Balance Sheet

The company exited 3Q11 with cash, cash equivalents and short-term investments of $5.26 billion versus $9.87 billion at the end of 2Q11. Lower cash balance was due to huge cash outlay in investing and financing activities. Net receivables from the clients were $3.23 billion. Days services outstanding, or DSOs remained unchanged from the previous quarter at 32. Accounts payable in the quarter were $862.7 million. Accenture carries a total debt burden (long term plus short term) of $4.7 million.

Cash Flow

Operating cash flow was $1.35 billion in 3Q11 versus $601.1 million 2Q11. Property and equipment additions (capital expenditure) were $112.7 million in 3Q11 versus $78.6 million in 2Q11.

Accenture also forecasts FY11 operating cash flow in the range of $2.9–$3.1 billion (previously $2.8–$3.0 billion); property and equipment additions of roughly $400.0 million (previously $420.0 million); and free cash flow in the range of $2.5 billion to $2.7 billion (previously $2.4 billion to $2.6 billion).

Share Repurchase Activity

During the third quarter, Accenture repurchased 11.4 million of its common outstanding shares at a total value of $644.0 million. The activity includes 9.7 million shares repurchased in the open market. As of May 31, 2011, Accenture had roughly $1.7 billion shares outstanding under the current authorization.

Accenture also paid a semi-annual cash dividend of 45 cents per share in the reported quarter.
 

Increased Competition:  The Company faces significant competition from larger players like IBM, as well as the offshore companies that are aggressively attempting to move up the value chain and do more high end work that ACN focuses on.

Offshore Delivery:  The Company has substantial investments in India, China, Eastern Europe, and other regions where political turmoil could impact operations.

Currency Risks:  ACN faces foreign currency risks which can act as a headwind to revenue growth, going forward.

Pricing:  IT Services firms like ACN are under pressure to reconsider pricing on existing contracts and are increasingly being gauged on price when clients are deciding between vendors for new projects.

Global Macro Environment:  Although ACN has executed well during the current challenging times and has outperformed its competitors, its performance will be impacted if the economy continues to be sluggish.