IFRS Impact on Profitability and Liquidity Parameters for the Indian IT Sector - Case Study Approach

International Conference on " Emerging Trends in Applied Finance and Business Economics"

11 Pages Posted: 24 Jul 2017

See all articles by Ameya Patil

Ameya Patil

Independent

Pranav Kenjale

University of Pune, Students

Akshay Kanade

University of Pune, Students; The Institute of Chartered Accountants of India, Students

Date Written: April 25, 2017

Abstract

International Financial Reporting Standards (IFRS) are the new global accounting standards and have made its way into India. As the country accepts these standards, investors are curious whether change of accounting standards from Indian GAAP (Generally Accepted Accounting Principles) to IFRS will result in significant changes in financial statements.

Our paper makes an attempt to study the impact of this transition for the Indian Information Technology (IT) sector using case study approach. The companies selected for this study include Infosys Ltd., Wipro Ltd., and Sify Technologies. Their financial statements with IFRS and Indian GAAP have been compared in depth. As the changes in financial statements manifest themselves better through ratios, we shall be studying the differences in profitability ratios such as the Net Profit ratio, Gross Profit ratio and Return on Investment (RoI) followed by some liquidity ratios like the Current ratio and Acid Test ratio. T-test analysis has been used to further see if there is a significant difference in these profitability and liquidity parameters.

Keywords: IFRS, Indian GAAP, Ratio Analysis, Return on Investment (ROI), Profitability, Liquidity

JEL Classification: G00, G02, G10, G14, G15, G18, G19, G21, G29

Suggested Citation

Patil, Ameya and Kenjale, Pranav and Kanade, Akshay, IFRS Impact on Profitability and Liquidity Parameters for the Indian IT Sector - Case Study Approach (April 25, 2017). International Conference on " Emerging Trends in Applied Finance and Business Economics", Available at SSRN: https://ssrn.com/abstract=2998069

Ameya Patil (Contact Author)

Independent ( email )

PUNE
India

Pranav Kenjale

University of Pune, Students ( email )

India

Akshay Kanade

University of Pune, Students ( email )

India

The Institute of Chartered Accountants of India, Students ( email )

India

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