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I CHAMAN KUMAR hereby declare that I have undergone training at KURMANCHAL NAGAR SAHKARI BANK LIMITED, NAINITAL of a period of 7 week from 1-August-2011 to 14-Sep2011

This report is being submitted in partial fulfillment of requirement of Master of business Administration (MBA) degree course of Kumaun University.

The information in this report is based on the data collected by me. It is my original work. I have neither copied from meant for any degree/diploma course nor have submitted for award of any degree/diploma or similar program elsewhere.



Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

I am very much obliged and indebted to Mr. Atul Shah, Branch Manager of KURMANCHAL NAGAR SAHKARI BANK LIMITED, NAINITAL for his approval and valuable suggestions to take up the project. I also extend my gratitude to Mr. Sanjay Shah, Personnel Manager at Head office for his approval and valuable suggestions to take up the project at KURMANCHAL NAGAR SAHKARI BANK LIMITED, NAINITAL. I am also thankful to Mr. Sanjeev Rana, Manager Account for his support and suggestions during the project.



Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

A professional course like two year Management program demand both conceptual and practical theory of knowledge. Hence there is a provision of project. By this the student learns through his or her own experience, real situation of corporate world, and its protocol and to put his/her theoretical knowledge into practice. This experience is very valuable for the student and plays a leading as well as vital role in the professional life of the management student

The report on KURMANCHAL NAGAR SAHKARI BANK LIMITED was a complete experience in itself, which has provided me with the understanding, which has become an inspirable part of my knowledge of management being learned in Management program. An opening experience to the concept that are applied for managing financial resources in the organization.

Implementing & learning the concepts of Finance in a work place provides an opportunity to learn practically. I got a chance to apply the theory & acquaint myself with the functioning of financial methodology. Real learning places its worth only when it gives sweet fruits in future. Project report is one way to learn work. I enjoyed the interesting experience & every part of it.

Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

Company Profile

Research & Methodology Need for study Objectives Methodology Limitation

Introduction Of Financial Management Ratio Analysis Steps in ratio Analysis Basis or Standards of Comparison Nature of Ratio Analysis Guidelines or Precautions for the use of Ratio Analysis Importance of Ratio Analysis

Classification of Ratios


Data Analysis and Interpretation Findings, Summaries & Conclusion


Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

Chapter 1

The Kurmanchal Nagar Sahkari Bank Ltd., situated in Nainital in Uttarakhand State started banking operations with effect from 1st January 1983, after receiving RBI license No DBOD (UBD)/UP 318P dated 06th October 1982 Over the years the bank has acquired the status of a leading Urban Cooperative Bank not only in the State of Uttarakhand but in the whole of Northern India as well. This has become possible due to customer friendly approach, product innovation, delivery system and technology up gradation of its retailbanking network spread over 23 centres. This has been the core strength of the bank. The financials of the bank are strong and the bank has registered remarkable growth with the financial sector reforms introduced in the country in the nineties.
A ringside view of Banks retail operations are as under: (Rs. in Lacs)

31.03.2009 Paid up share capital Reserve funds and other reserves Net worth 619.12 4605.23 5224.34

31.03.2010 858.88 5356.76 6215.64

31.03.2011 1516.63 6834.28 8351.02


Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

Deposits Investments (including term deposits with other banks) Loans & Advances Net Profit Gross NPA Net NPA

48663.90 21815.85

64946.62 28220.87

82271.32 34555.91

33466.72 621.95 165.67 Nil

49892.51 781.49 189.48 Nil

67958.39 1119.53 158.34 Nil

Management The affairs of the bank are managed by an elected board of directors. There are total 13 directors on the banks board including three professional directors, one being a retired DGM of State Bank of India and two Chartered Accountant with adequate bank audit experience. The board has constituted seven sub committees viz Loan Committee, Investment Committee, Audit Committee, Executive Committee, Staff Committee, ALM Committee and Premises Committee. The board has formulated loan policy and investment policy in conformity with RBI instructions. Expenditure policy and recruitment policy have also been formulated by the board. The banks 23 branches are supervised and controlled directly by the Head Office. Of the 23 branches, all have already been in CBS. In addition to the statutory audit and inspection by RBI the bank has its own inspection system. All the branches are inspected once in a year. Inspection reports and compliance thereof are put up to the audit committee. The bank has also prescribed adequate number of control returns for watching the performance of the branches. Position of over
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dues/growth in deposits and advances are reviewed by the board in every meeting resulting in minimum NPAs.

Organizational Structure The bank follows need based recruitment policy and appointments are made in proportion to the volume of business. Recruitment is done through open competition to get quality staff. All officers and clerical staff are either graduate or postgraduate in various disciplines. With the changing demand of the banking industry, the bank has started appointing personnel excelled in MBA, MCA and BCA. All the officers and clerical staff had been provided training either at CAB Pune/RBSC Chennai and in-house training with faculty assistance from Indira Gandhi Institute of Cooperative Management, Lucknow and Institute of Cooperative Management, Dehradun. The bank has also provided training to its staff by participation in training sessions conducted by NAFCUB.

Systems and Control The bank prepares annual business plan and budget for the ensuing year and communicates the same to the all concerned well in advance. The branch functionaries are delegated adequate administrative and financial powers to achieve the targets fixed. Business plan prepared are pragmatic, achievable and consistent but at the same time they have an element of challenge, as it is essential for motivation and growth with consistency. The bank has prescribed adequate number of control returns and introduced the
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system of concurrent audit, internal inspection and branch visits by HO officials to keep control over the branches. Achievements under the various head vis a vis the targets fixed are reviewed by the board/top management periodically. Control returns are received regularly and subjected to proper scrutiny. To ensure good housekeeping balancing of books is done regularly by persons other than the ones maintaining the same. Inter branch reconciliation is centralized at Head Office and is maintained up-to-date. The bank adheres to prudential norms relating to income recognition, asset classification and provisioning. All the branches of the bank are inspected once in a year. In its coveted endeavor to provide its esteemed customers new and competitive financial products and services the bank for this purpose has tied up with various insurance companies. Details of arrangement and products offered are given below: [A]LIFEINSURANCE 1.For Life Insurance products, we have entered into a tie-up with ING Vyasya Life Insurance Company Limited. 2.For providing insurance insurance cover to its depositors aged between 18years to 54 years we have tied up with Life Insurance Corporation of India to offer Life Insurance Coverage to our depositors of Rs 100,000.00 at an unbelievably low premium of Rs. 384 per annum under our Nanda Kavach Yojana. Under this scheme we are providing free insurance coverage of Rs 25,000.00 to all Savings Bank account holders who opt for this scheme and maintain a minimum balance of Rs 5,000.00 throughout the year.

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[B] NON-LIFE INURANCE: For Non-Life Insurance we have a tie-up with UNITED INDIA General Insurance Co Ltd.

The objective of the bank remains to be a preferred provider of banking services for retail customer segments. The Bank is paying higher interest to its customers on their deposits. The deposits are insured by DICGC. The Bank has an efficient mechanism for NPA management and it has managed to keep net NPA at zero percent of net bank credit. Know Your Customer (KYC)/ Anti Money Laundering norms are followed in accordance to the regulatory norms. The bank gives high priority to customer feedback and complaints to strengthen its resolve to be a preferred provider of retail banking services.

Business Description:
Kurmanchal Bank offers wide variety of deposit plans to choose from depending on the term period, nature of deposit and its unique saving and withdrawal features. Apart from competitive interest rates and convenient withdrawal options, our deposit plans offer other features such as overdraft facility, outstation cheque collections, safe deposit lockers.

Different Types of Deposits:

Saving Bank Deposit Current Account Term Deposit Scheme

Daily Deposit (PIGMY) scheme

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Loan Scheme:
Home Loan
For purchase of new

Loan / Advances for Traders

Traders both wholesalers & retailers prohibited of by goods and commodities which are not Govt/RBI. Borrowers may be individual/ sole proprietorship/ partnership firms/ HUF/ Joint stock companies.

Flat/Bungalow, construction of own house, for purchase of land for construction of house.

Professional Loan Schemes

KNSB Ltd. extends assistance to self-employed persons, firms and joint ventures of such professional persons engaged in various professions.

Loan against NSC / KVP / LIC Policy

Any Business / personal purpose other than for speculative ones.

Transport / Vehicle Loan

For purchase of new vehicle for personal/ commercial use. Also for purchase of pre-owned vehicle which is not more than 5 years old . The term vehicle includes Car, Van and Jeep, Multi Utility Vehicle (MUVs).

Educational Loan
To provide financial support to deserving students for pursuing higher professional or technical education in India and abroad.

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Loan for SSI (Small Scale Industries)

For financing of manufacturing units.

Loan for Salaried Person

For financing of personal requirements of salaried persons.

Consumption Loan
Financing for purchase of

Special (Festive) Loan

Financing for purchase of commodities during festival like Diwali.

consumer durables, furniture, Home appliances and financing of marriages etc.

The Banks first ATM has become operational and Banks customers will now be able to enjoy ATM facilities at nearly about 7500 outlets of the 26 banks which are members of the BANCS network. These banks include Axis Bank, Bank of India & IDBI bank among others. The use of internet banking facilities among Banks customers is gradually increasing. We are hopeful that more and more of them will adopt this mode of banking in the years to come. In view of Banks performance the Reserve Bank of India has approved 8 more licenses for the Bank and arrangements are under way to utilize all of these in the current fiscal year. The number of branches should thus increase to 31 by March 2012.

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Board of Directors
The members of the board are: Chairman Mr. Aloke Sah Vice-Chairman Mr.Kishan Chandra Pant

Mr. Ghanshyam Bisth Mr. Prakash Sah Mr. Devendra Lal Mr. Deepu Bhotia Mrs. Bharti Chaudhary Mr. Manoj Saluja Mr. Girish Pathak

Director Director Director Director Director Director Director

Mr. Neeraj Sharda (Chartered Accounted) Director Mr. Radha Raman Mr. Suresh Jain Director Director

Department of Management Studies, Kumaun University, Bhimtal (Nainital )|


Chapter 2
1. The study has great significance and provides benefits to various parties whom directly or indirectly interact with the company. 2. It is beneficial to management of the company by providing crystal clear picture regarding important aspects liquidity, leverage, activity and profitability. 3. The study is also beneficial to employees and offers motivation by showing how actively they are contributing for companys growth. 4. The investors who are interested in investing in the companys 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 companys shares.

The major objectives of the resent study are to know about financial strengths and weakness of KURMANCHAL BANK through FINANCIAL RATIO ANALYSIS. The main objectives of resent study aimed as: To evaluate the performance of the company by using ratio as a yardstick to measure the efficiency of the company. To understand the liquidity, profitability and efficiency positions of the company during the study period. To evaluate and analyze various facts of the financial performance of the company. To make comparisons between the ratios during different periods.
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1. To study the present financial system at KURMANCHAL BANK. 2. To determine the profitability, Liquidity Ratios

3. To analyze the capital structure of the company with the help of

Leverage ratio.

The information is collected through secondary sources during the project. That information was utilized for calculating performance evaluation and based on that, interpretations were made.

Sources of secondary data:

1. Most of the calculations are made on the financial statements of the company provided statements. 2. Referring standard texts and referred books collected some of the information regarding theoretical aspects. 3. Method- to assess the performance of he company method of observation of the work in finance department in followed.

1. The study provides an insight into the financial and other aspects of KURMANCHAL NAGAR SAHKARI BANK LIMITED. Every study will be bound with certain limitations. 2. The below mentioned are the constraints under which the study is carried out. 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 company.
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Time is an important limitation. The whole study was conducted in a period of 45 days, which is not sufficient to carry out proper interpretation and analysis.

Tools and Techniques

As no study could be successfully completed without proper tools and techniques, same with my project. For the better presentation and right explanation I used tools of statistics and computer very frequently. And I am very thankful to all those tools for helping me a lot. Basic tools which I used for project from statistics are- Bar Charts - Pie charts - Tables Bar charts and pie charts are really useful tools for every research to show the result in a well clear, ease and simple way. Because I used bar charts and pie charts in project for showing data in a systematic way, so it need not necessary for any observer to read all the theoretical detail, simple on seeing the charts anybody could know that what is being said.

Technological Tools
Ms- Excel Ms-Access Ms-Word

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Chapter 3
Introduction to Financial Management
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. Capital investment decisions comprise the long-term choice about which projects receive investment, whether to finance that investment with equity or debts, and when or whether to pay dividends to shareholders. Short-term corporate finance decisions are called working capital management and deal with balance of current assets and current liabilities by managing cash, inventories and short-term borrowing and lending (e.g., the credit term extended to customers). Corporate finance is closely related to managerial finance, which is slightly broader in scope, describing the financial techniques available to all forms of business enterprise, corporate or not.

Role of Financial Managers

The role of financial manager can be discussed under the following heads: 1. Nature of work
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2. Working conditions 3. Employment 4. Training, Other qualifications and Advancement 5. Job outlook 6. Earning 7. Related occupations Let us discussed each of these in a detailed manner.

1. Nature of work: Almost every firm, government agency and organizations has one or more financial managers who oversee the preparation of financial reports, direct investment activities, and implement cash management strategies. As computers are increasingly used to record and organize data, many financial managers are spending more time developing strategies and implementing the long-term goals f their organization. The duties of financial managers vary with their specific titles, which include controller, treasurer or finance officer, credit manager, cash manager, and risk and insurance manager. 2. Working conditions Financial managers work in comfortable offices, often close to top managers and to departments that develop the financial data these managers need. They typically have direct access to state-of-the-art computer systems and information services. Financial managers commonly work long hours, often up to 50 or 60 per week. They generally are required to attend meetings of financial and economic associations and may travel to visit subsidiary firms or to meet customers.
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3. Employment While the vast majority is employed in private industry, nearly 1 in 10 works for the different branches of government. In addition, although they can be found in every industry, approximately 1 out of 4 are employed by insurance and finance establishments, such as banks, savings institutions, finance companies, credit unions, and securities dealers. 4. Training, Other qualifications and Advancement A bachelors degree in finance, accounting, economics, or business administration is the minimum academic preparation for financial managers. However, many employers now seek graduates with a masters degree, preferably in business administration, economics, finance, or risk management. These academic programs develop analytical skills and provide knowledge of the latest financial analysis methods and technology. Experience may be more important than formal education for some financial manager positionsnotably, branch managers in banks. Banks typically fill branch manager positions by promoting experienced loan officers and other professionals who excel at their jobs. Other financial managers may enter the profession through formal management training programs offered by the company 5. Job outlook Some companies may hire financial managers on a temporary basis, to see the organization through a short-term crisis or to offer suggestions for boosting profits. Other companies may contract out all accounting and financial operations. Even in these cases, however, financial managers may be needed to oversee the contracts. Computer technology has reduced the time and staff required to produce financial reports. As a result, forecasting earnings, profits, and costs, and generating ideas and creative ways to increase profitability will become a major role of corporate financial managers
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over the next decade. Financial managers who are familiar with computer software that can assist them in this role will be needed. 6. Earnings Large organizations often pay more than small ones, and salary levels also can depend on the type of industry and location. Many financial managers in both public and private industry receive additional compensation in the form of bonuses, which also vary substantially by size of firm. Deferred compensation in the form of stock options is becoming more common, especially for senior level executives. 7. Related occupations Financial managers combine formal education with experience in one or more areas of finance, such as asset management, lending, credit operations, securities investment, or insurance risk and loss control. Workers in other occupations requiring similar training and skills include accountants and auditors; budget analysts; financial analysts and personal financial advisors; insurance underwriters; loan counselors and officers; securities, commodities, and financial services sales agents; and real estate brokers and sales agents.

Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed, determined and presented. Ratio analysis is an attempt to derive quantitative measure or guides concerning the financial health and profitability of business enterprises. Ratio analysis can be used both in trend and static analysis.

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Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationships between the items of the balance sheet and the profit and loss account. 1. Trade creditors are interested in firms ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evaluation of the firms liquidity position. 2. Suppliers of long-term debt, on the other hand, are concerned with the firms long-term solvency and survival. They analysis the firms profitability over time, its ability to generate cash to be able to pay interest and repay principal. Long term creditors do analysis the historical financial statements and also put stress on the projected financial statements. 3. Investors, who have invested their money in the firms shares, are most concerned about the firms earnings. They focus on the analysis of the firms present and future profitability. They are also interested in firms financial structure to the extent it affects firms earning and risk. 4. Management of the firm would be interested in every aspect of the financial analysis. It is their responsibility to see that the funds are used most effectively and efficiently, and the firms financial condition is sound.

Ratio is work out to analyze the following aspects of business organizationA) Solvency1) Long term 2) Short term 3) Immediate
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B) Stability C) Profitability D) Operational efficiency E) Credit standing F) Structural analysis G) Effective utilization of resources H) Leverage or external financing


Ratios are relative figures reflecting the relation between variables. They enable analyst to draw conclusions regarding financial operations. They use of ratios as a tool of financial analysis involves the comparison with related facts. This is the basis of ratio analysis. The basis of ratio analysis is of four types. Past ratios, calculated from past financial statements of the firm. Competitors ratio, of the some most progressive and successful competitor firm at the same point of time. Industry ratio, the industry ratios to which the firm belongs to Projected ratios, ratios of the future developed from the projected or pro forma financial statements

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Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. It is only a means of understanding of financial strengths and weaknesses of a firm. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The following are the four steps involved in the ratio analysis. Selection of relevant data from the financial statements depending upon the objective of the analysis. Calculation of appropriate ratios from the above data. Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs.


The calculation of ratios may not be a difficult task but their use is not easy. Following guidelines or factors may be kept in mind while interpreting various ratios are Accuracy of financial statements Objective or purpose of analysis Selection of ratios Use of standards Caliber of the analysis
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Chapter 4

Based on Financial Statement

Based on Function

Based on Users

1. Balance Sheet Ratio

1.Liquidity Ratio

1.Ratios For Short Term Creditors.

2. Revenue Statement Ratio

2.Leverage Ratio

2.Ratio For Shareholders

3. Composite Ratio

3.Activity Ratio

3. Ratio For Management

4. Profitability Ratio

4.Ratio For Long Term Creditors

5. Coverage ratio

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Accounting ratios express the relationship between figures taken from Financial statements. Figures may be taken from Balance Sheet, P&L A/C, or both. One-way of classification of ratios is based upon the sources from which are taken. 1] Balance sheet ratio: If the ratios are based on the figures of balance sheet, they are called Balance Sheet Ratios. E.g. ratio of current assets to current liabilities or ratio of debt to equity. While calculating these ratios, there is no need to refer to the Revenue statement. These ratios study the relationship between the assets & the liabilities, of the concern. These ratio help to judge the liquidity, solvency & capital structure of the concern. Balance sheet ratios are Current ratio, Liquid ratio, and Proprietary ratio, Capital gearing ratio, Debt equity ratio, and Stock working capital ratio. 2] Revenue ratio: Ratio based on the figures from the revenue statement is called revenue statement ratios. These ratio study the relationship between the profitability & the sales of the concern. Revenue ratios are Gross profit ratio, Operating ratio, Expense ratio, Net profit ratio, Net operating profit ratio, Stock turnover ratio. 3] Composite ratio: These ratios indicate the relationship between two items, of which one is found in the balance sheet & other in revenue statement. There are two types of composite ratios a) Some composite ratios study the relationship between the profits & the Investments of the concern. E.g. return on capital employed, return on proprietors fund, return on equity capital etc. b) Other composite ratios e.g. debtors turnover ratios, creditors turnover ratios, dividend payout ratios, & debt service ratios

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Accounting ratios can also be classified according to their functions in to liquidity ratios, leverage ratios, activity ratios, profitability ratios & turnover ratios. 1] Liquidity ratios: It shows the relationship between the current assets & current liabilities of the concern e.g. liquid ratios & current ratios. 2] Leverage ratios: It shows the relationship between proprietors funds & debts used in financing the assets of the concern e.g. capital gearing ratios, debt equity ratios, & Proprietary ratios. 3] Activity ratios: It shows relationship between the sales & the assets. It is also known as Turnover ratios & productivity ratios e.g. stock turnover ratios, debtors turnover ratios. 4] Profitability ratios: a) It shows the relationship between profits & sales e.g. operating ratios, Gross profit ratios, operating net profit ratios, expenses ratios b) It shows the relationship between profit & investment e.g. return on investment, return on equity capital. 5] Coverage ratios: It shows the relationship between the profit on the one hand & the claims of the outsiders to be paid out of such profit e.g. dividend payout ratios & debt service ratios.

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1] Ratios for short-term creditors:. Current ratios, liquid ratios, stock working capital ratios 2] Ratios for the shareholders: Return on proprietors fund, return on equity capital 3] Ratios for management: Return on capital employed, turnover ratios, operating ratios, expenses ratios 4] Ratios for long-term creditors: Debt equity ratios, return on capital employed, proprietor ratios.

LIQUIDITY RATIO: Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year) obligations. The ratios, which indicate the liquidity of a company, are Current ratio, Quick/Acid-Test ratio, and Cash ratio. These ratios are discussed below

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Meaning: This ratio compares the current assets with the current liabilities. It is also known as working capital ratio or solvency ratio. It is expressed in the form of pure ratio. E.g. 2:1 Formula: Current assets Current ratio = Current liabilities The current assets of a firm represents those assets which can be, in the ordinary course of business, converted into cash within a short period Time, normally not exceeding one year. The current liabilities defined as liabilities which are short term maturing obligations to be met, as originally contemplated, within a year. Current ratio (CR) is the ratio of total current assets (CA) to total current liabilities (CL). Current assets include cash and bank balances; inventory of raw materials, semi-finished and finished goods; marketable securities; debtors (net of provision for bad and doubtful debts); bills receivable; and prepaid expenses. Current liabilities consist of trade creditors, bills payable, bank credit, provision for taxation, dividends payable and outstanding expenses. This ratio measures the liquidity of the current assets and the ability of a company to meet its short term debt obligation. CR measures the ability of the company to meet its CL, i.e., CA gets converted into cash in the operating cycle of the firm and provides the funds needed to pay for CL. The higher the current ratio, the greater the short-term solvency. This compares assets, which will become liquid within approximately twelve months with liabilities, which will be due for payment in the same period and is intended to indicate whether there are sufficient short-term assets to meet the short- term liabilities. Recommended current ratio is 2: 1. Any ratio below indicates that the entity may face liquidity problem but also Ratio over 2: 1 as above indicates over trading, that is the entity is under utilizing its current assets.
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LIQUID RATIO: Meaning: Liquid ratio is also known as acid test ratio or quick ratio. Liquid ratio compare the quick assets with the quick liabilities. It is expressed in the form of pure ratio. The term quick assets refer to current assets, which can be converted into, cash immediately or at a short notice without diminution of value. Formula: Quick assets Liquid ratio = Quick liabilities Quick Ratio (QR) is the ratio between quick current assets (QA) and CL. QA refers to those current assets that can be converted into cash immediately without any value strength. QA includes cash and bank balances, short-term marketable securities, and sundry debtors. Inventory and prepaid expenses are excluded since these cannot be turned into cash as and when required. QR indicates the extent to which a company can pay its current liabilities without relying on the sale of inventory. This is a fairly stringent measure of liquidity because it is based on those current assets, which are highly liquid. Inventories are excluded from the numerator of this ratio because they are deemed the least liquid component of current assets. Generally, a quick ratio of 1:1 is considered good. One drawback of the quick ratio is that it ignores the timing of receipts and payments. CASH RATIO Meaning: This is also called as super quick ratio. This ratio considers only the absolute liquidity available with the firm.

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Formula: Cash + Bank + Marketable securities Cash ratio = Total current liabilities Since cash and bank balances and short term marketable securities are the most liquid assets of a firm, financial analysts look at the cash ratio. If the super liquid assets are too much in relation to the current liabilities then it may affect the profitability of the firm.


EARNING PER SAHRE:Meaning: Earnings per Share are calculated to find out overall profitability of the organization. An earnings per Share represents earning of the company whether or not dividends are declared. If there is only one class of shares, the earning per share are determined by dividing net profit by the number of equity shares. EPS measures the profits available to the equity shareholders on each share held.
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Formula: NPAT Earnings per share = Number of equity share The higher EPS will attract more investors to acquire shares in the company as it indicates that the business is more profitable enough to pay the dividends in time. But remember not all profit earned is going to be distributed as dividends the company also retains some profits for the business DIVIDEND PER SHARE:Meaning: DPS shows how much is paid as dividend to the shareholders on each share held. Formula: Dividend Paid to Ordinary Shareholders Dividend per Share = Number of Ordinary Shares

DIVIDEND PAYOUT RATIO:Meaning: Dividend Pay-out Ratio shows the relationship between the dividend paid to equity shareholders out of the profit available to the equity shareholders. Formula: Dividend per share Dividend Pay out ratio = Earning per share D/P ratio shows the percentage share of net profits after taxes and after preference dividend has been paid to the preference equity holders.
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CAPITAL GEARING RATIO:Meaning: Gearing means the process of increasing the equity shareholders return through the use of debt. Equity shareholders earn more when the rate of the return on total capital is more than the rate of interest on debts. This is also known as leverage or trading on equity. The Capital-gearing ratio shows the relationship between two types of capital viz: - equity capital & preference capital & long term borrowings. It is expressed as a pure ratio. Formula: Preference capital+ secured loan Capital gearing ratio = Equity capital & reserve & surplus Capital gearing ratio indicates the proportion of debt & equity in the financing of assets of a concern.

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These ratios help measure the profitability of a firm. A firm, which generates a substantial amount of profits per rupee of sales, can comfortably meet its operating expenses and provide more returns to its shareholders. The relationship between profit and sales is measured by profitability ratios. There are two types of profitability ratios: Gross Profit Margin and Net Profit Margin.

GROSS PROFIT RATIO:Meaning: This ratio measures the relationship between gross profit and sales. It is defined as the excess of the net sales over cost of goods sold or excess of revenue over cost. This ratio shows the profit that remains after the manufacturing costs have been met. It measures the efficiency of production as well as pricing. This ratio helps to judge how efficient the concern is I managing its production, purchase, selling & inventory, how good its control is over the direct cost, how productive the concern , how much amount is left to meet other expenses & earn net profit. Formula: Gross profit Gross profit ratio = Net sales * 100

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NET PROFIT RATIO:Meaning: Net Profit ratio indicates the relationship between the net profit & the sales it is usually expressed in the form of a percentage. Formula: NPAT Net profit ratio = Net sales This ratio shows the net earnings (to be distributed to both equity and preference shareholders) as a percentage of net sales. It measures the overall efficiency of production, administration, selling, financing, pricing and tax management. Jointly considered, the gross and net profit margin ratios provide an understanding of the cost and profit structure of a firm. RETURN ON CAPITAL EMPLOYED:Meaning: The profitability of the firm can also be analyzed from the point of view of the total funds employed in the firm. The term fund employed or the capital employed refers to the total long-term source of funds. It means that the capital employed comprises of shareholder funds plus long-term debts. Alternatively it can also be defined as fixed assets plus net working capital. Capital employed refers to the long-term funds invested by the creditors and the owners of a firm. It is the sum of long-term liabilities and owner's equity. ROCE indicates the efficiency with which the long-term funds of a firm are utilized. Formula: NPAT Return on capital employed = Capital employed *100 * 100

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FINANCIAL These ratios determine how quickly certain current assets can be converted into cash. They are also called efficiency ratios or asset utilization ratios as they measure the efficiency of a firm in managing assets. These ratios are based on the relationship between the level of activity represented by sales or cost of goods sold and levels of investment in various assets. The important turnover ratios are debtors turnover ratio, average collection period, inventory/stock turnover ratio, fixed assets turnover ratio, and total assets turnover ratio. These are described below:

DEBTORS TURNOVER RATIO (DTO) Meaning: DTO is calculated by dividing the net credit sales by average debtors outstanding during the year. It measures the liquidity of a firm's debts. Net credit sales are the gross credit sales minus returns, if any, from customers. Average debtors are the average of debtors at the beginning and at the end of the year. This ratio shows how rapidly debts are collected. The higher the DTO, the better it is for the organization. Formula: Credit sales Debtors turnover ratio = Average debtors
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INVENTORY OR STOCK TURNOVER RATIO (ITR) Meaning: ITR refers to the number of times the inventory is sold and replaced during the accounting period. Formula: Cost Of Goods Sold Stock Turnover Ratio = Average stock ITR reflects the efficiency of inventory management. The higher the ratio, the more efficient is the management of inventories, and vice versa. However, a high inventory turnover may also result from a low level of inventory, which may lead to frequent stock outs and loss of sales and customer goodwill. For calculating ITR, the average of inventories at the beginning and the end of the year is taken. In general, averages may be used when a flow figure (in this case, cost of goods sold) is related to a stock figure (inventories).

FIXED ASSETS TURNOVER (FAT) The FAT ratio measures the net sales per rupee of investment in fixed assets. Formula: Net sales Fixed assets turnover = Net fixed assets This ratio measures the efficiency with which fixed assets are employed. A high ratio indicates a high degree of efficiency in asset utilization while a low ratio reflects an inefficient use of assets.
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However, this ratio should be used with caution because when the fixed assets of a firm are old and substantially depreciated, the fixed assets turnover ratio tends to be high (because the denominator of the ratio is very low). PROPRIETORS RATIO: Meaning: Proprietary ratio is a test of financial & credit strength of the business. It relates shareholders fund to total assets. This ratio determines the long term or ultimate solvency of the company. In other words, Proprietary ratio determines as to what extent the owners interest & expectations are fulfilled from the total investment made in the business operation. Proprietary ratio compares the proprietor fund with total liabilities. It is usually expressed in the form of percentage. Total assets also know it as net worth. Formula: Proprietary fund Proprietary ratio = Total fund Shareholders fund Proprietary ratio = Fixed assets + current assets STOCK WORKING CAPITAL RATIO: Meaning: This ratio shows the relationship between the closing stock & the working capital. It helps to judge the quantum of inventories in relation to the working capital of the business. The purpose of this ratio is to show the extent to which working capital is blocked in inventories. The ratio highlights the predominance of stocks in the
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current financial position of the company. It is expressed as a percentage. Formula: Stock Stock working capital ratio = Working Capital Stock working capital ratio is a liquidity ratio. It indicates the composition & quality of the working capital. This ratio also helps to study the solvency of a concern. It is a qualitative test of solvency. It shows the extent of funds blocked in stock. If investment in stock is higher it means that the amount of liquid assets is lower. DEBT EQUITY RATIO: MEANING: This ratio compares the debts with shareholders fund. The relationship between borrowed funds & owners capital is a popular measure of the financial solvency of a firm. This relationship is shown by debt equity ratio. Alternatively, this ratio indicates the relative proportion of debt & equity in financing the assets of the firm. It is usually expressed as a pure ratio. E.g. 2:1 Formula: External Equities Debt equity ratio = Internal Equities Debt equity ratio is also called as leverage ratio. Leverage means the process of the increasing the equity shareholders return through the use of debt. Leverage is also known as gearing or trading on equity. Debt equity ratio shows the margin of safety for long-term creditors & the balance between debt & equity.

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RETURN ON PROPRIETOR FUND: Meaning: Return on proprietors fund is also known as return on proprietors equity or return on shareholders investment or investment ratio. This ratio indicates the relationship between net profit earned & total proprietors funds. Return on proprietors fund is a profitability ratio, which the relationship between profit & investment by the proprietors in the concern. Its purpose is to measure the rate of return on the total fund made available by the owners. This ratio helps to judge how efficient the concern is in managing the owners fund at disposal. This ratio is of practical importance to prospective investors & shareholders. Formula: NPAT Return on proprietors fund = Proprietors fund CREDITORS TURNOVER RATIO: It is same as debtors turnover ratio. It shows the speed at which payments are made to the supplier for purchase made from them. It is a relation between net credit purchase and average creditors Net credit purchase Credit turnover ratio = Average creditors Months in a year Average age of accounts payable = Credit turnover ratio Both the ratios indicate promptness in payment of creditor purchases. Higher creditors turnover ratio or a lower credit period enjoyed signifies that the creditors are being paid promptly. It enhances credit worthiness of the company. A very low ratio indicates that the
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* 100

company is not taking full benefit of the credit period allowed by the creditors.


As a tool of financial management, ratios are of crucial significance. The importance of ratio analysis lies in the fact that it presents facts on a comparative basis & enables the drawing of interference regarding the performance of a firm. Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects: 1] Liquidity position, 2] Long-term solvency, 3] Operating efficiency, 4] Overall profitability, 5] Inter firm comparison 6] Trend analysis. 1] LIQUIDITY POSITION: With the help of Ratio analysis conclusion can be drawn regarding the liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligation when they become due. A firm can be said to have the ability to meet its shortterm liabilities if it has sufficient liquid funds to pay the interest on its short maturing debt usually within a year as well as to repay the principal. This ability is reflected in the liquidity ratio of a firm. The liquidity ratio are particularly useful in credit analysis by bank & other suppliers of short term loans.

2] LONG TERM SOLVENCY: Ratio analysis is equally useful for assessing the long-term financial Ratio analysis reveals the strength & weaknesses of a firm in this
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respect. The leverage ratios, for instance, will indicate whether a firm has a reasonable proportion of various sources of finance or if it is heavily loaded with debt in which case its solvency is exposed to serious strain. Similarly the various profitability ratios would reveal whether or not the firm is able to offer adequate return to its owners consistent with the risk involved. 3] OPERATING EFFICIENCY: Yet another dimension of the useful of the ratio analysis, relevant from the viewpoint of management, is that it throws light on the degree of efficiency in management & utilization of its assets. The various activity ratios measures this kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales revenues generated by the use of its assets- total as well as its components. 4] OVERALL PROFITABILITY: Unlike the outsides parties, which are interested in one aspect of the financial position of a firm, the management is constantly concerned about overall profitability of the enterprise. That is, they are Concerned about the ability of the firm to meets its short term as well as long term obligations to its creditors, to ensure a reasonable return to its owners & secure optimum utilization of the assets of the firm. This is possible if an integrated view is taken & all the ratios are considered together. 5] INTER FIRM COMPARISON: Ratio analysis not only throws light on the financial position of firm but also serves as a stepping-stone to remedial measures. This is made possible due to inter firm comparison & comparison with the industry averages. A single figure of a particular ratio is meaningless unless it is related to some standard or norm. one of the popular techniques is to compare the ratios of a firm with the industry average. It should be reasonably expected that the performance of a firm should be in broad conformity with that of the industry to which it belongs. An inter firm
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comparison would demonstrate the firms position vice-versa its competitors. If the results are at variance either with the industry average or with the those of the competitors, the firm can seek to identify the probable reasons & in light, take remedial measures. 6] TREND ANALYSIS: Finally, ratio analysis enables a firm to take the time dimension into account. In other words, whether the financial position of a firm is improving or deteriorating over the years. This is made possible by the use of trend analysis. The significance of the trend analysis of ratio lies in the fact that the analysts can know the direction of movement, that is, whether the movement is favorable or unfavorable. For example, the ratio may be low as compared to the norm but the trend may be upward. On the other hand, though the present level may be satisfactory but the trend may be a declining one.


Financial ratios are essentially concerned with the identification of significant accounting data relationships, which give the decisionmaker insights into the financial performance of a company. The advantages of ratio analysis can be summarized as follows: Ratios facilitate conducting trend analysis, which is important for decision making and forecasting. Ratio analysis helps in the assessment of the liquidity, operating efficiency, profitability and solvency of a firm. Ratio analysis provides a basis for both intra-firm as well as inter-firm comparisons. The comparison of actual ratios with base year ratios or standard ratios helps the management analyze the financial performance of the firm.

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Ratio analysis has its limitations. These limitations are described below: 1] Information problems Ratios require quantitative information for analysis but it is not decisive about analytical output. The figures in a set of accounts are likely to be at least several months out of date, and so might not give a proper indication of the companys current financial position. Where historical cost convention is used, asset valuations in the balance sheet could be misleading. Ratios based on this information will not be very useful for decision-making. 2] Comparison of performance over time When comparing performance over time, there is need to consider the changes in price. The movement in performance should be in line with the changes in price. When comparing performance over time, there is need to consider the changes in technology. The movement in performance should be in line with the changes in technology. Changes in accounting policy may affect the comparison of results between different accounting years as misleading. 3] Inter-firm comparison Companies may have different capital structures and to make comparison of performance when one is all equity financed and another is a geared company it may not be a good analysis. Selective application of government incentives to various companies may also distort intercompany comparison. comparing the performance of two enterprises may be misleading. Inter-firm comparison may not be useful unless the firms compared are of the same size and age, and employ similar production methods and accounting practices.

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Even within a company, comparisons can be distorted by changes in the price level. Ratios provide only quantitative information, not qualitative information. Ratios are calculated on the basis of past financial statements. They do not indicate future trends and they do not consider economic conditions.


1] To identify aspects of a businesses performance to aid decision making 2] Quantitative process may need to be supplemented by qualitative Factors to get a complete picture. 3] 5 main areas: Liquidity the ability of the firm to pay its way Investment/shareholders information to enable decisions to be made on the extent of the risk and the earning potential of a business investment Gearing information on the relationship between the exposure of the business to loans as opposed to share capital Profitability how effective the firm is at generating profits given sales and or its capital assets Financial the rate at which the company sells its stock and the efficiency with which it uses its assets


It is true that the technique of ratio analysis is not a creative technique in the sense that it uses the same figure & information, which is already appearing in the financial statement. At the same time, it is true that what can be achieved by the technique of ratio analysis cannot be achieved by the mere preparation of financial statement.
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Ratio analysis helps to appraise the firm in terms of their profitability & efficiency of performance, either individually or in relation to those of other firms in the same industry. The process of this appraisal is not complete until the ratio so computed can be compared with something, as the ratio all by them do not mean anything. This comparison may be in the form of intra firm comparison, inter firm comparison or comparison with standard ratios. Thus proper comparison of ratios may reveal where a firm is placed as compared with earlier period or in comparison with the other firms in the same industry. Ratio analysis is one of the best possible techniques available to the management to impart the basic functions like planning & control. As the future is closely related to the immediate past, ratio calculated on the basis of historical financial statements may be of good assistance to predict the future. Ratio analysis also helps to locate & point out the various areas, which need the management attention in order to improve the situation. As the ratio analysis is concerned with all the aspect of a firms financial analysis i.e. liquidity, solvency, activity, profitability & overall performance, it enables the interested persons to know the financial & operational characteristics of an organization & take the suitable decision.

Chapter 5
1. CURRENT RATIO: Year 2010 2011 Current Assets 2140872026.53 4213929832.35 Current Liabilities 3109596245.16 6640778554.88 Ratios 1.97:1 2.14:1

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7000000000.00 6000000000.00 5000000000.00 4000000000.00 Current Labilities 3000000000.00 2000000000.00 1000000000.00 0.00 2010 2011 Current Assets


Current Ratio

2.20 2.10 2.00 1.90 1.80 2010 2011 Current Ratio

Interpretation: As a conventional rule, a current ratio of 2 to 1 or more is considered satisfactory but here the company has maintained satisfactory current ratio during the last 2 years. The main reason for that is the standard working capital policy adopted by the company. Apart from fix assets, major part of current assets was financed by the long term funds. Overall, the company enjoys a standard liquidity.
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2. ABSOLUTE LIQUID RATIO: Year Absolute Liquid Liquid Liabilities Assets 2010 411613973.42 3109596245.16 2011 608519031.00 6640778554.88

Ratios 0.192:1 0.196:1


3500000000.00 3000000000.00 2500000000.00 2000000000.00 Liquid Liabilities 1500000000.00 1000000000.00 500000000.00 0.00 2010 2011 Absolute Liquid Assets


Absolute Liquid ratio

0.196 0.195 0.194 0.193 Absolute Liquid ratio 0.192 0.191 0.19 2010 2011

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Interpretation: This ratio indicates the ability to discharge its short term liabilities with the available cash on hand. A ratio of 1:1 is considered to be a good ratio but a rate of 0.75:1 is also good. The above ratios stated above imply that the company does not have enough cash on hand to meet all the current liabilities. 3. DEBT EQUITY RATIO: Year External Equities Internal Equities 2010 7777514186.50 621557705.92 2011 10208826010.77 835090904.24 Ratios 12.51:1 12.22:1






External Equities Internal Equities



0.00 2010 2011

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Debt Equity Ratio

12.55 12.50 12.45 12.40 12.35 12.30 Debt Equity Ratio 12.25 12.20 12.15 12.10 12.05 2010 2011

Interpretation: From the debt-Equity ratio it is clear that the owners of kurmanchal Nagar Sahkari Bank Ltd Finance ltd have contributed fewer funds than its lenders in all the years. It implies that the company has depended more on debt than equity. This more reliance on debt allow the company from taking the advantage of the tax shield and financial leverage but at the same time it restrict the company from regular payment of interest and obligations.

Year 2010 2011

Current Assets 2140872026.53 4213929832.35

Fixed Assets 40,759,814.07 40,622,601.86

Ratios 103.38:1 163.47:1


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7,000,000,000.00 6,000,000,000.00 5,000,000,000.00 4,000,000,000.00 3,000,000,000.00 2,000,000,000.00 1,000,000,000.00 2010 2011

Fixed Assets Current Assets


Current Assets to fixed Assets ratio

180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 2010 2011 Current Assets to fixed Assets ratio

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Interpretation: Current assets are increased and the net fixed assets of the firm are decreased due to the charge of depreciation and there is no major increment in the fixed assets. The increment in current assets and the decrease in fixed assets resulted an increase in the ratio compared with the previous year

Year 2010 2011

Outside Liability Total Assets Ratios 7,763,768,456.50 8,526,217,188.42 0.910:1 10,189,963,212.77 11,113,745,650.01 0.917:1






Total Outside Liability Total Assets



2010 2011

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Solvency Ratio
0.917 0.916 0.915 0.914 0.913 0.912 Solvency Ratio 0.911 0.91 0.909 0.908 0.907 2010 2011

Interpretation: Outside Liabilities are increased and there is not much more increment in Total Assets which is resulted an increase in the ratio compared with the previous year.

Year 2010 2011

Working Capital Net Assets 8390027339.78 8390027339.78 11035028414.26 11035028414.26

Ratios 1:1 1:1

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8,000,000,000.00 Working Capital Net Assets 4,000,000,000.00



2010 2011


Working Capital Ratio

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2010 2011 Working Capital Ratio

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Interpretation: Over the last 2 years the company has maintain the Working Capital ratio at 1:1 which is reasonably good and indicates good liquidity of the company. However the reason for maintaining the same ratio is the % increase in the companys Working Capital and Net Assets. Higher NWC ratio cannot be taken as high liquidity always because it is the test of quantity not the quality. Liquidity also depends upon the quality of current assets.

7. PROPRIETARY RATIO: Year Shareholders Fund Total Funds 2010 621557705.92 6354801858.88 2011 835090904.24 9750374800.04

Ratios 9.78% 8.56%






Net worth Total Funds



2010 2011

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Proprietory Ratio

9.8 9.6 9.4 9.2 9 Proprietory Ratio 8.8 8.6 8.4 8.2 8 7.8 2010 2011

Interpretation: This ratio establishes the relationship between the shareholders funds and the total funds of the firm. It establishes the claims of the shareholders on the firms assets. It indicates the extent to which the shareholders funds have been invested in the assets of the company. On examination of this ratio, it denotes that the share holders funds have been moderately invested in the total assets. The ratio decreased in the current year because of greaterly increased in total funds of the company and lower increment in the net worth. 8. RETURN ON SHAREHOLDERS EQUITY: Year Net Profit After Shareholders Interest & Tax Equity 2010 78,144,260.62 621557705.92 2011 111,952,521.55 835090904.24

Ratios 12.57% 13.41%


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900,000,000.00 800,000,000.00 700,000,000.00 600,000,000.00 500,000,000.00 Net Profit After interest and tax 400,000,000.00 300,000,000.00 200,000,000.00 100,000,000.00 2010 2011 Shareholders Equity


Return on Shareholder Equity

13.60 13.40 13.20 13.00 12.80 12.60 12.40 12.20 12.00 2010 2011 Return on Shareholder Equity

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Interpretation: This is the ratio between net profits and shareholders funds. The ratio is generally calculated as percentage multiplying with 100.The net profit is increased due to the increase in the income from services and the shareholders funds are increased because of reserve & surplus. So, the ratio is increased in the current year. 9. RESERVE & SURPLUS TO CAPITAL RATIO: Year 2010 2011 RESERVE & SURPLUS 535669945.92 683428064.24 CAPITAL Ratios 85,887,760.00 6.24 151,662,840.00 4.51











0.00 2010 2011

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7.00 6.00 5.00 4.00 3.00 2.00 1.00 2010 2011 RESERVE & SURPLUS TO CAPITAL RATIO

Interpretation: The ratio is used to reveal the policy pursued by the company a very high ratio indicates a conservative dividend policy and vice-versa. Higher the ratio better will be the position. The capital is increased in the year 2011. So the decrease in the reserve & surplus to capital ratio caused a greater increase in capitals ratio compared with the older. 9. RETURN ON ASSETS: Year 2010 2011 Net Profit after Interest & Tax 78,144,260.62 111,952,521.55 Net Assets Ratios

8390027339.78 0.93% 11035028414.26 1.01%

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Profit After Interest & Tax Net Assets



2010 2011


Return on Assets

1.02 1 0.98 0.96 0.94 0.92 0.9 0.88 2010 2011

Return on Assets

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Interpretation: This is the ratio between net profit and net assets. The ratio indicates the return on net assets in the form of profits. The net profit is increased in the current year because of the increment in the income from services. The fixed assets are reduced due to the charge of depreciation and no major increments in fixed assets but the current assets are increased that effects an increase in the ratio compared with the last year i.e. 2010. 10. NET INTEREST MARGIN:

Year 2010 2011

Interest Rate on Credits 11.36% 10.165

Interest Rate On Deposits 5.67% 5.10%

Net Interest Margin 5.68% 5.06%





Interest Rate on Loans Interest Rate on Deposits



2010 2011

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Net Interest Margin

5.70 5.60 5.50 5.40 5.30 Net Interest Margin 5.20 5.10 5.00 4.90 4.80 4.70 2010 2011

Interpretation: This ratio determined the net margin bank yield through interest from credits deducting by interest on deposits. In the current year this ratio is decreased due to lower interest ratio (i.e. total interest earned/total credits) on credits compare to last year. 11. CREDIT - DEPOSIT RATIO: Year 2010 2011 Credits 4989250995.53 6795838900.57 Deposits 6,494,662,360.76 8,227,132,181.07 Ratio 76.82% 82.60%

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9000000000.00 8000000000.00 7000000000.00 6000000000.00 5000000000.00 4000000000.00 3000000000.00 2000000000.00 1000000000.00 0.00 2010 2011 Loans And Advances Deposits


C-D Ratio

83.00 82.00 81.00 80.00 79.00 78.00 77.00 76.00 75.00 74.00 73.00 2010 2011 CD Ratio

Interpretation: This is the ratio between credits and deposits. The ratio determines the relationship between credits and deposits in the bank.

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The credits is graterly increased in the current year and the deposits are also increased that effects an increase in the ratio compared with the last year i.e. 2010 12. PER EMPOYEE BUSINESS: Year 2010 2011 Deposits and No. of Employees Advances 11483913356.29 193 15022971081.64 189 Per Employee Business 59502141.74 79486619.48


Per Employee Business

80,000,000.00 70,000,000.00 60,000,000.00 50,000,000.00 40,000,000.00 30,000,000.00 20,000,000.00 10,000,000.00 2010 2011 Per Employee Business

Interpretation: This PEB determined the business (deposit and advances) doing by employees of the bank. In the current year the PEB increased from the last year because of increment in loans and deposits and decreased in the number of employees.

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Composition of deposits

Saving A/c 24%

FDRs 62%

Current A/c 8%

Mini Deposit A/c 6%

Non Performin Assets (NPAs)

190 185 180 175 Rupee in Lcs 170 165 160 155 150 145 140 Non Performin Assets (NPAs) 2008-09 165.67 2009-10 189.49 2010-11 158.34

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Composition wise yearly Growth of Deposits (Rs. In Lacks)

60000 50000 40000 30000 20000 10000 0 Current Accounts Saving Bank Accounts Mini Deposit Accounts 2008-09 2009-10 2010-11 Fixed deposits Accounts 2010-11 2009-10 2008-09

120000 110350.28 100000 83900.28 80000 60416.38 60000



0 2008-09 2009-10 2010-11

Working Capital
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FINDINGS OF THE STUDY 1. The current ratio has shown in a fluctuating trend as 1.97 and 2.14 during 2010 of which indicates a continuous increase in both current assets and current liabilities. 2. The absolute liquid ratio has been increased from 0.192 to 0.195 from 2010 11 3. The proprietory ratio has shown a fluctuating trend. The proprietory ratio is decreased compared with the last year. 4. The working capital increased from 8390027339.78 to 11035028414.26 in the year 2010-11. 5. The current assets to fixed assets ratio is increasing gradually from 2010-11 as 103.38 and 163.47. It shows that the current assets are increased than fixed assets. 6. The debt equity ratio is decreased to 12.51 from 12.22 which shows company reduced the part of debt capital and increased the owner capital. 7. The solvency ratio has been increased from 0.910 to 0.917 from 2010-11 8.The Net NPA were 0% of net advances assets as of March 31,2011 as against 0% respectively as of March 31,2010 reflecting the disciplined credit risk management. 9.The return on shareholders equity is increased to 13.41% from 12.57% which indicate the growth in return on owners equity. 10. The return on assets (ROA) has been increased from 0.93% to 1.01% from 2010-11
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11. The Reserves and Surplus to Capital ratio is decreased to 4.51 from 6.24. The capital is greaterly increased, the reserves and surplus is also increased in the current year but not as capital. 12. C-D ratio is increased in the current year which shows high investment in credit, which is good for a bank because it enable bank to earn high interest on it. 13. Net Interest Margin has a fluctuating trend, it decrease by 0.62 in the current year. 14. Per Employee Business increased greaterly in the current year which shows efficient working power of the bank. SUMMARY 1) After the analysis of Financial Statements, the Bank status is better, because the working capital of the Bank is highly increased from the last years position. 2) The Bank profits are huge in the current year; it is better to declare the dividend to shareholders. 3) The Bank is utilizing the fixed assets, which majorly help to the growth of the organization. The Bank should maintain that perfectly. 4) The Banks investment on Central and State Govt. Securities are raised from the inception, it gives the other income i.e., Interest on Central and State Govt. Securities. CONCLUSION The Banks overall position is at a good position. Particularly the current years 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.

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1. Title Author Financial Management - Tenth Edition I.M. Pandey

Publisher Vikas Publishing House Pvt Ltd, 2009 2. Title Author

Management Accounting- Second Edition Pillai & Bagavati

Publisher S. Chand & Company Ltd. 3. Title Author

Management Accounting - Second Edition Sharma & Gupta

Publisher Kalyani Publisher

1. 2. 3.

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Balance sheet as on 31 s t March 2011 (Amount in Rs.)
CAPITAL i ii Authorised Capital Subscribed Capital 100,000,000.00 85,887,760.00 TOTAL 85,887,760.00 RESERVE FUND AND OTHER RESERVES I ii iii iv v vi vii viii ix x Statutory Reserve Fund Building Fund Dividend Equalisation Fund Investment Fluctuation Reserve Bad and Doubtful Debt Reserve Staff Welfare Fund Cultural and Youth Welfare Fund Investment Depreciation Reserve Provision for Standard Assets General Provisions 370,447,042.85 14,000,000.00 3,300,000.00 10,000,000.00 18,923,273.84 140,000.00 50,000.00 1,300,000.00 19,939,530.38 33,172,568.23 TOTAL 471,272,415.30 DEPOSITS AND OTHER ACCOUNTS I Term Deposits Fixed Deposit Mini Deposit Recurring Deposit 4,004,631,628.52 5,058,771,642.38 357,953,806.15 53,622,588.00 478,966,360.15 58,260,935.00



200,000,000.00 151,662,840.00 151,662,840.00

424,976,723.47 14,000,000.00 3,300,000.00 40,000,000.00 45,425,664.41 140,000.00 50,000.00 1,300,000.00 27,978,384.58 33,172,568.23 590,343,340.69

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Security MD Agents ii iii Savings Bank Deposits Current Deposits 933,943.70 603,461.70

1,604,605,517.89 1,977,141,271.55 472,914,876.50 653,388,510.29

TOTAL 6,494,662,360.76 8,227,132,181.07 BILLS FOR COLLECTION 6,592,255.64 6,319,814.75






INTEREST PAYABLE OTHER LIABILITIES I ii iii iv v vi vii viii ix x xi xii xiii xiv Bills and Draft Payable Dividend Payable Sundry Creditors Provision for Bonus/Closing/Exgratia Service Charges Other Branch Clearing Provision for Gratuity Provision for DICGC Deffered Tax Liability Provision for Income Tax Share Capital (Doon Valley UC Bank) Staff Security (Doon Valley UC Bank) Term Deposit Adjustment Provision for CA Fees



1,153,698,048.16 1,824,752,135.05 3,473,880.00 2,985,310.30 4,673,401.00 94,155.00 5,250,286.00 3,859,110.00 1,491,293.28 38,763,563.82 961,700.00 4,250.00 3,568.00 243,780.20 5,189,050.00 4,129,018.20 11,500,000.00 827.00 1,083,724.98 4,136,715.00 1,491,423.66 53,623,173.06 950,600.00 4,250.00 12,488.00 393,155.00

Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

xv xvi xvii

Provision for Donation Provision for Electricity Bill Other Liabilities (Doon Valley UC Bank)

225,000.00 500.00 6,457.00 500.00 406,267.00 -

352,111.00 15,000.00

xviii Bills Payable (Doon Valley UC Bank) xix xx Staff Provision Provision for Cooperative Education Fund

TOTAL 1,216,141,069.76 1,907,633,670.95 PROFIT AND LOSS I ii Profit as per last Balance Sheet Profit for the year 5,000.00 78,144,260.62 TOTAL 78,149,260.62 CONTINGENT LIABILITIES I Guarantee Issued 127,139,296.00 69,817,735.00 6,000.00 111,952,521.55 111,958,521.55


8,526,217,188.42 11,113,745,650.01


CASH IN HAND BALANCES WITH OTHER BANKS i ii Current Deposits Fixed Deposits





1,708,715,679.00 1,316,087,134.75 TOTAL 2,020,772,620.21 1,808,085,453.15

INVESTMENTS i ii iii Central and State Govt. Securities Public Sector Unit Bonds Shares in Central Coop Bank of the dist concerned 991,839,461.03 79,000,000.00 5,000.00 2,057,971,961.03 79,000,000.00 5,000.00

Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

iv v

Shares of UP Urban Coop Bank (proposed) Mutual Fund

1,527,000.00 41,000,000.00

1,527,000.00 1,000,000.00

TOTAL 1,113,371,461.03 2,139,503,961.03 ADVANCES i ii iii Short Term Loan Medium Term Loan Long Term Loan 2,556,998,328.40 3,753,215,261.59 555,090,028.94 533,014,138.32

1,877,162,638.19 2,509,609,500.66 TOTAL 4,989,250,995.53 6,795,838,900.57

INTEREST RECEIVABLE i ii In Investment In Loans and Advances 93,009,863.60 3,245,735.00 TOTAL 96,255,598.60 BILLS RECEIVABLE 6,592,255.64 81,426,088.96 4,446,990.00 85,873,078.96 6,319,814.75








ii iii iv v vi vii

Income Tax Refund FBT Refund Clearing Adjustment Sundry Debtors Security Deposit Library

27,943,780.00 7,956.00 2,634,460.49 86,147.14 339,926.00 8,503.28

48,825,630.98 7,956.00 496,829.49 11,000.00 344,426.00 6,022.28


Department of Management Studies, Kumaun University, Bhimtal (Nainital )|

vii i

Other Assets (Doon Valley UC Bank)


157.00 51,163,392.09

TOTAL 32,518,115.13 CONTINGENT ASSETS i Guarantee Issued 127,139,296.00



11,113,745,650.0 8,526,217,188.42 1

Profit and Loss Account for the period ended on 31st March 2011 (Amount in Rs.)
i Interest on Deposits,Borrowings etc.



368,538,493.36 419,399,191.37


Salaries,Allowances & PF Director's & Local Comm Members Allowance







Rent,Taxes,Insurance,Lighting etc.



Law Charges Postage,Telegram & Telephone Charges







Auditor's fees



viii Depreciation & Repairs to property




Stationery,Printing,Advertisement etc.



Provisions made



Department of Management Studies, Kumaun University, Bhimtal (Nainital )|


Other Expenditure




Balance of Profit




590,745,338.22 730,775,939.94

i Interest and Discount



566,554,707.73 690,145,485.50


Commission,Exchange & Brokerage



iii Other Receipts




590,745,338.22 730,775,939.94

Department of Management Studies, Kumaun University, Bhimtal (Nainital )|