A CASE STUDY OF RATIO ANALYSIS OF GARIMA BIKAS

BANK LIMITED.

A Project Work Report

By
Symbol No.: 5390016
T.U. Reg. No. 7-2-0539-0076-2013
Shikharapur Campus

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Pharping, Kathmandu

May, 2018

DECLARATION
I hereby declare that the project work the entitled " Ratio Analysis of Garima Bikas
Bank Limited." submitted to the faculty of management, Tribhuvan University,
Kathmandu is an original piece of Work under the supervision of Mr. Balaram
Chapagain, faculty member, Shikharapur Campus,Pharping, Kathmandu and is
submitted in partial fulfillment of the requirements for the award of the degree of
Bachelor of Business Studies (B. B. S.).This project work report has not been
submitted to any other university or institution for the award of any degree or
diploma.

Signature:

Bikash bhattarai

Date:

SUPERVISOR’S RECOMMENDATION
The project work report entitled “Ratio Analysis of Garima Bikas bank Limited”
submitted by Niroj Bhurtel of Shikharapur Campus, Pharping, Kathmandu, is
prepared under my supervision as per the procedure and format requirements laid by
the faculty of Management, Tribhuvan University, as partial fulfillment of the
requirements for the award of the degree of Bachelor of Business Studies(BBS). I,
therefore, recommend the project work report for evaluation.

…….......................
te
(Balaram Chapagain)
Project Work Supervisor
Shikharapur Campus

ENDORSEMENT
We hereby endorse the project work report entitled "Ratio Analysis of Garima
Bikas Bank Limited" submitted by Niroj Bhurtel of Shikharapur Campus,
Pharping, Kathmandu in partial fulfillment of the requirements for award of the
Bachelor of Business Studies (B.B.S.) for external evaluation.

........................ ........................
(Balaram Chapagain) (Niroj Shrestha)
Head, Research Committee Campus Chief
Shikharapur Campus, Pharping Shikharapur Campus
Date: Date:
 ABSTRACT
The topic of the project work is " Ratio Analysis of Garima Bikas Bank Limited "
The main objective of the work is to analyze Ratio of Garima Bikas Bank Limited.

The design of the study is quantitative in nature. The researcher has used purposive
sampling method to select the data. Data in this study are collected using secondary
source .The collected data are analyzed and interpreted thematically and logically.

Banking sector plays an important role in the economic development of the country.
Commercial Banks are one of the vital aspects of this sector. It is the most important
factor from the view point of shareholders and bank management.

The major source of income of a bank is interest income from loans and investments
and fee based income. However, it is very important to be reminded that most of the
bank failures in the world are due to the shrinkage in the value of loans and advances.

Financial as well as statistical tools have been deployed in order to analyze and
interpret the data and information. Under financial analysis, profitability ratio and
growth ratio have been analyzed and interpreted. Under statistical analysis, relevant
statistical tools i.e. trend analysis have been used. This analysis gives clear picture of
the performance of the bank with regard to its investment operation.
 ACKNOWLEDGEMENT
I would like to express my deep gratitude to Shikharapur Campus , Pharping,
Kathmandu for allowing to carry out this project work in partial fulfillment of the
requirements for Bachelor of Business Studies (BBS).

I am extremely grateful and indebted my respected project work supervisor Mr.

Balaram Chapagain, Shikharapur Campus , Pharping, who in spite of his busy
schedule spared his valuable moments to provide me constructive input, in the way of
guidance, inspiration, support and constant encouragement to complete this project
work. I would like to appreciate him for supervision and inspirations to improve the
quality of project work.

I wish to express my sincere gratitude to Campus Chief Mr. Niroj Shrestha. I would
also like to thanks all the administrative staff of Shikharapur Campus, Pharping.

I would be failing in my duty if I do not express thanks to my lectures Mr. Balaram

Chapagain, Mrs. Anita Bhandari whose unending contribution and immense love
have carried me through to the present status.

I am thankful to my family members and all my friends who provided regular

inspiration and continuous contribution for the completion of project work.

Lastly, I hearty beg sorry for my any mistake and assure to take responsibility for all
comments.

Niroj Bhurtel
 ABBREVIATIONS
A.D.: Anno Domini

B.C: Before Christ

B.S.: Bikram Sambat

EPS: Earning Per Share

F/Y: Fiscal Year

L/C: Letter of Credit

PBL: Prabhu Bank Limited

NRB: Nepal Rastriya Bank

NIDC: National Industrial Development Corporation

ATM: Automated Teller Machine

BOP: Balance of Payments

 CHAPTER I
INTRODUCTION

1.1 Background of Study

Garima Bikas Bank was established by a group of enthusiastic, dedicated and

successful professionals and entrepreneurs from different fields including business,
teaching, engineering, banking, accounting, management etc. The management team
also consists of experienced, qualified and devoted professionals. The bank was
incorporated under Company Act on 2064.04.22. On 2064.06.24, it acquired license
from Nepal Rastra Bank to perform its financial transactions which was approved by
the Company Registrar’s office on 2064.5.29. The bank started its formal operations
on 2064.07.18 from Waling 3, Syangja. However in the third AGM it was decided to
shift the head office to Pokhara. This step was taken to speed up the expansion plan
and also to facilitate the upgrading the bank to a national level development bank.

Vision Statement

Our vision is to be the real bank for real people through quality services to the real
seekers of modern banking.

Mission

Missions of Garima Bikas Bank Ltd. can be summarized as:

 Deliver wonderful banking service to its customers through state of the art
technology.

 Satisfy all the stakeholders with healthy and sustainable value creation.

 Contribute in poverty alleviation providing financial service to the deprived

sector through micro finance program.

 To make our vision come true through professional integrity, corporate

governance and regulating compliance..

1
1.2 Statement of the problem

The main objective of any commercial bank is maximization of profit by mobilization

of resources they have. Today bank collect money through different medium such as
remittance and other for the profit maximization. This research will try to analyze the
amount of impact of remittance on the total profit of the organization.

 What is the financial condition of the Garima Bikas Bank Ltd.?

 What are the suggestion and changes that bank could do to increase the
financial position of the Bank?

1.3 Objective of the study

 To analyze the financial condition of Garima Bikas Bank.

 To point out some suggestion and to recommended Garima Bikas Bank.

1.4 Rationale of the study

The study specially deals with the reserve fund collected by the bank through saving
account so, it is important to those people who want to know about the saving position
of the bank and who are eager to open saving account. Saving deposit has a cheque
facility from which one cannot withdraw money at any time without any interruption
and it bears certain interest. Therefore, it is better to keep money on saving account
rather than keeping idle in house, which do not bear any return. From the deposited
amount bank performs many business transaction and helps in development of
economic side of the country including domestic trade, commerce and foreign trade.

1.5 Report Structure

The report will be divided into 5 different chapters

Chapter I. Introduction

The first chapter will deal with the subject matter consisting Introduction, Problem

Statement, objective of the Study, Rationale of the study and Report Structure.

2
Chapter II. Review of Literature

The second chapter will deal with review of literature. Review of Literature will be

done from different books and previous report or thesis done on the similar topic or

subject.

Chapter III. Research Methodology

The third chapter will deal with different methodology in preparing this research.

Sources of data, sample population, research design, data collection procedure and

limitation of the study will be discussed.

Chapter IV. Results and Findings

Different data will deal with deal with presentation of data in tables and figures and

represented in the form of graphs. Major findings from the analysis will be further

discussed.

Chapter V. Discussion and Conclusion

The fifth chapter will conclude the report with the discussion and conclusion

accordingly. It will present its implication as well.

3
 CHAPTER II

RELATED LITERATURE REVIEW

2.1 Conceptual Review

“A commercial bank means bank which deals in exchanging currency, accepting

deposit, giving loans and doing commercial transaction. “The commercial bank has its
own role and contribution in the economic development. It is a resource for he
economic development, it maintain economic confluence of various segments and
extends credit to people” (Ronald, 1999:87) “Principally commercial bank accepts
deposits and provides loans, primarily to business firms there by facilitating the
transfer of fund in economy” (Abrd and gupta, 1987:115) Commercial banks act as an
intermediately; accepting deposits and providing credits to the needy area. The main
source of the commercial bank is current deposit, so they give more importance to the
liquidity of investment and as such they specialize in satisfying the short-term credit
needs of business other than the long-term. Commercial banks are restricted to invest
their funds in corporate securities. Their business is confined to financing the short-
term needs of trade and industry such as working capital financing. They cannot
finance in fixed assets. They grant credits in the form of cash credits and overdraft.
Apart from financing, they also render services like collection of bills and cheques,
safe keeping of valuables, financial advising, etc to their customers.

2.2 Review of Previous Works:

In this thesis, I have attached the previous thesis review, which are mainly concerned
about lending practices investment policy, credit management lending policy and loan
management in the similar field of commercial bank.
Dahal I. B. (2004) “A comparative study of financial performance of NBBL and
GARIMA BIKAS BANK” states that the liquidity ratio measures the ability of a firm
to meet its short-term obligations and select the short term financial solvency of a
firm. The liquidity position of the banks in term of current ratio shows that the ratios
of NBBL are always above then normal standard (i.e.2:1) where as GARIMA BIKAS
BANK’s ratio is always below than normal standard. It shows that the liquidity
position in term of current assets to current liability of NBBL is better than GARIMA
BIKAS BANK.

4
This analysis shows that NBBL has more cash ideal than GARIMA BIKAS BANK.
The main statement of the problem of his research is the main objective of the bank to
collect deposits as much as possible from the customer to be mobilized into the most
profitable and preferable sector. The study basically focused on the financial
performance of GARIMA BIKAS BANK and NBBL. In Nepal many banks and
financial companies have opened up within a span of few years. Although joint
venture banks have managed to perform better than other local commercial banks
within the short period of time they have been facing a neck to neck competition
against one another. Therefore, it is necessary to analyze the profit present study seeks
to explore the efficient and comparative financial performance of GARIMA BIKAS
BANK and NBBL. In Nepal, the profitability rate operating expenses and dividend
distribution rate and the shareholders have been found different in the financial
performance of the two joint venture banks in different period. The problem of the
study will ultimately find out the reasons about different in financial performance.

2.3 Research Gap:

No research has yet been undertaken regarding the ratio analysis of Garima Bikas
Bank Limited. This study puts its effort to find out the proportion of saving deposit
and analysis the different diversification of deposit facility of the bank.

No case study has yet been conducted about the ratio analysis of Garima Bikas Bank
Limited. Some comparative studies are previously done but in-depth study about the
bank is not found.

5
 CHAPTER III

METHODS

3. RESEARCH METHODOLOGY

This is an analytical case study of Garima Bikash Bank Syangja Branch's saving
deposit.

It runs with the following research methodology:

3.1 Types of Research

This research will use descriptive design. I will conduct using development research
to define research problem by formulating different hypothesis. Research design will
be flexible.

3.2 Population and Sample

It is self-explanatory that the study is based on only field works, a single unit,
Syangja, has been projected for the study purpose. Hence, there is no need to express
the unit in terms of sample.

3.3 Nature and Sources of data

The data presented in this report are both primary and secondary data. The primary
data has been collected from Syangja branch office and further information are
collected through personal observation method. The secondary data has been taken,
out from daily newspaper 'Gorkhapatra' and ‘Nepal Bank Patrika’.

3.4 Data collection procedures

The procedures like personal observation method and survey method are adopted
while making and collecting these data.

3.5 Instrument

For the purpose of the mathematical analysis of the data collected, the mathematical
tools and techniques used are as below:

 Mean
 Standard Deviation (σ)
 Percentage basis

6
3.6 Techniques

The data will be presented in different table, charts and figure. Most of the source of
such data will be secondary data.

3.7 Limitation of the study:

 The study give emphasize on saving account of Garima Bikas Bank,

Syangja Branch only.
 The study on saving deposit uses the trend of past, five years only.
 The overall position of Garima Bikas Bank, Syangja cannot be judged by
this report as it focuses only on saving.
 The study is based on the data given by the bank.

7
 CHAPTER IV
RESULT AND FINDING
This chapter is incorporated with various analytical tools. These analytical tools are
used to find out financial nature of Himalayan bank Limited. Ratios are used as
analytical tools in this chapter.

4.1 Presentation of Data in Tables and Figures and Their Analysis

4.1.1 Comparative Balance Sheet

Comparative balance sheet is prepare from the balance sheet of the five years is
tabular form. It will help to study and compare the financial status very easily. Here is
the balance sheet of GARIMA BIKAS BANK of five years form F.Y. 2067/68,
2068/69, 2069/70, 2070/71 and 2071/72.

4.1.2 Liquidity Ratio

Liquidity ratio is defined as to test of the solvency position for the payment of short-
term liabilities; solvency positron or liquidity denotes ability for payment of short
term liabilities. It is extremely essential for a form ton be able to meet its current
oblivious. In fact, analysis of liquidity becomes due. Liquidity ratio measures the
ability of the firm to meet its current obligations. In fact, analysis of liquidity needs
the preparation of cash budgets and -.ash and funds flow statement; but liquidity ratios
by establishing cash and other current assets to current obligation, provide a quick
measure of liquidity. A firm should ensure that it doesn't suffer from. Lack of
liquidity, and also that it doesn't have excess liquidity. The failure of a company has
met its obligations, loss of creditors' confidence or even in legal tangles resulting in
the closure of the company. A very high degree of liquidity is also bad: idle assets
earn nothing. The firm's funds will unnecessarily tie up in current assets. Therefore, it
is necessary to strike a proper balance between high liquidity and lack of liquidity.

While considering current assets, it includes cash and those assets. Rich can be
converted into cash within a year, such as sundry debtors, short-term investment, bank
deposits, stock advances and accrued income etc. current liabilities include -those
obligations which are matured within a year such as creditors, bills payable,
outstanding expenses, bank overdraft, income tax payable etc.

8
4.2.1 Current Ratio

Current ratio is the between the current assets and current liabilities of a firm. The
current ratio is measure the firm's short term solvency. It includes the availability of
current assets in rupees for every one rupee of current liability. This ratio helps the
company to determine t he desirable liquidity position to meets its maturing obligation
so, that the company may suffer form the lack of neither liquidity nor too much high
liquidity. The current ratio is calculated, dividing current assets by current liabilities,
as a conventional rule, a current ratio of 2:1 or more is considered satisfactory.

Current Assets
Current Ratio = Current liabilities where,

Current Assets = Cash and bank balance + Receivable + Advance and Deposits.
Current Liabilities = Sundry creditors + Payables and Provision.

Table No. 4.2.1

Calculation of Current Ratio
Year Current Assets Current Liabilities Current Ratio

067/68 3218410314 16797967384 0.191595223

068/69 2973543970 15724194815 0.189106279

069/70 2461490124 13944163339 0.176524763

070/71 4111333017 12963357134 0.317150332

071/72 2601459225 11773686261 0.220955372

Total 15366236650 71203368933 0.215807719

Average 3073247330 14240673787 0.215807719

The above table can be presented in the following chart:

9
 Figure No. 4.2.1
Trend Line Showing Current Ratio
18000000000

16000000000

14000000000

12000000000

10000000000
Current Assets
8000000000 Current Liabilities
6000000000

4000000000

2000000000

0
067/68 068/69 069/70 070/71 071/72

Source: Annual report of GARIMA BIKAS BANK

The above table 1 and figure shows the highest and lowest a current ratio of
GARIMA BIKAS BANK as 0.317150332 times and 0.176524763 times respectively.
Generally current ratio of 2:1 is considered satisfactory. In the case of GARIMA
BIKAS BANK current ratio is below than standard ratio.

4.3.1 Leverage Ratio

Leverage ratio is defined as the ratio of relationship between the total debt and total
assets organization's long term solvency. The short — term creditors, like bankers and
suppliers of raw materials and more concerned with the firm's current debt paying
ability. On the other hand, long-term creditors like debenture holders, financial
institutions etc are more concerned with the firm's long term financial strength. To
judge the long-term financial position of a firm, financial leverage are capital
structure ratios are calculated. These financial positions indicate mix of finds provided
by owners and lenders. As a general urge, there should be an approximate mix of debt
and owner's equity in financing the firm's assets.

4.3.2 Debt Ratio

Several debt ratios may be used to analyze the long-term solvency of a firm. The firm
may be interested in knowing the proportion of the interest bearing debt in the capital

10
structure. It may therefore compute debt ratio by dividing total debt by total assets.
Total debt will include short term and long-term debentures, bond and different
payments for buying capital equipment, bank borrowings, public deposit and any
other interest bearing loan.

Totaldebt
Debt Ratio = totalassets

Where,
Total Debt = Borrowing - Deposit Liabilities + Other Liabilities
Total Assets = Cash and Bank balance ±- Placement + Investment = loans, Advance
and purchased + Fixed Assets = Other Assets

Table no. 4.3.2

Calculation of Debt Ratio

Year  Total debt Total asset Debt ratio

067/68 23437858634 24762024991 0.946524311

068/69 25876411412 27418157873 0.943769145

069/70 27694214056 29460389672 0.940049143

070/71 31372641456 33519841111 0.935942427

071/72 33662540035 36175531637 0.930533389

Total 142043665593 151335945284 0.938598331

Average 28408733119 30267189057 0.938598331

Source: Annual report of GARIMA BIKAS

BANK

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 Figure No. 4.3.2
Trend Line Showing Debt Ratio

Series 1
0.95

0.95

0.94
Series 1
0.94

0.93

0.93

0.92
067/68 068/69 069/70 070/71 071/72

Source: Annual report of GARIMA BIKAS BANK

From the above study, the highest and lowest debt ratios of GARIMA BIKAS BANK
are 0.946524311and 0.930533389times respectively. The average debt ratio is
0.938598331 times, it shows that GARIMA BIKAS BANK has financed
93.8598331of debt from total assets.
4.3.3 Debt-Equity Ratio
This ratio reflects the relation between the shareholders' fund and outsider's fund. I
relationship describing the lenders contribution for each rupee of he owner's
contribution called debt-equity ratio. It is a relationship between debt and equity i.e.
debt to equity is indicates to what extended the firm upon outsiders for its existence. It
is calculated as follows;

Long-Term Debt equity Ratio = Share Holders equity

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 Table No. 4.3.3
Calculation of Debt-Equity Ratio
Year  Long term debt Shareholder's equity  Debt equity ratio

067/68 659005881 1324166357 0.497676049

068/69 506048286 1541746461 0.328230548

069/70 504624897 1766175616 0.28571615

070/71 595967811 2146499655 0.277646358

071/72 943177973 2512991602 0.375320782

Total 3208824848 9291579691 0.345347611

Average 641764969.6 1858315938 0.345347611

Source: Annual report of GARIMA BIKAS

BANK

Figure No. 4.3.3

Trend Line Showing Debt Equity Ratio

 Debt equity ratio

0.6

0.5

0.4
 Debt equity ratio
0.3

0.2

0.1

0
067/68 068/69 069/70 070/71 071/72

Source: Annual report of GARIMA BIKAS

BANK

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 From the above table the highest and lowest debt-equity ratio of GARIMA
BIKAS BANK are 0.497676049 and 0.277646358 respectively. Since shareholders
equity is in rising trends, the debt equity ratio decreasing trends.

4.4.1 Profitability Ratio:

A company should earn profits to survive and grow over a long period of time.
Profits a essential but it would be wrong to assume that every action initiated by
management of company should be aimed at maximizing profits, irrespective of social
consequences. Prot is the difference between revenue and expenses over a period of
me.

The profitability ratio is calculated to measure the operating efficiency of the

company.) Generally higher value of profitability shows better financial performance
of the company and vice-versa.

4.4.2 Gross Profit Margin:

Gross profit margin is the ratio of relationship between gross profits with sales
to measure the relative operating efficiency of the company. This ratio indicates the
average spread between cost of good sold and the sales revenue. It can be calculated,

Cross profit margin = Gross profit / Sales (investment)

Table No. 4.4.2

Calculation of Gross Profit Margin:
 Year Gross income Sales Gross profit ratio

067/68 1519618639 13340176785 11.39129311

068/69 308275171 11822984558 2.607422597

069/70 457457696 10889031449 4.201087104

070/71 491822905 11692341559 4.206367925

071/72 635868519 9292102510 6.843107018

Total 3413042930 57036636861 29.24927775

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 Average 682608586 11407327372 5.84985551

Figure No. 4.4.2

Trend Line Showing Gross Profit Ratio

Gross profit ratio

12

10

8
Gross profit ratio
6

0
067/68 068/69 069/70 070/71 071/72

From the above study, the highest and lowest gross profit ratios of GARIMA
BIKAS BANK are 11.39129311and 2.607422597 times respectively. The average
gross profit ratio is 5.84985551 times.

4.4.3 Return on Shareholders Equity (ROSE):

Common or ordinary shareholders are entitled to the residual profits. The rate
of dividend is not fixed; the earning may be distributed to shareholders of retained in
the business. A return of shareholders equity is calculated to see the profitability of
owner's investment. ROSE indicates how well the firm has used the resources of
owners. In fact this ratio is one of the most important ratios in financial analysis.
Generally, higher ratio shows the efficient utilization of owner's ends. It is calculated
by;

NetprofitAftertax
ROSE= ×100
Shareholdersequity

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 Table No. 4.4.3

Calculation of Retrun on Share Equity

 Year Shareholder’s Net Profit After tax  Return on share holders
Equity equity

067/68 1324166357 1519618639 1.147604023

068/69 1541746461 308275171 0.199951924

069/70 1766175616 457457696 0.259010311

070/71 2146499655 491822905 0.229127875

071/72 2512991602 635868519 0.253032489

Total 9291579691 3413042930 0.367326444

Average 1858315938 682608586 0.367326444

(Source: Annual report of GARIMA BIKAS BANK)

Figure No. 4.4.3

Trend Line Showing Return on Shareholders Equity

 Return on share holders equity

1.4

1.2

0.8  Return on share holders

equity
0.6

0.4

0.2

0
067/68 068/69 069/70 070/71 071/72

16
 From the above table and figure, we know that the highest and lowest ratio of
return on shareholders equity is 1.147604023 and 0.199951924 respectively. From the
above table we know that in the beginning the ratio is decreasing trends, which shows
the poor management performance of GARIMA BIKAS BANK. But later fiscal year
2068/69 it is in increasing in trends which show the improvement in the management
performance.

4.4.4 Return on Total Assets:

Return on total assets is defined as the ratio of the relationship between to
earning per share and the total assets. It evaluates the efficiency of the company
utilizing and mobilizing its assets, It is calculated by;

Netprofitaftertax
Return on Total Assets = TotalAssets
Table No. 4.4.4
Calculation of Return on Total Assets

 Year Total Assets Net Profit After Tax Return on total assets

067/68 24762024991 1519618639 0.061368916

068/69 27418157873 308275171 0.011243468

069/70 29460389672 457457696 0.015527890

070/71 33519841111 491822905 0.014672591

071/72 36175531637 635868519 0.017577310

Total 151335945284 3413042930 0.022552758

Average 30267189057 682608586 0.022552758

(Source: Annual report of GARIMA BIKAS BANK)

In the above table the ratio of return on total assets is in increasing trends, the highest
and lowest ratio 0.061368916 in fiscal year 067/68 and 0.011243468 in fiscal year
068/69 respectively. It shows that the management has properly utilized it assets to
earn profit in its full capacity

4.4.5 Other Ratios

17
 The liquidity ratio, activity ratio, profitability ratio and leverage ratios are
mostly used for the manufacturing houses and firms. It doesn't -mean that these
financial indicators are nor useful for analyzing banking sector. But for proper
analysis of any bank we have to use other ratio are financial indicators. These
financial then only can properly analyze the financial status of any bank. They are as
follows;

4.5.1 Return on loans and advances

The ratio is we relationship between net profit after tax and loans advances
provided by the firms. It can be calculated by dividing net profit after tax by total leas
and advances.

ROLA = Net profit after tax / Loans and advances

Table No. 4.5.1
Calculation of Return on Loans and Advances
Year  Net profit after Loans and Return on loans &
tax advances advance

067/68 1519618639 11951869350 0.12714485

068/69 308275171 12424520646 0.024811836

069/70 457457696 14642559555 0.031241648

070/71 491822905 16997997046 0.028934168

071/72 635868519 19497520482 0.032612789

Total 3413042930 75514467079 0.045197206

Average 682608586 15102893416 0.045197206

(Source: Annual report of GARIMA BIKAS BANK)

From above table the ratio the highest and lowest ratio of return on loans and
advance is 0.12714485 and 0.024811836 respectively. Return on loans and advance is
in increasing trend from the fiscal year 068/69.

4.5.2 Return on Net Fixed Assets (RONFA):

Return on net fixed assets is the ratio shows the relationship between the net
fixed asset and quantity of return revenue on fixed assets. It can be calculated by;

18
RONFA = Net profit after tax /Net fixed assets
Where, Net fixed assets = Fixed assets – Depreciation

Table No. 4.5.2

Calculated of Return on Net fixed assets

 Year Net profit after Net fixed assets

tax  RONFA

067/68 1519618639 9292102510 0.16353873

068/69 308275171 11692341559 0.026365563

069/70 457457696 10889031449 0.042010871

070/71 491822905 11822984558 0.041598879

071/72 635868519 13340176785 0.047665674

 Total 3413042930 57036636861 0.059839484

 Average 682608586 11407327372 0.059839484

In the above table the ratio of return on Net fixed assets is first decreasing then
increasing in trends, the highest and lowest ratio 0.16353873 in fiscal year 067/68 and
0.026365563 in fiscal year 068/69 respectively. It shows that the management has
properly utilized it assets to earn profit in its full capacity.

4.2 Major findings

 Saving deposit of TDBL increases continuously but a diminishing rate.
 In average, saving deposit of TDBL contributes by 8.34% to total deposit.
 TDBL has been utilizing its saving deposit funds in investment in increase
trend.
 An average ratio of 32.59% of total saving deposit is maintained in cash and
bank balance.
 The average profit ratio i. e. 38.5% comes from the saving deposit of TDBL
 The total deposit of the bank is positively curs elated to the loans and advance
of this bank. Thus, when the total deposit increases the total loans and
advances also increases.

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  The trend analysis shows that the saving deposit is in increasing trend.

CHAPTER V

DISCUSSION AND CONCLUSION

5.1 Discussion
Ratio analysis is techniques of analysis and interpretation of financial
statement through mathematical expression. It may be defined as the mathematical
expression of the relationship between two accounting figures. To evaluate the
different performance of an organization by creating the ratios from the figures of
different accounts is terms as Ratio Analysis; in short, ratio analysis can be defined as
an analysis of financial statements with the help of ratios.

The objectives of this study are to investigate whether HBO, is financially

sound or not. To fulfill these objectives financial data are collected from GARIMA
BIKAS BANK for the period of five years, from fiscal year 2067/68 to fiscal year
2071/72.

After they have been organized in suitable table, chart financial position and
performance of GARIMA BIKAS BANK has been analyzed with the help of ratio
analysis.

Ratio Analysis concern with the measurement and analysis of financial

operation of the firm through liquidity, leverage, profitability and other useful ratio.
By using ratio analysis as analytical tools, some of the results found through this
study are as follows;

From the analysis of liquidity ratio of GARIMA BIKAS BANK, current ratio
of GARIMA BIKAS BANK shows that the higher ratio is 0.14128939 times and the
lowest ratio is 0.07950825 times. Generally, current ratio is considered satisfactory
when 2:1. The Current ratio of GARIMA BIKAS BANK is in decreasing trends,
which is not satisfactory.

From the study leverage ratio of GARIMA BIKAS BANK, the highest and
lowest debt ratios of GARIMA BIKAS BANK are 0.946524311and 0.930533389
times respectively. The average debt ratio is 0.938598331 times, it shows that HBO,
has financed 93.8598331of debt from total assets and the highest and lowest debt-

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equity ratio of GARIMA BIKAS BANK are 0.497676049 and 0.277646358
respectively. Since shareholders' equity is in rising trends, the debt equity ratio is
decreasing trends.

From the study of profitability ratio of GARIMA BIKAS BANK, the highest
and lowest gross profit ratios of GARIMA BIKAS BANK are 11.39129311and
2.607422597 times respectively. The average gross profit ratio is 5.84985551 times.
The highest and lowest ratio of return on shareholders equity is 1.147604023 and
0.199951924 respectively. From that we know that in the beginning the ratio is
decreasing trends, which shows the poor management performance of GARIMA
BIKAS BANK. But later fiscal year 2071/72 it is in increasing trends which show the
improvement in the management performance. The ratio of return or total assets is in
increasing trends, the highest and lowest ratio 0.061368916 in fiscal year 067/68 and
0.011243468 in fiscal year 068/69 respectively. It shows that the management has
properly utilized it assets to earn profit in its full capacity,

From the study of other assets of GARIMA BIKAS BANK, the highest
and lowest ratio of return on loans and advance is 0.12714485 and 0.024811836
respectively. Return on loans and advance is in increasing trend from the fiscal year
068/69. The ratio of return on Net fixed assets is first decreasing then increasing in
trends, the highest and lowest ratio 0.16353873 in fiscal year 067/68 and 0.026365563
in fiscal year 068/69 respectively. It shows that the management has properly utilized
it assets to earn profit in its full capacity

5.2 Conclusion
Being a Data of joint venture commercial banks GARIMA BIKAS BANK has
contributed its possible strength for the economic development of Nepal. The
management of GARIMA BIKAS BANK has tried to cope with increasing demand of
client as much as possible in a great extent. Thus, in spite of the competition
GARIMA BIKAS BANK adapted advance technology and good financial
management. The present study mainly aims to examine the liquidity, 'leverage,
profitability and other ratio of GARIMA BIKAS BANK, which help to evaluate the
financial position i.e. strength and weakness of the GARIMA BIKAS BANK.

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 The liquidity position of GARIMA BIKAS BANK is in not good position.
Liquid assets are not taken as satisfactory in the organization.

GARIMA BIKAS BANK has properly balanced the leverage ratio. It sow that
the bark has properly financed the debt from the total assets. However, the ratio is
satisfactory; management is utilizing its assets and capital efficiently during the study.

Profitability position of GARIMA BIKAS BANK is in satisfactory. Return on

shareholder equity, return or assets etc, is in satisfactory position in the view of
owners. Other ratio of GARIMA BIKAS BANK shows in the improvement position.

5.3 Implications
On the basis of the study, the following suggestions are recommended.
 The current ratio shows the minimum position, which is not much satisfactory;
Management should be concerned about it and should try to maintain good
current ratio in the future.

 The profitability as ratio of GARIMA BIKAS BANK is satisfactory but it

cannot be highly precise. The financial manager should make effective
policies to obtain high profit.

 The trend of return on loans and advances are not much satisfactory. The bank
has high percentage of public deposit and to pay them interest, the ratio of
return on loans and advances are not much enough. The management should
investigate & make effective policies to increase the ratio, loans and advances.

 The return on shareholder equity ratio is in increasing trend, which show that
the good performances of the management, which help to increase the
goodwill of the organization so that management should maintain this trend in
future too.

 The management should look the long-term opportunities to avoid existing

weakness by improving on the existing plan and strategies.

 The bank should introduce new scheme to attract the depositors and to
increase the investment.

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 REFRENCES
Agarwal, Dr. A.N. “Business methods and machinery”
Bajracharya , BC, “Business Statistics Mathematics”
Bankers Handbook for Asia 1991; Asian Financial Publication Ltd.
Manila,Philippines.
Bhuvan and Santa Dahal, "A Hand Book To Banking"
Dangol Ratna Man, "Accounting for Financial Analysis & Planning"
Different Commercial Banks and Financial Companies-Annual Report
Gharti Padam and Kiran Thapa, “A practical book of financial management”
GARIMA BIKAS BANK -Annual Report
K.C. Shekher “Banking theory and practice”, Vikash Publication House, New Delhi
Pandy, I.M. Financial Management, fourth Edition
Panta, Prem Raj, "Field Works Assignment & Report Writing"
Sheher K.C. "Banking theory and practice", Vikash Publication House, New Delhi
Upadhaya, G.B. and Tiwari, N.R.- Principal of Mosey and Banking in Nepal, Ratna
Pustak Bhandar
http\\ www.himalayanbank .com
http\\www.Garima Bikas Bank.com

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