Accenture Presentation

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

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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

45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

Operating Margin 16.00% 14.00% 12.00% 10.00% 8.00%

Gross Profit Margin

Operating Margin

6.00% 4.00% 2.00% 0.00%

Accenture

EDS

IBM

Industry

Accenture

EDS

EPS

7 6 5 4 EPS

3 2 1 0

Accenture

EDS

IBM

Industry

IBM

Industry

EBDIT EBDIT

20 15

Market Capital

10

Market Capital

5

141.54

150

0

Accenture

EDS

IBM

100 50 0

Net Income

21.68

Accenture

14.52

EDS

Net Income

IBM

10 8 6 4 2 0

Accenture

EDS

IBM

Particulars

2005

2004

2003

Sales

$17094

$15113

$13397

OPERATING EXPENSES Cost of services Sales and Marketing General and administrative costs

12002 1558 1512

10497 1488 1340

9087 1459 1300

Total

15072

13326

11846

Depreciation Cost of good sold

282 11720

257 10240

237 8850

Operating income Gain on investment Interest Other expenses Equity in losses of affiliates Income before Income taxes Provision for Income Taxes Income before Minority Interest Minority Interest Net Income Earning per share Basic Diluted

2111 21 84 (11) --2206 697 1509 (568) 941

1759 3 38 --(2) 1799 576 1223 (532) 691

1551 10 20 32 --1613 566 1049 (549) 500

$1.6 $1.5

$1.25 $1.22

$1.06 $1.05

Particulars ASSETS Current Assets Cash and cash equivalents Short-term investments Restricted cash Receivables Unbilled Services Other current assets Total current assets Non Current Assets Investments Property and equipment Other non current assets Total non current assets Total Assets

2005

$2484

2004

$2553

2003

$2332

463 --1753 1384 631 6685

285 --1662 1050 589 6139

--83 1419 829 377 5037

263 694 1315 2272

340 644 890 1874

33 650 739 1422

$8957

$8013

$6459

Particulars

2005

LIABILITIES AND SHARE HOLDER’S EQUITY Current Liabilities Short-term debt $31 Accounts Payable 807 Deferred revenues 1284 Accrued payroll and related benefits 1431 Other accrued liabilities 1309 Total current liabilities 4862

2004

2003

$37

$46

524

573 980 1463 1389 4393

677 974 1081 3351

Non Current Liabilities Long-term debt Other non current liabilities Total non current liabilities

44 1373 1417

32 1175 1207

14 1416 1430

Minority interest Share holder’s equity

981 1697

941 1472

884 794

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 (month)

1.967

1.967

2.033

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 ASSETS Current Assets Cash and cash equivalents Short-term investments Restricted cash Receivables Unbilled Services Other current assets Total current assets

2003

2004

2005

$100 --------100 100 100 100

$109.4 --------------117.12 126.65 156.23 121.87

$106.5 --------------123.53 166.94 167.37 132.71

Non Current Assets Investments Property and equipment Other non current assets Total non current assets

100 100 100 100

1030.30 99.07 120.43 131.78

796.96 106.76 177.94 159.77

Total Assets

100

124.05

138.67

Particulars

2003

2004

2005

LIABILITIES AND SHARE HOLDER’S EQUITY Current Liabilities Short-term debt Accounts Payable Deferred revenues

$100 100 100

80.43 91.44 131.02

67.39 140.83 189.66

Accrued payroll and related benefits Other accrued liabilities Total current liabilities

100 100 100

150.20 128.49 131.09

146.91 121.09 145.09

Non Current Liabilities Long-term debt Other non current liabilities Total non current liabilities

100 100 100

228.57 82.98 84.40

314.28 96.96 99.09

Minority interest Share holder’s equity

100 100

106.44 185.39

110.97 213.72

Total liabilities and share holder’s equity

100

124.05

138.67

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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,

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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.

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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.

•

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•

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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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