FINANCIAL ANALYSIS OF

SHREE INVESTMENT & FINANCE COMPANY LIMITED

(SIFC)

A Project work Proposal

By

RASHMI BHUSAL
TU Registration number: 7-2-927-188-2015
SHWOYAMBHU INTERNATIONAL COLLEGE

Submitted to
The Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Place of submission: Shwoyambhu International College, New -Baneshwor

January, 2020
 Table of Contents Page No.

1. Introduction............................................................................................................1
1.1 Statement of the Problem.........................................................................................1
1.2 Objective of the Study.............................................................................................2
1.3 Rationale of Study...................................................................................................2
2 Research Methodology..........................................................................................2
2.1 Research Design......................................................................................................2
2.2 Population and Sample............................................................................................3
2.3 Sources of Data........................................................................................................3
2.4 Data Analysis Techniques........................................................................................3
3 Scope and Limitation of Study.............................................................................4
4 Report Structure....................................................................................................4
5 References...............................................................................................................5
1. Introduction
Financial analysis is a subjective measure of how well a firm has allocated resources from its
primary mode of business to generate revenues. It is used as a general measure of a firm's
overall financial situation over a given period of time and further can be used to compare
similar firms across the same industry or to compare industries/ sector in overall. Typically,
financial analysis is used to analyze whether an entity is stable, solvent, liquid or profitable
enough to warrant a monetary investment and hence an important aspect of financial risk
management.

Financial statement is the most accurate source to recognize and analyze the performance of
company as it displays the records of former financial performance and the achievement
made over the years. So a legitimate analysis of financial statement enables a manager and
concern individuals to assess relative qualities and shortcomings of the firm in connection to
various part of company's financial performance. At present, financial analysis has
demonstrated itself as a tools to assist any financial institution to set a better arrangement for
future. The present study emphases on the analysis of the Financial Statements of Shree
Investment & Finance Co. Ltd. (SIFCO) for the period 2015/16 to 2017/18.

Shree Investment & Finance Co Ltd. (SIFCO) was incorporated in the year 1994 as a
Financial Services Company and a Merchant Bank. The Company has been licensed by the
Nepal Rastra Bank as “C” class Financial Institution to undertake finance services and
merchant banking activities in the country. In keeping with the growth targets, the company
has kept increasing its capital base. Today, the company has an authorized share capital of 1
Arba, issued capital is 80 Crore and paid-up capital is 80 Crore. 

1.1 Statement of the Problem

A decent financing system with assortments of services to fulfill commerce, trade industry
and agriculture needs of the country is essential for Nepal. It very well may be pictured that
the finance sector in Nepal is at its infant stage. However, in the recent period the finance
company have appeared to be showing good financial performance. In these conditions, it is
exceptionally suitable to make a research on SIFCO. This research should enable the users to
see clear image of the performance of the finance company.

The assessment has not been made to pass judgments on the financial performance of SIFCO.
Generally, its stock prices are considered for its better performance yet one can bring up the
question whether it is sufficient to reflect the financial performance of SIFCO.

The primary issue of the investigation is to ask whether the investigation of the financial
performance of SIFCO has expected to discover the following inquiries:

i) How well is the financial performance of SIFCO?

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ii) Does the finance company use its assets productively and viably?
iii) SIFCO is viewed as operationally and financially proficient, yet how far is it productive?
iv) Is the finance company keeping up its liquidity proportions?
v) Does the financial statement provide a genuine and reasonable perspective of the finance
company?

From the above focuses, the fundamental purpose behind the research is analyzing whether
the financial performance of SIFCO gives genuine and reasonable view regarding
profitability, liquidity, turnover, and effectiveness in operation.

1.2 Objective of the Study

Effective arrangements and control are key to enhancing enterprise esteem. Financial
arrangements may take many forms yet any good plan must be identified with the firm's
current quality and shortcomings. This quality must be comprehended in the event that they
are to be utilized to gain a competitive advantage and shortcoming must be perceived if a
restorative move is to be made. The basic purpose of this report is to evaluate and assess the
financial performance of SIFCO through the use of various ratios on its historical
performances and current financial conditions. Some of the specific objectives are tabulated
as below:

i) Analyze and compare the liquidity, leverage, capital adequacy and profitability ratio of
SIFCO.
ii) Study of cash inflow and outflow of the bank in the past 3 years.
iii) Providing recommendations for development of effectiveness in the smooth operation of
finance company.

1.3 Rationale of Study

This research significantly centers on the financial analysis of the liquidity position, their
profitability, cash flow management, risks and their returns of the SIFCO. The research is
imperative so as to explore the information about the significance of the financial position in
the banking perspective.

2 Research Methodology
Research Methodology is a systematic arrangement used to identify, select, process and
appraise the strategies undertaken to address the research issues. It is an approach of dealing
with the subject matter through plan and procedures in order to draw specific conclusions.
This includes accumulation of data (facts and figures), its assessment and interpretation.

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2.1 Research Design

Research design is a technique for the arrangement of the entire research exercises alongside
the research strategies to address the research issues for the most ideal outcome. It is
concerned with the identification, measurement, assessment and interpretation of data (facts
and figures).This procedure begins after selecting the research contents and expressing the
related issues. Among the types of research plan, descriptive design has been incorporated
here for analyzing and assessing the data to address the issues.

2.2 Population and Sample

Among the 25 Finance Company in Nepal, which will be considered as populace of the
research. Shree Investment & Finance Company (SIFCO) has been selected through a
random sampling.

2.3 Sources of Data

The research will be based on the data/ information gathered for the purpose of financial
analysis. The data, for example, annual reports, auditor's report along with the signed
financial statements are acquired from the company's website. Some other related data are
accumulated from the prospectus, brochures, etc. of the concerned finance company.

2.4 Data Analysis Techniques

The major part of the research will consist of ratio analysis among which few of them are
tabulated as below:

i) Liquidity analysis
- Current Assets/Current Liabilities
- Quick Assets/ Current Liabilities
ii) Profitability analysis
- Earnings per share= (Earning after tax - preference dividend)/Number of Share
- Return on equity = Net income/Shareholder equity
iii) Debt Management ratios
- Debt Equity ratio= Debt/ Equity
- Debt Assets ratio= Debt/ Assets
- Interest coverage ratio = Earnings before interest and tax/Interest cost
iv) Deposit and Total Lending
- Total Deposit/Total lending

Further, the research may consist of tools such as tables, bar diagrams, average, percentage
where necessary.

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3 Scope and Limitation of Study
This study is conducted in partial fulfillment of the requirement for the BBS 4th year. So, it
possesses some limitation of its own. They are listed as below:

i) Limited variable has been selected.

ii) The study incorporates the period of 3 Financial Years from 2015/16 to 2017/18.
iii) Use of limited tools and techniques in presenting and analyzing data.
iv) The study doesn’t show the overall position of the firm within the industry.

4 Report Structure
This section aims to give a brief outline of the table of contents of the final project report that
will comprise of three chapters as described below:

Chapter I: Introduction

This chapter tends to highlight the background of the research. It shall include a brief
introduction of the organization, objectives of study along with its rationale, review areas,
research methodology and its limitations.

Chapter II: Results and Analysis

This chapter shall cover analysis of profitability, leverage, liquidity, rates of return, Earning
per Share, Dividends per Share, cash flow statement, etc. along with the major findings of the
ratios calculated.

Chapter III: Summary and Conclusions

This chapter highlights the summary of the research on the financial analysis of SIFCO. The
research is concluded through a brief discussion on the findings with an appropriate
recommendation on its improvements and closed with the final remarks.

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5 References
 Annual Report, 2015-2018, Shree Investment & Finance Co. Ltd.

 https://www.shreefinance.com.np/

 www.nrb.org.np

 http://www.investopedia.com/terms/f/financialperformance.asp