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High Performance delivered

Harpreet Singh (051089)


Karan Chawla (051065)
Vipin Mittal (051087)
Gaurav Ahuja(051076)
Apratim Tiwari (051073)

Name of the Instructor: Mr. Himanshu Joshi

Department of Professional Development


JAYPEE UNIVERSITY OF INFORMATION TECHNOLOGY
WAKNAGHAT, SOLAN, HIMACHAL PRADESH, INDIA - 173215
Acknowledgement

We hereby acknowledge the kind support and


guidance extended by our reverend teacher Mr.
Himanshu Joshi and all my colleagues for their
constant encouragement without whom this project
on “Financial analysis of ACCENTURE” could not
have been completed.
Company Description
Founded1989

Headquarters Hamilton, Bermuda


110 offices in 48 countries

Key people William (Bill) D. Green (CEO)

Industry Management consulting services

Revenue $17.094 billion (2005)


1-Year Revenue Growth 11.6% (2005)
Market Capitalization $21.69 billion (2005)

Net income $940.5 Million (2005)


1-Year Net Income Growth 26.5%

Employees about 140,000


1-Year Employee Growth 13.8%

Slogan High Performance. Delivered.


Accenture is a global management consulting, technology services and
outsourcing company, with net revenues of US$16.65 billion for the fiscal year
ended Aug. 31, 2006. Committed to delivering innovation, Accenture collaborates
with its clients to help them become high-performance businesses and
governments.

Our "high performance business" strategy builds on our expertise in consulting,


technology and outsourcing to help clients perform at the highest levels so they
can create sustainable value for their customers and shareholders. Using our
industry knowledge, service-offering expertise and technology capabilities, we
identify new business and technology trends and develop solutions to help clients
around the world:
• Enter new markets.
• Increase revenues in existing markets.
• Improve operational performance.
• Deliver their products and services more effectively and efficiently.

We have extensive relationships with the world's leading companies and


governments and work with organizations of all sizes—including 91 of the
Fortune Global 100 and two-thirds of the Fortune Global 500. Our
commitment to client satisfaction strengthens and extends our relationships.
For example, 97 of our top 100 clients in fiscal year 2006, based on revenue,
have been clients for at least five years, and 77 have been clients for at least
10 years.
High Performance delivered

Who we are and What we do

r
Executive Leadership
Chairman & CEO of Accenture

William D. Green is the chairman & CEO of Accenture. In


addition to chairing the board of directors, he is responsible for
managing the company, formulating and executing long-term
strategies, and for all interactions with clients, employees,
investors and other stakeholders. Mr. Green is Accenture's
primary decision maker and policy maker, setting the tone for
the company's values, ethics and culture. He has served on
Accenture's board of directors since its inception in 2001.
William (Bill) D. Green
Chief Operating Officer

As Accenture’s chief operating officer, Steve Rohleder leads all


of the company’s business and geographic operations globally
and is responsible for executing Accenture’s business strategy
and ensuring operational excellence company-wide.
Prior to assuming his current role in September 2004, Mr.
Rohleder was group chief executive of Accenture’s global
Government operating group. Under his leadership, the
Government operating group achieved annual revenue growth of
approximately 30 percent, due in part to innovative deal
structures and offerings.
Stephen (Steve) J. Rohleder
Chief Financial Officer

Pamela J. Craig is Accenture's chief financial officer, responsible


for leading Accenture's Finance organization, which includes the
Corporate Controllership, Treasury, Tax, Investor Relations,
Corporate Transaction Services, Client & Corporate Finance,
Finance Operations and Strategic Planning & Analysis functions.
She is also a member of Accenture's Executive Leadership Team.
From March 2004 until October 2006, Ms. Craig was senior vice
president–Finance, with global responsibility for Accenture's client
deal structuring, client finance, country controllership and group
finance activities.
Pamela J. Craig
History
Continuous innovation and rapid transformation have been themes
throughout Accenture's history. Established in 1989 primarily as a technology
consultant and systems integrator, Accenture soon began offering a new
breed of business integration solutions to clients—solutions that aligned
organizations' technologies, processes and people with their strategies.
Throughout its history, Accenture has expanded its offerings and capitalized
on evolving management trends and technologies to benefit its clients. The
company pioneered systems integration and business integration; led the
deployment of enterprise resource planning, customer relationship
management and electronic services; and has established itself as a leader
in today's global marketplace.
Joe W. Forehand, a partner with 30 years of experience, was named
CEO in November 1999 and chairman of Accenture's board of directors
in February 2001. Under Forehand's leadership, Accenture became a
public company in July 2001 when it listed on the New York Stock
Exchange. After nearly five years as CEO, Mr. Forehand stepped down
from that position on Sep. 1, 2004, retaining the position of chairman.
He was succeeded as CEO by William D. Green, a partner with more
than 26 years of experience at Accenture, who had previously served
as chief operating officer—Client Services.
Today Accenture is a global management consulting, technology
services and outsourcing company, with net revenues of US$16.65
billion for the fiscal year ended August 31, 2006.
Services
Aerospace and Defense
Commercial Manufacturers, Defense Contractors

Airline
National Carriers, International Carriers, Airports...

Automotive
Original Equipment Makers (OEMs), Automotive Suppliers.

Chemicals
Manufacturers, Suppliers, Customers…

Communications
Wireline, Wireless, Cable, Satellite...
Freight and Logistics
Parcel Delivery, Air Cargo, Trucking and Shipping Fleets…

Government
Defense, Education, Health, Human Services, Immigration, Justice and Public Safety, Postal,
Revenue

Health and Life Sciences


Government Health, Payers, Pharmaceuticals and Medical Products, Providers

Industrial Equipment
Machinery, Automation, Power Generation, Construction...

Media and Entertainment


Broadcast, Entertainment, Publishing, Printing and Portal

Metals and Mining


Steel, Aluminum, Copper, Zinc, Precious Metals...
Consumer Goods and Services
Consumer Packaged Goods, Cosmetics, Apparel…

Electronics and High Tech


Aerospace, Consumer Electronics, Software…

Energy
Upstream, Downstream

Financial Services
Banking, Capital Markets, Insurance

Forest Products
Lumber, Pulp, Papermaking...

Public Transportation
Integrated e-Ticketing, Fleet Management, Rail, Tolling Solutions
Retail
Mass Merchants, Grocery Stores, Professional Service Firms...

Travel
Hotels Chains, Car Rental Companies, Casinos...

Utilities
Electric, Gas, Water...

Major Clients
US Airways: Spare Parts Management
DuPont: Alliance/IT Outsourcing
SAP: Human Resources Shared Services
Siemens: Financial Reporting Solution
Microsoft Xbox: Supply Chain Management
Microsoft: Siebel Sales Force Transformation
And more then 200 client successes
Accenture EDS IBM Industry
Market
Capitalization 21.68 14.52 141.54 195.4M
Gross Profit
Margin 27.09% 12.64% 41.89% 37.86%

EBDIT 2.28 2.15 17.74 20.11M


Operating
Margin 10.03% 3.84% 14.03% 6.10%

EPS 1.692 0.89 6.11 0.01

Net Income 1.04 0.499 9.42 1.01M

EDS = Electronic Data Systems Corp.


IBM = International Business Machines Corp.
Industry = Management Services
GRAPHICAL
REPRESENTATION
Gross Profit Margin Operating Margin

16.00%
45.00%
14.00%
40.00%
35.00% 12.00%
30.00% 10.00%
25.00% 8.00% Operating Margin
20.00% Gross Profit Margin
6.00%
15.00%
4.00%
10.00%
5.00% 2.00%
0.00% 0.00%
Accenture EDS IBM Industry Accenture EDS IBM Industry

EPS

4
EPS
3

0
Accenture EDS IBM Industry
EBDIT

EBDIT

20

15

Market Capital 10

Market Capital 5

0
141.54 Accenture EDS IBM
150

100

Net Income
50 21.68 14.52 Net Income

0
Accenture EDS IBM 10
8
6
4

0
Accenture EDS IBM
Particulars 2005 2004 2003
Sales $17094 $15113 $13397

OPERATING EXPENSES
Cost of services 12002 10497 9087
Sales and Marketing 1558 1488 1459
General and administrative costs 1512 1340 1300

Total 15072 13326 11846

Depreciation 282 257 237


Cost of good sold 11720 10240 8850

Operating income 2111 1759 1551


Gain on investment 21 3 10
Interest 84 38 20
Other expenses (11) --- 32
Equity in losses of affiliates --- (2) ---
Income before Income taxes 2206 1799 1613
Provision for Income Taxes 697 576 566
Income before Minority Interest 1509 1223 1049
Minority Interest (568) (532) (549)
Net Income 941 691 500
Earning per share
Basic $1.6 $1.25 $1.06
Diluted $1.5 $1.22 $1.05
Particulars 2005 2004 2003
ASSETS
Current Assets
Cash and cash equivalents $2484 $2553 $2332
Short-term investments 463 285 ---
Restricted cash --- --- 83
Receivables 1753 1662 1419
Unbilled Services 1384 1050 829
Other current assets 631 589 377
Total current assets 6685 6139 5037

Non Current Assets


Investments 263 340 33
Property and equipment 694 644 650
Other non current assets 1315 890 739
Total non current assets 2272 1874 1422

Total Assets $8957 $8013 $6459


Particulars 2005 2004 2003

LIABILITIES AND SHARE HOLDER’S EQUITY


Current Liabilities
Short-term debt $31 $37 $46
Accounts Payable 807 524 573
Deferred revenues 1284 980 677
Accrued payroll and related benefits 1431 1463 974
Other accrued liabilities 1309 1389 1081
Total current liabilities 4862 4393 3351

Non Current Liabilities


Long-term debt 44 32 14
Other non current liabilities 1373 1175 1416
Total non current liabilities 1417 1207 1430

Minority interest 981 941 884


Share holder’s equity 1697 1472 794

Total liabilities and share holder’s equity $8957 $8013 $6459

US Dollar amounts in millions, except share and per share data.


Ratio Analysis
Ratio 2003 2004 2005

Current Ratio 1.5 1.4 1.4

Quick Ratio 1.4 1.2 1.2

Debt-Equity Ratio 0.80 0.02 0.04

Leverage Ratio 8.1 5.4 5.3

Debtor Turnover Ratio 6.1 6.1 5.9

Asset Turnover Ratio 2.2 2.1 2.0


Ratio 2003 2004 2005

Average Collection Period 1.967 1.967 2.033


(month)

Gross Profit Margin Ratio 33.9 32.2 31.4

Net Profit Margin Ratio 3.7 4.6 5.5

Return on Stock Equity 62.7 46.9 55.4

Interest Coverage Ratio 51.6 58.4 69.3

Return on Total Asset 7.7 8.6 10.5


• Current Ratio has decreased from 1.5 in 2003 to
1.4 in 2005 implies that company has significantly
– Decreased its liquidity
– Imbalance Condition

• Debt-Equity Ratio has kept high for the initial years


signifies low protection suffered by the
creditors then and now this ratio has decreased.
• Quick Ratio has decreased upon the years and
the company will not be able to pay back the
liabilities
– Imbalance Condition

• Leverage Ratio has considerably decreased upon


the years
– Less risky
– Less profitable
• Debtor Turnover Ratio has decreased from 6.1 in
2003 to 5.9 in 2005 showing that debtors are not
able to pay back in time.

• Gross Profit Margin Ratio has decreased from


33.9 in 2003 to 31.4 in 2005 resulting in less
payment as dividend to equity share holders and
lesser retained earnings.
INDEX ANALYSIS
COMMON BASE YEAR FINANCIAL STATEMENT BALANCE
SHEET on December 31,2005

Particulars 2003 2004 2005


ASSETS
Current Assets
Cash and cash equivalents $100 $109.4 $106.5
Short-term investments ----- -------- --------
Restricted cash ----- -------- --------
Receivables 100 117.12 123.53
Unbilled Services 100 126.65 166.94
Other current assets 100 156.23 167.37
Total current assets 100 121.87 132.71

Non Current Assets


Investments 100 1030.30 796.96
Property and equipment 100 99.07 106.76
Other non current assets 100 120.43 177.94
Total non current assets 100 131.78 159.77

Total Assets 100 124.05 138.67


Particulars 2003 2004 2005

LIABILITIES AND SHARE HOLDER’S EQUITY


Current Liabilities
Short-term debt $100 80.43 67.39
Accounts Payable 100 91.44 140.83
Deferred revenues 100 131.02 189.66

Accrued payroll and related benefits 100 150.20 146.91


Other accrued liabilities 100 128.49 121.09
Total current liabilities 100 131.09 145.09

Non Current Liabilities


Long-term debt 100 228.57 314.28
Other non current liabilities 100 82.98 96.96
Total non current liabilities 100 84.40 99.09

Minority interest 100 106.44 110.97


Share holder’s equity 100 185.39 213.72

Total liabilities and share holder’s equity 100 124.05 138.67


• IT services provider Accenture Ltd. met net revenue expectations and topped
earnings forecasts in its second fiscal quarter of 2003 thanks in part to strong
growth in its outsourcing business,

• The company had earnings per share of $0.25, exceeding by one cent
analysts‘ earnings expectations.

• BT Group PLC has extended an existing human resources (HR) outsourcing


deal with Accenture Ltd. with a new 10-year contract valued at �306 million
(US$576 million). The deal will cover BT's HR functions in 38 countries for all of
its 97,000 employees and 180,000 BT pensioners.
• Despite growth in its outsourcing business, weakness in its core consulting
business is leading Accenture to cut about 750 employees, or about 1
percent of its 75,000 employees which is primarily affecting senior level
executives in the U.S. and the U.K.

• The company's core business, consulting, continued to slide with a 15


percent net revenue drop to $2 billion, following the market's trend of
depressed prices and low demand for consulting.
• Automotive Accenture Technology Labs is developing prototypes which
enable two-way communications with vehicles, enhance customer service,
accelerate product research and drive overall efficiencies.
• Airline During both turbulent and smooth times, successful airline companies
continuously invest in safety, security and customer service enhancements.
Accenture Technology Labs devises first class solutions that encompass
every facet of the airline industry.
• Banking Accenture Technology Labs shows how retail banks can transform
branches into proactive sales and service centers, switching costs from fixed
to variable. Open, Web-based, fully integrated platforms will offer more robust
customer insight capabilities that can provide a differentiating and profitable
customer experience.  
• Consumer Goods & Services Accenture Technology Labs is developing
prototypes to help consumer products companies gain competitive advantage
by staying tuned into customers' buying patterns and feedback, and by
improving supply chain functions.
1). Top 5 business threats to profitability for senior executives.

•Business Threats % of respondents selecting issue


•1. Inability to Retain Talent 40
•2. Fluctuating Canadian Dollar 31
•3. Macroeconomic Forces and the Global Economy 30
•4. Poor Customer Care 29
•5. Compliance with Government and other regulations 23
(Sarbanes Oxley)

2). Inability to retain talent.

3). Accenture is facing high challenges in Indian Market.


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