“A STUDY ON RATIO ANALYSIS OF AXIS BANK HOSUR”

A PROJECT REPORT

Submitted By

A.SUBASH

Reg No: AC14MBF079

In partial fulfillment for the award of the degree

Of
MASTER OF BUSINESS ADMINISTRATION

Under the Guidance of

Dr N.ARUN SANKAR

DEPARTMENT OF MANAGEMENT STUDIES

ADHIYAMAAN COLLEGE OF ENGINEERING

(An Autonomous Institution, Affiliated to Anna University, Chennai)
Dr. MGR Nagar, Hosur – 635109
APRIL – 2016
 CERTIFICATE

This is to certify that the Main Project

report entitled “ A STUDY ON RATIO ANALYSIS OF AXIS BANK HOSUR”
” submitted by A.SUBASH (AC14MBF079) is the Bonafide work of the main project
done by him during the academic year 2015-2016, under my guidance and supervision in
partial fulfillment for the award of DEGREE OF MASTER OF BUSINESS
ADMINISTRATION.

Place: Hosur
Date:

Dr .N.Arunsankar Dr.V.Navaneetha Kumar

(Faculty Guide) (Director

Department of Management Studies

Submitted for the Main Project Viva-voce examination held on

Internal Examiner ExternalExaminer

 DECLARATION

I hereby declare that this main project

report on entitled “STUDY ON RATIO ANALYSIS IN AXIS BANK HOSUR”
submitted to Department of Management Studies, Adhiyamaan College of Engineering,
Hosur in partial fulfillment of the requirement for the award of the Degree of Master of
Business Administration is a original work done by me during the period of my study at the
college under the supervision and guidance of Dr.N.ARUNSANKAR, (Faculty Guide)
Department of Management Studies, Adhiyamaan College of Engineering(Autonomous),
Hosur.

Place: Hosur
Date:

(A.SUBASH)
 ACKNOWLEDGEMENT

I take this opportunity with pride and immense pleasure to thank Dr.
G.RANGANATH, Principal, Adhiyamaan College of Engineering, Hosur for giving this
opportunity to know the real experiences from this project.

I am very much thankful to Dr.V.NAVANEETHAKUMAR, Director, of the

Management Studies for his valuable guidance in every step of this project.

I am highly indebted to my project guide Dr.N.ARUNSANKAR who inspired me

and guided me in every step of the project work.

I am thankful to Mr.VENKATESH who gave me this opportunity to do the project,

for supporting me in all aspects and giving me valuable guidance.

I express my sincere thanks to all the respondents who gave their honest response to
my schedule. I also take this opportunity to thank all those creative minds and helpful
hearts for their assistance in making this project work successfully.

I am also glad to extend my sincere thanks to my parents, faculty members and all
my friends and my brother and sister who supported me for completion of my project
successfully.

SUBASH.A
Chapter No Contents Page No
 1. INTRODUCTION

1.1 About the project

Financial ratios are widely used for modelling purposes both by practitioners and
researchers. The firm involves many interested parties, like the owners, management,
personnel, customers, suppliers, competitors, regulatory agencies, and academics, each
having their views in applying financial statement analysis in their evaluations.
Practitioners use financial ratios, for instance, to forecast the future success of companies,
while the researchers' main interest has been to develop models exploiting these ratios.
Many distinct areas of research involving financial ratios can be discerned. Historically one
can observe several major themes in the financial analysis literature. There is overlapping
in the observable themes, and they do not necessarily coincide with what theoretically
might be the best founded areas.

Financial Management is the specific area of finance dealing with the financial
decision corporations make, and the tools and analysis used to make the decisions. The
discipline as a whole may be divided between long-term and short-term decisions and
techniques. Both share the same goal of enhancing firm value by ensuring that return on
capital exceeds cost of capital, without taking excessive financial risks.

Before understanding the meaning of analysis of financial statements, it is necessary

to understand the meaning of ‘analysis’ and ‘financial statements‘.

Analysis means establishing a meaningful relationship between various items of the

two financial statements with each other in such a way that a conclusion is drawn. By
financial statements, we mean two statements- (1) profit & loss a/c (2) balance sheet. These
are prepared at the end of a given period of time. They are indicators of profitability and
financial soundness of the business concern.

Thus, analysis of financial statements means establishing meaningful relationship

between various items of the two financial statements, i.e., income statement and position
statement

After preparation of the financial statements, one may be interested in knowing the
position of an enterprise from different points of view. This can be done by analyzing the
financial statement with the help of different tools of analysis such as ratio analysis, funds
flow analysis, cash flow analysis, comparative statement analysis, etc. Here I have done
financial analysis by ratios. In this process, a meaningful relationship is established
between two or more accounting figures for comparison.

Parties Interested In Analysis of Financial Statements

Analysis of financial statement has become very significant due to widespread

interest of various parties in the financial result of a business unit. The various persons
interested in the analysis of financial statements are:-

1. Short- term creditors

They are interested in knowing whether the amounts owing to them will be paid as
and when fall due for payment or not.

2. Long –term creditors

They are interested in knowing whether the principal amount and interest thereon
will be paid on time or not.

3. Shareholders

They are interested in profitability, return and capital appreciation.

4. Management

The management is interested in the financial position and performance of the

enterprise as a whole and of its various divisions.

5. Trade unions

They are interested in financial statements for negotiating the wages or salaries or
bonus agreement with management.

6. Taxation authorities

These authorities are interested in financial statements for determining the tax
liability.
 7. Researchers

They are interested in the financial statements in undertaking research in business

affairs and practices.

8. Employees

They are interested as it enables them to justify their demands for bonus and
increase in remuneration.

You have seen that different parties are interested in the results reported in the
financial statements. These results are reported by analyzing financial statements through
the use of ratio analysis.
BANKING IN INDIA

Without a sound and effective banking system in india it can not have a healthy economy.
The banking system of india should not only be hassle free but it should be able to meet
new challenges posed by the technology and any other external and internal factor.for the
past three decades banking system has several outstanding achievements to its credit. The
most strinking is its extensive reach. It is no longer confided to only metropolitans or
cosmopolitants in india. Indian banking system has reached even to the remote corners of
the country. This is one of the main reason of india’s growth process

HISTORY

The first bank in india, though conservative, was established in 1786. From 1786 till today,
the journey of Indian Banking System can be segregated in to three distinct phases. They
are as mentioned below:

PHASE 1- Early phase from 1786 to 1969 of Indian Banks

PHASE II – Nationalization of Indian Banks and up to 1991

PHASE III – Indian Financial & Banking sector Reforms after 1991

PHASE-I :

The General Bank of India was set up in the year 1789. Next came Bank of Hindustan and
Bengal Bank.

The east India bank Established

 Bank of Bengal (1809)

 Bank of Bombay (1840)
 Bank of Madras (1843)

As independent units and called it presidency Bank

 These three banks were amalgamated in 1920 and Imperial Bank of India
was established which started as private share holders bank, mostly Europeans
shareholders. During the first phase the growth was very slow and bank also Experienced
periodic failure between 1913 and 1948. There were approximately 1100 banks, Mostly
small. To streamline.
1.2 Scope of the Study

1. The study has great significance and provides benefits to various parties whom
directly or indirectly interact with the bank.
2. It is beneficial to management of the bank by providing crystal clear picture
regarding important aspects like liquidity, leverage, activity and profitability.
3. The study is also beneficial to employees and offers motivation by showing how
actively they are contributing for bank’s growth.
4. The investors who are interested in investing in the bank’s shares will also get
benefited by going through the study and can easily take a decision whether to
invest or not to invest in the bank’s shares.
5. To know whether the bank is growing or incurring losses or it is stagnant in its
performance.
 2. REVIEW OF LITERATURE

A Review of the Theoretical and Empirical Basis of Financial Ratio Analysis

Financial ratios are widely used for modeling purposes both by practitioners and
researchers. The firm involves many interested parties, like the owners, management,
personnel, customers, suppliers, competitors, regulatory agencies, and academics, each
having their views in applying financial statement analysis in their evaluations.
Practitioners use financial ratios, for instance, to forecast the future success of companies,
while the researchers' main interest has been to develop models exploiting these ratios.
Many distinct areas of research involving financial ratios can be discerned. Historically one
can observe several major themes in the financial analysis literature. There is overlapping
in the observable themes, and they do not necessarily coincide with what theoretically
might be the best founded areas, ex post.

The existing themes include

 The functional form of the financial ratios, i.e. the proportionality discussion,
 Distributional characteristics of financial ratios,
 Classification of financial ratios,
 Comparability of ratios across industries, and industry effects,
 Distributional characteristics of financial ratios,
 Classification of financial ratios,
 Comparability of ratios across banking industries, and banking industry effects,
 Time-series properties of individual financial ratios,
 Bankruptcy prediction models,
 Explaining (other) firm characteristics with financial ratios,
 Stock markets and financial ratios,
 Forecasting ability of financial analysts vs. financial models,
 Estimation of internal rate of return from financial statements
 The history of financial statement analysis dates far back to the end of the
previous century. However, the modern, quantitative analysis has developed into its various
segments during the last two decades with the advent of the electronic data processing
techniques. The empiricist emphasis in the research has given rise to several, often only
loosely related research trends in quantitative financial statement analysis. Theoretical
approaches have also been developed, but not always in close interaction with the empirical
research.
 3. PROFILE

3.1 INDUSTRY PROFILE

Axis Bank Limited provides a suite of corporate and retail banking products. The Bank
operates through four segments: Treasury, Retail Banking, Corporate/Wholesale Banking
and Other Banking Business. Its Treasury operations include investments in sovereign and
corporate debt, equity and mutual funds, trading operations, derivative trading and foreign
exchange operations on the proprietary account and for customers. Its Retail Banking
constitutes lending to individuals/small businesses and activities include liability products,
card services, Internet banking, mobile banking and financial advisory services among
others. Its Corporate/Wholesale Banking includes corporate relationships not included
under Retail Banking, corporate advisory services, placements and syndication, project
appraisals, capital market related services and cash management services. Its Other
Banking Business includes Para banking activities, such as third-party product distribution
and other banking transactions.

Axis Bank is the third largest private sector bank in India. The Bank offers the entire
spectrum of financial services to customer segments covering Large and Mid-Corporate,
MSME, Agriculture and Retail Businesses.
The Bank has a large footprint of 2589 domestic branches (including extension counters)
and 12,355 ATMs spread across the country as on 31st March 2015. The overseas
operations of the Bank are spread over nine international offices with branches at
Singapore, Hong Kong, Dubai (at the DIFC), Colombo and Shanghai; representative
offices at Dhaka, Dubai, Abu Dhabi and an overseas subsidiary at London, UK. The
international offices focus on corporate lending, trade finance, syndication, and investment
banking and liability businesses.

Axis Bank is one of the first new generation private sector banks to have begun operations
in 1994. The Bank was promoted in 1993, jointly by Specified Undertaking of Unit Trust of
India (SUUTI) (then known as Unit Trust of India), Life Insurance Corporation of India
(LIC), General Insurance Corporation of India (GIC), National Insurance Bank Ltd., The
New India Assurance Bank Ltd., The Oriental Insurance Bank Ltd. and United India
Insurance Bank Ltd. The share holding of Unit Trust of India was subsequently transferred
to SUUTI, an entity established in 2003.
With a balance sheet size of Rs. 4, 61,932crores as on 31st March 2015, Axis Bank has
achieved consistent growth and stable asset quality with a 5 year CAGR (2010-11 to 2014-
15) of 21% in Total Assets, 18% in Total Deposits, 22% in Total Advances and 24% in Net
Profit.
Overview

Retail banking

The Bank aims to increase its share in the financial services sector by continuing to build a
strong retail franchise. The segment continues to be one of the key drivers of the Bank’s
growth strategy, encompassing a wide range of products delivered through multiple
channels to customers. The Bank offers a complete suite of products across deposits, loans,
investment solutions, payments and cards and is committed to developing long-term
relationships with its customers by providing high-quality services.
The Bank pursues an effective customer segmentation strategy, the success of which is
reflected in the fact that Savings Bank deposits grew at a Compounded Annual Growth
Rate (CAGR) of 26.13% over the last five years. During the year, Savings Bank deposits
grew 23.44% to Rs. 63,778 cores from Rs. 51,668 cores last year. On a daily average basis,
Savings Bank deposits grew 20.26% to Rs. 52,243 crores. The Bank has also maintained its
approach in increasing the proportion of Retail Term Deposits. On the 31st March 2013,
retail term deposits grew 24.37% year-on-year to Rs. 59,531 crores, constituting 42.37% of
total term deposits, compared to 37.20% last year. Likewise, the Bank continued to focus
on increasing its share of retail loans in total advances. The retail loans of the Bank grew
43.62% to Rs. 53,960 crores as on 31st March 2013 from Rs. 37,570 crores last year. Retail
loans constituted 27.40% of the Bank’s total advances as on 31st March 2013, compared to
22.13% last year of which secured loans accounted for 87%. The distribution of specific
portfolios within the Retail loan segment as on 31st March 2013 was as follows: home
loans - 65%, loans against property - 7%, auto loans - 14%, personal loans and credit cards
- 9%.

Business banking:

Business Banking offers transactional banking services, leveraging upon the Bank’s
network and technology. Its initiatives focus on procurement of low-cost funds by offering
a range of current account products and cash management solutions across all business
segments covering corporates, institutions, central and state government ministries and
undertakings as well as small and retail business customers. Product offerings of this
business segment aim at providing customised transactional banking solutions to fulfill
customer’s business requirement. Cross-sell of transactional banking products, product
innovation and a customer-centric approach have succeeded in growing current account
balances and realisation of transaction banking fees. As on 31st March 2013, balances in
current accounts increased by 21.55% and stood at Rs. 48,322 crores compared to Rs.
39,754 crores last year. On a daily average basis, current accounts balances grew by 4.73%
to Rs. 28,698 crores compared to Rs. 27,403 crores last year.
In the cash management services (CMS) business, the Bank focuses on offering customised
service to its customer to cater to specific corporate requirements and improve the existing
product line to offer enhanced features to customers. The Bank is also focusing on host-to-
host integration for both collections and payments, such as IT integration between
corporates and the Bank for seamless transactions and information flow. The Bank provides
comprehensive structured MIS reports on a periodic basis, for better accounting and
reporting. CMS continued to constitute an important source of fee income and contributed
significantly to generate low cost funds. The Bank is one of the top CMS providers in the
country with the number of locations covered under CMS increased to 890 from 801 last
year. The number of CMS clients has grown to 15,818 from 11,548 last year.

Corporate credit:

In the backdrop of a subdued macro-economic environment, capital expenditure by

corporates remained lacklustre during the year. Loans for working capital and the
drawdown on committed sanctions in existing projects under implementation contributed to
the growth in corporate credit during the year. The corporate credit portfolio of the Bank
comprising advances to large and mid-corporates including infrastructure) grew 7.89% to
Rs. 98,239 crores from Rs. 91,053 crores last year. This includes advances at overseas
branches amounting to Rs. 29,972 crores (equivalent to USD 5.52 billion) comprising
mainly the portfolio of Indian corporates and their subsidiaries as also trade finance. The
advances at overseas branches accounted for 15.22% of total advances. The Bank’s
infrastructure business includes project and bid advisory services, project lending, debt
syndication, project structuring and due diligence, securitisation and structured finance.

International banking:

The international operations of the Bank have generally catered to Indian corporates who
have expanded their business overseas. The overseas network of the Bank currently spans
the major financial hubs in Asia. The Bank now has a foreign network of four branches at
Singapore, Hong Kong, DIFC-Dubai and Colombo (Sri Lanka), and three representative
offices at Shanghai, Dubai and Abu Dhabi, besides strategic alliances with banks and
exchange houses in the Gulf Co-operation Council (GCC) countries. While branches at
Singapore, Hong Kong, DIFC-Dubai and Colombo enable the Bank to partner with Indian
corporates doing business globally and primarily offer corporate banking, trade finance,
treasury and risk management solutions, the Bank also offers retail liability products from
its branches at Hong Kong and Colombo. The representative offices and strategic alliances
with banks and exchange houses in the GCC countries cater to the large Indian diaspora
and promote the Bank’s NRI products. With management of liquidity being a major
challenge in the present global markets, the Bank consciously restrained its asset growth at
the overseas centres to report an asset size of USD 6.84 billion as at 31st March 2013 vis-à-
vis USD 6.35 billion as at 31st March 2012. Further, interactions are also in progress with
China Banking Regulatory Commission (CBRC) for upgrade of the Shanghai
Representative Office into a branch.

Information technology:

Technology is one of the key enablers for business and for delivering customised financial
solutions. The Bank continued to focus on introducing innovative banking services through
investments in scalable, robust and function-rich technology platforms to enable delivery of
efficient and seamless services across multiple channels for customer convenience and cost
reduction. The Bank has also focused on improving the governance process in IT. During
the year, the Bank has received certification of ISO 27001:2005 by BSI (ANAB accredited)
for complying with the standards of Information Security Management System for its data
centres located in Navi Mumbai and Bengaluru. The Bank has also successfully completed
migration of its data centre to a co-hosted location during the year. The new premises offer
a category IV data center that complies with the highest benchmarking standards applicable
to data centres promising built-in redundancy of infrastructure. A robust Project
Management framework is used to ensure that investments in IT are based on good gate-
keeping principles and result in appropriate payback in value terms.

CSR:

Axis Bank has set up a Trust – the Axis Bank Foundation (ABF)to channel its
philanthropic initiatives. The Foundation has committed itself to participate in various
socially relevant endeavours with a special focus on poverty alleviation, providing
sustainable livelihoods, education of the underprivileged, healthcare, sanitation etc. The
Bank contributes up to one per cent of its net profit annually to the Foundation under its
CSR initiatives.
The Foundation aims to provide one million sustainable livelihoods to the underprivileged
in some of the most backward regions of the country in the next five years, with 60% of the
beneficiaries being women.
The Foundation nurtures / supports NGOs working in the areas of education health and
development of underprivileged and special children. The Foundation also supports various
projects to impart vocational training to the underprivileged youth.
The Foundation supports the Lifeline Foundation for providing high level trauma care and
rural medical relief in the states of Maharashtra, Kerala, Gujarat and Rajasthan. The
Foundation also supports projects in skill development, water harvesting and low-cost
agricultural practices to enhance farm yield.
 Vision 2015

To be the preferred financial solutions provider excelling in customer delivery through

insight, empowered employees and smart use of technology

Core Values

 Customer Centricity
 Ethics
 Transparency
 Teamwork
 Ownership

Awards:

1. Axis Bank wins 'Best Loyalty Program of the year' for the second year in a row, 9th
Edge Loyalty Awards 2016
2. Axis Bank wins 'Best Reward Program of the year' for the second year in a row, 9th
Edge Loyalty Awards 2016
 SWOT ANALYSIS:

Strengths
 Axis bank has been given the rating as one of top three positions in terms of fastest growth
in private sector banks
 Financial express has given number two position and BT-KPMG has rated AXIS bank as
the best bank with some 26 parameters
 The bank has a network of 1,493 domestic branches and 8,324 ATMs
 The bank has its presence in 971 cities and towns
 The banks financial positions grows at a rate of 20% every year which is a major positive
sign for any bank
 The bank’s net profit is Q3FY12 is 1,102.27 which has a increase of 25.19% growth
compared to 2011

Weaknesses
 Gaps – Majorly they concentrated in corporate, wholesale banking, treasury services, retail
banking
 Foreign branches constitute only 8% of total assets
 Very recently the bank started focusing its attention towards personal banking and rural
areas
 The share rates of AXIS bank is constantly fluctuating in higher margins which makes
investors in an uncomfortable position most of the time
 There are lot of financial product gaps in terms of performance as well as reaching out to
the customer
 There are many fraudulent activities involved in credit cards as the banks process credit
card approval even without verification of original documents
 Their financial consultants are not wise enough to guide the customers towards right
investments
 Customer service has to improve a lot in order to be in race with other major players
 Opportunities
 Acquisitions to fill gap
 In 2009, Alliance with MotilalOswal for online trading for 10 million customers
 In 2010, acquired Enam Securities Pvt Ltd – broking and investment banking
 In Sep 2009, SEBI approved Axis Asset Management Co. for mutual fund business
 No. of e-transactions increased from 0.7 million to around 2 million
 Geographical expansion to rural market – 80% of them have no access to formal lending
 46% use informal lending channels
 24% unregulated money lenders
 Now number of branches increased to 1493 from 339.
 Last quarter there were 48 new branches opened across the Nation
 Since it’s a new age banking there are lot of opportunities to have the advance technicalities
in banking solutions compared to existing major players
 The assets in their international operations are growing at a very faster pace with a growth
rate of 9%.
 The concept of ETM (Everywhere teller machine) by AXIS Bank had a good response in
terms of attracting new customers in personal banking segment

Threats
 Since 2009, RBI has increased CRR by 100 basis points
 Increased repo rate reverse repo rate by 50 points – 11 times of late
 Increasing popularity of QIPs due to ease in fund raising
 RBI allowed foreign banks to invest up to 74% in Indian banking
 Government schemes are most often serviced only by govern banks like SBI ,Indian Banks,
Punjab National Bank etc
 ICICI and HDFC are imposing strong threats in terms of their expansion in customer base
by their aggressive marketing strategies
 4. RESEARCH METHODOLOGY

4.1 Statement of Problem

The analysis of the financial statements i.e. income statement and the balance sheet
it is very difficult to analyze the complete picture of financial performance. Therefore there
is a need of applying the modern tools of management accounting to access the exact
financial performance and position of the business enterprise.

Accounting ratios are relationships expressed in mathematical terms between the

figures that are connected with each other in some manner. All companies whether big or
small will prefer to be in good financial position. The balance sheet of the bank that has
been undertaken for the study, furnishes that the bank is in good financial position. But the
exact worth of the financial position of the bank would be better understandable only if it is
subjected to analysis such as “Ratio Analysis in Axis bank

Hence the topic for the study is chosen as “Analysis of Financial Statement using
Ratio Analysis.”

4.2 Research Methodology

Research methodology is a way to systematically solve the research problem. It may

be understood as a science of studying how research is done scientifically. So, the research
methodology not only talks about the research methods but also considers the logic behind
the method used in the context of the research study.

Research Design

Descriptive research is used in this study because it will ensure the minimization of
bias and maximization of reliability of data collected. The researcher had to use fact and
information already available through financial statements of earlier years and analyze
these to make critical evaluation of the available material. Hence by making the type of the
research conducted to be both Descriptive and Analytical in nature.

From the study, the type of data to be collected and the procedure to be used for this
purpose were decided.
4.3 Objectives of the Study

1. To determine the Profitability, Liquidity Ratios.

2. To analyze the capital structure of the bank with the help of Leverage ratio.
3. To study the present and past financial system at Axis bank.
4. To offer appropriate suggestions for the better performance of the organization

4.4 Data Collection

The required data for the study are basically secondary in nature and the data are
collected from the audited reports of the bank.

4.4.1. Primary Data

The primary data was collected mainly with the interactions and discussions with
the bank executives.

4.4.2. Secondary data

Most of the calculations are made on financial statements of the bank and the bank
provided financial statement of 5 years.

Some of the information regarding to the theoretical aspects were collected by

referring standards texts and through internet.
4.5 DESIGN OF THE STUDY

RATIO ANALYSIS

The term “Ratio” refers to the numerical and quantitative relationship between two
items or variables. This relationship can be exposed as

 Percentages
 Fractions
 Proportion of numbers

Ratio analysis is defined as the systematic use of the ratio to interpret the financial
statements. Hence the strengths and weaknesses of a firm, as well as its historical
performance and current financial condition can be determined. Ratio reflects a quantitative
relationship helps to form a quantitative judgment.

Guidelines or Precautions for Use of Ratios

The calculation of ratios may not be a difficult task but their useis not easy. Following
guidelines or factors may be kept in mind whileinterpreting various ratios is

 Accuracy of financial statements

 Objective or purpose of analysis
 Selection of ratios
 Use of standards
 Caliber of the analysis

Importance of Ratio Analysis

 Aid to measure general efficiency

 Aid to measure financial solvency
 Aid in forecasting and planning
 Facilitate decision making
 Aid in corrective action
 Aid in intra-firm comparison
 Act as a good communication
 Evaluation of efficiency
Limitations of Ratio Analysis

 Differences in definitions
 Limitations of accounting records
 Lack of proper standards
 No allowances for price level changes
 Changes in accounting procedures
 Quantitative factors are ignored
 Limited use of single ratio
 Background is over looked
 Limited use
 Personal bias

Classifications of Ratios

The use of ratio analysis is not confined to financial manager only. There are
different parties interested in the ratio analysis for knowingthe financial position of a firm
for different purposes. Various accountingratios can be classified as follows:

1. Traditional Classification

2. Functional Classification

3. Significance ratios

1. Traditional Classification

It includes the following.

 Balance sheet (or) position statement ratio: They deal with the relationship between
two balance sheet items, e.g. the ratio of current assets to current liabilities etc., both
the items must, however, pertain to the same balance sheet.
 Profit & loss account (or) revenue statement ratios: These ratios deal with the
relationship between two profit & loss account items, e.g. the ratio of gross profit to
sales etc.,
  Composite (or) inter statement ratios: These ratios exhibit the relation between a
profit & loss account or income statement item and a balance sheet items, e.g. stock
turnover ratio, or the ratio of total assets to sales.

2. Functional Classification

These include liquidity ratios, long term solvency and leverageratios, activity ratios
and profitability ratios.

3. Significance ratios

Some ratios are important than others and the firm may classifythem as primary and
secondary ratios. The primary ratio is one, which is of the prime importance to a concern.
The other ratios that support the primaryratio are called secondary ratios.

In The View of Functional Classification the RatiosAre:

1. Liquidity ratio

2. Leverage ratio

3. Activity ratio

4. Profitability ratio

1. Liquidity Ratios

Liquidity refers to the ability of a concern to meet its currentobligations as & when
there becomes due. The short term obligations of afirm can be met only when there are
sufficient liquid assets. The short termobligations are met by realizing amounts from
current, floating (or)circulating assets The current assets should either be calculated liquid
(or)near liquidity. They should be convertible into cash for paying obligations of short term
nature. The sufficiency (or) insufficiency of current assets should be assessed by comparing
them with short-term current liabilities. If currentassets can pay off current liabilities, then
liquidity position will besatisfactory. To measure the liquidity of a firm the following ratios
can becalculated

 Current ratio
 Quick (or) Acid-test (or) Liquid ratio
 Absolute liquid ratio (or) Cash position ratio
(a) Current Ratio:

Current ratio may be defined as the relationship betweencurrent assets and current
liabilities. This ratio also known as Workingcapital ratio is a measure of general liquidity
and is most widely used tomake the analysis of a short-term financial position (or) liquidity
of a firm.

Current Ratio = Current asset / Current liabilities

(b) Quick Ratio

Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to
the ability of a firm to pay its short-term obligations as &when they become due. Quick
ratio may be defined as the relationship between quick or liquid assets and current
liabilities. An asset is said to be liquid if it is converted into cash within a short period
without loss of value.
Quick or liquid asset / Current liabilities
Quick Ratio =

(c) Absolute Liquid Ratio

Although receivable, debtors and bills receivable are generallymore liquid than
inventories, yet there may be doubts regarding their realization into cash immediately or in
time. Hence, absolute liquid ratioshould also be calculated together with current ratio and
quick ratio so as toexclude even receivables from the current assets and find out the
absoluteliquid assets.

Absolute Liquid Ratio = Absolute liquid assets / Current liabilities

/ Current liabilities

Absolute liquid assets include cash in hand etc. The acceptable forms for this ratio
is 50% (or) 0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid assets are considered to pay Rs.2
worth current liabilities in time as all thecreditors are nor accepted to demand cash at the
same time and then cashmay also be realized from debtors and inventories.

2. Leverage Ratios

The leverage or solvency ratio refers to the ability of a concern to meet its long term
obligations. Accordingly, long term solvency ratios indicate firm’s ability to meet the fixed
interest and costs and repayment schedules associated with its long term borrowings.

The following ratio serves the purpose of determining the solvency of the concern.

(a) Debt-to-equity ratio

Debt-to-equity ratio is the key financial ratio and is used as a standard for judging a
bank's financial standing. It is also a measure of a bank's ability to repay its obligations.
When examining the health of a bank, it is critical to pay attention to the debt/equity ratio.If
the ratio is increasing, the bank is being financed by creditors rather than from its own
financial sources which may be a dangerous trend. Lenders and investors usually prefer low
debt-to-equity ratios because their interests are better protected in the event of a business
decline. Thus, companies with high debt-to-equity ratios may not be able to attract
additional lending capital.

Debt-to-equity ratio = Long-time debt/ Shareholders fund

/ Current liabilities

(b) Fixed asset to long term funds ratio

A fixed asset to equity ratio measures the contribution of stockholders and the
contribution of debt sources in the fixed assets of the bank. It is computed by dividing the
fixed assets by the stockholders’ equity.

Other names of this ratio are fixed assets to net worth ratio and fixed assets to
proprietors fund ratio.

Fixed asset to long term

funds ratio = Fixed assets/ Long-terms funds

/ Current liabilities
(c) Interest cover ratio

The interest coverage ratio (ICR) is a measure of a bank's ability to meet its interest
payments. Interest coverage ratio is equal to earnings before interest and taxes (EBIT) for a
time period, often one year, divided by interest expenses for the same time period. The
interest coverage ratio is a measure of the number of times a bank could make the interest
payments on its debt with its EBIT. It determines how easily a bank can pay interest
expenses on outstanding debt.

Interest coverage ratio is also known as interest coverage, debt service ratio or debt
service coverage ratio.

Interest cover ratio = PBIDT/ Interest

/ Current liabilities
(d) Debit service

amount of cash flow available to meet annual interest and principal payments on debt,
coverage ratio

In corporate finance, it is the including sinking fund payments.

In government finance, it is the amount of export earnings needed to meet annual

interest and principal payments on a country's external debts.

In personal finance, it is a ratio used by bank loan officers in determining income

property loans. This ratio should ideally be over 1. That would mean the property is
generating enough income to pay its debt obligations.

(PAT+Depreciation+ Interest
Debt service coverage ratio = Loan)/ (Interest on loan+ loan
repayment in a year)
4. Asset management Ratio

Asset management (turnover) ratios compare the assets of a bank to its sales
revenue. Asset management ratios indicate how successfully a bank is utilizing its assets to
generate revenues. Analysis of asset management ratios tells how efficiently and effectively
a bank is using its assets in the generation of revenues. They indicate the ability of a bank
to translate its assets into the sales. Asset management ratios are also known as asset
turnover ratios and asset efficiency ratios

(a) Inventory turnover ratio

Inventory turnover is a measure of the number of times inventory is sold or used in

a given time period such as one year. It is a good indicator of inventory quality (whether
the inventory is obsolete or not), efficient buying practices, and inventory management.
This ratio is important because gross profit is earned each time inventory is turned over. it
is also called as stock turnover.

Inventory turnover ratio = Cost of goods sold/ Average inventory

/ Current liabilities

(b) Debtors turnover ratio

The receivable turnover ratio (debtor’s turnover ratio, accounts receivable turnover
ratio) indicates the velocity of a bank’s debt collection, the number of times average
receivables are turned over during a year. This ratio determines how quickly a bank collects
outstanding cash balances from its customers during an accounting period. It is an
important indicator of a bank’s financial and operational performance and can be used to
determine if a bank is having difficulties collecting sales made on credit.

Debtor’s turnover ratio = Credit sales/ Average debtors

/ Current liabilities
(c) Creditor’s turnover ratio

This ratio is similar to the debtor’s turnover ratio. It compares creditors with the
total credit purchases.

It signifies the credit period enjoyed by the firm in paying creditors. Accounts
payable include both sundry creditors and bills payable. Same as debtor’s turnover ratio,
creditor’s turnover ratio can be calculated in two forms, creditors’ turnover ratio and
average payment period.

Creditor’s turnover ratio = Credit purchase/ Average creditors

/ Current liabilities
(d) Fixed asset turnover ratio

Fixed asset turnover ratio compares the sales revenue a bank to its fixed assets. This
ratio tells us how effectively and efficiently a bank is using its fixed assets to generate
revenues. This ratio indicates the productivity of fixed assets in generating revenues. If a
bank has a high fixed asset turnover ratio, it shows that the bank is efficient at managing its
fixed assets. Fixed assets are important because they usually represent the largest
component of total assets.

Fixed asset turnover ratio = Sales/ Fixed assets

/ Current liabilities
(e) Total asset turnover ratio

Asset turnover ratio is the ratio of a bank’s sales to its assets. It is an efficiency ratio
which tells how successfully the bank is using its assets to generate revenue.

Total asset turnover ratio = Sales/ Total assets

/ Current liabilities
(f) Working capital turnover ratio

The working capital turnover ratio measures how well a bank is utilizing its
working capital to support a given level of sales. Working capital is current assets minus
current liabilities. A high turnover ratio indicates that management is being extremely
efficient in using a firm’s short-term assets and liabilities to support sales. Conversely, a
low ratio indicates that a business is investing in too many accounts receivable and
inventory assets to support its sales, which could eventually lead to an excessive amount of
bad debts and obsolete inventory.

Working capital turnover ratio = Sales/ working capital

(Or)
/ Current liabilities
Sales/ Net current assets

/ Current liabilities
5. Profitability Ratios

Profitability ratios measure a bank’s ability to generate earnings relative to sales,

assets and equity. These ratios assess the ability of a bank to generate earnings, profits and
cash flows relative to relative to some metric, often the amount of money invested. They
highlight how effectively the profitability of a bank is being managed.

(a) Gross profit margin

Gross profit margin (gross margin) is the ratio of gross profit (gross sales less cost
of sales) to sales revenue. It is the percentage by which gross profits exceed production
costs. Gross margins reveal how much a bank earns taking into consideration the costs that
it incurs for producing its products or services. Gross margin is a good indication of how
profitable a bank is at the most fundamental level, how efficiently a bank uses its resources,
materials, and labour. It is usually expressed as a percentage, and indicates the profitability
of a business before overhead costs; it is a measure of how well a bank controls its costs.

Gross profit margin = (Sales- cost of goods sold/ sales) *100

/ Current liabilities

(b) Net Profit margin

Net profit margin (or profit margin, net margin, return on revenue) is a ratio of
profitability calculated as after-tax net income (net profits) divided by sales (revenue). Net
profit margin is displayed as a percentage. It shows the amount of each sales dollar left over
after all expenses have been paid.

Net profit margin = (PBIT/ sales) *100

/ Current liabilities
(c) Return on capital employed

Return on capital employed (ROCE) is a measure of the returns that a business is

achieving from the capital employed, usually expressed in percentage terms. Capital
employed equals a bank's Equity plus Non-current liabilities (or Total Assets − Current
Liabilities), in other words all the long-term funds used by the bank. ROCE indicates the
efficiency and profitability of a bank's capital investments.

Return on capital Employed = (PBIT/ Capital employed) *100

(Or)
/ Current liabilities
PBIT/ Average net worth + loan funds

/ Current liabilities
 5. ANALYSIS AND INTERPRETATION

1. Current Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

CA&Loans and
advances 5699.28 9587.39 8711.54 7604.87 8138.7

CL& provisions 4973.51 4370.12 7811.18 12255.16 5674.04

Current Ratio 1.15 2.19 1.12 0.62 1.43

Interpretation

From above table the current ratio of a bank has a standard position only in the year
of 2012 to 2013, because as per rule, the current ratio of 2:1 (or) more indicates highly
solvent position of firm.
2. Quick Liquid/Acid Test Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)
CA & loans and
advances minus
inventories 3727.56 7757.65 7100.4 5925.21 6618.12
CL & Provisions
minus Bank OD 4382.64 2735.56 7640.17 9214.9 5674.04
QL/ Acid Test
0.85 2.84 0.93 0.64 1.17
Ratio

Interpretation

From the above table the bank is having good liquidity position i.e.1.17 in the year
of 2014 to 2015. The quick ratio of 1:1 indicates satisfactory position of the firm.
3. Debt-Equity Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Long time debt 166.9 500 166.9 289.83 1733.74

Share holders
fund 3707.84 2832.68 2849.88 2338.69 3184.15
Debt-Equity
0.045 0.177 0.059 0.124 0.544
Ratio

Interpretation

If the debt-equity ratio is greater than 1, then the bank assets are financed through
debt or if the ratio is less than 1, its assets are primarily financed through equity.

From the above table bank ratio is less than 1, from the year of 2011 to 2015. Hence
the bank assets are financed trough equity.
4. Fixed Asset to Long- Term Funds Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Fixed asset 5546.86 7999.88 4705.11 4652.63 3577.92

Long-term funds 166.9 500 166.9 289.83 1733.74

FA to LT funds
33.23 16.00 28.19 16.05 2.06
ratio

Interpretation

Comparing this fixed-assets-to long term funds ratio against industry, high ratios
can be interpreted as liquidity problems, because it means the bank does not have
immediate access to cash.

From the above table the bank can have an easy access to cash to meet financial
obligations in the year 20014-15, when compared to remaining years (2010-11,2011-
12,2012-13,2013-14).
5. Interest Cover

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

PBIT 1772.58 334.09 1487.56 594.85 2516.04

Interest 286.9 428.1 704.44 734.97 637.54

Interest cover 6.18 0.78 2.11 0.81 3.95

Interpretation

In the years of 2010-11,2012-13,2014-15 the interest expenses has incurred by bank

is greater than the earnings that bank have had to pay, but compare to remaining years.
However the bank is easily able to meet the interest obligation from profits.
6. Debt Service Coverage Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

PAT plus Dep plus

interest on loan 1461.08 2017.11 2188.78 1688.94 2220.09
Interest on loan plus
loan repayment in a
year 357.05 7612.22 7082.81 4617.53 4333.54

DSCR 4.09 0.26 0.31 0.37 0.51

Interpretation

The debt service coverage ratio, as per rule 2 is a satisfactory, but if it is below 1
indicates a negative cash flow.

From above table the bank is negative cash flow except in the year 2010-11, when
compared to remaining years (i.e., 2011-12, 2013-14, 2014-15) because it is less than 1.
7. Inventory Turnover Ratio

2007-08 2008-09 2009-10 2010-11 2011-12

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Cost of goods sold 13693.65 15012.49 16426.22 19097.99 23281.47

Average Inventory 563.905 501.96 417.845 322.025 365.68

Inventory
24.28 29.91 39.31 59.31 63.67
turnover ratio

Interpretation

From the above table the inventory turnover ratio of the bank is satisfactory because
the ratio is going on increasing year by year from 2010-2011 to 2014-2015.
8. Debtors Turnover Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Credit Sales 19104.87 19625.18 22356.35 24078.27 30664.18

Average Debtors 2937.7 4513.68 5813.3 5358.805 4946.355

Debtors 6.50 4.35 3.85 4.49 6.20

Turnover Ratio

Interpretation

From the above table ratio increases in the year 2010-11 is at 6.50, which decreases
to 6.20 in the year 2014-15. But in the year 2011-12 to 2013-14, it decreases to 4.35, 3.85,
4.49. It indicates that debts are being collected more promptly.
9. Creditors Turnover Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Credit Purchase 13979.91 14885.1 16374.43 18086.99 23273.03

Average creditors 3020.295 3624.009 5472.705 7226.37 4802.085

Creditors
4.63 4.11 2.99 2.50 4.85
Turnover Ratio

Interpretation

From the above table creditor’s turnover ratio is likely down in 2012-13 and 2013-
14. It shows the payment of creditor’s is slow compare with other years. A high ratio
implies velocity of payment to creditors and low the other side.
10. Fixed Asset Turnover Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Sales 19104.87 19625.18 22356.35 24078.27 30664.18

Fixed Asset 4963.475 6773.37 6352.495 4678.87 4115.275

FA turnover
3.85 2.90 3.52 5.15 7.45
ratio

Interpretation

From above table the fixed asset turnover is too high in the year 2014-15, when
compared to remaining years (i.e., 2010-11, 2011-12,2012-13, 2013-14). So, its shows that
firm is likely operating over capacity and needs to either increase its asset base (plant,
property, equipment) to support its sales or reduce its capacity.
11. Total Asset Turnover Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Sales 19104.87 19625.18 22356.35 24078.27 30664.18

Total asset 6710.01 13477 8594.23 15131.65 14823.99

Total asset
2.85 1.46 2.60 1.59 2.07
turnover ratio

Interpretation

If a bank can generate more sales with fewer assets it has a higher turnover ratio
which tells it is a good bank because it is using its assets efficiently. A lower turnover ratio
tells that the bank is not using its assets optimally. Total asset turnover ratio is a key driver
of return on equity.

From above table the total asset turnover ratio is high i.e.2.85 (in the year of 2010-
11), when compared with remaining years (i.e.,2011-12, 2012-13, 2013-14,2014-15). In the
beginning the bank was in good in using asset efficiency, later it was quite normal and
negligible.
12. Working Capital Turnover Ratio

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

Sales 19104.87 19625.18 22356.35 24078.27 30664.18

WC or Average
Net CA 1296.105 2971.52 3058.215 982.18 1719.375
WC turnover
14.74 6.60 7.31 24.52 17.83
ratio

Interpretation

The working capital turnover ratio is high in the year 2013-14 is at 24.52, and in the
year 2014-15 is at 17.83. But in the years of 2010-11, 2011-12 and 2012-13 it decreases to
14.74, 7.31 and 6.60.But it is quite normal and it is negligible. This ratio indicates that
working capital has been effectively utilized.
13. Gross Profit Margin

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)
Sales minus Cost
of Goods sold 5411.22 4612.69 5930.13 4998.28 7382.71

Sales 19104.87 19625.18 22356.35 24078.27 30664.18

GPM 28.32 23.50 26.53 20.76 24.08

Interpretation

From the above table the gross profit was high in the year 2010-11, when compared
to remaining years (i.e., 2011-12, 2012-13, 2013-14, 2014-15). A high gross profit
margin indicates that the bank can make a reasonable profit, as long as it keeps the
overhead cost in control. A low margin indicates that the business is unable to control its
production cost.
14. Net Profit Margin

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

PBIT 1239.65 362.83 604.04 163.19 2081.66

Sales 19104.87 19625.18 22356.35 24078.27 30664.18

NPM 6.49 1.85 2.70 0.68 6.79

Interpretation

From the above table the net profit margin is high in the year 2014-15, when
compared to previous years. So it’s shows that higher the margin is, the more effective the
bank is in converting revenue into actual profit.
15. Return on Capital Employed (ROCE)

2010-11 2011-12 2012-13 2013-14 2014-15

Particulars
(Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs) (Rs in Lakhs)

PBIT 1239.65 362.83 604.04 163.19 2081.66

Average Networth
plus Loan Funds 6139.16 13470.29 8263.55 8483.255 8044.025

ROCE 20.19 2.69 7.31 1.92 25.88

Interpretation

The return on capital employed is greater or higher in the year of 2014-15, when
compared to previous years. Hence ROCE can indicate that a bank can reinvest a greater
portion of its profits back into its operations, to the benefit of shareholders. The re-invested
capital is, in turn, employed ata higher rate of return, which help sgenerate higher earnings
growth.
 6.FINDINGS SUGGESTIONS AND CONCLUSION

FINDINGS

1. The current ratio has shown in a fluctuating trend from 2010-11 to 2014-15
(i.e.1.15, 2.19, 1.12, 0.62and1.43) of which indicates a continuous increase in both
current assets and current liabilities.
2. The quick ratio is also in a fluctuating trend throughout the period 2010-2015
resulting as 0.85, 2.84, 0.93, 0.64and 1.17. The bank’s present liquidity position is
satisfactory.
3. The working capital turnover ratio is increased in the year 2010-11 is at 24.52, and
in the year 2014-15 is at 17.83. But in the years of 2010-11, 2011-12 and 2012-13 it
decreases to 14.74, 7.31 and 6.60. But it is quite normal and it is negligible. This
ratio indicates that working capital has been effectively utilized.
4. The fixed asset turnover is too high i.e., 7.45, when compared to remaining years.
So, its shows that firm is likely operating over capacity and needs to either increase
its asset base (plant, property, equipment) to support its sales or reduce its capacity.
5. The net profit ratio is in fluctuation manner. It increased in the current year
compared with the previous year from 0.68 to 6.79.
6. The total asset turnover ratio is increased i.e. 2.85 (in the year of 2010-11), when
compared with remaining years. In the beginning the bank was good in using asset
efficiency, later it was quite normal and negligible.
7. The return on capital employed is greater or higher in the year of 2014-15 compared
to previous years. Hence ROCE can indicate that a bank can reinvest a greater
portion of its profits back into its operations, to the benefit of shareholders.
8. In the years of 2010-011,2012-13,2014-15 the interest expenses has incurred by
bank is greater or higher the earnings that bank have had to pay, but compare to
remaining years. However the bank is easily able to meet the interest obligation
from profits.
9. The debt service coverage of the bank is in negative cash flow except in the year
2007-08, when compared to remaining years because it is less than 1.
10. The creditor’s turnover ratio is likely down in 2013-14 to 2014-15.It shows the
payment of creditor’s is slow compare with other years. A high ratio implies
velocity of payment to creditors and low the other side.
SUGGESTION

1. From the study it is found that there is lack of periodic review & analysis which is
leading to inefficient utilization of resources &its leads to loss when its compare to
previous years apart from current year. So the firm should conduct quarterly
analysis. Hence the problems can be amended in time.
2. Liquidity refers to the ability of the concern to meet its current obligation as and
when these become due. The bank should improve its liquidity position.
3. After the analysis of Financial Statements, the bank status is better, because the Net
working capital of the bank is doubled from the last year’s position.
4. The bank profits are huge in the current year; it is better to declare the dividend to
shareholders.
5. The bank is utilizing the fixed assets, which majorly help to the growth of the
organization. The bank should maintain that perfectly.
6. The bank fixed deposits are raised from the inception, it gives the other income i.e.,
Interest on fixed deposits.
7. Bank needs to have stringent credit policy, to reduce the funds required for working
capital.
8. The bank must do efficient utilization of shareholders fund to improve its ROI and
ROE to maintain its goodwill in investors mind. The bank can go for some debt
borrowing to increase E.P.S for shareholders.
CONCLUSION

Finance is the life blood of every business. Without effective financial management
a bank cannot survive in this competitive world. A Prudent financial Manager has to
measure the working capital policy followed by the bank

The bank’s overall position is at a good position. Particularly the current year’s
position is well due to raise in the profit level from the last year position. It is better for the
organization to diversify the funds to different sectors in the present market scenario.

Higher demand for seating system can be expected in the next decade,
onceinvestments in ports and port development have started to reach fruition. As India
ishopeful of competing with other established shipbuilding nations, the multinationals
arelikely to find plentiful opportunity in India, given the compliance requirements
imposedby effects of international legislation on seating systems.

Also other segments are showing promising opportunities to grow. Withthese many
opportunities at hand along with the potential player who would be able tomake use of the
situation well, researcher would rather start looking at a career in Axis. So from this
researcher can conclude that there is a better opportunities for investors to invest in this
bank.
 7. LIMITATIONS

Limitations of the Study

1. The study provides an insight into the financial, personnel, marketing and other
aspects of Axis bank . Every study will be bound with certain limitations.
2. The study is done only on the Balance sheet and profit and Loss A/c.
3. One of the factors of the study was lack of availability of sample information. Most
of the information has been kept confidential and as such as not assed as art of
policy of bank.
4. Time is an important limitation. The whole study was conducted in a period of 60
days, which is not sufficient to carry out proper interpretation and analysis.
5. Study is based on information provided by the bank.

Need For the Study

The financial parameters are the ultimate performance indicator of any bank. This is
because invariability all costs and efficiency activities and solvency position of the bank
will reflect the financial status of the bank. The following are stated to be in the need for
the study:

 To know the financial performance of Axis bank.

 To know the operating efficiency of the bank.
 To know liquidity position of the bank.
 To understand the movements of profits over a period of time.
 To know the reasons for the variation of profits.

In short, this study is conducted so that the financial performance evaluation will
serve as an eye opener to the bank.
 BIBLIOGRAPHY

Text Books

 M Y Khan and P K Jain - Financial Management Fourth Edition-2006, Tata

McGraw-Hill Publishing Bank Limited, New Delhi.
 Murthy - Management Accounting First Edition-2000, S.Viswanathan (Printers
&Publishers), PVT, LTD.
 S.M. Maheswari - Management Accounting, Sultan Chand & Sons Educational
Publishers, New Delhi.
 R.K. Sharma and Shashi K Gupta Management Accounting and Business
Finance-16th Edition 2008
 Murali Krishna Working Capital Management- 2010
 Prasanna Chandra Financial Management: Theory & Practice- 2004

Website

 www.haritaseating.com
 www.acma.in
 www.google.com
 www.readyratios.com
 www.crisilresearcher.com
 www.moneycontrol.com
 ANNEXURE

Balance Sheet as on 31st March, 2014 & 2015

(Rs.in Lakhs)
As at 31.03.2012 As at 31.03.2011
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
a. Share Capital 776.90 776.90
b. Reserves and Surplus 2,407.25 1,561.79
2. Non- Current Liabilities
a. Long-term borrowings 1,278.27 111.65
b. Deferred tax liabilities(net) 244.88 247.97
c. Other Long- term liabilities 347.93
d. Long-term Provisions 107.54 178.18
3. Current Liabilities
a. Short-term borrowings 1,993.59 1,520.13
b. Trade payables 4,313.07 5,291.10
c. Other current liabilities 2,684.42 5,333.63
d. Short-term provisions 670.14 110.30
TOTAL 14,823.99 15,131.65
2.ASSETS
1. Non-current assets
a. Fixed assets
i.Tangible assets 3,561.38 4,411.31
ii.Intangible assets 14.41 17.47
iii. Capital work-in-
progress 2.13 223.85
b. Non-current investment 2,759.00 2,759.00
c. Deferred tax assets(net)
d. Long-term loans and
advances 313.37 72.16
e. Other non-current assets 35.00 42.99
2. Current Assets
a. Current investment 185.57 193.10
b.Inventories 760.29 839.83
c. Trade receivables 4,775.27 5,105.44
d. Cash and cash equivalents 501.31 350.52
e. Short-term loans and
advances 32.10 29.36
f. Other current assets 1,884.16 1,086.62
TOTAL 14,823.99 15,131.65