PROJECT REPORT ON RATIO ANALYSIS IN HDFC BANK.

For the Partial Fulfillment of degree of B.Com.III (Prof.) of the deptt of commerce & Bussian Management of Guru Nanak $mritsar %&&'(%&&). e! "ni!ersit#

Guided By : Dr. K. K. Chawla Kuram Duggal

HOD

Submitted By : Sunil B.Com.(Prof.) inal

( De!tt. Of Commer"e # $oll %o.:&'()* Bu++ine++ ,anagement ) $oll %o. :&

College -ni..

Submitted To : Guru Nanak Colle e ! Suk"#"a$nana Sa"$%!P"a &ara

ACKNOWLEDGEMENT
I &$'" (o a#kno&le) e a )ee* 'en'e o+ ra($(u)e (o all ("o'e &"o "a,e -a)e a -a.or #on(r$%u($on an) "el*e) -e a lo( $n ("e *re*ara($on o+ ("$' *ro.e#(. F$r'(! o+ all I a#kno&le) e &$(" a )ee* 'en'e o+ ra($(u)e (o&ar)' -/ u$)e Dr. K. K. Chawla &"o "a' u$)e) -e a lo( r$ "( +ro- ("e %e $nn$n (o&ar)' ("e en) o+ ("e *ro.e#( re*or(. I '$n#erel/! ("ank' HD C B/%K &"ole '(a++! &"o "a,e "el*e) a lo( $n *ro,$)$n rele,an( $n+or-a($on +or ("$' re*or( &$(" ("e$r #o0o*era($,e %e"a,$our.

Sunil Kumar Duggal

B. CO1 2PROF.3 F$nal

CONTENTS

A. Anal/'$'

In(ro)u#($on

(o

Ra($o

B.

O%.e#($,e o+ '(u)/! Re'ear#" 1e("o)olo / 4)a(a 'our#e Ra($o In(er*re(a($on Anal/'$' 4

C.

D. E. B$%l$o ra*"/

F$n)$n ' 4 Con#lu'$on Su e'($on 4

In(ro)u#($on (o Anal/'$'

Ra($o

CHAPTER 0 5

O%.e#($,e o+ '(u)/! Re'ear#" 1e("o)olo / 4 )a(a 'our#e

CHAPTER 0 6

OB01C2341 O S2-D56 $1S1/$CH ,12HODO7OG5 /%D D/2/ SO-$C1

OB01C2341 O S2-D5

The main objective of Ratio Analysis is to get knowledge about financial position of * FC B$N+ Phagwara. S!e"ially6 ob8e"ti.e+ of +tudy are a+ follow+ : To know about ratios prevailing at the end of different financial years. To form opinion about financial position of * FC B$N+ Phagwara, we have to find the trend of ratios.

D/2/ SO-$C1 In order to complete this project report the data is collected through primary as well as secondary sources of the bank. The primary source includes the discussion with clerk cum cashier of

!"# $ank, Phagwara.

The secondary source include reports of $alance %heet " Profit " &oss a7c of the bank.

Ra($o Anal/'$' 4 In(er*re(a($on

CHAPTER 8 9

3%2$OD-C23O% 2O $/23O /%/75S3S

Ratio is numerical relationship between two variables which are connected with each other in some way or the other. Ratios may be e'pressed in any one of the following manners( As a number between )** and +** may be e'pressed as ),)** divided by +**As a fraction may be e'pressed as former being ) times of the later. As a percentage the relationship between +** and )** may be e'pressed as .*/ of the later. As a proportion relationship between +** and )** may be e'pressed as +(). Ratio analysis facilitate the presentation of information of financial statements in simplified and concise and summari0ed form.

In the words of 1und, 2illiam,3 Ratios are simply a means of highlighting in arithmetical terms the relationship between figures drawn from financial statements.3

%/2-$1 O

$/23O /%/75S3S

$atio analy+i+ i+ ba+i"ally a te"hni9ue of: +. .. 4stablishing meaningful relationship between significant variables of financial statement. Interpreting the relationship to form judgement regarding the financial affairs of the unit.

;'e+ulne'' o+ ra($o anal/'$' )e*en)' u*on $)en($+/$n objective of analysis5 selection of relevant data5 deciding appropriate ratios to be calculated5 comparing the calculated ratios with norms of standards or forecasts5 Interpretation of ratios.

3%21$P$12/23O% O

$/23OS

Ratios are interpreted in following different ways: individual ratio may be studied with reference to certain rule of thumb.

group ratio may be interpreted by considering group of several related ratios.

comparison with past. comparison with projections. inter firm or inter industry comparison.

F$n)$n ' 4 Con#lu'$on

CHAPTER 8 <

$/23O /%/72S3S

6I7A78IA& RATI9%

%olvency ratio

turnover ratio

Profitabi lity ratio

=#urren( ratio =l$>u$) ra($o ra($o

=)e%(0e>u$(/ ratio =re'er,e (o #a*$(al ra($o ear$n ra($o ='ol,en#/ Ra($o =(o(al In)e%(e)0 ne'' ra($o =*ro*r$e(ar/ Ra($o =$n(ere'( #o,era e ra($o

= :ebtor turnover =ne( &ork$n #a*$(al ra($o =+$?e) a''e(' (urno,er ra($o =$n,en(or/ (urno,er ra($o ratio

= 7et profit =o*era($n *ro+$( ra($o =earn$n *er '"are =)$,$)en) *a/-en( ra($o =+$?e) a''e(' (o ne( &or(" =re(urn on '"are"ol)er'@ $n,e'(-en(

=a%'olu(e =#a*$(al

73:-3D $/23O

&i;uid ratio measures the ability of the unit to meet its short term obligations and reveals the short < term financial strength or weakness. This ratio is used to determine whether the unit is: = #a*a%le (o -ee( '"or(0(er- o%l$ a($on' = ("e &ork$n #a*$(al %e$n *ro*erl/ u($l$Ae) = ("e #urren( +$nan#$al *o'$($on $-*ro,$n

Current ratio ; ("$' ra($o $' al'o kno&n a' &ork$n #a*$(al or 6:5 ra($o. T"$' ra($o re,eal' ("e a)e>ua#/ o+ #urren( a''e(' (o *a/ o++ all #urren( l$a%$l$($e'. For-ula (o #al#ula(e ("$' ra($o $':

Current $atio:&

a' a ( a' a(
31-3-04 Rs.000 omitted 8.A. 8.&. 8.R. ,current ratio.*=).>?+ @ A+.=?A)? B.+ 31-3-05

a' a(
31-3-06

a' a(
31-3-07 Rs.*** omt.

Rs. 000 Rs.000 omitted omt. .A>@B=B. * A?*?@=.. ).+(+

.)>=BA)A+ .@*@)@?)> B+>=.=?A =..(+ B?..=>=B ).>(+

7 6 5 4 3 2 1 0 2004 yr. 2005 yr. 2006 yr. 2007 yr.

current ratio

INTERPRETATION The current ratio is very popular and good indicator of li;uidity position of the enterprise. Cery high current ratio is not desirable as it shall mean less efficient use of funds. The current ratio of 1:68 $A7# is high as standard specify, but as the ratio analysis revealed this ratio has been improved as compared to earlier years.

SO741%C5 $/23O
The long term financial soundness of any business can be judge by its long term creditors with the help of solvency ratio. This ratio helps to interpreting the capacity of business to: make periodic payment of interest , repay long term debt as per installments stipulated in the contract.

Debt&e9uity ratio; :ebt e;uity ratio measures the relationship between borrowed funds and internal ownersD funds. 1igher e;uity shall mean a higher stake of owners and may be a healthy sign.

Method to calculate this ratio is :

Debt

19uity

As at 31-3-04 Rs. omt. :ebt

as at 31-3-05

As at 31-3-06

as at 31-3-07 000

000 Rs. omt.

000 Rs. omt.

000 Rs. omt.

+=>@.*?B .

+?..BA>@ A +==)B*.+ +..)B(+

.*>A>+>= + +>??B>+) +..).(+

..AA)A*>A .**@>AA@ +..++(+

4;uity +)?A>A=) Ratio ++.)A(+

12.6 12.4 12.2 12 11.8 11.6 11.4 11.2 11 2004 yr. 2005 yr. 2006 yr. 2007 yr.

debt-equity ratio

INTERPRETATION In the year .**B debt e;uity ratio of * FC B$N+ is low as compared to subse;uent years. As, in subse;uent years this ratio is decreasing after the year .**) which indicate higher ownersD stake and indicate healthy sign of bankDs position.

$e+er.e to "a!ital ratio= This ratio establishes between reserves and capital. 1igher proportion of reserves shows financial soundness because

Enit shall be able to meet future losses as and when suffered. II. Enit can e'pand, grow, diversify as it may desire.

I.

$e+er.e Ca!ital

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs 000 Rs 000 Rs 000 Rs 000 omt omt omt omt Reserv e 8apital Ratio +)B)B?+ * B@.B)) AA(+ +=+=?+* * B@B?.+ AB.A(+ +>)*?>? B B@B?.+ A).+(+ +?=*.B+> B@B?.+ B+.B(+

45 40 35 30 25 20 15 10 5 0 2004 yr. 2005 yr. 2006 yr. 2007 yr.

reserve to capital ratio

INTERPRETATION The upward trend of ratio reveals higher proportion of reserves. It shows that * FC B$N+ has sufficient safety margin to meet its future losses in contingency and may also utili0e its fundsFreserves for e'pansion and diversification.

Ca!ital gearing ratio; it is the ratio between capital plus reserves and fi'ed cost bearing securities. This ratio measures the e'tent of capitali0ation by the funds raised by the issue of fi'ed cost bearing securities. This ratio is interpreted by the use of two terms. 1ighly geared means lower proportion of e;uity, low geared means high proportion of e;uity. 1igher capital gearing ratio reveals e;uity shareholders gain on the strength of their e;uity. This ratio is calculated as under:

19uityfi<ed "o+t bearing +e"uritie+

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. 4;uity +)?A>A= ) +==)B*. + A+?B@+? +>??B>+ ) .=A?AB> .**@>AA@ =.*+@?)

6.8.$.% .?>*+*A .

,fi'ed cost bearing securitiesRatio ).B=(+ ).A+(+ =.?+(+ B..A(+

7 6 5 4 3 2 1 0 2004 yr. 2005 yr. 2006 yr. 2007 yr.

capital gearing ratio

INTERPRETATION As the chat reveals that in earlier years till .**= capital gearing ratio was increasing " indicate e;uity shareholdersD strength to gain on their investment, but, in the year .**> ratio comes down fastly because of much more increase in fi'ed cost bearing securities as compare to earlier " indicate less return to shareholders.

Sol.en"y ratio; solvency is the term which is used to describe the financial position of any business which is capable to meet outside obligations in full out of its own assets. %olvency ratio is computed as under:

Debt total a++et+

as at 31-3-04 Rs. 000omt. :ebt +=>@.*?B .

as at 31-3-05

as at 31-3-06

as at 31-3-07 Rs. 000 omt. ..AA)A*>A .@=B=).@* @>/

Rs. 000 Rs. omt. 000omt. +?..BA>@ A .BB@*+=* > @@.)/ .*>A>+>= + .=BB@?@. . @@.B/

Total .+.*)>)= assets A Ratio @?.+/

8 .50% 8 .00% 88.50% 88.00% 87.50% 87.00% 86.50% 86.00% 85.50% 2004 yr. 2005 yr. 2006 yr. 2007 yr.

solvency ratio

INTERPRETATION &ower solvency ratio is always desirable because lower ratio means more the bank is able to meet its debt obligations out of its own funds and the bank has no need to depend on outsiders and to pay fi'ed interest on borrowings.

2otal indebtedne++ ratio; this ratio differs slightly from debt e;uity ratio as instead of term liabilities only, we take total outside liabilities i.e. term and current both. This may reflect the solvency position in a better way. As it indicates the ade;uacy of firmDs e;uity in making payment of outside liabilities. This ratio is computed as:

2otal out+ider=+ liability 2angible net worth

as at 31-3-04

as at 31-4-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. T.9.&. +?=+.*+? @ ..@+B>)@ = .B=B?)+* > .==A>>?B.

,Total outsiderDs liabilityT.7.2. +)?A>A=) ,Tangible worthRatio +A.A(+ net +B.>(+ +B.=(+ +B..(+ +==)B*.+ +>??B>+) .**@>AA@

15 14.5 14 13.5 13 12.5

2004 yr.

2005 yr.

2006 yr.

2007 yr.

total indebtedness ratio

INTERPRETATION The capability of bank to pay outsidersD liability was decreasing in the year .**) as the chatDs upward trend indicate, but afterwards it starts slopping downward and indicate improvement in bankDs position, to pay its obligations.

Pro!rietary ratio; This ratio establishes relationship between proprietorDs funds to total resources of the unit. This ratio highlights that what is the proportion of proprietors and outsiders in financing the total business. 6ormula to calculate ratio is:

Pro!rietor+= fund+ 2otal a++et+

as at 31-3-04 Rs. omt. P.F.

as at 31-3-05

as at 31-3-06

as at 31-3-07

000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. +==)B*.+ +>??B>+) .**@>AA@

+)?A>A=)

2proprietorsD fundsTotal .*@B@@== assets = Ratio @.=B/ .A?@>*B* = >.?B/ .)?)?*=? ? >.?A/ .@.=?AB*@ @.++/

8.80% 8.60% 8.40% 8.20% 8.00% 7.80% 7.60% 7.40% 2004 yr. 2005 yr. 2006 yr. 2007 yr.

proprietary ratio

INTERPRETATION Gore proprietary ratio is always desirable as it represents the funds financed by proprietorsD and outsiders. * FC B$N+ proprietary ratio is very low " indicates only >.++/ of funds are financed by owners in the year .**> remaining by outsiders.

3ntere+t "o.erage ratio; this ratio measures debt servicing capacity of a business so far as interest on long term loans is concerned. This ratio shows how many times the interest charges are covered by the earnings. This ratio is calculated with the formula:

1arning before int # ta< i<ed intere+t "harge+

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. 4.$.I.T. B@A@B*A ,earning before interest " ta'6.I.8. ,fi'ed chargesRatio >+.?=A interest ..>A(+ =.>@(+ ..B.(+ ).@.(+ =?.@+. +.>@?> B )@@).. +@?B+@ B A+*+@* * AB.@+A+

8 7 6 5 4 3 2 1 0

2004 yr.

2005 yr.

2006 yr.

2007 yr.

interest coverage ratio

INTERPRETATION The chart shows fluctuations in interest coverage ratio * FC B$N+ As more interest coverage ratio is desirable in the year .**= this ratio falls at increasing rate which was not good sign but in the year .**> its rateFtrend again gone upward " indicate improvement in coverage capacity.

3C31%C5>2-$%O41$ $/23O

4fficiency ratios are concerned with measuring the efficiency in asset management. 4fficiency implies effective utili0ation of available resources in the process of business activity, in relation to sales or cost of goods sold. %et wor?ing "a!ital ratio; This ratio states as how efficiently or actively working capital is being used. This ratio is useful when inter firm or inter period comparison is being done. 6ormula to calculate this ratio is:

%et +ale+%et wor?ing "a!ital

as at 31-3-04 as at 31-3-05 as at 31-3-06 as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. 7et +@..?B=B sales 7et +>).)@)) ? +=A+.)>> +?@>B>>? @ +@+>+*)B .+)@@*@A @ .*)?)A=? .A+=A.+?A

working capital Ratio *.+*B(+ *.*@.(+ *.*@B(+ *.*@@(+

0.12 0.1 0.08 0.06 0.04 0.02 0 2004 yr. 2005 yr. 2006 yr. 2007 yr.

net !or"ing capital ratio

INTERPRETATION Increasing ratio indicates that working capital is more active, it is supporting, comparatively, higher level of production and sales, it is being more intensively. 8hart shows * FC B$N+ working capital ratio decreased in .**) but afterwards, it starts increasing, which is good indication.

i<ed a++et+ turno.er ratio; this ratio establishes relationship between sales and fi'ed assets. The purpose is to judge whether firm is generating ade;uate sales for the investment in fi'ed assets of the firm. The formula of this ratio is as under:

/nnual +ale+

i<ed a++et+

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. Annual +@..?B= sales B 6i'ed assets Ratio +?=*>B@ >.. times +=A+.)> > .*.A?@= >.+ times +@+>+*) B +?B>+=@ @.A times .*)?)A=? +@ABB)+ +*.. times

12 10 8 6 4 2 0 2004 yr. 2005 yr. 2006 yr. 2007 yr.

#i$ed assets turnover ratio

INTERPRETATION 6i'ed assets turnover ratio of * FC B$N+ falls during the year .**) as indicated by chart. $ut after .**) chart shows upward trend of this ratio, indicate firm is generating ade;uate sales for investment in fi'ed assets and the ratio is satisfactory.

P$O 32/B37325 $/23O

In general terms efficiency, in business is measured by profitability. &ow profitability may arise due to lack of control over e'penses. $ankers and other financial institutions looks at the profitability ratio as an indicator whether or not firm earns substantially more than it pays interest for use of borrowed funds and whether ultimate repayment of their debt appears reasonably certain. This ratio also indicates return which owners get on their investment. %et !rofit ratio; this ratio e'presses relationship between net profit and sales. This ratio indicates what proportion of net sales is left for owners after all e'penses have been met. It is calculated as follows:

%et !rofit @ ')) Sale+

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. 7et B*=AA** profit %ales +@..?B= B ++)*=?* +=A+.)> > +>=@BAB +@+>+*) B .>BB@=A .*)?)A=?

Ratio ../

>.+/

?.>/

+A.A/

25% 20% 15% 10% 5% 0% 2004 yr. 2005 yr. 2006 yr. 2007 yr.

net pro#it ratio

3%21$P$12/23O% 7et profit ratio of * FC B$N+ falls at increasing rate in the year .**), but after year .**) upward trend shows increasing profitability of bank.

O!erating net !rofit ratio; This ratio establishes relationship between operating net profits and sales. This ratio helps in determining the ability of the management in running the business. It is calculated as:

O!erating net !rofit @

')) Sale+

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07 000

Rs. 000 Rs. omt. omt.

000 Rs. omt.

000 Rs. omt.

9perating @).@?,P- .B*>=)),&- .ABB*+B,&- .+...@=,&net profitF loss %ales Ratio @+..?B= B *.B>/ +=A+.)>> +B.>/ +@+>+*)B +A/ .*)?)A=? +*.A/

16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%

2004 yr.

2005 yr.

2006 yr.

2007 yr.

operating pro#it

operating loss

3%21$P$12/23O% The ratio analysis and graph indicates that * FC B$N+ management is not efficient to operate its business as after year .**B itDs operating ratio falls and bear huge losses in the year .**), but after this its position starts improving " recovering from losses, which is good indication for its financial healthFposition.

1arning !er +hare; This ratio indicates earning power of business and gives view of comparative earning of firm, inter firm. In case of intra firm comparison it gives view of increase or decrease in earning power of firm over the period of time. Ratio is calculated with following formula:

%et !rofit after ta< # !referen"e di.idend %umber of +hare+

as at as at as at as at

31-3-04

31-3-05

31-3-06

31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. N.P.A.T&D B*=AA** ,7.P. after ta' " pref. dividend7umber of shares Ratio B@.B))F+* B@B?.+F+* B@B?.+F+* B@B?.+F+* @=(+ .).>(+ A@.B@(+ )@.=.(+ ++)*=?* +>=@BAB .>BB@=A

100 80 60 40 20 0 2004 yr. 2005 yr. 2006 yr. 2007 yr.

earning per s%are

INTERPRETATION The chart indicates that in the year .**) * FC B$N+. earning power decreasesFgoes down but afterwards upward trend of ratio reveals progress in the earning ratioFpower of the bank.

Di.idend !ay&out ratio; dividend pay out ratio

is calculated to find the e'tent to which earning per share have been retained in the business. It is an important ratio because ploughing back of profits enable a unit to grow " pay more dividends in future. This ratio is calculated as:

Di.idend !er +hare 1arning !er +hare

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. :ividend ).*. per share 4arning @B per share Ratio )/ >.?? .A.> AA/ >.?? A=.B@ .+/ ++.B? )=.=. .*/

35% 30% 25% 20% 15% 10% 5% 0% 2004 yr. 2005 yr. 2006 yr. 2007 yr.

dividend pay-out ratio

INTERPRETATION The ratio indicates that dividend payment per share increasing continuously " earning per share also starts increasing after the year .**). * FC B$N+ dividend pay out ratio declines after year .**), as the rate of payment is higher than the rate of earnings.

i<ed a++et+ to long&term fund+; this ratio indicates the e'tent to which the total fi'ed assets are financed by long term funds of firm. If fi'ed assets e'ceed from long term funds, it means fi'ed assetsD part has financed out of current funds, which is not a good financial policy. If fi'ed assets are less, it means that a part of working capital re;uired is met out of long term funds of firm. This ratio is calculated as:

i<ed a++et+ 7ong&term fund+

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. 6i'ed assets &ong term funds Ratio +?=*>B@ +@?*>B= @ +*.A>/ .*.A?@= +?@B@@B * +*.+?/ +?B>+=@ .*=AB*= . ?.BA/ +@ABB)+ .=.@?.AA

=.?>/

12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2004 yr. 2005 yr. 2006 yr. 2007 yr.

#i$ed assets to long-ter& #unds ratio

3%21$P$12/23O%

The ratio indicates that fi'ed assets proportion is less and coming down gradually as compared to long term funds, it means that a part of working capital of * FC B$N+ is financed by or met out of its long term funds.

i<ed a++et+ to net worth ratio; the ratio indicates the e'tent to which shareholdersD funds are sunk into fi'ed assets. Henerally, purchase of fi'ed assets should be financed by shareholdersD e;uity. If ratio is less than +**/ it means working capital is provided by shareholdersD funds. If ratio is more than +**/ it means that ownerDs funds are not sufficient to finance fi'ed assets " firm has to depend on outsiders. RatioDs formula is:

i<eda++et+ Shareholder+= fund

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07

Rs. 000 Rs. 000 Rs. 000 Rs. 000 omt. omt. omt. omt. 6i'ed assets +?=*>B@ .*.A?@= +==)B*. + +?B>+=@ +>??B>+ ) +@ABB)+ .**@>AA@

sh.h.6. +)?A>A= ) ,shareholdersD fundsRatio +..A/

+..+/

+*.@/

?.+/

14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2004 yr. 2005 yr. 2006 yr. 2007 yr.

#i$ed assets to net !ort% ratio

3%21$P$12/23O% The downward trend of ratio indicates that fi'ed assets proportion is coming down as compared to net worth, " the working capital is provided by shareholdersD funds.

$eturn on +hareholder+= in.e+tment; the profitability from the view point of shareholders is judge through this ratio. This ratio is useful in making investment decisions. This ratio is also used in finding out whether the shareholders are getting ade;uate return on their money or not. Ratio is computed as under:

%et !rofit after ta< Shareholder+= fund+

as at 31-3-04

as at 31-3-05

as at 31-3-06

as at 31-3-07 000

Rs. 000 Rs. 000 Rs. 000 Rs. omt. omt. omt. omt. 7et B*=AA** ++)*=?* +==)B*. + +>=@BAB +>??B>+ )

.>BB@=A profit .**@>AA@

%h.h.6. +)?A>A= ) ,shareholdersD fundsRatio .).B/

=.?/

?.@./

+A.==/

30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2004 yr. 2005 yr. 2006 yr. 2007 yr.

return on s%are%olders' invest&ent

INTERPRETATION The higher the ratio most profitably shareholdersD funds are invested in business. ! " # bankDs ratio fall in .**), but afterwards upward trend shows increase in ratio " indicates improvement in funds effective utili0ation.

3%D3%GS

inding+ = The li;uidity ratio, capital gearing ratio,

solvency ratio, profitability ratios, Return on shareholdersD funds ratio, all these fall in the year .**), which e'press bad impression of financial positionFhealth of * FC B$N+ ltd., because these ratios are always desirable to rise in subse;uent years, as these are the main indications of progress of any unit. 9n the other hand, debt e;uity ratio, reserve to capital ratio, interest coverage ratio, dividend pay out ratio, all these ratios arise in the year .**) which too is undesirable, increasing Reserve ratio shows increasing need to maintain separate funds to meet prevailing unfavourable conditions, " which may interpret smooth day to day functioning of bank. Increasing :ividend pay out ratio shows undesirable burden to pay even under unfavourable conditions which tooFfurther leads to misery position of business.

CONCLUSION
Con"lu+ion = The overall analysis of financial
position of * FC B$N+ &td. %tates that bankDs efficiency decreased in the year .**) due to the posting of inefficient transactions " bank had to bear losses, especially, the loss of operating profits, but without being too late bank performs carefully " improved its financial position. 7ow, bankDs position is at recovering stage.

S-GG1S23O%S
Sugge+tion+ = An analysis of above conditions
direct to form serious planning to recover but as year .**= *> shows progress in bankDs condition, it is at recovering stage. In nutshell, it can be said that $ank shall review the strategies followed in the years .**= " .**>.

B3B73OG$/PH5
'.

Chawla
Sa?+ena

$.
K.

K.6

0une8a

C.

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