Executive Summary:
The report concentrates on the characteristics that create high performance and many
ways in which Accenture have succeeded. A comparative study is done based on the
financial highlights of the FY’s from 2002 – 2006. On analyzing one can see a
considerable increase in the net revenue. Accenture has its different working units in
Asia / Pacific, US, Europe and Can/Americans of which almost 50% of the revenue is
contributed by Europe and 40 % by US. Accenture’s biggest and the most profitable
segment is communications and high tech sector which contributes almost 27% of the net
revenue generated. The remaining is been contributed by the Government and Resources
sectors. Accentures stability is determined by calculating the various financial ratios. This
includes profitability ratios, financial ratios, liquidity ratios and leverage ratios. From all
these interpretations it is clear that Accenture is a firm with good financial stability and
less liabilities. A SWOT analysis was done where in the core areas of Accenture was
explored. The main strength of Accenture is the long term committed and experienced
employees which make their dream real. Also Accenture updates itself with the latest
technology thereby increasing the value added services to its customers. The health of the
global economy is seen as the biggest threat for the companies’ success.
Thus the report gives an insight toward the companies’ performance for different FYs.
Introduction:
Accenture is the worlds leading management consulting, technology services
and outsourcing company which were established in 1989. They uphold innovation and
high performance. The three building blocks of high performance are market focus and
positioning, distinctive capabilities and performance anatomy which results in better
decisions, better practices and better mindsets. With this Accenture can mobilize the right
people, skills and technologies to help clients improve their performance. Their
performance is measured by profitability, growth, positioning for the future, longevity
and consistency. According to Business Week the present value of Accenture’s brand is
$6.73 billion. As a part of building capabilities several acquisitions were made including
those of Advantium Inc, Meridian Informed Purchasing Ltd, Savista Group and Pecaso
Ltd.
Throughout its history, Accenture has expanded its offerings and capitalized on evolving
management trends and technologies to benefit its clients. Their service lines include:
Customer Relationship Management: Helps increase the value of customer
relationships by offering complete solutions to today’s most complex sales, marketing
and services challenges.
Finance & Performance Management: Helps senior fiancé executives identify critical
issues, set strategic direction and deliver complex change successfully.
Human Performance: Helps solve human performance issues that are crucial to
operational success.
Strategy & Business Architecture: Develops and implements strategies that unlock new
sources of value.
Supply Chain Management: Helps develop and implement new operating models
across the supply chain to improve clients’ cost position, customer service performance,
assets productivity and competitive advantage.
Solution Units
Solution units that provide business process outsourcing services include:
Accenture HR Services: Provides outsourced human resources services across the
employee life cycle.
Accenture Finance Solutions: Provides outsourced transformational financial
management solutions.
Accenture Learning: Provides outsourced transformational learning solutions. Includes
Indeliq, Inc., an Accenture affiliate that develops scalable performance simulation
electronic learning applications
.
In 1999 Accenture was headed by Mr. Joe W. Forehand and it was under his
leadership Accenture became a public company in July 2001 and was listed in New York
Stock Exchange. 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$19.70 billion for the fiscal year ended Aug. 31, 2007.
Board of Directors:
William D Green
(Chairman and CEO)
Dina Dublon
(Former Chief Financial Officer)
JP Morgan
Dennis F. Hightower
(Former Chief Executive Officer)
Europe Online Networks
Nobuyuki idei
(Chief Corporate advisor)
William L.Kimsey
(Former CEO)
Ernst & Young LTD
Robert I Lipp
(Senior Advisor)
Marjorie Magner
(Former Chairman&CEO)
Blythe J Mcgarvie
(President)
Leadership of International finance
Sir Mark Moody-Stuart
(Chairman)
Wulf Von Schimmelmann
Chief Executive Officer
Deutsche postbank AG
Accenture Total Revenue (%)
Revenue - 2005
Asia/Pacific
7%
US
40%
Europe
50%
Can/Americans
3%
Accenture has its different working units in Asia / Pacific, US, Europe and
Can/Americans. Of which almost 50% of the revenue is contributed by Europe and 40 %
by US. Accenture is now planning to host new projects in Asia / Pacific regions. There by
pumping in more work force. Out of the total work force (122000), Accenture has almost
35000 people in its global delivery network of which 16,000 are Indians.
Accenture Revenue by Industry (%)
Revenue by Industry
Financial
Services
20%
Government
15%
Comm& High
Tech
27%
Resources
16%
other
0.1%
Products
22%
Accenture is into various services like financial management, Human performance,
customer relationship management, supply chain management etc. Among Accenture’s
various industry units, the products group which comprises transportation, health case
and retail and consumer products contribute 22 % of the total revenue from the industry.
But Accenture’s biggest and the most profitable segment is communications and high
tech sector which contributes almost 27%. The remaining is been contributed by the
Government and Resources sectors.
REVENUE ANALYSIS
FOR THE FISCAL YEAR 2002 WITH COMPARISON TO 2001
The net revenues for the full fiscal year 2002 were $11.57 billion, an increase of 1
percent in U.S. dollars and 2 percent in local currency over the prior fiscal year. Diluted
earnings per share for fiscal year 2002 were $0.56 on a GAAP basis. Operating income
for fiscal year 2002, on a GAAP basis, was $1.39 billion, or 12.0 percent of net revenues.
Excluding the real estate consolidation charge. Operating cash flow was $1.06 billion for
the year and $517 million for the fourth quarter, reflecting a more efficient use of
working capital. Net revenues for Accenture's Government operating group in fiscal 2002
were $1.32 billion, an increase of 31 percent over fiscal 2001. The Products operating
group reported a 4 percent increase in net revenues, to $2.44 billion. The Resources
operating group reported net revenues for the year of $2.01 billion, a 4 percent increase.
The Communications & High Tech operating group reported net revenues for the year of
$3.18 billion, a 2 percent decrease from 2001.
FOR THE FISCAL YEAR 2003 WITH COMPARISON TO 2002
THE net revenues for the full fiscal year 2003 were $11.82 billion, compared with $11.57
billion for the full fiscal year 2002, an increase of 2 percent in U.S. dollars and a decrease
of 4 percent in local currency. Diluted earnings per share for fiscal year 2003 were $1.05,
compared with $0.56 for fiscal year 2002. Operating income for fiscal year 2003 was
$1.55 billion, compared with $1.39 billion for fiscal year 2002, an increase of $166
million. Operating income as a percentage of net revenues for fiscal year 2003 was 13.1
percent, compared with 12.0 percent in fiscal year 2002.Outsourcing accounted for $3.57
billion of net revenues for fiscal year 2003, an increase of 37 percent in U.S. dollars and
32 percent in local currency over the full fiscal year 2002. Consulting revenues were
$7.92 billion of net revenues for fiscal year 2003, representing a decrease of 10 percent in
U.S. dollars and a decrease of 16 percent in local currency from the full fiscal year 2002.
Net revenues for Accenture's five operating groups in fiscal year 2003 were as follows:
Communications & High Tech: $3.29 billion, compared with $3.18 billion for fiscal year
2002, an increase of 3 percent in U.S. dollars, primarily due to increased revenues from
large outsourcing contracts and favorable currency translation offsetting lower consulting
revenues. Financial Services: $2.36 billion, compared with $2.37 billion for fiscal year
2002. Government: $1.58 billion, compared with $1.32 billion for fiscal year 2002, an
increase of 20 percent in U.S. dollars, mainly driven by strong growth in both consulting
and outsourcing revenues as well as favorable currency effects. Resources: $1.97 billion,
compared with $2.01 billion for fiscal year 2002, a decrease of 2 percent in U.S. dollars.
FOR THE FISCAL YEAR 2004 WITH COMPARISON TO 2003
Revenues were up by 16% for the full fiscal year. to $13.7 billion, exceeding our forecast
of $13.4 billion. All Accenture lines of business - horizontal, vertical and geographic –
grew for the entire fiscal year. Free cash flow was $1.47 billion, up from $1.3 billion the
year before. Cash or cash-equivalent balance was $3.15 billion, up from $2.42 billion at
the end of FY03. Financial services and government continue to lead all other industry
sectors, surging by 25% and 13% in the latest quarter, and by 18% and 26% respectively
for the full fiscal year. Communications & Hi-Tech, Products and Resources also grew
in double digits.
FOR THE FISCAL YEAR 2005 WITH COMPARISON TO 2004
Revenues were up 15% in the quarter, bringing the year's total to $15.5 billion, up 14%
over the last fiscal year's (which was up 16% over FY03). Net earnings were up 25% to
$229 million in the quarter, while operating profit surged by 37% to $509 million. In the
fiscal year 2005, operating cash flow amounted to $1.9 billion. In the fiscal year 2006,
the company expects to generate operating cash flow of $2.0 to $2.2 billion, and the free
cash flow of $1.55 billion to $1.75 billion. After a strong fourth quarter in which
revenues increased by 10%, the unit surpassed the $1 billion-revenue mark for the first
time, finishing the fiscal year 2005 with a $1.1 billion total. Accenture biggest and the
most profitable segment is communications and high tech. Its fiscal year 2005 revenues
exceeded $4 billion, thanks in part to a rebound in the electronics and high tech sector. In
the fiscal year 2005, operating cash flow amounted to $1.9 billion while the free cash
flow was $1.6 billion. The fiscal year's total stock buybacks to $1.6 billion.
FOR THE FISCAL YEAR 2006 WITH COMPARISON TO 2005
Net revenue climbed to $4.17 billion from $3.73 billion a year earlier. Accenture
reiterated its previous fiscal year 2006 targets for revenue growth of 9% to 12% in local
currency. Accenture raised full-year earnings guidance to $1.52 to $1.57 a share from a
prior range of $1.45 to $1.50 a share. Accenture's consulting net revenue was $2.58
billion in the first quarter, an increase of 8% in U.S. dollars and 9% in local currency
from a year earlier. Outsourcing generated $1.59 billion of net revenue, an increase of
18% in both U.S. dollars and local currency from the same period last year. outsourcing
bookings rose 34% to $2.76 billion. The company's BPO revenue rose 25% during the
YEAR. Accenture reported a 12.3% first-quarter GAAP operating margin, up from
11.4% on an options-adjusted basis a year ago. The company's gross margin was 31.7%,
compared with 32.6% a year ago on a GAAP basis.
NET REVENUE BY OPETATING GROUP
Communications & High Tech: $1.05 billion, compared with $973 million for the first
quarter of fiscal 2005, an increase of 8 percent in both US dollars and local currency.
Financial Services: $855 million, compared with $807 million for the year-ago period, an
increase of 6 percent in US dollars and 7 percent in local currency. Government: $598
million, compared with $524 million for the year-ago period, an increase of 14 percent in
US dollars and 15 percent in local currency. Products: $1.02 billion, compared with $862
million for the year-ago period, an increase of 18 percent in US dollars and 19 percent in
local currency. Resources: $650 million, compared with $564 million for the year-ago
period, an increase of 15 percent in US dollars and 14 percent in local currency.
FINANCIAL RATIO ANALYSIS
Financial ratios are among the most popular and widely used tools of financial analysis.
They are useful indicators of a firm’s performance and financial situation. Most of the
ratios can be calculated with the help of financial statements. Analysis of a ratio reveals
important relations and bases of comparison in uncovering conditions and trends which is
difficult to detect by inspecting individual components comprising the ratio.
Ratios, like other analysis tools, are future oriented and are interpretable only in
comparison with prior ratios, predetermined standards or ratios of competitors.
Conclusions are drawn as to whether the firm is improving or deteriorating.
ANALYSIS OF RATIOS FOR THE YEAR 2006, 2005,2004,2003,2002
Financial ratios
Aug-06
Aug-05
Aug-04
Aug-03
Aug-02
Net Profit Ratio
0.05
0.06
0.05
0.04
0.02
Gross Profit Ratio
0.27
0.30
0.12
0.12
0.11
Capital Turnover Ratio
1.94
1.91
1.89
2.07
2.39
Return on Capital Employed
0.27
0.23
0.19
0.16
0.11
Debtors Turnover Ratio
9.51
9.75
9.09
9.46
9.85
Current Ratio
1.26
1.37
1.38
1.50
1.22
Return on Shareholders
Investments
0.51
0.55
0.47
0.63
0.56
Debt-to-Equity Ratio
0.03
0.04
0.05
0.07
0.15
Return on Assets
0.10
0.10
0.09
0.08
0.04
Return on Equity
0.51
0.55
0.47
0.63
0.56
Debt Ratio
0.01
0.01
0.01
0.01
0.01
Financial ratios can be classified according to the information they provide. The
following types of ratios frequently are used:
Liquidity ratios
Asset turn over ratios
Financial leverage ratios
Profitability ratios
Dividend policy ratios
Liquidity ratios:
Liquidity ratios provide information about a firm's ability to meet its short-term financial
obligations. They are of particular interest to those extending short-term credit to the
firm. Two frequently-used liquidity ratios are the current ratio (or working capital ratio)
and the quick ratio.
The current ratio is the ratio of current assets to current liabilities:
Current Ratio = Current Assets / Current Liabilities
Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders
may prefer a lower current ratio so that more of the firm's assets are working to grow the
business. Typical values for the current ratio vary by firm and industry. One drawback of
the current ratio is that inventory may include many items that are difficult to liquidate
quickly and that have uncertain liquidation values.
Analysis of the Current Ratio:
Financial
ratios
Current Ratio
Aug-06
1.26
Aug-05
1.37
Aug-04
1.38
Aug-03
1.50
Aug-02
1.22
The current ratio is a measure of the firm’s short term solvency. It indicates the
availability of current assets in $ for every one dollar of current liability. A ratio of
greater than one means that the firm has more current assets than the current claims
against them. For all the five years, Accenture’s current ratio is above 1.2:1. As a
conventional rule, a current ratio of 2:1 or more is considered satisfactory. Therefore it
can be interpreted to be insufficiently liquid. This does not mean that the company is not
doing well; this just shows the quantity but not the quality.
Financial Leverage Ratios
Financial leverage is the use of debt to increase earnings. These ratios provide an
indication of the long-term solvency of the firm. Unlike liquidity ratios that are concerned
with short-term assets and liabilities, financial leverage ratios measure the extent to
which the firm is using long term debt.
The debt ratio is defined as total debt divided by total assets.
Debt Ratio = Total debt / Total Assets
The debt-to-equity ratio is total debt divided by total equity.
Debt-to-equity ratio = Total debt / Total Equity
Debt ratios depend on the classification of long-term leases and on the classification of
some items as long-term debt or equity. This financial leverage ratio indicates that every
dollar of common equity commands that much amount in assets for the company.
Analysis of Debt Ratio:
Financial
ratios
Debt Ratio
Aug-06
0.0055
Aug-05
0.0084
Aug-04
0.0086
Aug-03
0.0093
Aug-02
0.0120
Debt ratios can be used to ascertain the long term solvency of a firm. Debt ratio is
calculated by dividing total debt by capital employed or net assets. Total debt includes
long term and short term borrowings, bank borrowings and any other interest bearing
loan. Debt ratio for the year 2006 is .0055 which means that the lenders have financed
0.55% of Accenture’s net assets. This means that the owners have contributed the
remaining finances. When compared with the previous year there debt ratio has decreased
by 0.29%.
Analysis of Debt-to-Equity Ratio:
Financial ratios
Aug-06
Aug-05
Aug-04
Aug-03
Aug-02
Debt-to-Equity
Ratio
0.03
0.04
0.05
0.07
0.15
It is clear that the owners have contributed most towards Accenture. The relationship
describing the lenders contribution for each dollar of the owners’ contribution is called
the debt- equity ratio. Lenders contribution is 0.03 times of the owners’ contribution for
the year 2006. When considering from 2002 there has been a significant drop in the
lenders contribution.
Profitability Ratios
Profitability refers to the ability of the business to earn profit. It shows the
efficiency of the business. These ratios measure the profit earning capacity of the
company. Profitability has direct link with sales.
The gross profit margin is a measure of the gross profit earned on sales. This ratio shows
the margin of profit. The gross profit margin considers the firm’s cost of goods sold, but
does not include other costs. It is defined as follows:
Return on Assets = Net Income / Total Assets
Analysis of Return on assets:
Financial ratios
Return on Assets
Aug-06
0.10
Aug-05
0.10
Aug-04
0.09
Aug-03
0.08
Aug-02
0.04
Return on Assets is viewed independently of its financing resources, using net income
and total assets. This measures the intensity with which companies utilize assets. A
consistently high return on assets is the earmark of effective management. Asset turnover
cannot be increased indefinitely. For the year 2006, the return on assets is 10% which
shows that the companies return on assets are poor. Comparing 2003 with 2002 there is a
significant increasing of 4% which shows that the companies assets have increased.
Return on equity is the bottom line measure for the shareholders, measuring the profits
earned for each dollar invested in the firm's stock. Return on equity is defined as follows:
Return on Equity = Net Income / Shareholders Equity
Analysis of Return on Equity:
Financial ratios
Return on Equity
Aug-06
0.51
Aug-05
0.55
Aug-04
0.47
Aug-03
0.63
Aug-02
0.56
The return on equity is net profit after taxes divided by shareholders equity which is
given by net worth. ROE indicates how well the firm has used the resources of the
owners. The ratio of net profit to owners’ equity reflects the extent to which this has been
accomplished. This ratio is of great interest to the present and the prospective
shareholders and also of great concern to the management because it is there
responsibility to maximize the owners’ welfare. For the year 2006 it is 51% which shows
that there is a decrease of 4% from the previous year. This means that the there is a
significant decrease which shows that they are not successfully trading on equity.
Gross Profit Ratio: Gross profit margin indicates how well the company can generate a
return at the gross profit level. This ratio indicates the extent to which selling prices of
goods per unit may decline without resulting in losses on operation of the firm. It
addresses three areas -- inventory control, pricing and production efficiency.
Gross profit Ratio = Gross Profit / Total Sales
Analysis of Gross Profit Ratio:
Financial ratios
Gross Profit Ratio
Aug-06
0.27
Aug-05
0.30
Aug-04
0.12
Aug-03
0.12
Aug-02
0.11
The gross profit margin reflects the efficiency with which management produces with
each unit of product. In the year 2006 the gross profit ratio is decreased to 27% when
compared with the previous year 2005, 30%. This may be due to higher cost of services
or inefficient use of plant and machinery or over investment in plant and machinery. This
ratio can also be low due to fall in the prices for services in the market. There is an
increase of 18% for the year 2005 when compared with 2004 because of either the cost of
services remaining constant.
Net Profit Margin: establishes relationship between net profit and sales. It shows the
operational efficiency of the firm. Increase in this ratio, the performance of the
management must be appreciated and decrease in this ratio indicates the managerial
inefficiency and excessive selling and distribution expenses.
Net profit Margin = Net Profit / Total Sales * 100
Analysis of Net Profit Margin:
Financial ratios
Net Profit Ratio
Aug-06
0.05
Aug-05
0.06
Aug-04
0.05
Aug-03
0.04
Aug-02
0.02
Net profit is obtained when operating expenses, interest and taxes are subtracted from the
gross profit. This ratio indicates that Accenture’s management’s efficiency in
administering and selling their products. For the year 2006 the net profit is 5% which
shows the company’s ability to turn each dollar sales into net profit. The net margin for
the year 2006 is not significant which means that the firm failed to achieve satisfactory
return on shareholders funds.
Return on Capital Employed:
Return on capital employed establishes the relationship between profits and the capital
employed. It is used to measure the overall profitability and efficiency of a business.
Return on Capital Employed = Adjusted net profit / Net capital Employed
ROCE should always be higher than the rate at which the company borrows; otherwise
any increase in borrowing will reduce shareholders' earnings. A variation of this ratio is
return on average capital employed (ROACE), which takes the average of opening and
closing capital employed for the time period.
Analysis on Return on Capital Employed
Financial ratios
Aug-06
Aug-05
Aug-04
Aug-03
Aug-02
Return on Capital
Employed
0.27
0.23
0.19
0.16
0.11
Return on capital employed establishes the relationship between profits and capital
employed. This ratio also measures the efficiency of the firm. The term Net Capital
Employed refers to the total assets used in a business less its current liabilities. A higher
percentage of return on capital employed will satisfy the owners that their money is
profitably used. The return on capital employed for the year 2006 is 27% which shows
that the outsiders like bankers, creditors, financial institutions is viable of giving credit or
extending loans. There is a significant increase in the % for the returns for capital
employed when compared with the previous years. This will help Accenture to devise
future policies for expansion and diversification.
Return on Shareholders Investment or Net Worth
This ratio is one of the most important ratios for measuring the overall efficiency
of the firm. This ratio is important for the present and prospective shareholders.
Investment represents pool of funds supplied by shareholders and lenders, while profit
after tax represents residue income of shareholders. The return on shareholders
investments is usually compared with the return of other similar firms in the same
industry.
Return on Shareholders Investment = Net Profit / Shareholders fund
Analysis on Return on Shareholders Investment
Financial ratios
Aug-06
Aug-05
Aug-04
Aug-03
Aug-02
Return on Shareholders
Investments
0.51
0.55
0.47
0.63
0.56
The ROI for the year 2006 shows a decrease of .04% when compared with the previous
year. There is an increase of .08% for the year 2005 when compared with the previous
year 2004. For the year 2004 there is a decrease in 0.16% when compared with 2003.
There is an increase of 0.07% in 2003 when compared with 2002. The overall change for
the five years shows the company’s growth and deterioration in the company’s
profitability and efficiency.
Capital Turn Over Ratio:
Financial ratios
Aug-06
Aug-05
Aug-04
Aug-03
Aug-02
Capital Turnover
Ratio
1.94
1.91
1.89
2.07
2.39
Analysis of Capital Turn Over Ratio:
Capital turnover ratio is actually the relationship between cost of goods sold (or sales
when the information is not given about the cost of goods sold) and the capital employed.
This ratio is calculated to measure the efficiency or effectiveness with which a firm
utilizes its resources or the capital employed. As capital is invested in a business to make
sales and earn profits, this ratio is a good indicator of overall profitability of a concern.
The firm’s ability to produce a large volume of sales for a given amount of net assets is
the most important aspect of the operating performance. The capital turnover for 2006 is
1.94 times implies that Accenture is producing 1.94$ of sales for one dollar of capital
employed in net assets. When we compare for the five years there has been a significant
decrease from 2002- 2006.
Debtors Turn Over Ratio
DTO is calculated by dividing the net credit sales by average debtors outstanding during
the year. It measures the liquidity of a firm's debts. Net credit sales are the gross credit
sales minus returns, if any, from customers. Average debtors are the average of debtors at
the beginning and at the end of the year. This ratio shows how rapidly debts are collected.
The higher the DTO, the better it is for the organization.
Debtors Turn Over Ratio = Net Credit Sales / Average Debtors
Analysis of Turn over Ratio
Financial ratios
Debtors Turnover Ratio
Aug-06
9.94
Aug-05
10.01
Aug-04
9.82
Aug-03
9.75
Aug-02
9.85
The liquidity position of the firm depends on the quality of debtors to a great extent. This
ratio is found out by dividing credit sales by average debtors. Debtors turnover indicates
the number of times debtors turnover each year. Higher the value of debtors’ turnover,
the more efficient is the management credit. For the year 2006, Accenture is able to
turnover its debtors to 9.94 times in a year which means that the average number of days
for which the debtors remain outstanding is 36 days when compared with the previous
year is 35 days.
CASH FLOW
A statement of changes in financial position on cash basis is commonly known as the
CASH FLOW statement. It summarizes the causes of changes in cash position between
dates of two or more balance sheets. An analysis of cash flow is useful for short run
planning. The firm makes projections of cash inflows and outflows for the near future to
determine the availability of cash. A historical analysis of cash flows provides insight to
prepare reliable cash flow projection for the immediate future. Cash flow excludes
movements between items that constitute cash or cash equivalence because these
components are part of the cash management of an enterprise rather than part of its
operating, investing and financing activates.
According to AS-3, the cash flow statement should report cash flows during the period
classified by operating, investing and financing activities. Thus cash flows are classified
into three main categories:



Cash flows for operating activities
Cash flows from investing activities
Cash flows from financing activities
FY
Operating Activities
Net Income ( Loss)
Depreciation
Amortization
Amortization of Intangibles
Deferred Income Taxes
Operating (Gains) Losses
Extraordinary (Gains) Losses
Decrease in Receivables
Decrease in Inventory
Decrease in Prepaid Expenses
Decrease in Other Current Assets
Decrease in Payables
Decrease in Other Current Liabilities
Decrease in Other Working Capital
Other Non- Cash Items
Net Cash from Continuing Operations
Net Cash from Discontinued Operations
Net Cash from Operating Activities
Investing Activities
Sale of Property , Plant , Equipment
Sale of Long Term Investments
Sale of Short Term Investments
Purchase of Property , Plant , Equipment
Acquisitions
Purchase of Long term Investments
Purchase of Short Term Investments
Other Investing Changes Net
Cash from Disc. Investing Activities
Net Cash form Investing Activities
Financial Activities
Insurance of Debt
Insurance of Capital Stock
Repayment of Debt
Repurchase of Capital Stock
Payment of Cash Dividends
Other financing charges net
Cash from Disc Financial Activities
Net Cash from Financial Activities
Effect of exchange rate changes
Net change in cash and cash equivalence
Cash at beginning of Period
Cash at end of Period
Aug-07
Aug-06
Aug-05
Aug-04
1243.15
444.5
0
0
-107.67
465.14
0
-7.48
0
0
3.06
107.53
810.34
-661.17
333.16
2630.57
0
2630.57
973.33
320.61
0
0
-223.64
410.67
0
309.68
0
0
35.76
48.16
524.19
-33
302.22
2667.99
0
2667.99
940.47
282.07
0
0
63.14
551.21
0
-653.25
0
0
-12.45
270.5
445.39
0
0
1887.08
0
1887.08
690.83
257.08
0
0
92.86
519.4
0
-183
0
0
-515.93
-65.49
960.2
0
0
1755.95
0
1755.95
14.55
0
885.46
-364.37
-192.36
0
-693.73
0
0
-350.45
13.95
0
657.63
-306.17
-220.99
0
-401.18
4.26
0
-252.5
6.32
0
944.48
-317.77
-188.47
0
-1019.32
0
0
-574.76
11.03
0
421
-281.99
0
0
-1046.66
0
0
-896.62
41.31
488.25
-67.17
-2307.95
-293.06
10.92
0
-2127.71
95
247.41
3066.99
3314.4
70.01
436.92
-88.71
-2087.03
-267.97
2.32
0
-1934.47
101.98
583
2483.99
3066.99
67.9
298.71
-80.51
-1625.1
0
-38.45
0
-1377.46
-3.84
-68.97
2552.96
2483.99
97.65
2741.47
-119.55
-3459.93
0
52.67
0
-687.69
49.15
220.8
2332.16
2552.96
Analysis of Cash Flows
The cash flow from operating activities exceeds more than the net income for all the
three years which is a very good sign indicating that the company is generating cash from
their business operations. Cash from investing activities includes business activities that
the company needs to remain competitive and grow the business. A negative number is
not a sign of trouble, as long as they are generating more cash than is being invested
which is the case here when comparing Cash from operating activities to cash from
investing activities. Accenture utilized 306.17$, 401.18$ (in million) in acquiring fixed
assets (Property, plant and equipment), acquisitions (220.99$) and short term investments
respectively. After adjusting for investment income and sale of assets, the net outflow on
account of investment activities was 252.50million dollars.
Cash from financing activities includes the business activities that finance the firm.
Accenture raised 529.56$ through issuance of debt and capital stock. Its repayments were
far more than this amount resulting in net negative financing flow of Rs. 1934.47 million
dollars. Accenture’s net cash flow from its operating, investment and financing activities
is a positive figure, 583 million dollars. The previous year had a negative net cash flow of
68 million dollars.
SWOT ANALYSIS
STRENGTHS
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The management of Accenture comprises of long term employees of the company
with substantial experience in the consulting and outsourcing business. As a result
they understand the consulting and outsourcing business very well
The key drivers for Accenture are bookings, utilization and rate per billable hour.
Since bookings are higher than sales, they may be able to generate more billable
hours which will drive revenue higher.
Accenture focuses on driving business results through high-touch, value-added
human resources outsourcing solutions, including integrated talent management,
recruitment, workforce performance and learning capabilities
Working with Accenture, clients have been able to reduce their HR operating
costs while achieving better business outcomes through effective human capital
management
Accenture provide clients with seamless delivery of services from multiple
geographic locations, with 24/7 coverage.
Accenture's strength is the way it can ally business-process change to technology
change, and BPO can play strongly to those strengths.
OPPURTUNITIES
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The company could double the size of its managing consulting staff because the
company is driven part by strong client demand for supply chain-services.
Accenture needs to invest more in the Asia Pacific region as it is one of the largest
growing markets worldwide.
WEAKNESS
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Accenture handed contracts worth £2bn over to rival Computer Sciences
Corporation after getting paid just £110m for spending a third of the allotted 10
years on the job. Its hand had been forced by losses of $450m it was set to make
on the deal this year.
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Accenture lacks in live testing system.
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Accenture have denied responsibility for the failure of the Rural Payments
Agency (RPA) to pay out vital Subsidies to British farmers on time.
THREATS
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The health of the global economy is seen as the biggest threat for the companies’
success.
Inability to attract and retain the best talent of the employees.
Low employee morale.
Terrorism was seen as a major threat.
Inability to develop new products and services.
LIMITATIONS OF THE REPORT
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The cash flow for the FY 2002 and 2003 were not available.
The analysis has been done with the available data got from the Accenture’s web
site.
The data is taken only till 2006 so the report lacks the latest updates.
Some ratios like the inventory ratios were not calculated as Accenture is a service
firm, thus no inventory data was available.
RECOMMENDATIONS
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The company could double the size of its managing consulting staff because the
company is driven part by strong client demand for supply chain-services.
Accenture needs to invest more in the Asia Pacific region as it is one of the largest
growing markets worldwide.
Cash at end of period percentage needs to be increased.
Impressive track records as far as extraordinary losses are concerned.
Accenture needs to invest more in increasing the performance.
Operating losses needs to come down for better efficiency and stability.
More investments to be done in the financial service sector.
Extraordinary gains need to be considered.
More concentration needed in diversifying business across the globe.
Buy backs of share needs to be reduced.
Mergers and Acquisitions of Accenture needs to catch up.
Cash dividend ratio needs to be increased.
New contracts in all the sectors need to be increased.
Cash generation is a distinguished characteristic of Accenture which needs to be
multiplied for expansions.
A projected statement of changes in the financial position for the year 2007 would
help them to obtain loans from banks and other financial institutions to increase
their revenue in the government and product sectors.
Accenture needs to look into multiple ways to squeeze savings out of their supply
chains.
They should be targeting bookings in the $22-$24 billion range to make the most
successful sales period.
The no of diluted share outstanding should be reduced which would add points to
be EPS growth.
The average expected rate per share on an average should increase
REFERENCES
WWW.ACCENTURE.COM
ANNEX RESEARCH
INTERNAL SOURCE (EMPLOYEES OF ACCENTURE)
COMPREHENSIVE FINANCIAL ACCOUNTING (S.A.SIDDIKUI)
FINANCIAL ACCOUNTING (R.NARAYANASWAMI)
MANAGENEMENT ACCOUNTING (SHASHI. K. GUPTA & RK SHARMA)
CONTENTS:
EXECUTIVE SUMMARY
INTRODUCTION
BOARD OF DIRECTORS
ACCENTURE TOTAL REVENUE – BY GEOGRAPHICAL LOCATION
BY INDUSTRY
REVENUE ANALYSIS
ANALYSIS OF FINANCIAL RATIOS
CASH FLOW STATEMENTS
ANALYSIS OF CASH FLOWS
SWOT ANALYSIS
LIMITATIONS
RECOMMENDATIONS
REFERENCES
FINANCE PROJECT REPORT
SUBMITTED BY:
ANITHA
PRIYA
GAYATHRI
SRIKANTH