
and enables the drawing of inferences regarding the performance of a firm. Ratio analysis is
relevant in assessing the performance of a firm in respect of the following
1. Liquidity Position:
With the help of the ratio analysis conclusions can be drawn regarding the liquidity position of
affirm. The liquidity position of a firm would be satisfactory if it is able to meet its current
obligations when they become due. The liquidity ratios are particularly in credit analysis banks
and other suppliers of short-loans.
2. Long- term solvency: -
Ratio analysis is equally useful for assessing the long-term solvency is measured by the leverage
capital structure and profitability ratio, which focus on earning power and operating efficiency.
Ratio analysis reveals the strength and weakness of a firm in this respect.
3. Operating Efficiency:-
Ratio analysis throws light on the degree of efficiency in the management and utilized of assets.
Various activity ratios measure this kind of operational efficiency. The solvency of a firm
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depends upon the sales revenues generated by the use of its assets total as well as its
components.
4. Overall Profitability: -
The management constantly concerned about the overall profitability of the enterprise that is
they are concern about the ability of firm to meet its short term as well as long-term obligations
to its creditors to ensure a reasonable return to its owner and secure optimum utilization of the
asset of the firm.
5) Inter firm Comparison: -
Ratio analysis is one of the popular technique uses to compare ratio of firm with the industrial
average. A single figure related to some standards an inter firm comparison. Would demonstrate
the relative position vis--vis competitors. If any variance is found the firm can identify the
probable results and in that light, it takes remedial measures.
6) Trend Analysis:-
Ratio analysis enables a firm to take the time dimension in to account that is it reveals whether
the financial position of affirm is made possible by the use of trend analysis. The firms
movement may be favorable.
Types of Ratios :
The various group of purpose are as follows.
a) Short Term Solvency Ratios.
b) Long Term Solvency Ratios.
c) Profitability Ratios.
d) Turnover Ratios.
e) Expenses Ratios.
A) Short term solvency Ratios / Liquidity Ratios:-
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Liquidity ratios measures short-term liquidity of firm. Management can employ these ratios to
ascertain how efficiently they are managing working capital. The Liquidity Ratios measures the
ability of a firm to meet its short-term obligations and reflect the short-term financial solvency of
a firm.
1. Current Ratio.
2. Quick Ratio or Acid Test Ratio.
1. Current Ratio:-
Current ratio is defined as the ratio of current assets to current liabilities current liability.
Current ratio means those assents convertible or expected to be converted into cash within a
year. Current liabilities are those liabilities, which are to be paid of within the same period.
Current assets include cash in hand and at bank, marketable securities, debtors, prepaid expenses
etc. Current liabilities include outstand or accrued expenses, Sundry creditors, Bills payable,
Provisions for taxation etc.
Thus, current ratio is an index of firms financial stability. The logic behind current ratio is that
cash need not be available to meet all current liabilities on particular date. But there should be
good prospects for an adequate inflow of cash indicated by the amount of individual component
current assets.
A high current ratio is an assurance that the firm will have adequate funds to pay current
liability.
Current Ratios = Current Assets / Current Liability
2. Quick Ratio / Acid Test:-
Quick ratio is the ratio of quick assets to current liability. Quick assets are those, which can be
converted into cash without diminution in their value. Which assets include cash, bank and
sundry debtors. Quick Ratio is more rigorous test of liquidity than current ratio since; it
eliminate. Inventories and prepaid expenses as a part of current assets. A high quick ratio
compared to current ratio indicates under stocking. While a low quick ratio may indicate
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overstocking. A quick ratio of 1:1 is assumed as standard in theory. But this may very season to
seasons and also from Business to Business.
Quick Ratio = Quick Assets / Quick liability
B) Long term Solvency Ratio or Leverage Ratio:-
Solvency ratio are those ratio calculated to determine the firms ability to meet its long term
obligations. The long term obligations include the claims of debentures holders and other
financial institutions which have offered long term and medium term loans to the firm. The
solvency position of a firm can be determined with the help of following ratio:
1. Debt Equity Ratio:-
2. Shareholder Equity Ratio:-
3. Interest Coverage Ratio
4. Fixed Assets to long term fund
5. Capital Gearing Ratio
1) Debt Equity Ratio:-
Debts equity ratio is those calculated to know the extent of outsider fund and shareholder funds
used in acquiring the assets for a firm in other words, it is calculated to measure the relative
claim of outsiders and share holder against the assets of a firm. It is also called as external
internal equity ratio or debt to net worth ratio.
Debt or outsider fund: An outsider fund refers to long term liabilities. Some writer are of the
opinion that preference share should be considered as outsiders funds for the reason that
dividend payable on these shares is fixed and the amount of these shares may be redeemed after
expiry a stipulated period. Similarly, there is a controversy regarding current liabilities also.
Some writers are of the opinion that current liabilities should be considered as outsiders funds
for the reason that they represent the firm obligations to outsiders. However we are of the
opinion that debt equity ratio may be calculated excluding current liabilities because they are
repayable with in a very short period and these liabilities widely fluctuate during a year.
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Shareholder funds: Equity share capital + preference share capital + all accumulated profits (i.e.
both revenue and capital reserves) less accumulated losses.
A low debt equity ratio indicates that the interests of outsiders are safe and guarded and a firm
need not worry about their payment. On the other hand, a high debt equity ratio indicates that the
claims of outsiders are more than the shareholders, their interests are not safe and they (outsider)
have to bear the probable future losses.
Debt Equity Ratio = Long Term / Equity Capital.
2) Shareholder Equity Ratio:-
The Shareholders Equity Ratio is the ratio of Shareholders Equity & Total Capital employed. It
is calculated by dividing the Shareholders Equity & Total Capital employed.
This is an important ratio for determining the long - term solvency of a company. In general the
higher the share of owned capital, proprietors in the total capital of the company, the less is the
like hood of insolvency in future, given normally efficient management. The general principle is
that more stable the earnings of the business, lower will be the equity ratio which would be
considered acceptable and safe.
Shareholder equity ratio= Shareholder Equity/Total Capital Employed
3) Interest Coverage Ratio:-
It is also known as time interest-earned ratio. this ratio measures the debt servicing capacity
of a firm in so far as fixed interest on long-term loan is concerned. It is determined by dividing
the operating profits or earnings before interest and taxes (EBIT) by the fixed interest charges on
loans. Thus,
Interest coverage = EBIT / Interest
It should be noted that this ratio uses the concept of net profits before taxed because interest is
tax-deductible so that tax is calculated after paying interest on long term loan. This ratio, as the
name suggests, indicates the extent to which a fall in EBIT is tolerable in that the ability of the
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firm to service its interest payments would not be adversely affected. For instance, an interest
coverage of 10 times would imply that even if the firms EBIT were to decline to one-tenth of
the present level, the operating profits available for servicing the interest on loan would still be
equivalent to the claims of the lenders. On the other hand, coverage of five times would indicate
that a fall in operating earnings only to up to one-fifth level can be tolerated. From the point of
view of the lenders, the larger the coverage, the greater is the ability of the firm to handle fixed-
charges liabilities and the more assured is the payment of interest to them. However, too high a
ratio may imply unused debt capacity. In contrast, a low ratio is a danger signal that the firm is
using excessive debt and does not have the ability to offer assured payment of interest to the
lenders.
4) Fixed Assets to long term fund:-
It reflects the security of fixed obligation. It indicates, to some extent, whether or not additional
creditor funds may be obtained by using the same security.
Fixed Assets to long term fund = Fixed Assets/ Long Term Fund
5) Capital Gearing Ratio:-
Capital Gearing indicates the relationship between equity
Shareholders funds and fixed interest bearing debentures / loans. If the fixed interest bearing
debentures exceeds equity shareholders funds, it is called Highly geared it is called Low
geared capital and if both are equal, it is called Evenly geared capital.
Capital Gearing Ratio = Equity shareholder funds / long term + unsecured loans.
C) Profitability Ratios:-
The purpose of study and analysis of profitability ratio to help assessing the adequacy of profits
earned by the company and also to discover whether profitability is increasing of declining. The
profitability of the firm is the net result of a large number of policies and decisions. The
profitability ratios show the combined effects of liquidity, asset management and debt
management on operating results. Profitability ratios are measured with reference to sales,
capital employed, total assets employed, shareholders funds etc.
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1. Returns on Capital Employed or Return on Investment.
2. Cash Profit Ratio.
3. Return on Shareholders Fund Ratio.
4. Gross Profit Ratio.
5. Net Profit Ratio.
1. Returns on Capital Employed or Return on Investment:-
A return on Capital Employed is determined by divining Net Profit by Capital Employed.
ROI = EAT + Interest / Total Capital Employed *100
The strategic aim of a business enterprise is to earn a return on capital. If in any particular case,
the return in long run is not satisfactory, then the deficiency should be corrected or the activity is
abandoned for a more favorable one.
2. Cash Profit Ratio:-
Cash Profit Ratio is computed using cash flow business operation as the numerator. This vale is
determined by adding non-cash expenses, such as depreciation and amortization to net profits
available to equity owners. The ratio indicates the cash generating ability (per equity share) of
the firm. Like EPS, cash EPS should be used with caution. It is beset with all the limitation
associated with EPS measure.
Cash Profit Ratio = Net profits + Deprecation / Net sales*100
3. Return on Shareholders Fund Ratio:-
According to this ratio, profitability is measured by dividing the net profits after taxes (but
before preference dividend) by the average total shareholders equity. The term shareholders
equity includes (i) preference share capital; (ii) ordinary shareholders equity consisting of (a)
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equity share capital, (b) share premium, and (c) reserves and surplus less accumulated losses.
The ordinary shareholders equity is also referred to as net worth. Thus,
Return on total shareholders equity = Net profit / shareholders equity*100
The ratio reveals how profitably the owners funds have been utilized by the firm. A comparison
of this ratio with that of similar firms as also with the industry average will throw light on the
relative performance and strength of the firm.
4. Gross Profit Ratio:-
The ratio measures the gross profit margin on the total net sales made by the company. The gross
profit represents the excess of sales proceeds during the period under observation over their cost,
before taking into account administration, selling and distribution and financing charges. The
ratio measures the efficiency of the companys operations and this can also be compared with the
previous years results to ascertain the efficiency partners with respect to the precious year.
Gross Profit Ratio = GP / Sales *100
5. Net Profit Ratio:-
The net profit ratio measures the relationship between net profit and Income from Sales in
percentage.
Net Profit Ratio = Net Profit / Sales *100
The ratio of net profit to income from sales expresses the cost price effectiveness of the
operation. A high net profit ratio would ensure adequate return on investment. A low net profit
ratio has the opposite implications.
D) Turnover Ratio:-
The efficiency or activity ratio are those ratio calculated to measure the operational efficiency of
a business concern. The operational efficiency a firm is judged based on its profits earning
capacity and the optimum utilization of its available resources in accordance with financial
policies related to its operation.
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These ratios are also called as Turnover Ratio, Performance Ratio or Current Assets
Movement Ratio because they measure the speed with which the assets are converted into sales.
All the ratios coming under this category are calculated with reference to sales or cost of sales
and expressed in number of times say, 6 times, etc. A number of turnover ratios can be
calculated, such as,
1) Inventory Turnover Ratio (In Times).
2) Debtors Turnover Ratio - Average Collection Period.
3) Fixed Assets Turnover Ratio.
1) Inventory Turnover Ratio (In Times):-
The inventory turnover, or stock turnover, measures how fast the inventory is moving through
the firm and generating sales. The inventory turnover reflects the efficiency of inventory
management. The higher the ratio, the more efficient the management of inventory turnover may
be caused by a low level of inventory which may result in frequent stock outs and loss of sales
and customer goodwill.
Notice that as inventories tend to change over that year, we use the average of the inventories at
the beginning and end of the year. In general, average may be used when a flow figure is related
to a stock figure.
Inventory Turnover Ratio = Cost of goods sold / Average total stock.
2) Debtors Turnover Ratio and Average Collection Period :-
A firm may sell goods on cash as well as on credit. When the goods are sold on credit, the parties
to whom the goods have been sold, are called as debtors or book-debts in accounting
terminology. There must be proper credit collection policy to ensure proper collection of debts
without which there is every possibility of outstanding debt becoming bad. Therefore, Debtors
turnover ratio is calculated to measure the efficiency of credit promotion policy and credit
collection policy. Debtors turnover ratio indicates the speed with which the debtors are turnover
during a year. It is expressed in number of times the debtors are turned over.
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Higher Debtors Turnover Ratio indicates more efficient collection of debts and signifies the
more liquidity of debts and lowers Debtors Turnover Ratio, more in efficient collection of debts
and signifies the less liquidity of debts.
Debtors turnover = Total credit sales/Average sundry debtors.
The quality of debtors can be evaluated by ascertaining average collection period also. This is
calculated to know how many days credit is outstanding. Average collection period serves as
check on collection of Outstanding balances from customers. A high average collection period
indicates inefficient collection of debts and it affects liquidity position of a firm, whereas a low
average collection period indicates better quality of debts and sound liquidity position of a firm.
Average collection period = total days in a year / Debtors turnover Ratio
3) Fixed Assets Turnover Ratio:-
This ratio is calculated to measure the adequacy or otherwise of investment in fixed assets. This
ratio is very significant for the manufacturing concerns. High ratio indicates efficiency in work
performance where as low ratio means inadequate investment in fixed assets.
Fixed Assets Turnover Ratio = Sales / Fixed Assets.
E) Expenses Ratios:-
Another profitability ratio related to sales is the Expenses Ratio. It is computed by dividing
expenses by sales. The term expenses includes
1) cost of goods sold,
2) administrative expenses,
3) selling and distribution expenses,
4) financial expenses but excludes taxes, dividends and extraordinary losses due to theft of
goods, good destroyed by fire and so on.
There are different variants of expense ratios. That is listed below
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1) Cost of goods sold ratio:-
The cost of goods sold ratio shows what percentage share of sales is consumed by cost of goods
and, conversely, what proportion is available for meeting expenses such as selling general
distribution expenses as well as financial expenses consisting of taxes, interest and dividend, and
so on.
The expenses ratio is, therefore, very important for analyzing the profitability of a firm. It should
be compared over a period of time with the industry average as well as firms of similar type. As
a working proposition, a low ratio is favorable, while a high is unfavorable.
Cost of goods sold Ratio = Cost of goods sold / Net sales *100
2) Operating expenses ratio:-
The ratio is test of the operational efficiency with which the business is being carried. It indicates
the managerial ability to control the operating expenses. Operating expenses Ratio indicate
company ability to general profits out of its available resources with control of management
therefore low operation ratio is better.
Operating expenses Ratio = Administrative expenses + Selling Expenses / Net sales *100.
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CHAPTER-II
COMPANY PROFILE :-
About Broadridge :-
Broadridge is a technology Services Company focused on global capital markets. Broadridge is
the market leader enabling secure and accurate processing of information for communications
and securities transactions among issuers, investors and financial intermediaries. Broadridge
builds the infrastructure that underpins proxy services for over 90% of public companies and
mutual funds in North America; processes more than $3 trillion in fixed-income and equity
trades per day; and saves companies billions annually through its technology solutions.
History :-
Broadridge is the former Brokerage Services division of ADP. On March 30th, 2007, we spun
off from ADP and began operating as an independent public company. Our company has more
than 40 years of history of providing innovative solutions to the financial services industry and
publicly held companies. In 1962, the Brokerage Services division of ADP opened for business
with one client, processing an average of 300 trades per night. In 1979, we expanded our U.S.-
based securities processing solutions to process Canadian securities.
We made significant additions to our Securities Processing Solutions business through two key
acquisitions in the mid-1990s. In 1995, we acquired a London-based provider of multi-currency
clearance and settlement services, in order to become a global supplier of transaction processing
services. In 1996, we acquired a provider of institutional fixed income transaction processing
systems. In fiscal year 2008, we processed on average approximately $3 trillion daily in fixed
income trades.
We began offering our proxy services in 1989. The proxy services business, which developed
into our Investor Communication Solutions business, leveraged the information processing
systems and infrastructure of our Securities Processing Solutions business. Our proxy services
offering attracted 31 major clients in its first year of operations. In 1992, we acquired The
Independent Election Corporation of America, further increasing our proxy services capabilities.
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By 1999, we were handling over 90% of the investor communication distributions for all
securities held on record by banks and broker-dealers in the U.S.from proxy statements to
annual reports. During the 1990s, we expanded our proxy services business to serve security
owners of Canadian and United Kingdom issuers and we began offering a complete outsourced
solution for international proxies.
In 1998, having previously provided print and distribution services as an accommodation to our
securities processing and proxy clients, we decided to focus on account statement and reporting
services. In 2001, we developed and released Post Edge to meet the need for electronic
distribution and archiving of all investor communications.
In 2004, we entered the securities clearing business by purchasing Bank of America
Corporations U.S. Clearing and Broker Dealer Services businesses. The following year we
commenced offering our unique business process outsourcing service to self-clearing U.S.
broker-dealers.
In 2007, we became the new independent company Broadridge Financial Solutions, Inc.
Headquartered in Lake Success, New York, our international presence spans regional and local
centers across the United States, Canada, Europe, Asia and Australia. In 2008, Broadridges first
full year as an independent public company, we grew revenues, pre-tax earnings, and sales
despite a challenging market environment. The foundation of our optimism about the future in
the face of the current challenges to our industry is our companys culture of engaged,
trustworthy, motivated associates. They have demonstrated throughout our history their
resilience and capacity to adapt to change and their commitment to our shared goals.
Lines of Business :-
Broadridge is a leading global provider of technology-based outsourcing solutions to the
financial services industry. Our systems and services include investor communication solutions,securities processing solutions, and securities clearing and operations outsourcing solutions. In
short, we provide the infrastructure that helps make the financial services industry work. With
more than 40 years of experience, we provide financial services firms with advanced,
dependable, scalable and cost-effective integrated systems. Our systems help reduce the need for
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clients to make significant capital investments in operations infrastructure, thereby allowing
them to increase their focus on core business activities.
Our clients include thousands of financial services firms and public companieswe not only
help them conduct business, we also help them communicate with their shareholders.
Broadridge delivers a wide range of cost-effective technology-based solutions to our clients, in
support of all steps in the investment lifecycle. Whether a client is a huge multinational
corporation or a smaller firm, we provide affordable, reliable solutions to perform their back-
office operations so they can focus on growing their businesses, and better serving their clients.
In our 2008 fiscal year, we:
Distributed over one billion investor communications, including proxy materials, investor
account statements, trade confirmations, tax statements and prospectuses;
Provided components of our securities processing solutions to eight of the top 10 United States
broker-dealers, as ranked by Securities Industry and Financial Markets Association; and
Served over 100 correspondents through our securities clearing services. Our business is divided
into two units: Investor Communication Solutions and Security Processing Solutions.
Investor Communication Solutions :-
This is our largest business. A large portion of our Investor Communication Solutions business
involves the processing and distribution of proxy materials to investors in equity securities and
mutual funds, as well as the facilitation of related vote processing. ProxyEdge our innovative
electronic proxy delivery and voting solution for institutional investors, helps ensure the
participation of the largest shareholders of many companies. We also provide the distribution of
regulatory reports and corporate action/reorganization event information, as well as tax reporting
solutions that help our clients meet their regulatory compliance needs. In addition, we provide
financial information distribution and transaction reporting services to both financial institutions
and securities issuers. These services include the processing and distribution of account
statements and trade confirmations, traditional and personalized document fulfillment and
content management services, marketing communications, and imaging, archival and workflow
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solutions that enable and enhance our clients communications with investors. All of these
communications are delivered in paper or electronic form.
Securities Processing Solutions :-
We offer a suite of advanced computerized real-time transaction processing services that
automate the securities transaction lifecycle, from desktop productivity tools and portfolio
management to order capture and execution, trade confirmation, settlement, and accounting. Our
services help financial institutions efficiently and cost-effectively consolidate their books and
records, focus on their core businesses, and manage risk. With multi-currency capabilities, our
Global Processing Solution supports real-time global trading of equity, option, mutual fund, and
fixed income securities in established and emerging markets.
Why Broadridge :-
We know that the energy, expertise and teamwork of our associates create a wonderful work
environment and make Broadridge an unparalleled leader in our industry. While each associate
plays an important role in the progress of our company, true success at Broadridge comes from
our ability to come together as a team. A team where all associates are respected engaged and
where diverse perspectives are valued. We recognize our success as being aligned with our
values, and encourage repetition of behaviors that lead to our success. It also encourages
engagement among our associates, which has direct impact on client satisfaction. Our associates
make the difference.
Vision :-
We enable the financial services industry to achieve superior levels of performance through our
passion to deliver extraordinary value to our clients, shareholders, and associates.
Values
Trustworthy
Respectful
Engaged
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Accountable
Client Centric
Company Culture
At Broadridge we believe in celebrating as a team, and thanking at an individual level.
Celebrating is important, as recognizes successes aligned with our values, and encourages
repetition of behaviors that lead to success. It also encourages engagement among our associates,
which has direct impact on client satisfaction. Company celebrations that keep our associates
engaged include:
World Class Service Day - associates are provided with a free lunch or dinner served bysenior level management. If goals have been reached, the associates are also given a
monetary reward.
Annual picnics and barbecues for associates and their families.
Annual holiday party.
Competitive and Fair Salaries
Our Vision Statement says Broadridge has a "passion to deliver extraordinary value" to not just
our clients and shareholders, but also to our Associates. We aim to accomplish this by providing
a mix of rewards that attract and retain the best possible Associates, and motivate them to
achieve superior individual, team, and Company-wide performance.
Merit Increases That Reflect Our Culture :-
The Merit Budget provides guidelines to management for determining appropriate compensation
increases for associates. Payment of merit increases is based on the assessment of each
associates behavior. We look not only at whether or not an associate achieved set goals, but
whether the associates behavior fully reflects our values and our efforts to create a high
engagement culture. Starting in 2010, merit increases will also recognize progress with
individual development goals.
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Bonuses Defined by Shared Goals :-
We provide two bonus plansthe MBO Bonus Plan and the World Class Service Bonus Plan.
Associates are very involved in writing their objectives and defining their goals.
World Class Service Bonus :-
Associates not eligible for the MBO Bonus Plan participate in our unique World Class Service
Bonus. This program is ten years old and guarantees that all our associates know they can earn a
bonus, no matter their position. This dissolves the barrier between bonus eligible and non-
bonus eligible employees that exists at some companies. Our associates feel invested in our
companys success and know they are contributing to it directly.
Equity as Compensation :-
We are optimistic about the future because we have committed associates. Many of our
associates are even more closely linked to our companys future success because they are also
shareholders. Broadridge equity, in the form of restricted stock units, is a component of total
compensation for about one-third of our associates. Additionally, all our corporate officers are
subject to share ownership guidelines designed to increase their share ownership to further align
their interests with those of our shareholders.
Retirement Plan :-
We sponsor a very generous defined contribution retirement plan with matches above
benchmark. We offer both non elective contributions and matching contributions. Our 401(K) is
our strongest plan and is very popular because it offers such rich benefits.
Broadridge an organization that you can trust :-
Spun off from ADP in 2007, Broadridge continues to extend the strong global heritage of service
excellence upon which our market leadership is founded.
We maintain the dedicated staffing resources, intellectual capital, uncompromising ethics,
financial staying power and vision to focus entirely on what we do best helping financial
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services institutions and public companies around the world become more efficient and more
focused on better serving their customers.
Principal businesses :-
Broad solutions portfolio includes mission-critical products and services for securities
processing, clearing and outsourcing and investor communication.
Broadridge offers complete brokerage processing services, from the industrys most widely
trusted and deployed processing platform to our robust wealth management solutions.
We offer a complete range of execution, clearing and custody services as well as technology
and operations outsourcing solutions for both retail and institutional firms.
Leveraging the latest technologies, Broadridge offers comprehensive investor
communications, document management and proxy processing services to companies around
the globe each day. Our services help clients streamline their business processing and reduce
costs.
Outsourcing leadership
Through our unique breadth of best-in-class outsourcing solutions and our highly scalable
processing model we process an average of nearly two million trades per day, and we process
and distribute more than one billion shareowner communications annually through our
industry-leading data centres.
Mission :-
We are fully committed and highly focused on enabling our clients' growth. Our mission is to
drive the industry we serve to higher levels of efficiency and compliance; to partner with
financial institutions and public companies to enable their growth; and to provide innovative
outsourcing solutions for mission-critical activities, Global presence, local expertise.
Broadridge is strategically aligned to the way its clients conduct their business. We service our
clients by providing solutions and services that meet global, regional and local requirements,
backed by comprehensive and in-depth market expertise.
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Headquartered in New York, our international market presence spans regional and local
centers across the Americas, Europe, Asia and Australia.
World leading services, world leading people
With over 4,000 dedicated professionals, including our well-established and highly
experienced management team, Broadridge associates are committed to consistently attaining
the highest standards of service excellence at every level across our global organization.
Broadridge clients :-
Broadridge delivers optimized solutions and a consistent, best-in-class experience to all of our
clients. We offer global banks, retail, institutional and discount brokerage firms, correspondent
clearing firms, mutual and hedge funds, investment firms, public corporations and other
institutions a wide range of cost-effective and scalable multi-currency processing solutions.
Whether a client is large or small, we help each one seize opportunities to grow their business.
Work/Life Balance :-
One of our values is respect, which we define as respecting the ideas and work-life balance of
all of our associates. Below are several examples of initiatives that support the work-life
balance of our associates.
Childcare Back-up Program :-
As previously mentioned, we survey our associates frequently to uncover what they might need.
In response to their feedback we created our Childcare Back-up Program.Associates can bring
their children to one of Bright Horizons 250+ registered daycare centers or 1,000 network
centers any day when a childs school is closed or the regular caregiver is out sick or on
vacation. In addition, this program also offers in-home care for those associates who dont live
or work near one of the centers or who need someone to watch a sick child.Broadridge has also
teamed up with the Learning Care Group, which operates 1,100+ U.S. child daycare centers, to
provide associates with a 10% discount off the standard tuition rate for children between the ages
of 2 and 12. In addition, the Dependent Care FSA allows associates to contribute between
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$500 and $5,000 pre-tax dollars to cover the costs of dependent care. Broadridge also offers
associates adoption assistance.
Compsych :-
Compsych Broadridges work/family vendor is a resource available to our associates and their
household members at no cost to help them balance their daily responsibilities and life events.
Associates may access Compsych online for referrals to comprehensive services including:
Confidential consultation on personal issues
Legal information and resources
Information, referrals and resources for work-life needs
Financial information, resources and tools
Online information, resources and tools
Flex Work
We believe we only encourage commitment from our associates when we help them to balance
life and work. For this reason based on department flexibility we offer flexible work
solutions, such as:
Telecommuting
Alternative work schedules
Flexible and/or compressed work schedules
Flexible summer hours
Job sharing
All of our associates can take advantage of personal days and our vacation flex plan which
enables all full- and part-time associates to choose an additional one week of vacation time in
lieu of one weeks pay.
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Benefits :-
At Broadridge your particular benefits package will depend on your work location, position and
years with the company. No matter which global location you are located, our benefits offer
plenty of flexibility for you and your family. Here is a preview of what you might be eligible for:
Comprehensive Healthcare Coverage
Flexible Spending Accounts
Survivor Benefits
Basic Life/AD&D
Group Universal Life
Personal/Business
Travel Accident Insurance
Disability Benefits
401K Above market plan
Paid Vacations and Holidays
Wellness Programs
Employee Assistance Program
On Site Medical Offices
Balancing Work & Life
Transit Program
Child Back-up programs
Child Day Care
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Center Discounts
Com Psych
On Site Cafs
Tuition Reimbursement
Associate Recognition Programs
Additional Discount Programs
Social Investment, One Solution at a Time
Our passion to deliver extraordinary service to our clients, shareholders and associates has
contributed to the success of the financial services industry.. This passion, which begins with our
core values of being trustworthy, respectful, engaged and accountable, has grown to include a
wider circle of stakeholders: our communities and our planet. We take our responsibility as a
leader in our industry and a citizen of the global community as a serious commitment.
In March 2009, we launched our Corporate Social Responsibility (CSR) program and established
the Broadridge Foundation. Since then, we have actively participated in a broad spectrum of
CSR initiatives that embody our core values. The Foundation has played an important role in
supporting As a company, we actively participate in Earth Hour and other green initiatives as
well as Adopt-a-Family, Read Across America, Take a Classroom to Work, Habitat for
Humanity, and Cells for Soldiers, to name just a few. Individually, our associates volunteer
countless hours of their time, energy and passion to local programs that enrich their lives and the
communities in which they live.
Broadridge is committed to delivering efficient, innovative investor communications tools to the
industry another way we demonstrate responsibility in our area of expertise. We have
launched a new education website that provides retail shareholders with important information
about the proxy voting process. We look forward to sharing important milestones for our CSR
program and the Broadridge Foundation with you as our initiatives evolve. We invite you view
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our brochure, which showcases how our associates have contributed to making these initiatives
their own.
Awards and Recognition :-
Almost immediately, Broadridge began to be recognized for our culture and work environment,
as well as for outstanding service.In 2008, Broadridge also received the Stevie Award for Sales
Team of the Year for a 19.1% increase in sales.
Best Companies to Work For In New York :-
Broadridge has been selected as one of the 25 best large companies to work for in New York!
Our selection for 2011 marks our fourth consecutive year of being recognized by Best
Companies to Work for in New York. In 2010, we were named as the #1 Best Large Company to
work for in New York.
Gallup :-
Broadridge was awarded The 2010 Gallup Best Place to Work Award. The Award recognizes
the best-performing workforces in the world based on the most rigorous workplace research ever
conducted. To select the winners, a panel of workplace experts evaluates applicants based on
data from millions of work teams in more than 100 countries. Gallup awarded only 25
companies with this prestigious honor in 2010.
Outsourcing :-
Broadridge was ranked the Brokerage Process Outsourcing Provider for the second consecutive
year in the Black Book of Outsourcing, an annual report published by Brown-Wilson Group, a
Data monitor company. In addition to receiving the top overall honor in the Brokerage Process
Outsourcing survey, Broadridge also ranked 1 in 14 of the surveys 18 key performance areas.
Best Company awards in Canada for 2009 UK we were selected for the one to watch list for
the UK Best Companies. (2009).
The India HR Strategy Award :-
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In India, we received the 2008/2009 award for Global HR Strategy from the Employer Branding
Institute in Mumbai, and several HR awards in the Asia-Pacific region.
THEORETICAL FRAME WORK :-
In our present day economy, finance is defined as the provision of money at the time when it is
required. Every enterprise, whether big, medium of small, needs finance to carry its operations
and to achieve its targets. In fact, finance is so indispensable today that it is rightly said to be the
lifeblood of an enterprise. Without adequate finance, no enterprise can possibly accomplish its
objectives. Financial management is applicable to every type of organization, irrespective of its
size kind of nature. It is as useful to a small concern as to a big unit. A trading concern gets the
same utility from its application as a manufacturing unit may expect. This subject is important
and useful for all types of ownership organizations. Where there is a use of finance. Financial
management is helpful. Every management aims to utilize its funds in a best possible and
profitable way. So this subject is acquiring a universal applicability
It is indispensable in any organization as helps in:
Financial planning and successful promotion of an enterprise;
Acquisition of funds as and when required at the minimum possible cost;
Proper use and allocation of funds;
Taking sound financial decisions;
Improving the profitability through financial controls;
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Increasing the wealth of the investors and the nation; and
Promoting and mobilizing individual and corporate savings
CHAPTER III
DATA ANALYSIS AND INTERPRETATION :-
Balance Sheet of Broadridge Finance Solutions :-
Assets 2011 2010 2009 2008 2007
Cash & Short Term Investments 241.50M 412.60M 173.40M 232.00M 155.00M
Receivables 406.60M 354.30M 381.00M 1.785B 1.744B
Other Current Assets 103.30M 101.70M 83.20M 61.90M 61.10M
Total Current Assets 751.40M 992.40M 2.052B 2.079B 1.96B
Gross Property, Plant &
Equipment404.60M 383.40M 366.10M 352.70M 314.80M
Accumulated Depreciation 321.50M 296.00M 290.70M 270.10M 237.40M
Net Property, Plant & Equipment 83.10M 87.40M 75.40M 82.60M 77.40M
Long Term Investments
Goodwill & Intangibles 882.80M 555.60M 511.20M 514.40M 511.60M
Other Long Term Assets 186.70M 159.00M 136.30M 157.40M 129.20M
Total Long Term Assets 1.153B 802.00M 722.90M 754.40M 718.20M
Total Assets 1.904B 1.794B 2.775B 2.834B 2.678BLiabilities 2011 2010 2009 2008 2007
Current Portion of Long Term
Debt
Accounts Payable 119.00M 91.30M 72.00M 89.90M 91.50M
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Accrued Expenses 230.30M 261.20M 216.70M 252.60M 287.90M
Deferred Revenues 33.40M 34.80M 34.60M 25.50M 24.60M
Other Current Liabilities
Total Current Liabilities 782.70M 486.40M 1.430B 1.525B 1.429B
Total Long Term Debt 124.30M 324.10M 324.10M 447.90M 617.70M
Shareholder's Equity 2011 2010 2009 2008 2007
Deferred Income Tax 71.30M 56.20M 23.20M
Minority Interest
Other Long Term Liabilities 81.10M 72.80M 37.60M 53.60M 61.00M
Total Long Term Liabilities 324.00M 500.90M 435.80M 562.40M 718.50M
Total Liabilities 1.107B 987.30M 1.866B 2.088B 2.147B
Common Shares Outstanding 123.70M 129.20M 139.30M 140.40M 139.30M
Preferred Stock
Common Stock, Net 1.50M 1.50M 1.40M 1.40M 1.40M
Additional Paid-in Capital 667.40M 587.80M 505.90M 469.50M 412.90M
Retained Earnings 642.20M 546.90M 432.30M 248.20M 90.30M
Treasury Stock 529.90M 327.70M 37.50M 2.00M 0.10M
Other Shareholder's Equity
Shareholder's Equity 797.30M 807.10M 909.00M 745.80M 531.10M
Total Liabilities & Shareholder's
Equity1.904B 1.794B 2.775B 2.834B 2.678B
Profit and Loss Account of Broadridge Finance Solutions :-
Income 2011 2010 2009 2008 2007
Revenue 2.167B 2.209B 2.073B 2.131B 2.138B
Cost of Revenue 1.617B 1.616B 1.510B 1.548B 1.588B
Gross Profit 549.80M 592.80M 562.90M 583.00M 549.80M
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Selling, General, & Admin. Expense 270.00M 241.60M 212.90M 232.40M 216.70M
Operating Interest Expense
Other Operating Income (Expense) -10.10M -9.10M -4.00M -30.90M -12.30M
Total Operating Expenses 1.897B 1.867B 1.727B 1.811B 1.817B
Operating Income 269.70M 342.10M 346.00M 319.70M 320.80M
Non-Operating Income
Pretax Income 269.70M 342.10M 346.00M 319.70M 320.80M
Provision for Income Taxes 97.90M 117.00M 122.90M 131.30M 123.70M
Income after Tax 171.80M 225.10M 223.10M 188.40M 197.10M
Income Before Extraordinaries &
Disc. Operations
171.80M 225.10M 223.10M 188.40M 197.10M
Income from Discontinued Operations -2.20M -35.10M 0.20M 3.80M
Net Income 169.60M 190.00M 223.30M 192.20M 197.10M
Earnings Per Share Data 2011 2010 2009 2008 2007
Average Shares to compute diluted
EPS
128.3 139.1 141.6 141 139
Average Shares used to compute basic
EPS
124.8 135.9 140 139.6 138.8
EPS - Basic net 1.36 1.4 1.6 1.38 1.42
EPS - Diluted net 1.32 1.37 1.58 1.36 1.42
Cash Flow Statement of Broadridge Finance Solutions :-
Cash Flow - Operations 2011 2010 2009 2008 2007
Net Income 169.60M 190.00M 223.30M 192.20M 197.10M
Depreciation, Depletion,
Amortization
72.30M 57.00M 53.70M 48.40M 62.50M
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Other Non-Cash Items 42.90M 65.60M 24.90M 11.00M 30.40M
Total Non-Cash Items 115.20M 122.60M 78.60M 59.40M 92.90M
Deferred Income Taxes
Total Changes in
Assets/Liabilities
-88.50M 46.40M -23.90M 48.90M -133.00M
Other Operating Activities -5.40M 1.10M -0.80M 7.40M 3.50M
Net Cash from Operating
Activities
190.90M 360.10M 277.20M 307.90M 160.50M
Cash Flow - Investing 2011 2010 2009 2008 2007
Capital Expenditures -29.20M -42.70M -26.80M -41.40M -31.80M
Acquisitions, Divestitures -293.50M -35.20M -60.80M -6.10M
Cash Flow - Financing 2011 2010 2009 2008 2007
Net Cash from Investing
Activities
-340.80M -88.30M -90.70M -52.60M -37.90M
Debt Issued 200.00M -114.40M -170.00M 631.90M
Equity Issued -174.30M -211.70M -28.50M 18.10M 4.30M
Dividends Paid -74.80M -66.60M -37.90M -33.60M
Other Financing Activities 3.80M 0.20M 0.40M 1.70M -720.20M
Net Cash from Financing
Activities
-45.30M -278.10M -180.40M -183.80M -84.00M
Foreign Exchange Effects 7.90M 0.10M 3.10M 0.70M -0.10M
Net Change in Cash & Cash
Equivalents
-171.10M 239.20M 118.70M -17.50M 38.50M
Cash at beginning of period 412.60M 173.40M 54.70M 72.20M 50.10M
Cash at end of period 241.50M 412.60M 173.40M 54.70M 88.60M
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CURRENT RATIO :-
Current ratio may be defined as the relationship between current assets and current liabilities.
This ratio is also known as "working capital ratio". It is a measure of general liquidity and is
most widely used to make the analysis for short term financial position or liquidity of a firm. It is
calculated by dividing the total of the current assets by total of the current liabilities.
Following formula is used to calculate current ratio:
Year 2007 2008 2009 2010 2011
current ratio 1.37 1.36 1.43 2.04 0.96
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Interpretation:
From the above graph current ratio was highest in the year 2010 is 2.04, that is equal to ideal
current ratio is 2:1, and the ratio was decreased to 0.96 in the year 2011 it represent the liquidity
position of the company is also decreased.
TOTAL DEBT TO ASSETS :-
The ratio used to measure a company's financial risk by determining how much of the company's
assets have been financed by debt. Calculated by adding short-term and long-term debt and then
dividing by the company's total assets.
Year 2007 2008 2009 2010 2011
Total debt to assets 0.8 0.73 0.6 5.5 0.58
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.
Interpretation:
From the above information total debt to assets ratio was decreasing from the year 2007 to 2009
is 0.8 to 0.6, the ratio was highest in the year 2010 is 5.5 again it was decreased to 0.58 in the
year 2011which shows that company debts are also decreased.
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DEBT EQUITY RATIO:
The debt-equity ratio is anotherleverage ratiothat compares a company's total liabilities to its
totalshareholders' equity. This is a measurement of how much suppliers, lenders, creditors and
obligors have committed to the company versus what the shareholders have committed.
To a large degree, the debt-equity ratio provides another vantage point on a company's leverage
position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets
in the debt ratio. Similar to the debt ratio, a lower the percentage means that a company is using
less leverage and has a stronger equity position.
Debt Equity ratio =
Year
2007 2008 2009 2010 2011
Debt equity ratio 0.4 0.27 0.2 1.22 0.13
Interpretation:
From the above graph Debt equity ratio was decreasing from the year 2007 to 2009 and it was
increasing in the year 2010 is 1.22 again it was decreased to 0.13 in the year 2011, it represents
the company is using high leverage and has a weaker equity position.
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RETURN ON EQUITY (%):
The amount of net income returned as a percentage of shareholders equity. Return on
equity measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested.
ROE is expressed as a percentage and calculated as:
Return on Equity =
Year 2007 2008 2009 2010 2011
Return on equity (%) 37.1 25.7 24.5 23.5 21.6
Interpretation:
From the above information the Return on equity ratio was decreased from the year 2007 to 2011
the ratio was highest in the year 2007 is 37.75% it indicates that the income generate onshareholders investment is also decreased.
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RETURN ON ASSETS (%):
Return on assets is a key profitability ratio which measures the amount of profit made per
dollar of assets that they own. It measures the companys ability to generate profits before
leverage with its own assets, rather than by using leverage in the form of shareholders' equity or
other debt liabilities. Generally speaking, the higher this number is the more effective the
company is in utilizing its assets. Return on assets is a key profitability measure which can be
used to measure relative efficiency of companies within the same industry who have a similar
product or service line.
Return on assets =
Year 2007 2008 2009 2010 2011
Return on Assets (%) 7.35 6.78 8.04 10.5 8.9
Interpretation:
Return on assets ratio was increasing from 2007 to 2010 it was highest in the year 2010 is 10.5 it
represents the company is more effective by utilizing the assets. And the ratio was decreased in
the year 2011 it indicates the company efficiency is also decreased.
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GROSS PROFIT MARGIN :
The gross profit margin is a measurement of a company's manufacturing and distribution
efficiency during the production process. The gross profit tells an investor the percentage of
revenue / sales left after subtracting the cost of goods sold. A company that boasts a higher gross
profit margin than its competitors and industry is more efficient. Investors tend to pay more for
businesses that have higher efficiency ratings than their competitors, as these businesses should
be able to make a decent profit as long as overhead costs are controlled (overhead refers to rent,
utilities, etc.)
Gross profit margin=
Year 2007 2008 2009 2010 2011
Gross profit margin 25.71 27.35 27.15 26.83 25.37
Interpretation:
The gross profit margin of the company was satisfactory in the years 2008 and 2009. However, it
decreased by 25.37 % in the year 2011It indicating the efficiency of companys financial
services also decreased.
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NET PROFIT MARGIN (%) :
Net profit margin is one of the profitability ratios and an important tool for financial analysis. It
is the final output; any business is looking out for. Net profit ratio is a ratio of net profits after
taxes to the net sales of a firm. All the efforts and decision making in the business is to achieve a
higher net profit margin with increase in net profits.Net profit margin shows the margin left for
the equity and preference shareholders i.e. the owners. Unlike the gross profit which measures
the operating efficiency of the business, net profit margin measures the overall efficiency of the
business. An adequate margin of net profits will be generated only when most of all the activities
are being done efficiently. The activities may be production, administration, selling, financing,
pricing or tax management.
Net Profit Margin or Ratio=
0
2
4
6
8
10
12
2007 2008 2009 2010 2011
Net profit margin
Interpretation: From the above fig; it is understood that the margin available for owners is
slightly decreased compared to previous years. The value is decreased nearly 1 % from the
previous margin that available for owners. The net profit ratio was high in the year 2009.
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Year 2007 2008 2009 2010 2011
Net profit margin 9.21 9.01 10.77 8.6 7.82
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OPERANG PROFIT MARGIN :
A ratio used to measure a company's pricing strategy and operating efficiency.
Calculated as:
Operating margin is a measurement of what proportion of a company's revenue is left over after
paying for variable costs of production such as wages, raw materials, etc. A healthy operating
margin is required for a company to be able to pay for its fixed costs, such as interest on debt.
Year 2007 2008 2009 2010 2011
Operating profit margin 15 15 16.69 15.48 12.44
0
5
10
15
20
2007 2008 2009 2010 2011
Operating profit margin
Interpretation:
From the above fig: it is understood that the operating profit margin was increasing and
decreasing trend from the year 2008 to 2011 and the ratio was high in the year 2009 and it was
decreased in 2011.
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PRICE EARNINGS RATIO:
Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earnings
per share.
The ratio is calculated to make an estimate of appreciation in the value of a share of a company
and is widely used by investors to decide whether or not to buy shares in a particular company.
Following formula is used to calculate price earnings ratio:
Year 2007 2008 2009 2010 2011
Price Earnings Ratio 14.3 15.4 16.7 17.7 18.3
Interpretation:
The Price earnings ratio was increasing from the year 2007 to 2011 is 14.3 to 18.3. This shows
that that the investors are much attracted to invest in the company.
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DIVIDEND PER SHARE:
Dividend Per Share (DPS) ratio relates the dividends announced for the year to the number of
shares issued for that year. It is an indication of the cash return that shareholders receive from
holding shares in the listed company.
Year 2007 2008 2009 2010 2011
Dividend Per share 0.23 0.26 0.28 0.56 0.6
Interpretation:
From the graph, it is clear that the dividend per share in the year 2007 is 0.23 and it increased to
0.56 in 2010 and continued the same in 2011. The graph shows the increase in the amount of
dividend received by the shareholders for their shares.
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EARNINGS PER SHARE:
An earnings per share ratio (EPS Ratio) is a small variation of return on equity capital ratio
and is calculated by dividing the net profit after taxes and preference dividend by the total
number of equity shares.
The formula of earnings per share is:
Year 2007 2008 2009 2010 2011
Earnings per share 1.44 1.34 1.6 1.4 1.36
Interpretation:
From the above information Earning per share ratio was slightly increased and decreased from
the year 2007 to 2011 the ratio was highest in the year 2009 is 1.6 and it was decreased to 1.36 in
the year 2011 which shows that earning power of the company is decreased.
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DIVIDEND PAYOUT RATIO:
Dividend payout ratio is calculated to find the extent to which earnings per share have been used
for paying dividend and to know what portion of earnings has been retained in the business. It is
an important ratio because ploughing back of profits enables a company to grow and pay more
dividends in future.
Following formula is used for the calculation of dividend payout ratio
Year 2007 2008 2009 2010 2011
Dividend Payout ratio 0.15 0.19 0.17 0.4 0.44
Interpretation:
The dividend payout ratio of the company shows the earnings used by the companies to pay the
dividends. The ratio has increased from 0.15 in 2007 to 0.44 in 2011 which shows the
companys dividend is more compared to its earnings.
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DIVIDEND YIELD RATIO:
Dividend yield ratio is the relationship between dividends per share and the market value of the
shares.
Share holders are real owners of a company and they are interested in real sense in the earnings
distributed and paid to them as dividend. Therefore, dividend yield ratio is calculated to evaluate
the relationship between dividends per share paid and the market value of the shares.
Following formula is used for the calculation of dividend yield ratio:
Year 2007 2008 2009 2010 2011
Dividend Yield ratio 1.6 0.99 1.21 2.3 2.7
Interpretation:
From the above graph Dividend yield ratio was decreased in the year 2008 and it was increasing
from 2009 to 2011 is 1.21 to 2.7 which shows that the dividend paid to the shareholders is higher
than the market price compared to the previous years.
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CHAPTER IV
FINDINGS :-
current ratio was highest in the year 2010 is 2.04, that is equal to ideal current ratio is 2:1,and the ratio was decreased to 0.96 in the year 2011 it represent the liquidity position of the
company is also decreased.
Total debt to assets ratio was decreasing from the year 2007 to 2009 is 0.8 to 0.6, the ratio
was highest in the year 2010 is 5.5 again it was decreased to 0.58 in the year 2011which
shows that company debts are also decreased.
Return on equity ratio was decreased from the year 2007 to 2011 it indicates that the income
generate on shareholders investment is also decreased.
Return on assets ratio was increasing from 2007 to 2010 it was highest in the year 2010 is
10.5 it represents the company is more effective by utilizing the assets.
Net profit margin was increasing and decreasing trend from the year 2007 to 2011 and the
net profit ratio was high in the year 2009.
The Price earnings ratio was increasing from the year 2007 to 2011 is 14.3 to 18.3. Thisshows that that the investors are much attracted to invest in the company.
Dividend per share is increasing from the year 2007 to 2011. This shows the increase in the
amount of dividend received by the shareholders for their shares.
Earnings per share ratio was slightly increased and decreased from the year 2007 to 2011 it
was decreased in the year 2011 which shows that earning power of the company is
decreased.
Dividend payout ratio has increased from 0.15 in 2007 to 0.44 in 2011 which shows the
companys dividend is more compared to its earnings.
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Dividend yield ratio was increasing from 2009 to 2011 is 1.21 to 2.7 which shows that the
dividend paid to the shareholders is higher than the market price compared to the previous
years.
SUGGESTIONS :-
The dividend payout ratio is increased year on year. However it is not good and the investors
received a high portion of earnings per share in the form of dividends. So try to decreased the
paying the dividends to shareholders.
The Price earnings ratio was increasing from the year 2007 to 2011. This shows that that the
investors are much attracted to invest in the company. It is very favour to the company.
Earnings per share ratio is decreasing year by year it is unfavour to the company. So try to
increase their earning capacity on dividends.
Return on equity ratio is decreased which is not favourable to the company so try to increase
the returns on shareholders.
The debt equity ratio of the company is too low which is not favourable. The company
should increase the debt while reducing the other sources of capital.
Return on assets ratio was increasing from 2007 to 2010 it represents the company is more
effective by utilizing the assets. which is better to the company
Current ratio was highest in the year 2010 is 2.04, that is equal to ideal current ratio is 2:1,
which is favour to the company.
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CONCLUSION :-
The study Financial Performance analysis in Broadridge finance solutions was
undertaken with an objective of getting an insight into the analysis of financial
performance of Broadridge finance solutions.
The study attempts to determine the profitability performance of company. Further, the
study aims to determine the Financial Performance, Solvency position and capacity of
payment of interest and dividends and lending capacity of Broadridge finance solutions.
The study is done using the Balance sheet, Profit and Loss account and other financial
information of Broadridge finance solutions. The entire study is based on the secondary
data only. The analytical tools used for the study are ratio analysis. The study is done at
Hyderabad for a period of 60days. The study had few limitations which were taken care
of.
The financial information obtained was analyzed using the appropriate techniques and it
was found that the dividend payout ratio of the company has increased a lot which is
almost 6 times of that in 2007. The company also showed a high capital gearing ratio and
dividend per share. Further, it was found that the price earnings ratio is low.
The company is paying out good amount of the dividends to the shareholders which are
increased in the recent years. It is also higher compared to the market. So, the company is
suggested to maintain the same in the future in order to attract the investors.
The company should also improve its debt equity ratio which is currently unfavourable.The company is enjoying the high cash on return which increased by 80% in 2011. This
should be continued in the future.
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ANNEXURE
BIBLIOGRAPHY :
I.M. Pandey, Financial Management Ninth Edition, Vikas Publishing House Pvt Ltd, 10thedition, 2009
Prasanna chandhra, Financial Management,Tata McGraw-Hill Education, 7th edition, 2008.
Dr.R.K. Mittal, Management Accounting and Financial Management,V.K(india) Enterprises-
2010.
WEBILIOGRAPHY:
www.morevalue.com/i-reader/ftp/Ch17.PDF
www.freemba.in/articles.php?stcode=10&substcode=30
www.wikipedia.org
www.scrid.com
www.zainbooks.com
http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22I.M.+Pandey%22&source=gbs_metadata_r&cad=3http://www.morevalue.com/i-reader/ftp/Ch17.PDFhttp://www.freemba.in/articles.php?stcode=10&substcode=30http://www.wikipedia.org/http://www.scrid.com/http://www.zainbooks.com/http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22I.M.+Pandey%22&source=gbs_metadata_r&cad=3http://www.morevalue.com/i-reader/ftp/Ch17.PDFhttp://www.freemba.in/articles.php?stcode=10&substcode=30http://www.wikipedia.org/http://www.scrid.com/http://www.zainbooks.com/