GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

Contents
Sl.No. Titles I Chapter 1 Page No.

2-6 

Executive summary  Statement of the Problem  Scope of the study  Limitations of the study  Objectives of the Study  Methodology and data collection
II Chapter 2 
INDUSTRY PROFILE

7-10

III

Chapter 3 

ORGANIZATION PROFILE

11-19

IV

Chapter 4 

Introduction to the topic
V Chapter 5

20-28 

Analysis and interpretation

29-46

VI

Chapter 4

47-56 

Findings  Suggestions  Conclusion  Bibliography

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

EXECUTIVE SUMMARY

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

EXECUTIVE SUMMARY
Finance is a very important business entity it is required from the establishment of the business for liquidity or winding up of a business, so financial institutions play a very important role in the operation of the business. In the early days banking business was confined to receiving of deposits and lending of money. But now, a modern banker undertakes wide variety of functions to assist their customers. They provide various facilities to customers which makes the transaction easy and comfortable. Financial institutions such as banks, financial service companies, insurance companies, securities firms and credit unions have very different ways of reporting financial information. Running a bank is just difficult as analyzing it for investment purposes. In this report emphasizes on knowing the financial position of the Government Official¶s Co-Operative Bank Ltd, Bijapur. The project title is ³A study of financial performance based on ratio analysis´ which means a process to identify the financial performance of a firm by properly establishing the relationship between the items of balance sheet and profit & loss account.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

DESIGN OF THE STUDY

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

TITLE OF THE PROJECT:
³A Study of Financial Performance Based On Ratios´ at GOCC Bank Bijapur.

PROJECT OBJECTIVES:
y y y y y y

To recognize the diagnostic role of financial ratios. To study the source and uses of ratio analyses. To know the financial performance of the organization To study different ratios in GOCC bank To determine the profitability and liquidity of the bank through ratios analysis To compare the present and previous year¶s performance of GOCC bank

STATEMENT OF THE PROBLEM:
Ratios are very useful to draw the conclusion so that the management knows factors are contributing towards growth, which help in improving the profitability and liquidity of the organization.

SCOPE OF THE STUDY:
The study is exclusively conducted for Government officials co-operative Bank Ltd, Bijapur. It covers details of the company information comparison of financial statements of last 5 years, Techniques of statement analysis like ratio analysis finally, findings and suggestions has been made a part of this project.

LIMITATIONS OF THE STUDY:
The following are the limitations of the study
y y

The period of the study is limited to 5 years. The study of the ratio analysis is done at GOCC Bank and no comparison is made with other institution.

y

The accuracy of the result depends upon the information present on the balance sheet and P&L a/c.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

METHODOLOGY AND DATA COLLECTION

Methodology
Methodology is the way in which we collect the data. The tools for collection of data for present project are the primary data and secondary data. The information furnished in this report has been collected from primary data as well as secondary data.

Data collection
y

Primary data has been collected by approaching to General Manager and other staff members.

y

The sources of secondary data are annual reports of the Bank. The company profile
was made available by the officials through several documents. Theoretical help was derived from books and past reports and records. Support from internet and other journals.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

INDUSTRY PROFILE

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

CO-OPERATIVE BANKS OVERVIEW
Co-operation means working together. The history of modern civilization is that without cooperation the social & economic progress would have been impossible. Cooperative movement owes its origin to England, where a great philosopher, Robert Owen (17711858) gave the idea of 'self help through mutual help, to mitigate the sufferings of the exploited class in the wake of industrial revolution. The policy makers of our country considered cooperation as an instrument for development of rural economy particularly the neglected section of the nation. Considering this concept of cooperation in mind, the idea took a concrete shape in India first time in 1904 when the cooperative credit societies Act a measure designed to face rural indebt ness & provide for registration of credit societies was passed. Later in 1912, the cooperative societies Act also provided for registration of non-credit societies, well as, federation of cooperatives. Since then cooperative movement has made noticeable progress with some hindrances, especially in agricultural credit, marketing & processing of agricultural produce. The Idea of growth of cooperative movement in India can be had from the fact that there were as many 3.5 lakh cooperative societies of all type with total membership of about 16 crores & total working capital about 62500 crores as on 30 June 1990. The distinguishing feature of cooperative system is that it is largely village-based. In other word, it is suit for village dominates country like ours. Participation of masses at different levels in development schemes is a must. The idea of cooperative essentially is based on the principle of involving the people themselves directly in the mage of their affairs of different kinds because it is the people who know best what their problems are, what their priorities are & what could be the best solutions to suit their needs. The cooperative banking in India has grown in size & volume. A special feature of cooperative banks in India is its federal structure the units ranging from primary level to national level. Cooperative banking in India can be divided into two important areas viz agriculture and non-agriculture. The agricultural co-operative banks are primary cooperative banks at the village level, central co-operative banks at the district level horticulture. During the recent years, the land development banks are bent upon lending bans only for land improvement and cultivation.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR The no. of land development banks increased from 5 in 1950-51 to 19 in 1983-84, while that of primary banks increased from 286 to 1170 during the same period. But nearly 70% of LDBS are located in the three southern states of Tamilnadu, Andhra Pradesh and Karnataka. GROWTH OF CO-OPERATIVE SOCIETY IN INDIA: -

Particulars

1960-61

1970-71

1980-81

1985-86

1988-89

1. No. of Societies

(in lakhs)

3.32

3.20

3.26

3.21

3.50

2. Membership

352
(in lakhs)

644

1176

1420

1600

3. Share Capital (in Crores) 4. Working Capital (in Crores)

222

251

2088

3998

5242

1312

6810

25119

41548

62500

The above tables shows no. Of societies increased very slowly; which was 3.32 lakh in 1960-61 and 3.50 lakh in 1988-89 only. Members increased from 352 lakh in 1960-61 to 1600 lakhs in l988-89 indicate that people have shown a keen interest in cooperation. While working capital and share capital also increased made a major and important role in rural & agricultural lending.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

MEANING OF CO-OPERATIVE BANK:
³A form of organization wherein persons voluntarily associate together as human beings on the basis of equality for the promotion of the economic interest of themselves´

FEATURES:
Co-operative Banks are organized and managed on the principal of Co-operation, selfhelp and mutual help. They function with the rule of ³One Member, One Vote´. Cooperative Banks perform all the main banking functions of deposits, supply of Credit and provision of remittance facilities. Co-operative Banks provide limited banking products and are functionally specialist in agriculture related products. Co-operative Banks now provide Housing loans, Vehicle loans, Industrial loans, Hypothecation loans etc. Some Co-operatives are Scheduled Banks while other are Non - schedule Banks. Cooperative Banks are subject to CRR and liquidity requirement and other Scheduled and Non - scheduled Banks requirement is less than commercial Banks. Although the Reserve Bank of India had power to regulate the Co-operative Bank but this has been exercised only after 1979 in respect of non agricultural advances they were free to charge any rates at their discretion. The main aim of the Co-operative Banks is to provide cheaper credit to their members and not to maximize profits. They may access the money market to improve their income so as to remain viable.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

ORGANIZATION PROFILE

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

HISTORY OF THE GO CC BANK
This institution was started as Co-operative Society in the year 1909 under the provision of the Co-operative Societies Act 1904, with view to meet the pressing credit need of the Society. The founder this bank is Shri.Shate. It commenced business with small capital without any deposits. And got the status of the Bank in the year 1989, it received a license from RBI on 23rd September 1989. Today it is one well managed Co-operative Bank with annual turnover of more than rupees 5 crores. In the year 2009 the bank completed a entire decade i.e 100 years.

ORGANIZATION FROFILE
GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR. Branch was started in 12-10-1909 in Karnataka.

Location: MAHAVEER ROAD, Bijapur-586101 Infrastructure: 1) well equipped building.
2) Safety Lockers

Man Power: (Main branch) Total 38 employees are working in this bank. Major Customer: - Professional like state government employees

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

OBJECTIVES OF THE BANK 
Providing variety of loans in order to full fill the needs of the members of the bank to create funds by means of issue of Shares. Acceptance of deposits, donations and loans from higher agencies and to lend out to the members of the Bank at a moderate rate of interest.  To satisfying the employees through good remuneration as well as wealthy relationship with employees.  Giving quality service to the members of the bank.  Adding new features to the bank so that it will help the members of the bank.  The objectives of the bank to promote the economic interest of its members and to encouraging them for savings.  To create funds by deposits and borrowings here after to lend members at moderate rates of interest  To lend money to its members for their specific needs on gold or immovable properties.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

ORGANIZATION CHART

Board of Directors

General Manager

Manager

Accountants

Recovery Officer

First Division Clerks

Junior assistants

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

AUTHORITY OF CHAIRMAN:

1. The chairman shall have general preside over the meetings of the board, he shall have general control over the paid staff and to do such other things as will be conducive to the interest of the bank under the general directions of the board of the directors.

2. To sanction regular expenditures, salaries of the staff, office rent, electric charges usual contingent expenses subject to the approved of the board.

3. To inspect at any time during the working hours of the bank by himself or along with the members of the board, cash valuables and other securities of the bank and to respond the matter to the board for its information and to take necessary action in consultation with the board.

4. Any other powers that may be delegated by the board of the directors. The chairman and one of the elected directors and the secretary of the bank shall sign all documents.

DUTIES OF BOARD OF THE DIRECTORS
The board of directors shall have the following duties. 1. To admit new members 2. To consider the applications for shares 3. To consider the applications for registration of members 4. To consider the applications for transfer of shares or refund of shares amount 5. To hear and deal with complaints 6. To hear, deal, and structionise the loan applications and to grant loans according to purpose 7. To institute defend and comprise legal proceedings 8. To incur and sanction office rent and other necessary expenses in connection with the management of the bank including the purchase of furniture, stationary, articles required for office use. 9. To make steps for recovery of overdue loans 10. To consider the audit report inspection note and take necessary action KLS¶s Institute of Management Education and Research, Belgaum
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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

TYPES OF LOANS
The loans can be broadly classified as follows. 1. Short term loans as demand loan. 2. Long Term loan. 1. Short Term Loan : It is granted for a short period of a year or less than one year. 2.

Long Term loan: Term loan is of two types
a. Medium term loan being repayable in 1 to 3 years. b. Long-term loan being repayable in above 3 to 5 years.

TYPES OF LOANS
1. Personal Security Loan 2. Staff House Loan 3. Vehicle Loan 4. Members House Construction Loan 5. F.D Loan 6. C.T.D Loan 7. Loan on the basis of N.S.C Letter 8. Staff Personal Loan 9. Loan on the basis of N.S.C. Letter 10. Pigmy Loan 11. Staff vehicle Loan 12. Members House Pledge Loan

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PRO CEDURE OF SANCTIONING OF LOAN
Bank has rules and regulations regarding loan sanction. The first rule for getting loan is ³a person should be a member of the bank´. Only after that he is eligible for getting loan.

PROCEDURE FOR GETTING MEMBERSHIP OF THE BANK
If a person wants to be a member of the Bank he should be Government office employee (State Government, but except 4th categories, means peons), then he can apply for membership. In meeting, the BOD and other members will decide whether he is eligible for membership or not, if they accept then he will be called as the member of the bank. Once he gets the membership of the bank, then he can apply for the loan. There are some criteria that have to be evaluated while loan sanctioning. These criteria¶s differ according to the purpose of the loans and type of the loans. These are not standardized for particular loan. These depend on situation and condition of economy and position of the applicant. If applicant has, credit worthiness the criteria will not considered as much importance. If applicant has less credit worthiness and has lot of liabilities then criteria may be considered important and adhered strictly with those criteria¶s.

Step 1: Receiving of Application
The bank has printed application format for every type of loans .The application forms are designed in such a way that it furnishes all the information regarding applicant and purpose of loan and other information. This is very important because the processing of application starts from here onwards. The application contains various clauses that have to be filled by applicant and he has to give declaration about genuineness of the information.

Step-2: Processing Of Application
Next step is the processing of applications. This level branch Manager studies application proposal carefully visibility assessment of loan proposal. At this stage, only he can reject the proposal if it is not feasible. He checks all the factors to determine feasibility of loan proposal with respect to amount of loan, credibility of the applicant, purpose of loans, repayment of loan, ability of the applicant to utilize properly and maintenance of the asset etc. It is the primary assessment, which reflects feasibility of the loan proposal. KLS¶s Institute of Management Education and Research, Belgaum
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Step-3: Field Study Report
There are field officers in bank. Their work is to visit the applicants working place and collect information and to submit a report to the bank. They collect actual information of the applicant. They collect some other extra information like requirements of the loan to the applicant, financial condition of the applicant, his transactions with others etc. These types of casual visit are given by field officers and they provide information to the bank. The applicant may not mention or tell some hidden facts and these are identified by the field visit. When the fields study report matches with the information given in the application. Only after that the application is accepted and forwarded.

Step-4: Recommendation & Built-up Proposal to Head Office
After completing field study Branch Manager forwards to the head office. He has to give his own opinion about loan proposal and recommend on that proposal. His recommendation or opinion is very important to the head office to evaluate the loan proposal. The loan sanction wholly depends upon his recommendation of branch manager. Because he is nearer to the applicants ability to repayment of interest and principal. He must examine consequence of the loan and sanction and highlight risk factors. The Branch Manager will inform to the Head Office about applicant & his ability to repayment it. The Branch Manager also highlights true income of the applicant & what would be the income after loan sanction. The Branch Manager recommendation include other factors like safety, risk in loan proposal, profitability of the Bank etc.

SCHEMES
The total number of members in banks are increasing day by day. For the convenient of the customer¶s bank has got the permission from town municipal commissioner Bijapur to purchase 10,000 sq.mtrs plot at Basavan Bagewadi.

Safe Deposit Locker:
For the convenient of the customers bank has provided the Safe Deposit Locker facility. Earlier it is not there, on 2006 they started to provide the facility. Bank has started a scheme i.e. ³Pratiba Puraskar Yojana´ during 2005-2006. The scheme is mainly for the staffs and members children¶s who have scored highest marks in the annual examination, the said students will be honored under ³Pratiba Puraskar Yojana´. KLS¶s Institute of Management Education and Research, Belgaum
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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

Special Schemes:
As per the Reserve Bank of India guidelines / directions the bank is giving 1% interest for the senior citizens. Insurance security is provided for the depositors up to Rs. 100000/-.

DEPOSIT SCHEMES
1. Current Deposit 2. Savings Bank Deposit 3. Fixed Deposit 4. Kalpavruksha Deposit 5. Sanchit Deposit 6. Cash Certificate Deposit 7. Pigmy Deposit 8. Cumulative Deposit 9. Members Thrift Deposit.

INTERESTS ON DEPO SIT :
1. Above 30 days and up to 180 days 6.5%

2. Above 180 days and up to 364 days

-

7.5%

3. Above 364 days and up to 24 months

-

8.5%

4. Above 24 months and up to 36 months

-

9%

5. Above 36 months and up to 60 months

-

9.25%

6. Above 60 months

-

9.5%
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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

INTRODUCTION TO TOPIC

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INTRODUCTION
When we observed the financial statement comprising the balance sheet and profit or loss account is that they do not give all the information related to financial operations of firm, they can provide some extremely useful information to the extent that the balance sheet shows the financial position on a particular date in terms of structure of assets, liabilities and owner¶s equity and profit or loss account shows the results of operation during the year. Thus the financial statements will provide a summarized view of the firm. Therefore in order to learn about the firm the careful examination of a valuable reports and statements through financial analysis or ratio is required.

MEANING AND DEFINITION

Ratio analysis is one of the powerful techniques which are widely used for interpreting financial statements. This technique serves as a tool for assessing the financial soundness of the business. It can be used to compare the risk and return relationship of firms of different sizes. The term ratio refers to the numerical or quantitative relationship between two items/ variables. The idea of ratio analysis was introduced by Alexander Wall for the first time in 1919. Ratios are quantitative relationship between two or more variables taken from financial statements. Ratio analysis is defined as, ³the systemic use of ratio to interpret the financial statement so that the strength and weakness of the firm as well as its historical performance and current financial condition can be determined. In the financial statement we can find many items are co -related with each other for example current assets and current liabilities, capital and long term debt, gross profit and net profit purchase and sales etc

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BASIS OF COMPARISON
Ratios are relative figures reflecting the relationship between variables. They enable analysts to draw conclusions regarding financial operations. The use of the ratios, as a tool of financial analysis involves their comparison, for a single ratio like absolute figures, fails to reveal the true position. For example, if in the case of a firm, the return on capital employed is 15 percent in a particular year, what does it indicate? Only if the figure is related to the fact that in the preceding year the relevant return was 12 per cent or 18 percent, it can be inferred whether the profitability of the firm has declined or improved. Alternatively, if we know that the return for the industry as a whole is 10 percent or 20 percent, the profitability of the firm in question can be evaluated. Comparison with related facts is, therefore, the basis of ratio analysis. Four types of comparison are involved

i.

Trend ratio
Trend ratios involve a comparison of the ratios of a firm over time, that is, present ratios are compared with the past ratio of the same firm. Trend ratio indicates the direction of change in the performance, improvement, deterioration or constancyover the years. This kind of ratio particularly applicable to the items of profit and loss account. It is advisable that trends of the sales and the net income may be studied in the light of two factors: the rate of fixed expansion or secular trend in the growth of the business and the general price level. it might be found in practice that a number of firms would show a persistent growth over the period of the years.

ii.

Intra firm comparison
Intra firm comparison involving comparison of the ratio of the firm with those of

the others in the same line of business or for the industry as a whole reflects its performance in relation to its competitors.

iii.

Comparison of items within a single year¶s financial statement of a firm

iv.

Comparison with standard or plans.

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IMPORTANCE OF THE RATIO ANALYSIS
As a tool of financial management, ratios are of crucial significance. The importance of the ratio analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inference regarding the performance of a firm. Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects.

1. USEFULL TOOL FOR ANALYSIS:
Ratios are exceptionally useful tool with which one can infer the financial performance of the enterprise over a period of time with the help of ratio analysis. Conclusions can be drawn regarding several aspects such as financial health, profitability and operational efficiency of the firms. Liquidity position to meet its short term obligations and long term solvency. They indicate strength and weakness of the firms.

2. LIQUIDITY POSITION
With the help of ratio analysis conclusion can be drawn regarding the liquidity position of the firm. The liquidity position of the firm would be satisfactory if it is able to meet its current obligation when they become due. a firm can be said to have the ability to meet its short term liabilities if it has sufficient liquidity funds to pay the interest on its short maturing debts usually within a year as well as to repay the principal.

3. LONG TERM SOLVENCY
Ratio analysis is equally useful for assessing the long term financial viability of the firm. This aspects of the financial position of a borrower is of concern to the long term creditors, security analysis and the present and potential owners of a business. The long term solvency is measured by the leverage or capital structure and profitability ratios which focus on earning power and operating efficiency. Ratio analysis reveals the strength and weakness of a firm in this respect. The leverage ratios, for instances, will indicate whether a firm has a reasonable proportion of various sources of finance or whether heavily loaded with debt in which case its solvency is exposed to serious strain. Similarly the various profitability ratio would reveal whether or not the firm is able to offer adequate return to its owners consistent with the risk involved.

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4. OPERATING EFFICIENCY
Yet another dimension of the usefulness of the ratio analysis, relevant from the view point of the management, is that it throws light on the degree of the efficiency in the management and utilization of its assets. The various activity ratios measure this kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales generated by the use of its assets -total as well as its components.

5. OVERALL PROFITABILITY
Unlike the outside parties which are interested in one aspect of the financial position of a firm, the management is constantly concerned about the overall profitability of the enterprise. That is, they are concerned about the ability of the firm to meet its short term as well as long term obligations to its creditors, to ensure a reasonable return to its owners and secure optimum utilization of the assets of the firm. This is possible if an integrated view is taken and all the ratios are considered together.

6. INTER-FIRM COMPARISON
Ratio analysis not only throws the light on the financial position of a firm but also serves as a stepping stone to remedial measures. This is made possible due to interfirm comparison and comparison with the averages. A single figure of a particular ratio is meaningless unless it is related to some standard or norm. One of the popular techniques to compare the ratio of the firm with the industry average. It should be reasonably expected that the performance of a firm should be in broad conformity with that of the industry to which it belongs. An interfirm comparison would demonstrate the firm¶s position vis-à-vis its competitors.

7. TREND ANALYSIS
Finally, ratio analysis enables a firm to take the time dimension into account. In other words, whether the financial position of a firm is improving or deteriorating over the years. This is made possible by the use of the trend analysis. The significance of a trend analysis of the ratio lies in the fact that the analyst can know the direction of movement, that is, whether the movement is favorable or unfavorable.

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ADVANTAGES AND DISADVANTAGES OF RATIO ANALYSIS:

ADVANTAGES: 
Simplifies financial statements: Ratio Analysis simplifies the comprehension of financial statements. Ratios tell the story of changes in financial condition of the business. 

Measurement of the profitability: We can measure the profitability of
the business by calculating gross profit, net profit, expenses and other ratios. Profitability is the profit earning capacity of the business. So, profitability ratios indicate the actual performance of the business. If these ratios fall, effective control measures will be applied to improve the working of the business. 

Judges the operational efficiency of the business: With the help of
ratio analysis comparison of the performance between different divisions of the firm is possible. The ratios are helpful in deciding about the firm¶s efficiency in the past and likely in the future  Facilitates inter firm comparison: Ratio analysis provides data for inter company comparison. Ratio highlights the association with successful and unsuccessful firms. They also reveal strong and weak companies, overvalued and undervalued companies. 

Assessing the efficiency of the business: We can ascertain whether the
firm is solvent or not by calculating solvency ratios show relationship between liabilities and assets. If total assets are lesser than outside liabilities, it shows unsound position of the business. In such case the business will try its best to improve its solvency i.e., ability to repay loans. 

Makes intra firm comparison possible: Ratio analysis also makes possible comparison of the performance of different division of the company. The ratio helpful in deciding about their efficiency.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR  Helps in planning: Ratio Analysis helps in planning and forecasting over period of time a company develops certain norms that may indicates future success/ failure. If relationship changes in firms data over different time periods. The ratio may provide clues on trends and future problems.  Liquidity position: With the help of ratio analysis conclusions can be drawn regarding liquidity position of the company. The liquidity position of a company could be satisfactory if it is able to meet its current obligations when they become due. 

Long term solvency: Ratio analysis equally useful for assessing the long-term
financial viability of a firm. The long-term solvency is measured by the leverage / capital structure and profitability ratios, which focus on earning power and operating efficiency. 

Useful in improving future performance: Ratio analysis indicates
the weak spots of the business. This helps management in overcoming such weakness and improving the overall performance of thee business in future.

DISADVANTAGES:
Ratio analysis is a widely used tool of financial analysis. Yet, it suffers from various limitations. The operational implication of this is that while using ratios, the conclusion should not been taken on their face value. Some of the limitation which characterize ratio analysis are

1. Difficulty in comparison
One serious limitation of ratio analysis arises out of the difficulty associated with their comparability. One technique that is employed is interfirm comparison. But such comparisons are vitiated by different procedures adopted by various firms. The difference may relate to
y y y y y

Difference in the basis of inventory valuation Different depreciation methods (i.e. straight line vs. written down basis) Estimated working life of the assets, particularly of plant and equipment Amortization of intangible assets like goodwill, patents and so on. Amortization of deferred revenue expenditure such as preliminary expenditure and discount on issue of shares

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR
y y

Capitalization of lease Treatment of extraordinary items of income and expenditure and so on Secondly, apart from different accounting procedures, companies may have different accounting periods, implying differences in the composition of the assets, particularly the current assets. For these reasons, the ratios of two firms may not be strictly comparable.

2. Impact of inflation
The second major limitation of the ratio analysis as a tool of financial analysis is associated with price level changes. This, in fact is a weakness of the traditional financial statement which are based on historical cost. An implication of this feature of the financial statement as regards ratio analysis is that assets acquired at different periods are, in effect, shown at different prices in the balance sheet, as they are not adjusted for changes in the price level. As a result, ratio analysis will not yield strictly comparable and therefore, dependable results.

3. Conceptual Diversity
Yet another factor which affects the usefulness of ratios is that there is difference of opinion regarding the various concepts used to compute the ratios. There is scope for diversity of opinion as to what constitutes shareholders¶ equity, debt, asset, profit and so on. Different firms may use these terms in different senses or the same firm may use them to mean different things at different times. Reliance on a single ratio for a particular purpose may not be a conclusive indicator. For instance, the current ratio alone is not an adequate measure of shortterm financial strength; it should be supplemented by the acid test ratio, debtor¶s turnover ratio and inventory and inventory turnover ratio to have a real insight into the liquidity aspect.

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CLASSIFICATION OF RATIO

1. Profitability Ratios
a. Ratio of profit to total income b. Ratio of profit to deposits c. Return on equity d. Return on Capital e. Ratio of return on assets

2. Operating Ratios
a. Ratio of interest earned to interest paid b. ratio of interest paid to total income c. Ratio of staff expenses to total expenses d. Ratio of total expenses to total income.

3. Solvency ratios
a. ratio of cash to deposit b. ratio of investment to deposits c. Credit deposit ratio d. ratio of fixed assets to net worth e. Current assets ratio f. Quick ratio g. Fixed assets ratio

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

ANALYSIS AND INTERPRETATION

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

PROFITABILITY RATIO:
This ratio shows the earning ability of organization, in other words profitability ratios are designed to provide answers to questions such as :a) Is the profit earned by the firm adequate? b) What rate of return does it represents? c) What is the rate of profit for various divisions and segments of the firm? d) What is the rate of return to equity share holders?

The profitability of the firm can be determined on the following ratios

1. RATIO OF NET PROFIT TO INCOME: This ratio implies that the percentage of net profit earned by the organization out of its income. Here this ratio indicates the net profit ratio out of total profit. Normally it is expected between 10%-15%.

Ratio of net profit to total income = net profit *100 Total income

Year

Ratio of net profit to income (%)

Amount

2004-05 2005-06 2006-07 2007-08 2008-09

6.8 6.5 1.54 2.32 2.95

=4091762/59681976*100 =4910114/71618371*100 =1001704/64788253*100 =1504277/64562627*100 =2024423/68469180*100

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GOVER MENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

Ratio of net profit to income (%)
8
7

6.8

6.5

6
5

4 2.95 3
2 1.54

2.32

1
0

2004-05 2005-06 2006-07 2007-08 2008-09

Interpretati n: The ratio of profit to income is drasticall came down from 6.5%(2005 -06) to 1.54%(2006-07) it is because of increase in the expenses li e advertisement expenses and increase in nonperforming asset. and last two years it is showing gradual growth 2.32%(2007-08) and 2.95%(2008-09). which show that last 3 years profitability is not adequate.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

2. Ratio of profit to deposits: This ratio shows organi ation¶s earnings on deposits.
Normal expected rate is (1.0 -2.0).

Ratio of profit to deposits = profit / total deposits *100

year

Ratio of profit to deposits

Amounts

2004-05 2005-06 2006-07 2007-08 2008-09

0.92 1.01 0.21 0.30 0.36

=4091762/442160198*100 =4910114/484646420*100 =1001764/472873643*100 =1504277/489297593*100 =2024423/550966276*100

Ratio of profit to d posits
.2 0.92
   
.0 0.36

0.6
0.4 0.2 0.2

0
£ £
2004-05 2005-06 2006-07 2007-0 200 -09

Interpretation: Ratio of profit to total deposits in the first year 2004-05 it was 0.92% and in year 2005-06 it was 1.01. And last three years i.e. 0.21%, 0.30 and 0.36%.Iit indicates that the Bank has not utili ed its deposits effectively.

KLS¶s Institute of Management Education and Research, Belgaum

 

¡

0.

 

¢

0.3

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

3. Return on asset : An indicator of how profitable a company is relative to its total
assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing profit by its total assets. Normally it is expected to be between 0.6% to 2.0%. Return on asset = profit / total assets * 100

Ratio of Year return on assets 2004-05 2005-06 2006-07 2007-08 2008-09 0.74 0.80 0.16 0.23 0.28

Amounts

=4091762/546861500*100 =4910114/606309871*100 =1001764/614073557*100 =1504277/636396364*100 =2024423/715676149*100

Ratio of r turn on ass ts
0.9 0.8 0.74

0.8
0.7

0.6
0.5 0.4

0.28 0.3
0.2 0.16 0.23

0.1
0

Year

2004-05

2005-06

2006-07

2007-08

2008-09

Interpretation: Return on asset ratio 0.74 %( 2004-05) And 0.8% (2005-06). After this next three years Ratio¶s are 0.16%,023% and 0.28% . This trend shows that the organi ation is not good in converting investment into profit as the expected level is between 0.60% to 2.0%.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 4. Return on equity: This ratio measures the return on the owners (both equity and preference shareholders) invested in the firm. Normally it is expected to be (10%-17%). =profit / equity *100

Year

Return on equity (%)

= Amounts

2004-05 2005-06 2006-07 2007-08 2008-09

16 17.85 3.38 4.98 6.4

=4091762/25264485*100 =4910114/27492955*100 =1001764/29587190*100 =1504277/30194249*100 =2024423/31584149*100

Return on equit (%)
16

Interpretation: The return on equity ratio in the first year it was 16% then in second year it was17.85% then in third year drastically came down to 3.38% due to decrease in the profit ,in last two years it is showing gradual growth i.e. ,4.98% and 6.4%.still the ratio is not satisfactory as still it is far behind from the expected rate.

KLS¶s Institute of Management Education and Research, Belgaum

¥

¥ ¤

¤

¦

¦

2004-0

200 -06

2006-0

§

3.3

200 -0

§

6 4 2 0

¦¥ ¤
6.4

¥

20 1 16 14 12 10

1 .

¥

4.9

200 -09

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

5. Return on capital e ployed: This ratio shows the return on capital employed (share
capital, reserve, retained earnings and long term borrowings) used in the organi ation. Normally this ratio is expected to be (15%-20%).

Return on capital e ployed = profit / capital employed * 100

Year 2004-05 2005-06 2006-07 2007-08

Return on capital employed (%) 7.04 6.72 1.19 1.59

= Amount =4091762/58049562*100 =4910114/72991040*100 =1001704/83792976*100 =1504277/94314060*100

2008-09

1.99

=2024423/101574578*100

Return on apital emplo ed (%)
8 7.04 7 6.72

6 5
4 3

1.99 2 1
0 Year 2004-05 2005-06 2006-07 2007-08 2008-09

1.59
1.19

Interpretation: The return on capital ratio in second year it came down to 6.72% in third year it drastically came down to 1.19% after that next two year it is gradually moving up. But the ratio is not satisfactory it indicates that the capital is not utili ed properly as normal expected rate is 15% to 20%.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

II. OPERATING RATIO
This ratio gives the operation efficiency of the organi ation. The operation efficiency can be determined by following ratios 1. Ratio of interest earned to interest paid: this ratio shows the percentage of interest earned on loans and advances and interest paid on deposits. Normally it is expected to be <200%. Ratio of interest earned to interest paid == interest earned / interest paid *100 Ratio of interest year earned to interest paid (%) 2004-05 2005-06 2006-07 2007-08 2008-09 135 128 152 156 155 =58309746/4377981*100 =60308734/44876384*100 =63780425/41956898*100 =61470557/39279940*100 =67496035/436336125*100 amounts

Ratio of interest earned to interest paid (%)
200
150 100 50

135

128

0
¨ ¨
2004-05 2005-0 200 -07 2007-08 2008-09

Interpretation: This ratio decreases from 135% (2004-05) to 128 % (2005-06) because interest paid on barrowing was more after that last three years it is showing consistent performance i.e.152 %(2006-07) ,156% (2007-08) and 155% (2008-09).this ratio is not satisfactory as it is expected be <200%. KLS¶s Institute of Management Education and Research, Belgaum P 36

¨

152

15

155

GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 2. Ratio of interest paid to total inco e: this ratio shows the percentage of interest paid to deposits accepted. Ratio of interest to total income= interest paid /total income *100 Ratio of interest paid Year to total income amounts

2004-05 2005-06 2006-07 2007-08 2008-09

72.3% 62.6% 64.76% 60.80% 63.73%

=4377981/59681976*100 =44876384/71618371*100 =41956898/64788253*100 =39279940/645662627*100 =43636125/68469180*100

Rati of i terest pai to total i ome
74.00% 72.00% 70.00% 68.00% 66.00% 64.00% 62.00% 60.00% 58.00% 56.00% 54.00% 72.30%

64.76%

63.73%
62.60% 60.80%

2004-05

2005-06

2006-07

2007-08

2008-09

Interpretation: Ratio of interest paid to total income decreases from 72.3% (2004 -05) to 62% (2005-06) because decrease in interest paid on the borrowings again the ratio slightly increased in the next year to 64.76% (2006-07) and in last two years it is showing 60.80% (2007 -08) and 63.73% (2008-09).Normally this ratio is expected to be below 40% so this ratio is not satisfactory

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

3. Ratio of staff expenses to total expenses: this ratio is the percentage of staff expenses to total expenses Ratio of staff expenses to total expenses= staff expenses / total expenses*100 Ratio of staff Year expenses to total expenses (%) 2004-05 2005-06 2006-07 2007-08 2008-09 9.9 9.11 10.35 11.73 14.1 =5504232 / 55590214 *100 =5812554/63748726*100 =6603975/63786489*100 =7400383/63058350*100 =9415551/66444757*100 Amount

Ratio of staff expenses to total expenses (%)
15
11.73 14.1

9.9 10 5 0
2004-05

10.35
9.11

2005-06

2006-07

2007-08

2008-09

Interpretation:

The ratio shows that the staff expenses are gradually increasing year after year and last year it is increased to 14.1% (2008-09) from 11.73% (2007-08) .payment of the employs is increasing.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 4. Ratio of expenses to inco e: This ratio shows the percentage of expenses to total income. Normally this ratio is expected to be in the range (50%-75%). Ratio of expenses to income =total expenses / total income *100

Ratio of Year expenses to income% 2004-05 2005-06 2006-07 2007-08 2008-09 93.14 91.27 98.45 97.67 97.04 =55590214/59681976*100 =66708257/71618371*100 =63786549/64786549*100 =63058350/64562627*100 =66444757/68469180*100 Amount

Ratio of expenses to in ome
100
98.45

96 94 93.14

90
88 86

Interpretation:

Ratio of expenses to income is very high for last three years i.e. 98.45% (2006007), 97.67 % (2007-08) and 97.04(2008-09) due to increase in operating expenses and staff expenses. Normally it is expected to be in the range (50% -75%) so this ratio is not satisfactory.

KLS¶s Institute of Management Education and Research, Belgaum  

   

004-05

005-06 

© 

©

9

91.

006-0

00 -08

008-09 

98 



9 .6

9 .04

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

5. Ratio of ad inistration expenses to total inco e: This ratio indicates the percentage of administration expenses out of total income where the administration expenses include like rent, printing charges, insurance ect.

= administration expenses / total income * 100

Year

Ratio of admn exp to tol inc (%)

Amount

2004-05 2005-06 2006-07 2007-08 2008-09

11.28 10.03 13.48 13.53 17.04

=6733790/59681976*100 =7184570/71618371*100 =8734763/64788253*100 =8741118/64562627*100 =11976146/68469180*100

Ratio of admn exp to tol in (%)
16

14
12

10 6 

0

2004-05

Interpretation: Ratio of administration expenses to total income shows that in second year the ratio reduced to 10.3% then again in third year it raised to 13.48% ,forth year shows not much difference but last year it raised to 17.04% .the rise in the ratio is due to increase in the administrative expenses which comprises printing , stationary and other administrative expenses. KLS¶s Institute of Management Education and Research, Belgaum P 40 

11.

10.03

2005-06

2006-07 

13.

13.53

2007-08

2008-09 

18

17.0 



GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

III. Sol ency Ratio This ratio helps to know the liquidity of the firm i.e. ability to meet its short term obligations or current liabilities. The solvency of the firm can be determined in the following ratios. 1. Current ratio is measure of liquidity. Current assets are divided by current liabilities. The higher the current ratio, the more assurance those current liabilities can be paid. Standard ratio for current ratio is 2:1. 1. Current ratio = current asset / current liabilities *100

year 2004-05 2005-06 2006-07 2007-08 2008-09

Current ratio (%) 3.52 9.24 2.27 4.51 3.91

Amount =21163324/6005364*100 =40855205/4419397*100 =20807053/9134617*100 =38570706/8537389*100 =33151812/8473360*100

Current ratio (%)
10 9 8 7 6 5 4 3 2 1 0 9.24

4.51

3.52
2.27

3.91

2004-05

2005-06

2006-07

2007-08

2008-09

Interpretation: Current ratios are satisfactory but in the year 2005-06 it is 9.24 and in 2007-08 it is 4.5 excess of current ratio indicates that presence of ideal money so the organi ation should maintain current ratio in such a manner that there should not be ideal current asset. KLS¶s Institute of Management Education and Research, Belgaum P 41

GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 2. Ratio of cash to deposits: This ratio helps to find what extent the deposits used and cash balance in hand This ratio helps to find what extent the deposits used and cash balance in hand. The conversion into cash while payment of deposits is very important for any bank. If there is more need of deposit liquidity the bank as to keep more funds in cash. This ratio can be calculated with the following formula. Ratio of total cash to total deposit= total cash / total deposit *100 Year 2004-05 2005-06 2006-07 2007-08 2008-09 Ratio of cash to deposits (%) 4.78 8.42 4.4 7.88 6.01 Amount =21163324/442160198*100 =40855205/484646620*100 =20807053/472873643*100 =38570706/489297593*100 =33151812/550966276*100

Ratio of cash to deposits (%)
9

8.42
7.88

8 7 6 5
4 3 2 1 4.78

6.01 4.4

0
2004-05 2005-06 2006-07 2007-08 2008-09

Interpretation: ratio of cash to total deposits increases from 4.78%(2004-05) to 8.42% (2005-06) then it decrease to 4.4 (2006-07) but in last two years it is showing 7.8% and 6.01% The organi ation need to reserve (10%-20%) of cash reserves to meet current obligation. KLS¶s Institute of Management Education and Research, Belgaum P 42

GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 3. Ratio of invest ents to deposits This ratio shows at what extent the firm invested its deposits on scurrilities from its deposits. Ratio of investment to deposit = total investment / total deposits *100

Year

Ratio of investment to deposit (%)

Amount

2004-05 2005-06 2006-07 2007-08 2008-09

30.25 33.63 34.80 37.68 46.24

=133757414/442160198*100 =163027644/484646620*100 =164600881/472873643*100 =184404122/489297593*100 =254781961/550966276*100

Ratio of i vestment to deposit (%)
50

46.24 37.68 33.63 30.25
34.8

45
40 35

30
25

20 15
10

5
0

2004-05

2005-06

2006-07

2007-08

2008-09

Interpretation: The investment to deposit ratio is gradually increasing year by year. But the ratio is not satisfactory it indicates the presence of ideal money so bank need to invest the ideal money available.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 4. Ratio of credit deposit: This ratio shows the percentage of loans and advances provided by bank from its deposits. This ratio is purely depending upon the lending policy of the bank and also the loan requirements of bank customer. If there is increase in loans demand higher than the likely rise in deposits the bank has to keep more of its funds in liquid assets to meet the increase in the loan demand and this is also depending upon the nature of loan and type of deposit of the bank.

Ratio of credit deposit= loan and advances / total deposits *100

Year

Ratio of credit deposit (%)

Amount

2004-05 2005-06 2006-07 2007-08 2008-09

75.09 71.20 77.82 72.18 65.14

=332042108/442160198*100 =345101283/484646620*100 =368035233/472873643*100 =353195064/489297593*100 =358899844/550966276*100

Ratio of credit deposit (%)
80 78 76 74 72 70 68 66 64 62 60 58

77.82
75.09 71.2

72.18

65.14

2004-05

2005-06

2006-07

2007-08

2008-09

Interpretation: Credit deposits ratio is showing consistent performance but last year it has been decreased to 65.14% (2008-09) from 72.18% (2008-09).but the ratios are satisfactory except the last year. The normal expected rate of this ratio ranges between (70% -80%).

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 5. Ratio of loans to total assets: The loans to total assets ratio measures the total loans as a percentage of total assets. The higher this ratio indicates a bank is loaned up and its liquidity is low. The higher the ratio more risky the bank may be to higher defa ults. This figure is determined as follows: Ratio of loans to total assets = loans / total assets *100 Year Ratio of loan to total assets (%) 2004-05 2005-06 2006-07 2007-08 2008-09 60.84 56.91 59.93 55.49 50.14 =332042108/545686150*100 =3451011233/606309871*100 =368035233/614073557*100 =353195064/636396364*100 =358899844/715676149*100 Amount

Ratio of loan to total assets (%)
0 56.91 60 50 40

0

20 10
0

Interpretation: Ratio of loan to total assets decreases from 60.84%(2004 -05) to 56.91%(2005-06) then again it increase to 59.93%(2006-07) after that it decrease to 55.49%(2007-08) and 50.14%(2008-09) .this ratio is not satisfactory because it is expected to be (60%-80%)

KLS¶s Institute of Management Education and Research, Belgaum  

2004-05

2005-06

2006-0   

60.84

59.9

55.49 50.14

200 -08

2008-09

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 6. Ratio of current asset to fixed asset: This ratio shows the percentage of current assets and fixed assets.

Ratio of current asset to fixed asset = current asset / fixed asset * 100

Year

Ratio of C.A TO F.A (%)

= current asset / fixed asset * 100

2004-05 2005-06 2006-07 2007-08 2008-09

657.8 1386.1 441.9 883.85 743.8

=21163324 /3216946*100 =40855205/2947328*100 =20807053/4717653*100 =38570706/4363899*100 =33151812/4456903*100

Ratio of C.A TO F.A (%)
1600

1400 1200
1000 800 600

400 200
0

2004-05

2005-06

2006-07

2007-08

2008-09

Interpretation: Ratio of current asset to fixed asset in second year it increased to 1386.1% from 657.8% of first year then in third year it suddenly reduced to 441.9 then in forth year itincreased to 883.85% last year it slightly reduced to 743.8%.this ratio is satisfactory. The increase in the ratio indicates that excess amount of cash in hand.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

FINDINGS

KLS¶s Institute of Management Education and Research, Belgaum

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

FINDINGS: 
The ratio of profit to income has drastically come down from 6.5%(200506) to 1.54%(2006-07), it is because of increase in the expenses like advertisement expenses and increase in nonperforming asset and last two years it is showing gradual growth 2.32 %( 2007-08) and 2.95 %( 200809), which show that last 3 years profitability is not adequate. Organization need to cut down the expenses.

This ratio is not satisfactory as it is very less compared to the expected ratio.  Ratio of profit to total deposits in the first year 2004-05 was 0.92% and in year 2005-06 it was 1.01. And last three years i.e. 0.21%, 0.30 and 0.36%.Iit indicates that the Bank has not utilized its deposits effectively. 

Return on asset ratio 0.74 %( 2004-05) And 0.8% (2005-06). After this next three years Ratio¶s are 0.16%,023% and 0.28% . This trend shows that the organization is not good in converting investment into profit as the expected level is between 0.60% to 2.0%.  The return on equity ratio in the first year was 16% then in second year it was17.85% then in third year it drastically came down to 3.38% due to decrease in the profit ,in last two years it is showing gradual growth i.e. ,4.98% and 6.4%.still the ratio is not satisfactory as still it is far behind from the expected rate. 

The return on capital ratio in second year came down to 6.72% in third year it drastically came down to 1.19% after that next two year it is gradually moving up. But the ratio is not satisfactory which indicates that the capital is not utilized properly as normal expected rate is 15% to 20%.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 

Ratio of interest earned to interest paid decreased from 135% (2004-05) to 128 % (2005-06) because interest paid on barrowing was more after that last three years it is showing consistent performance i.e.152 %(2006-07) ,156% (2007-08) and 155% (2008-09).this ratio is not satisfactory as it is expected be < 200%.  Ratio of interest paid to total income decreases from 72.3% (2004-05) to 62% (2005-06) because decrease in interest paid on the borrowings again the ratio slightly increased in the next year to 64.76% (2006-07) and in last two years it is showing 60.80% (2007-08) and 63.73% (200809).Normally this ratio is expected to be below 40% so this ratio is not satisfactory.  The ratio shows that the staff expenses are gradually increasing year after year and last year it is increased to 14.1% (2008-09) from 11.73% (200708) .payment of the employs is increasing.  Ratio of expenses to income is very high for last three years i.e. 98.45% (2006-007), 97.67 % (2007-08) and 97.04(2008-09) due to increase in operating expenses and staff expenses. Normally it is expected to be in the range (50%-75%) so this ratio is not satisfactory.  Ratio of administration expenses to total income shows that in second year the ratio reduced to 10.3% then again in third year it raised to 13.48% ,forth year shows not much difference but last year it raised to 17.04% .the rise in the ratio is due to increase in the administrative expenses which comprises printing , stationary and other administrative expenses.  Current ratios are satisfactory but in the year 2005-06 it is 9.24 and in 2007-08 it is 4.5 times excess of current ratio indicates that presence of ideal money so the organization should maintain current ratio in such a manner that there should not be ideal current asset.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR 

Ratio of cash to total deposits increases from 4.78%(2004-05) to 8.42% (2005-06) then it decrease to 4.4 (2006-07) but in last two years it is showing 7.8% and 6.01% this ratio is satisfactory but the organization need to reserve (10%-20%) of cash reserves to meet current obligation.  The investment to deposit ratio is gradually increasing year by year. But the ratio is not satisfactory it indicates the presence of ideal money so bank need to invest the ideal money available.  Credit deposits ratio is showing consistent performance but last year it has been decreased to 65.14% (2008-09) from 72.18% (2008-09).but the ratios are satisfactory except the last year. The normal expected rate of this ratio ranges between (70%-80%).  Ratio of loan to total assets decreased from 60.84%(2004-05) to 56.91%(2005-06) then again it increase to 59.93%(2006-07) after that it decrease to 55.49%(2007-08) and 50.14%(2008-09) .this ratio is not satisfactory because it is expected to be (60%-80%).  Ratio of current asset to fixed asset in second year has increased to 1386.1% from 657.8% of first year then in third year it suddenly reduced to 441.9 then in forth year it increased to 883.85% last year it slightly reduced to 743.8%.this ratio is satisfactory. The increase in the ratio indicates excess amount of cash in hand.

KLS¶s Institute of Management Education and Research, Belgaum

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

SUGGESTIONS

KLS¶s Institute of Management Education and Research, Belgaum

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

SUGGESTIONS: 
Regarding administration expenses the expenses like salary to employee, printing and stationery are increasing, so it should appoint right person in the right job so the organization can get maximum contribution with limited payment. As regarding printing and stationary it should adopt new software programs by which it can achieve paper less work and it reduces manual work. 

Current ratios are satisfactory but in the year 2005-06 it is 9.24 and in 2007-08 it is 4.5 excess of current ratio indicates that presence of ideal money so the organization should utilize that ideal money. 

Ratio of profit to deposits decreases from (2004-05) 0.68% to 0.16% (2005-06) .after that the ratio shows a gradual growth in last three years i.e. 0.21%,0.30 and 0.36%.the organization need to use the deposits effectively. 

The expenses are very high for last three years i.e. 98.45% (2006-007), 97.67 % (2007-08) and 97.04(2008-09) so it needs to be minimized. 

The organization can improve on selection of assets class for investment and other related factors such as timing etc. This could enhance their Return to Total Assets and Total Investment to Total Deposits ratios.

KLS¶s Institute of Management Education and Research, Belgaum

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

CONCLUSION

KLS¶s Institute of Management Education and Research, Belgaum

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

CONCLUSION:

This society is existed on the bases of co-operation of its members it shows how cooperation is achieved in the society and this society has a great opportunity of increase of its members. When we analyse its financial performance through ratios there is great decline of its profit in the year of 2006-07 but in the last three year there is a small increment in its financial performance but it is not enough because the society has huge experience and it has faced many problems during this period. Still society facing problems from nationalised banks in some aspects. If the society takes suggestions given then it will reach its maximum profitability.

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

BIBLIOGRAPHY

KLS¶s Institute of Management Education and Research, Belgaum

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GOVERNMENT OFFICIAL¶S CO-OPERATIVE BANK LTD, BIJAPUR

BIBLIOGRAPHY

Balance sheet and Financial Statements were analysed and interpreted from the Banks ANNUAL REPORT journal.

Text Books 
Financial Management  Financial Accounting

: Khan and Jain

: Narayanaswamy

KLS¶s Institute of Management Education and Research, Belgaum

Page 56

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