Accenture: Module 10

1. Accenture: Module 10 Kevin Overholt 3/30/2014

2. Agenda • Background of Accenture • Balance Sheet • Income Statement • Footnotes • Other Items of Note

3. Background • Accenture is a global leader in the information technology services industry. • Spinoff of Arthur Andersen’s consulting branch. • Three core businesses are technology consulting, software development, and outsourcing services. • Current share price is $78.81 with a market cap of $52.49 billion.

4. Accenture’s Financial Statements • Balance Sheet • Relatively small Total Assets and Total Liabilities • Zero Long-Term Debt • Largest account balance is Cash • In reality, largest asset is people. Not located on the Balance Sheet. • Income Statement • 70% of revenues go directly to salary/service expense. • Steady growth in Net Income (roughly 10% annually) • 93-94% of income comes from services, 6-7% from non-enterprise activities

7. Balance Sheet Conclusions • NEA = 0. Human Capital is main resource. • Net Financial Assets exist, not Net Financial Liabilities. • Retained Earnings is largest single account, confirming the above conclusions. • WACC = rEq

9. Income Statement Conclusions • Revenues ≈ 2x Total Assets • 2/3 of Expenses are ‘cost of services’, otherwise known as salary/benefits. • Not much Interest Income/Expense relative to income • Pay roughly statutory rate on Net Income

10. Digging Deeper • Will analyze: • Postretirement Benefit Disclosures • Property, Plant, and Equipment • Goodwill • Deferred Tax Assets/Liabilities • Income Taxes

11. Postretirement Benefits • Gain of $77 million in FY2013 • Largely due to Actuarial Gains (better than expected market in 2013) • Lumped into OCI

12. Property, Plant and Equipment

13. Goodwill • Ineffective Foreign Currency Management • Numerous acquisitions deemed ‘immaterial’, lumped into additions/adjustments

14. Deferred Tax Assets/Liabilities

15. Income Taxes

16. Questions?