CHAPTER I

INTRODUCTION AND DESIGN OF THE STUDY

The financial statement provides the basic data for financial performance analysis.Basic

limitation of the traditional financial statement comprising the balance sheet and the profit and

loss account is that they do not give all the information regarding the financial operations of a

firm. Nevertheless, they provide some useful information to the extent the balance sheet mirrors

the financial position on a particular date in terms of the structure of assets, liabilities and owners

equity, and so on. The profit and loss account shows the results of operations during a certain

period of time in terms of the revenues obtained and the incurred during the year. Thus, the

financial statements provide a summarized view of the financial position and operations of a

firm. Therefore, much can be learnt about a firm from a careful examination of its financial

statements as invaluable documents / performance reports. The analysis of financial statements

is, thus, an important aid to financial analysis.

The focus of financial analysis is on key figures in the financial statements and the

significant relationship that exists between them. The analysis of financial statements is a process

of evaluating relationship between component parts of financial statements to obtain a better

understanding of the firm’s position and performance. The first task of financial analyst is to

select the information relevant to the decision under consideration from the total information

contained in the financial statement. The second step involved in financial analysis is to arrange

the information in a way to highlight significant relationships. The final step is interpretation and

drawing of inferences and conclusions. In brief, financial analysis is the process of selection,

relation, and evaluation.

FINANCIAL STATEMENT ANALYSIS

The process of reviewing and evaluating a company's financial statements (such

as the balance sheet or profit and loss statement), thereby gaining an understanding of the

financial health of the company and enabling more effective decision making. Financial

1

statements record financial data; however, this information must be evaluated through financial

statement analysis to become more useful to investors, shareholders, managers and other

interested parties.

Financial statement analysis is an evaluative method of determining the past,

current and projected performance of a company. Several techniques are commonly used as part

of financial statement analysis including horizontal analysis, which compares two or more years

of financial data in both dollar and percentage form; vertical analysis, where each category of

accounts on the balance sheet is shown as a percentage of the total account; and ratio analysis,

which calculates statistical relationships between data.

The following procedure is adopted for the analysis and interpretation of

financial statements:-

A relationship is established among financial statements with the help of tools &

techniques of analysis such as ratios, trends, common size, fund flow etc.

The analyst should acquaint himself with principles and postulated of accounting. He

should know the plans and policies of the management so that he may be able to find out

whether these plans are properly executed or not.

The extent of analysis should be determined so that the sphere of work may be decided. If

the aim is find out. Earning capacity of the enterprise then analysis of income statement

will be undertaken. On the other hand, if financial position is to be studied then balance

sheet analysis will be necessary.

The financial data be given in statement should be recognized and rearranged. It will

involve the grouping similar data under same heads. Breaking down of individual

components of statement according to nature. The data is reduced to a standard form.

The information is interpreted in a simple and understandable way. The significance and

utility of financial data is explained for help in decision making.

2

STATEMENT OF THE PROBLEM

Ratios are very useful to draw the conclusion so management wants to know what are the

factor contributing for the future growth and also wants to maintain the same in the longer run

and also improve the profitability and liquidity of the organization.

Financial management tools are much essential at all levels of a firm’s past, present,

future, financial condition. The present study make an adapt to financial analysis of State bank of

India

OBJECTIVES OF THE STUDY

1. To study the development and profile of the State bank of India

2. To examine and evaluate the liquidity position of the State bank of India

3. To measure the extent if influence of the variable responsible

4. To fore cost the of State bank of India

5. To give suggestion in financial improve efficiency for profitability of State bank

of India

SCOPE OF THE STUDY

The scope of the present study covers the financial performance and financial strength

and weakness of State bank of India

The study aim to find out the liquidity, turn over and profitability. The finding of the

study could help to formulate appropriate policies for effective performance

SOURCES OF DATA

The study is based on secondary data. It covers a period of 5 years from 2009-2010 to

2013-2014.The data are collected from the State bank of India

3

RESEARCH DESIGN

The details are collected from the annual reports and other records of the State bank of

India. The data collected tabulated separately.A research designs is the arrangement of

conditions for collection and analysis data in a manner that aims to combine relevance to the

research purpose with economy in procedure. Research Design is the conceptual structure with in

which research in conducted. It constitutes the blueprint for the collection measurement and

analysis of data. Research Design includes and outline of what the researcher will do form

writing the hypothesis and it operational implication to the final analysis of data. A research

design is a framework for the study and is used as guide in collection and analyzing the data. It is

a strategy specifying which approach will be used for gathering and analyzing the data. It also

include the time and cost budget since most studies are done under these two cost budget since

most studies are done under theses tow constraints. The design is such studies must be rigid and

not flexible and most focus attention on the following

PERIOD OF STUDY

The study covers a period of three months 1 April 31 st March. The accounting year

from 1th April to 31th march.

LIMITATION OF THE STUDY

Difficulty in data collection.

Limited knowledge about the bank in the initial stages.

Branch manager was reluctant for giving financial data of the bank.

The analysis and interpretation are based on secondary data contained in the

published annual reports of SBI Bank for the study period.

4

Methods of Financial Statement Analysis

There are several general categories of ratios, each designed to examine a different aspect

of a company's performance. The general groups of ratios are:

Liquidity ratios. This is the most fundamentally important set of ratios, because they

measure the ability of a company to remain in business. Click the following links for a

thorough review of each ratio.

Cash coverage ratio. Shows the amount of cash available to pay interest

Current ratio. Measures the amount of liquidity available to pay for current

liabilities.

Quick ratio. The same as the current ratio, but does not include inventory.

Liquidity index. Measures the amount of time required to convert assets into cash.

Activity ratios. These ratios are a strong indicator of the quality of management, since

they reveal how well management is utilizing company resources. Click the following

links for a thorough review of each ratio.

Accounts payable turnover ratio. Measures the speed with which a company pays

its supplier

Accounts receivable turnover ratio. Measures a company's ability to collect

accounts receivable

Fixed asset turnover ratio. Measures a company's ability to generate sales from a

certain base of fixed assets.

Inventory turnover ratio. Measures the amount of inventory needed to support a

given level of sales

Sales to working capital ratio. Shows the amount of working capital required to

support a given amount of sales.

Working capital turnover ratio. Measures a company's ability to generate sales

from a certain base of working capital

Leverage ratios. These ratios reveal the extent to which a company is relying upon debt

to fund its operations, and its ability to pay back the debt. Click the following links for a

thorough review of each ratio.

5

Debt to equity ratio. Shows the extent to which management is willing to fund

operation with debt, rather than equity

Debt service coverage ratio. Reveals the ability of a company to pay its debt

obligations

Fixed charge coverage. Shows the ability of a company to pay for its fixed costs.

Profitability ratios. These ratios measure how well a company performs in generating a

profit.

Reveals the sales level at which a company breaks

Contribution margin ratio. Shows the profits left after variable costs are subtracted

from sales.

Gross profit ratio. Shows revenues minus the cost of goods sold, as a proportion

of sales.

Margin of safety. Calculates the amount by which sales must drop before a

company reaches its breakeven point.

Net profit ratio. Calculates the amount of profit after taxes and all expenses have

been deducted from net sales.

Return on equity. Shows company profit as a percentage of equity.

Return on net assets. Shows company profits as a percentage of fixed assets and

working capital.

Return on operating assets. Shows company profit as percentage of assets utilized.

6

Mean

The sample mean is the average and is computed as the sum of all the observed outcomes

from the sample divided by the total number of events. We use x as the symbol for the sample

mean. In math terms, where is the sample size and the x correspond to the observed valued.

∑(X)

Mean = -------

  N

Where∑ sum of

X=individual data points

N=Sample size (number of data points)

7

CHAPTER – II

PROFILE OF STATE BANK OF INDIA

HISTORY Of STATE BANK OF INDIA

Not only many financial institution in the world today can claim the antiquity and

majesty of the State Bank Of India founded nearly two centuries ago with primarily intent of

imparting stability to the money market, the bank from its inception mobilized funds for

supporting both the public credit of the companies governments in the three presidencies of

British India and the private credit of the European and India merchants from about 1860s when

the Indian economy book a significant leap forward under the impulse of quickened world

communications and ingenious method of industrial and agricultural production the Bank

became intimately in valued in the financing of practically and mining activity of the Sub-

Continent Although large European and Indian merchants and manufacturers were undoubtedly

thee principal beneficiaries, the small man never ignored loans as low as Rs.100 were disbursed

in agricultural districts against glad ornaments. Added to these the bank till the creation of the

Reserve Bank in 1935 carried out numerous Central – Banking functions.

Adaptation world and the needs of the hour has been one of the strengths of the Bank, In

the post depression exe. For instance – when business opportunities become extremely restricted,

rules laid down in the book of instructions were relined to ensure that good business did not go

post. Yet seldom did the bank contravenes its value as depart from sound banking principles to

retain as expand its business. An innovative array of office, unknown to the world then, was

devised in the form of branches, sub branches, treasury pay office, pay office, sub pay office and

out students to exploit the opportunities of an expanding economy. New business strategy was

also evaded way back in 1937 to render the best banking service through prompt and courteous

attention to customers.

A highly efficient and experienced management functioning in a well defined

organizational structure did not take long to place the bank an executed pedestal in the areas of

business, profitability, internal discipline and above all credibility A impeccable financial status

8

consistent maintenance of the lofty traditions if banking an observation of a high standard of

integrity in its operations helped the bank gain a pre- eminent status. No wonders the

administration for the bank was universal as key functionaries of India successive finance

minister of independent India Resource Bank of governors and representatives of chamber of

commercial showered economics on it.

Modern day management techniques were also very much evident in the good old days

years before corporate governance had become a puzzled the banks bound functioned with a high

degree of responsibility and concerns for the shareholders. An unbroken records of profits and a

fairly high rate of profit and fairly high rate of dividend all through ensured satisfaction,

prudential management and asset liability management not only protected the interests of the

Bank but also ensured that the obligations to customers were not met.

The traditions of the past continued to be upheld even to this day as the State Bank years itself to

meet the emerging challenges of the millennium.

ABOUT LOGO

THE PLACE TO SHARE THE NEWS ...……

SHARE THE VIEWS ……

Togetherness is the theme of this corporate loge of SBI where the world of banking

services meet the ever changing customers needs and establishes a link that is like a circle, it

9

indicates complete services towards customers. The logo also denotes a bank that it has prepared

to do anything to go to any lengths, for customers.

The blue pointer represent the philosophy of the bank that is always looking for the

growth and newer, more challenging, more promising direction. The key hole indicates safety

and security.

MISSION STATEMENT:

To retain the Bank’s position as premiere Indian Financial Service Group, with world

class standards and significant global committed to excellence in customer, shareholder and

employee satisfaction and to play a leading role in expanding and diversifying financial service

sectors while containing emphasis on its development banking rule.

VISION STATEMENT:

Premier Indian Financial Service Group with prospective world-class Standards of

efficiency and professionalism and institutional values

Retain its position in the country as pioneers in Development banking.

Maximize the shareholders value through high-sustained earnings per Share.

An institution with cultural mutual care and commitment, satisfying and

Good work environment and continues learning opportunities.

VALUES

Excellence in customer service

Profit orientation

Belonging commitment to Bank

Fairness in all dealings and relations

Risk taking and innovative

Team playing

Learning and renewal

10

Integrity

Transparency and Discipline in policies and systems.

SBI Group

The Bank of Bengal, which later became the State Bank of India. State Bank of India

with its seven associate banks commands the largest banking resources in India.

Nationalization

The next significant milestone in Indian Banking happened in late 1960s when the then

Indira Gandhi government nationalized on 19th July 1949, 14 major commercial Indian banks

followed by nationalisation of 6 more commercial Indian banks in 1980.

The stated reason for the nationalisation was more control of credit delivery. After this,

until 1990s, the nationalized banks grew at a leisurely pace of around 4% also called as the

Hindu growth of the Indian economy.

After the amalgamation of New Bank of India with Punjab National Bank, currently there

are 19 nationalized banks in India.

Liberalization-

In the early 1990’s the then Narasimharao government embarked a policy of

liberalization and gave licences to a small number of private banks, which came to be known as

New generation tech-savvy banks, which included banks like ICICI and HDFC. This move along

with the rapid growth of the economy of India, kick started the banking sector in India, which

has seen rapid growth with strong contribution from all the sectors of banks, namely Government

banks, Private Banks and Foreign banks. However there had been a few hiccups for these new

banks with many either being taken over like Global Trust Bank while others like Centurion

Bank have found the going tough.

The next stage for the Indian Banking has been set up with the proposed relaxation in the

norms for Foreign Direct Investment, where all Foreign Investors in Banks may be given voting

rights which could exceed the present cap of 10%, at present it has gone up to 49% with some

restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were

used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new

11

wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All

this led to the retail boom in India. People not just demanded more from their banks but also

received more.

CURRENT SCENARIO

Currently (2007), overall, banking in India is considered as fairly mature in terms of

supply, product range and reach-even though reach in rural India still remains a challenge for the

private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian

banks are considered to have clean, strong and transparent balance sheets-as compared to other

banks in comparable economies in its region. The Reserve Bank of India is an autonomous body,

with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee

is to manage volatility-without any stated exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially

in its services sector, the demand for banking services-especially retail banking, mortgages and

investment services are expected to be strong. M&As, takeovers, asset sales and much more

action (as it is unraveling in China) will happen on this front in India.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake

in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has

been allowed to hold more than 5% in a private sector bank since the RBI announced norms in

2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that

is with the Government of India holding a stake), 29 private banks (these do not have

government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign

banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to

a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total

assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5%

respectively.

12

13

Organization Structure

14

CHAPTER III

FINANCIAL PERFORMANCE OF SBI BANK

1. CURRENT RATIO :

• This ratio is used to assess the firm’s ability to meet its current liabilities. The

relationship of current assets to current liabilities is known as current ratio. The ratio is

calculated as:

• This includes cash in hand, cash at bank, sundry debtors, bills receivable, short term

investment or marketable securities, stock and prepaid expenses.

• Current Liabilities are those liabilities which are payable within one year.

This includes bank overdraft, sundry creditors, bills payable and outstanding expenses

Current Assets

Current Ratio = ------------------------

Current Liabilities

15

TABLE NO 3.1

CURRENT RATIO TABLE

YEARSCURRENT

ASSETS

CURRENT

LIABILITIESCURRENT RATIO

2009-2010 35112.76 80336.70 0.43

2010-2011 43777.85 105248.39 0.41

2011-2012 53113.02 80915.09 0.65

2012-2013 47892.03 95455.07 0.50

2013-2014 43545.90 96412.96 0.45

TOTAL 2.44

MEAN 0.49

INTERPRETATION

According to table 3.1 show that the Current Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.41) in 2010-2011 when the current

liabilities were below the current assets. The ratio was just high in 2011-2012 when the current

liabilities were more than the current assets. From the viewpoint of mean value the ratio higher

than the value of 0.49, which indicates that the ratio perform well during year of study period.

16

CHART NO.3.1

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.43 0.41

0.650000000000002

0.50.45

CURRENT RATIO

Current ratio

17

QUICK RATIO

This ratio is used to assess the firm’s short term liquidity. The relationship of liquid (or)

quick assets to current liabilities is known as liquid ratio. It is otherwise called as Quick ratio or

Acid Test ratio. The ratio is calculated as.

Quick Assets

Quick Ratio = ----------------------

Current Liabilitie

\

18

TABLE NO 3.2

QUICK RATIO

YEARS QUICK ASSETSCURRENT

LIABILITIESQUICK RATIO

2009-2010 728653.87 80336.7 9.07

2010-2011 894611.32 105248.39 8.5

2011-2012 975026.83 80915.09 12.05

2012-2013 1159779.10 95455.07 12.15

2013-2014 1338211.88 96412.96 13.88

TOTAL 55.65

MEAN 11.13

INTERPRETATION

According to table 3.2 show that the Quick Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (08.5) in 2010-2011 when the current

liabilities were below the quick assets. The ratio was just high in 20013-2014 when the current

liabilities were more than the quick assets. From the viewpoint of mean value the ratio higher

than the value of 11,13 which indicates that the ratio perform well during year of study period.

19

CHART NO 3.2

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

2

4

6

8

10

12

14

16

9.078.5

12.05 12.15

13.88

QUICK RATIO

Series 1

20

SOLVENCY RATIOS

Solvency refers to the Firms ability to meet its long term indebtedness. Solvency ratio studies

the Firms ability to meet its long term obligations. The following are the important solvency

ratios:

1. Fixed asset ratio

2. Debt-Equity Ratio

3. Proprietary Ratio

1. Fixed asset ratio

The fixed assets ratio is the most basic solvency ratio, measuring the percentage of a

company’s total assets that is financed by debt. The ratio is calculated by dividing total liabilities

by total assets. A high number means the firm is using a larger amount of financial leverage,

which increases its financial risk in the form of fixed interest payments.

Fixed assets

Fixed asset ratio = --------------------------

Shareholder funds

21

TABLE NO 3.3

FIXED ASSET RATIO

YEARS FIXED ASSETSSHAREHOLDER

FUNDS

FIXED ASSET

RATIO

2009-2010 11,831.63 10530.15 0.89

2010-2011 4,764.19 4144.85 0.87

2011-2012 5,133.87 4363.79 0.85

2012-2013 6,595.71 5804.22 0.88

2013-2014 8,002.16 7201.94 0.9

TOTAL 4.39

MEAN 0.88

INTERPRETATION

According to table 3.3 show that the fixed assets Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.09) in 2013-2014 when the long term

funds were below the fixed assets. The ratio was just high in 2009-2010 when the long term

funds were more than the fixed assets. From the viewpoint of mean value the ratio higher than

the value of 0.88, which indicates that the ratio perform well during year of study period.

22

CHART NO 3.3

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140.82

0.83

0.84

0.85

0.86

0.87

0.88

0.89

0.9

0.91

0.89

0.870000000000002

0.850000000000001

0.88

0.9

FIXED ASSET RATIO

23

DEBT EQUITY RATIO

This ratio helps to ascertain the soundness of the long term financial position of the

concern. It indicates the proportion between total longterm debt and Shareholders funds. This

also indicates the extent to which the firm depends upon outsiders for its existence. The ratio is

calculated as:

Total long term debt includes Debentures, long term loans from banks and financial

institutions. Shareholder’s funds Includes Equity share capital, Preference share capital, Reserves

and surplus.

Total long-term funds

Debt equity ratio= ---------------------------

Shareholder funds

24

TABLE NO 3.4

DEBT EQUITY RATIO

YEARSTOTAL LONG TERM

FUNDS

LONG TERM

FUND

DEBT EQUITY

RATIO

2009-2010 128,362.54 10530.15 12.19

2010-2011 59,561.43 4144.85 14.37

2011-2012 54,241.90 4363.79 12.43

2012-2013 70,579.37 5804.22 12.16

2013-2014 84,910.92 7201.94 11.79

TOTAL 62.94

MEAN 12.59

INTERPRETATION

According to table 3.4 show that the Debt equity Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (11.79) in 2013-2014 when the

Shareholders funds were below the total long term debts. The ratio was just high in 2010-2011

when the Shareholders funds were more than the total long term debts. From the viewpoint of

mean value the ratio higher than the value of 12,59 which indicates that the ratio perform well

during year of study period.

25

CHART NO 3.4

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

2

4

6

8

10

12

14

16

12.19

14.37

12.43 12.16 11.79

DEBT EQUITY RATIO

Debt Equity Ratio

26

PROPRIETARY RATIO

This ratio shows the relationship between proprietors or Shareholders funds and total

tangible assets. The ratio is calculated as:

Tangible assets will include all assets except goodwill, preliminary expenseset

Shareholder funds

Proprietary Ratio = -------------------------

Total tangible assets

27

TABLE NO 3.5

PROPRIETARY RATIO

YEARSSHAREHOLDER’S

FUNDS

TOTAL TANGIBLE

ASSETSPROPRIETARY RATIO

2009-2010 10530.15 383245 0.03

2010-2011 4144.85 340560 0.09

2011-2012 4363.79 285628 0.08

2012-2013 5804.22 242713 0.08

2013-2014 7201.94 180648 0.09

TOTAL 0.37

MEAN 0.07

INTERPRETATION

According to table 3.5 show that the Proprietary Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.03) in 2009-2010 when the Total

tangible assets were below the Shareholders funds. The ratio was just high in 2010-2011 when

the Total tangible assets were more than the Shareholders funds. From the viewpoint of mean

value the ratio higher than the value of 0.07, which indicates that the ratio perform well during

year of study period.

28

CHART NO 3.5

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.02

0.04

0.06

0.08

0.1

0.12

0.1

0.09

0.08 0.08

0.09

PROPRIETARY RATIO

29

PROFITABILITY RATIOS

Efficiency of a business is measured by profitability. Profitability ratio measures the

profit earning capacity of the business concern. The important profitability ratios are discussed

below:

1. Gross Profit Ratio

2. Net Profit Ratio

3. Operating Profit Ratio

4. Operating Ratio

5. Expenses ratio

1. Gross Profit Ratio

This ratio indicates the efficiency of trading activities. The relationship of Gross profit to

income is known as gross profit ratio. The ratio is calculated as:

Gross profit is taken from the Trading Account of a business concern. Otherwise Gross

profit can be calculated by deducting cost of goods sold from sales or income.

Gross profit

Gross Profit Ratio = -------------------

Income

30

TABLE NO 3.6

GROSS PROFIT RATIO

YEARSGROSS PROFIT

INCOME GROSS PROFIT RATIO

2009-2010 972626.18 85962.07 0.712010-2011 745443.18 97218.96 0.662011-2012 1532031.1

9120872.90

0.782012-2013 1197627.9

9135691.94

0.702013-2014 1026230.6

5154903.72

0.67TOTAL 3.52

INCOME 0.70

INTERPRETATION

The table 3.6 show that the Gross profit Ratio. It indicates that the ratio was increasing

above the actual norm fixed. This was low (0.66) in 2010-2011 when the Income were below the

Gross profit. The ratio was just higher in 2011-2012 when the income where more than the Gross

profit. From the viewpoint of mean value the ratio higher than the value of 0.70, which indicates

that the ratio perform well during year of study period.

31

CHART NO 3.6

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140.6

0.62

0.64

0.66

0.68

0.7

0.72

0.74

0.76

0.78

0.8

0.710000000000001

0.660000000000002

0.78

0.700000000000001

0.670000000000002

GROSS PROFIT RATIO

Gross profit ratio

32

NET PROFIT RATIO

This ratio determines the overall efficiency of the business. The relationship of

Net profit to income is known as net profit ratio. The ratio is calculated as:

Net profit is taken from the Profit and Loss account of the business concern or the gross

profit of the concern less administration expenses, selling and distribution expenses and financial

expenses.

Net profit

Net Profit Ratio = ----------------------

Income

33

TABLE NO 3.7

NET PROFIT RATIO

YEARS NET PROFIT INCOME NET PROFIT RATIO

2009-2010 9,166.05 85962.07 0.11

2010-2011 8,264.52 97218.96 0.09

2011-2012 11,707.29 120872.90 0.10

2012-2013 14,104.98 135691.94 0.10

2013-2014 10,891.17 154903.72 0.07

TOTAL 0.46

MEAN 0.09

INTERPRETATION

The table 3.7 show that the Net profit Ratio. It indicates that the ratio was increasing

above the actual norm fixed. This was low (0.07) in 2013-2014 when the Income were below the

Net profit. The ratio was just higher in 2009-2010 when the income where more than the Net

profit. From the viewpoint of mean value the ratio higher than the value of 0.09, which indicates

that the ratio perform well during year of study period.

34

CHART NO 3.7

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.02

0.04

0.06

0.08

0.1

0.120.11

0.090.1 0.1

0.07

NET PROFIT RATIO

Net profit ratio

35

OPERATING PROFIT RATIO

This ratio is an indicator of the operational efficiency of the management. It establishes

the relationship between Operating profit and Income. The ratio is calculated as:

Non-operating Income are dividend, interest received and profit on sale of asset. (or)

Operating profit = Gross profit –– Operating expenses.

Operating profit

Operating Profit Ratio = ----------------------------

Income

36

TABLE NO 3.8

OPERATING PROFIT RATIO

YEARSOPERATING

PROFITINCOME

OPERATING PROFIT

RATIO

2009-2010 46,280.41 85962.07 0.54

2010-2011 47,997.59 97218.96 0.49

2011-2012 80,452.46 120872.90 0.67

2012-2013 79,241.85 135691.94 0.58

2013-2014 84,689.60 154903.72 0.55

TOTAL 2.83

MEAN 0.57

INTERPRETATION

The table 3.8 show that the Operating profit Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.49) in 2010-2011 when the Income were

below the Operating profit. The ratio was just higher in 2011-2012 when the income where more

than the Operating profit. From the viewpoint of mean value the ratio higher than the value of

0.57, which indicates that the ratio perform well during year of study period.

37

CHART NO 3.8

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.540.49

0.670000000000002

0.580.55

operating profit ratio

operating profit ratio

38

OPERATING RATIO

This ratio determines the operating efficiency of the business concern. Operating ratio

measures the amount of expenditure incurred in production, Income and distribution of output.

The relationship between

Operating cost to Sales is known as Operating Ratio. The ratio is calculated as:

Operating expenses

Operating Ratio = ---------------------------------

Income

39

TABLE NO 3.9

OPERATING RATIO

YEARS OPERATING

EXPENSES

INCOME OPERATING RATIO

2009-2010 24941.01 85962.07 0.29

2010-2011 23015.44 97218.96 0.24

2011-2012 26068.99 120872.9 0.22

2012-2013 29284.42 135691.94 0.22

2013-2014 35725.85 154903.72 0.23

TOTAL 1.19

MEAN 0.24

INTERPRETATION

The table 3.9 show that the Operating profit Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.22) in 2011-2012 when the Income were

below the Operating expenses. The ratio was just higher in 2009-2010 when the income where

more than the Operating expenses. From the viewpoint of mean value the ratio higher than the

value of 0.24, which indicates that the ratio perform well during year of study period

40

CHART NO 3.9

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.29

0.240.22 0.22 0.23

OPERATING RATIO

41

EXPENSES RATIO

This ratio determined specific Expenses and income efficiency of the concern. It is

related a Expenses andincome.The ratio relationship between expenses to income calculatedas

This only considers as an expenses and Income of the organisation.

Total Expenses

Expenses Ratio = --------------------------

Income

42

TABLE NO 3.10

EXPENSES RATIO

YEARSSPECIFIC

EXPENSESINCOME EXPENSES RATIO

2009-2010 24713.51 85962.07 0.29

2010-2011 33396.77 97218.96 0.34

2011-2012 26068.99 120872.9 0.22

2012-2013 40415.25 135691.94 0.30

2013-2014 51661.2 154903.72 0.33

TOTAL 1.48

MEAN 0.30

INTERPRETATION

The table 3.10 show that the Expenses Ratio. It indicates that the ratio was increasing

above the actual norm fixed. This was low (0.22) in 2011-2012 when the Income were below the

specific expenses. The ratio was just higher in 2010-2011 when the income where more than the

specific expenses. From the viewpoint of mean value the ratio higher than the value of 0.30 ,

which indicates that the ratio perform well during year of study period.

43

CHART NO 3.10

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.29

0.34

0.22

0.3

0.330000000000001

EXPENSES RATIO

44

ACTIVITY RATIOS

Activity ratios indicate the performance of the business. The performance of a business is judged with its income (turnover) or cost of goods sold. These ratios are thus referred to as turnover ratios. A few important activity ratios are discussed below:

1. Capital turnover ratio2. Fixed assets turnover ratio3. working capital turnover ratio4. average asset turnover ratio5. account receivable turnover ratio

2.Fixed assets turnover ratioThis shows how best the fixed assets are being utilised in the business concern. The

relationship between Sales and Fixed assets is known as fixed assets turnover ratio. The ratio is calculated as:

Fixed asset

Fixed assets turnover ratio = -------------------------------

Income

45

TABLE NO 3.11

FIXED ASSETS TURN OVER RATIO

YEARS FIXED ASSETS

INCOME FIXED ASSETS TURN OVER RATIO

2009-2010 4117.72 85962.07 0.052010-2011 4764.19 97218.96 0.052011-2012 5133.87 120872.9 0.042012-2013 6595.71 135691.94 0.052013-2014 8002.16 154903.72 0.05

TOTAL 0.24MEAN 0.05

INTERPRETATION

The table 3.11 show that the Fixed assets turnover Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.04) in 2011-2012 when the Fixed assets

were below the income. The ratio was just higher in 2009-2010 when the Fixed assets where

more than the income. From the viewpoint of mean value the ratio higher than the value of 0.05,

which indicates that the ratio perform well during year of study period.

46

CHART NO 3.11

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.01

0.02

0.03

0.04

0.05

0.06

0.05 0.05

0.04

0.05 0.05

FIXED ASSEST TURN OVER RATIO

47

CAPITAL TURNOVER RATIO

This shows the number of times the capital has been rotated in the process of carrying on

business. Efficient utilisation of capital would lead to higher profitability. The relationship

between income and Capital employed is known as Capital Turnover Ratio. The ratio is

calculated as:

Capital employed

Capital turnover Ratio = --------------------------

Income

Where Sales means Sales less sales returns or income and Capital employed refers to

total long term funds of the business concern i.e., Equity share capital, Preference share capital,

Reserves and surplus and Long-term borrowed funds

48

TABLE NO 3.12

CAPITAL TURNOVER RATIO

YEARSCAPITAL

EMPLOYEDINCOME

CAPITAL TURN OVER RATIO

2009-2010 65949.2 85962.07 0.772010-2011 64986.04 97218.96 0.672011-2012 83951.2 120872.9 0.692012-2013 98883.68 135691.94 0.732013-2014 118282.25 154903.72 0.76

TOTAL 3.62MEAN 0.72

INTERPRETATION

The table 3.12 show that the Capital turnover Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.67) in 2010-2011 when the Capital

employed were below the income. The ratio was just higher in 2009-2010 when the Capital

employed where more than the income. From the viewpoint of mean value the ratio higher than

the value of 0.72, which indicates that the ratio perform well during year of study period.

49

CHART NO 3.12

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140.62

0.64

0.66

0.68

0.7

0.72

0.74

0.76

0.78 0.770000000000002

0.670000000000002

0.690000000000001

0.730000000000001

0.760000000000002

CAPITAL TURN OVER RATIO

50

WORKING CAPITAL TURNOVER RATIO

This shows the number of times the working capital has been rotated in the process of

carrying on business. Efficient utilisation of working capital would lead to higher profitability.

The relationship between Income and working Capital employed is known as working Capital

Turnover Ratio. The ratio is calculated as:

Working capital

Working Capital Turnover Ratio = --------------------------

Income

Where Sales means Sales less sales returns or income and working Capital refers to total

short term funds of the business concern i.e., current asset –current liabilities

51

TABLE NO 3.13

WORKING CAPITAL TURNOVER RATIO

YEARSWORKING

CAPITALINCOME

WORKING CAPITAL

TURN OVER RATIO

2009-2010 13471 85962.07 0.16

2010-2011 8636 97218.96 0.09

2011-2012 8953 120872.9 0.07

2012-2013 7557 135691.94 0.06

2013-2014 5859 154903.72 0.04

TOTAL 0.41

MEAN 0.08

INTERPRETATION

The table 3.13 show that the Working capital turnover Ratio. It indicates that the ratio

was increasing above the actual norm fixed. This was low (0.04) in 2013-2014 when the working

capital were below the income. The ratio was just higher in 2009-2010 when the working capital

where more than the income. From the viewpoint of mean value the ratio higher than the value of

0.08, which indicates that the ratio perform well during year of study period.

52

CHART NO 3.13

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.16

0.09

0.070.06

0.04

WORKING CAPITAL TURN OVER RATIO

53

AVERAGE ASSETS TURNOVER RATIO

This shows how best the total average assets are being utilised in the business concern.

The relationship between and average assets is known as average assets turnover ratio. The ratio

is calculated as:

Average asset

Average Assets Turnover Ratio= ----------------------------

Income

54

TABLE NO 3.14

AVERAGE ASSETS TURNOVER RATIO

YEARSAVERAGE

TOTAL ASSETINCOME

AVERAGE ASSET

TURNOVER RATIO

2009-2010 192623 85962.07 2.24

2010-2011 170280 97218.96 1.75

2011-2012 142814 120872.9 1.18

2012-2013 121357 135691.94 0.89

2013-2014 90324 154903.72 0.58

TOTAL 6.65

MEAN 1.33

INTERPRETATION

The table 3.14 show that the Average assets turnover Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.58) in 2013-2014 when the average total

assets were below the income. The ratio was just higher in 2009-2010 when the average total

assets were more than the income. From the viewpoint of mean value the ratio higher than the

value of 1.33, which indicates that the ratio perform well during year of study period.

55

CHART NO 3.14

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.5

1

1.5

2

2.52.24

1.75

1.18

0.89

0.58

AVERAGE ASSEST TURN OVER Ratio

56

ACCOUNT RECEIVABLE TURNOVER RATIO

This establishes the relationship between Income and average accounts receivable.

Account receivable turnover ratio indicates the period in which the payments are made to debtor.

The ratio is calculated as:

Income and averageaccount receivable calculated as.

Income

Account receivable Turnover Ratio = -------------------------

Average account receivable

57

TABLE NO 3.15

ACCOUNT RECEIVABLE TURNOVER RATIO

YEARSAVERAGE

ACCOUNTRECEIVABLEINCOME

ACCOUNT

RECEIVABLE TURN

OVER RATIO

2009-2010 18301 85962.07 0.21

2010-2011 13948 97218.96 0.14

2011-2012 17318 120872.9 0.14

2012-2013 16237 135691.94 0.12

2013-2014 9646 154903.72 0.06

Total 0.68

Mean 0.14

INTERPRETATION

The table 3.15 show that the Account receivable turnover Ratio. It indicates that the ratio was

increasing above the actual norm fixed. This was low (0.06) in 2013-2014 when the average

account receivable were below the income. The ratio was just higher in 2009-2010 when the

average account receivable where more than the income. From the viewpoint of mean value the

ratio higher than the value of 0.14, which indicates that the ratio perform well during year of

study period.

58

CHART NO 3.15

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.05

0.1

0.15

0.2

0.25

0.21

0.14 0.14

0.12

0.06

ACCOUNT RECEIVABLE TURN OVER RATIO

59

CHAPTER-IV

FINDINGS, SUGGESTIONS & CONCLUSION

FINDINGS

The major findings of the study, which has been made for a period of five years

from 2009-2010 to 2013-2014, are as follows.

Current ratio of the Company was above the standard norm during the study period 2009-

2010 to 2013-2014, which indicates that liquidity position was satisfactory. The Current

ratio was high in 2010-2011 and five year of the study periods accounts higher than the

mean value

Liquid ratio of the company was above the standard norm during the study period 2009 -

2010 to 2013-2014, which indicates that liquidity position was satisfactory. The Current

ratio was high in 2010-2011(0.41)and five year of the study periods accounts higher than

the mean value

Debt –equity ratio was the standard norm, which implies that lesser claim of owner than

outsider. The debt equity ratio shows a higher ratio during 2010-2011and its Identify the

mean values.

Fixed asset ratio was the standard norm during the study period 2009 -2010 to 2013-

2014.The fixed asset ratio shows a higher ratio during 2009-2010 and its Identify the

mean values.

Shareholder’s funds to total assets were above the normal percentage and the higher

reliance on assets is not better for the future period. The proprietary ratio was high in

2010-2011 and its Identify the mean values

Gross profit ratio normal trend. Gross profit was satisfactory. The gross profit shows high

in 2011-2012(0.78) and its Identify the mean values.

60

Net profit ratio was the standard norm and satisfactory during of the period in five years.

The net profit ratio shows a higher ratio 2009-2010 and its Identify the mean values.

Operating profit ratio was the standard norm and satisfactory during of the period in five

years. The operating profit ratio shows a higher ratio 2012-2013 and its find out the mean

values.

Operating ratio was the standard norm and satisfactory during of the period in five years.

The operating ratio shows a higher ratio 2009-2010 and its finding the mean values.

Expenses ratio was the standard norm and satisfactory during of the period in five years.

The expenses ratio shows a higher ratio 2010-2011 and it’s realizing the mean values.

Fixed assets turnover ratio indicates underutilization of fixed assets and below the actual

norm of the period in five years. The Fixed assets turnover ratio is fluctuating and is

above the mean values.

Capital turnover ratio indicates proper utilization of capital and satisfactory during of the

period in five years. The capital turnover ratio shows a higher ratio 2009-2010 and its

find out the mean values.

Working Capital turnover ratio indicates satisfactory position of company the standard

during of the period in five years. The working capital turnover ratio shows a higher ratio

2009-2010 efficient situation of working capital of the mean values.

Average asset turnover ratio was the standard norm and satisfactory during of the period

in five years. The average assets turnover ratio shows a higher ratio 2009-2010 and it’s

identifying the mean values.

Average account receivable turnover ratio was the standard norm and satisfactory during of

the period in five years. The Average account receivable turnover ratio shows a higher ratio

2009-2010 and it’s find out the mean values

61

SUGGESTIONS

The Bank maintains excess of current assets than what is actually required, the

management should take steps to avoid excess of investment in current assets.

The management should take effective steps to improve its debt equity position.

Outsider’s funds should be increased. It will reduce the tax burden of the Bank,

The Bank should increase the operating profit ratio, by decreasing the operating expenses

and increasing the banking.

The Bank should increase capital turnover ratio. In order to achieve this, Bank may

increase its banking and manage the capital efficiently.

The Bank can decrease its current liabilities to improve its solvency position.

Decrease in the banking reflects on the net profit. So, the net banking have to be

increased to increase the net profit.

The liquidity position could be strengthened by reducing the current liabilities.

62

CONCLUSION

The project undertaken has helped a lot in understanding the concept of project financing

in nationalized bank with reference to State Bank of India. The project financing is an

important aspect which helps in increasing the profit of the banks.

Project financing is a vast subject and it is very difficult to apply all the aspect in all type

of project when bank want to finance, and it is very difficult to cover all aspect in this

project.

To sum up it would not be out of way to mention here that the state bank of India has

given a special impetus on “Project Financing” .the concerted efforts of the management

and staff of state bank of India has helped the bank in achieving remarkable progress in

almost all important aspects.

Finally the success of project financing would mostly depend on the proper analysis of

the projects before financing.

63

BIBLIOGRAPHY

1. SHARMA.R.K, SHASHI K. GUPTHA “Financial Management’’, Kalyani Publishers

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2. JAMES.C, VANHOME, “Financial Management’’ Prentice-Hall of India Private Limited.

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64

JOURNALS

1. NAGOLKAR, J.M. AND PANDIT S.B “Relationship between profitability, growth

and working capital”, Chartered Accountant, 32(9) March1984, pp. 567-572.

2.SYED ZABID HOSSAIN AND HALIBUR RAHMAN AKON MD “Financial of

working capital case study of Bangladesh Textile mills corporation BTMC “,journal

Of Financial management and Analysis, 10 (2) July-dec-1997, pp37-43.

3.MAINSAJID NAZIR AND TALAT ATZA “Impact of Aggressive working capital

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4.KRISHNA VENI (Performance appraisal of an India chemical industry after

Liberalization”. Finance India volXX11 NO3 Sep 2008 pp971-980.

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REPORTS

1. Annual Reports of axis bank

WEB SOURCES

1. www.google.com

2. Moneycontrol.com

4. www.ndftv profit.com

5. www.encyclopedia.com

65