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 firms 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
1

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

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.

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.
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.

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)

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
8

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 SubContinent 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
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
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.

10

MISSION STATEMENT:
To retain the Banks 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

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
11

Standards of

Belonging commitment to Bank

Fairness in all dealings and relations
Risk taking and innovative
Team playing
Learning and renewal
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.
12

LiberalizationIn the early

1990s 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
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.
13

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.

14

15

Organization Structure

16

CHAPTER III
FINANCIAL PERFORMANCE OF SBI BANK
1. CURRENT RATIO :
17

This ratio is used to assess the firms 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

TABLE NO 3.1
CURRENT RATIO TABLE

YEARS
2009-2010
2010-2011
2011-2012

CURRENT

CURRENT

ASSETS
35112.76
43777.85
53113.02

LIABILITIES
80336.70
105248.39
80915.09
18

CURRENT RATIO
0.43
0.41
0.65

2012-2013
2013-2014

47892.03
43545.90

95455.07
96412.96
TOTAL
MEAN

0.50
0.45
2.44
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.

CHART NO.3.1

19

CURRENT RATIO
0.7

0.65

0.6
0.5

0.5
0.43

0.45

0.41

0.4
0.3
0.2
0.1
0

2009-2010

2010-2011

2011-2012
Current ratio

QUICK RATIO
20

2012-2013

2013-2014

This ratio is used to assess the firms 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

TABLE NO 3.2
21

QUICK RATIO

YEARS

QUICK ASSETS

2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

728653.87
894611.32
975026.83
1159779.10
1338211.88

CURRENT
LIABILITIES
80336.7
105248.39
80915.09
95455.07
96412.96
TOTAL
MEAN

QUICK RATIO
9.07
8.5
12.05
12.15
13.88
55.65
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.

22

CHART NO 3.2

QUICK RATIO
16
13.88

14
12
10

9.07

12.05

12.15

2011-2012

2012-2013

8.5

8
6
4
2
0

2009-2010

2010-2011

Series 1

23

2013-2014

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
companys 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

24

TABLE NO 3.3
FIXED ASSET RATIO
YEARS

FIXED ASSETS

2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

SHAREHOLDER

FIXED ASSET

FUNDS
10530.15
4144.85
4363.79
5804.22
7201.94
TOTAL

RATIO
0.89
0.87
0.85
0.88
0.9
4.39

MEAN

0.88

11,831.63
4,764.19
5,133.87
6,595.71
8,002.16

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.

25

CHART NO 3.3

FIXED ASSET RATIO

0.91
0.9
0.89

0.9
0.89
0.88

0.88

0.87

0.87
0.86

0.85

0.85
0.84
0.83
0.82

2009-2010

2010-2011

2011-2012

26

2012-2013

2013-2014

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. Shareholders funds Includes Equity share capital, Preference share capital, Reserves
and surplus.
Total long-term funds
Debt equity ratio= --------------------------Shareholder funds

27

TABLE NO 3.4
DEBT EQUITY RATIO

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

TOTAL LONG TERM

FUNDS
128,362.54
59,561.43
54,241.90
70,579.37
84,910.92

LONG TERM
FUND
10530.15
4144.85
4363.79
5804.22
7201.94
TOTAL
MEAN

DEBT EQUITY
RATIO
12.19
14.37
12.43
12.16
11.79
62.94
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.

28

CHART NO 3.4

DEBT EQUITY RATIO

16
14
12

14.37
12.19

12.43

12.16

11.79

2011-2012

2012-2013

2013-2014

10
8
6
4
2
0

2009-2010

2010-2011

Debt Equity Ratio

29

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

30

TABLE NO 3.5
PROPRIETARY RATIO

YEARS

SHAREHOLDER

TOTAL TANGIBLE

S FUNDS
10530.15
4144.85
4363.79
5804.22
7201.94

ASSETS
383245
340560
285628
242713
180648
TOTAL
MEAN

2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

PROPRIETARY RATIO
0.03
0.09
0.08
0.08
0.09
0.37
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.

CHART NO 3.5
31

PROPRIETARY RATIO
0.12
0.1

0.1
0.09

0.08

0.09
0.08

0.08

2011-2012

2012-2013

0.06
0.04
0.02
0

2009-2010

2010-2011

2013-2014

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:
32

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

TABLE NO 3.6
GROSS PROFIT RATIO

YEARS

GROSS
PROFIT

INCOME
33

GROSS PROFIT RATIO

2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

972626.18
745443.18
1532031.1
9
1197627.9
9
1026230.6
5

85962.07
97218.96
120872.90
135691.94
154903.72
TOTAL
INCOME

0.71
0.66
0.78
0.70
0.67
3.52
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.

CHART NO 3.6

34

GROSS PROFIT RATIO

0.8

0.78

0.78
0.76
0.74
0.72

0.71

0.7

0.7
0.68

0.67

0.66

0.66
0.64
0.62
0.6

2009-2010

2010-2011

2011-2012
Gross profit ratio

NET PROFIT RATIO

35

2012-2013

2013-2014

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

TABLE NO 3.7
NET PROFIT RATIO
36

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

NET PROFIT

INCOME

NET PROFIT RATIO

9,166.05

85962.07

8,264.52
11,707.29
14,104.98
10,891.17

97218.96
120872.90
135691.94
154903.72
TOTAL
MEAN

0.11
0.09
0.10
0.10
0.07
0.46
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.

37

CHART NO 3.7

NET PROFIT RATIO

0.12

0.11
0.1

0.1

0.1

0.09

0.08

0.07

0.06
0.04
0.02
0

2009-2010

2010-2011

2011-2012
Net profit ratio

38

2012-2013

2013-2014

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

39

TABLE NO 3.8
OPERATING PROFIT RATIO

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

OPERATING
PROFIT
46,280.41
47,997.59
80,452.46
79,241.85
84,689.60

INCOME
85962.07
97218.96
120872.90
135691.94
154903.72
TOTAL
MEAN

OPERATING PROFIT
RATIO
0.54
0.49
0.67
0.58
0.55
2.83
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.

CHART NO 3.8

40

operating profit ratio

0.8

0.67

0.7
0.6

0.58

0.54

0.55

0.49

0.5
0.4
0.3
0.2
0.1
0

2009-2010

2010-2011

2011-2012
operating profit ratio

OPERATING RATIO

41

2012-2013

2013-2014

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

TABLE NO 3.9
OPERATING RATIO

42

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

OPERATING
EXPENSES
24941.01
23015.44
26068.99
29284.42
35725.85

INCOME

OPERATING RATIO

85962.07
97218.96
120872.9
135691.94
154903.72
TOTAL
MEAN

0.29
0.24
0.22
0.22
0.23
1.19
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

CHART NO 3.9

43

OPERATING RATIO
0.35
0.3

0.29
0.24

0.25

0.22

0.22

0.23

2011-2012

2012-2013

2013-2014

0.2
0.15
0.1
0.05
0
2009-2010

2010-2011

EXPENSES RATIO

44

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

TABLE NO 3.10
EXPENSES RATIO

45

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

SPECIFIC
EXPENSES
24713.51
33396.77
26068.99
40415.25
51661.2

INCOME

EXPENSES RATIO

85962.07
97218.96
120872.9
135691.94
154903.72
TOTAL
MEAN

0.29
0.34
0.22
0.30
0.33
1.48
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.

CHART NO 3.10

46

EXPENSES RATIO
0.4

0.34

0.35
0.3

0.33
0.3

0.29

0.25

0.22

0.2
0.15
0.1
0.05
0
2009-2010

2010-2011

2011-2012

ACTIVITY RATIOS
47

2012-2013

2013-2014

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.
2.
3.
4.
5.

Capital turnover ratio

Fixed assets turnover ratio
working capital turnover ratio
average asset turnover ratio
account receivable turnover ratio

2.Fixed assets turnover ratio

This 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

TABLE NO 3.11
FIXED ASSETS TURN OVER RATIO
48

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

FIXED
ASSETS
4117.72
4764.19
5133.87
6595.71
8002.16

INCOME
85962.07
97218.96
120872.9
135691.94
154903.72
TOTAL
MEAN

FIXED ASSETS TURN

OVER RATIO
0.05
0.05
0.04
0.05
0.05
0.24
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.

CHART NO 3.11

49

FIXED ASSEST TURN OVER RATIO

0.06
0.05

0.05

0.05

0.05

0.05

2012-2013

2013-2014

0.04

0.04
0.03
0.02
0.01
0
2009-2010

2010-2011

2011-2012

CAPITAL TURNOVER RATIO

50

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

TABLE NO 3.12
CAPITAL TURNOVER RATIO
51

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

CAPITAL
EMPLOYED
65949.2
64986.04
83951.2
98883.68
118282.25

INCOME
85962.07
97218.96
120872.9
135691.94
154903.72
TOTAL
MEAN

CAPITAL TURN OVER

RATIO
0.77
0.67
0.69
0.73
0.76
3.62
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.

CHART NO 3.12

52

CAPITAL TURN OVER RATIO

0.78

0.77
0.76

0.76
0.74

0.73

0.72
0.7

0.69

0.68

0.67

0.66
0.64
0.62
2009-2010

2010-2011

2011-2012

WORKING CAPITAL TURNOVER RATIO

53

2012-2013

2013-2014

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

TABLE NO 3.13
WORKING CAPITAL TURNOVER RATIO

54

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

WORKING
CAPITAL
13471
8636
8953
7557
5859

INCOME
85962.07
97218.96
120872.9
135691.94
154903.72
TOTAL
MEAN

WORKING CAPITAL
TURN OVER RATIO
0.16
0.09
0.07
0.06
0.04
0.41
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.

CHART NO 3.13

55

WORKING CAPITAL TURN OVER RATIO

0.18
0.16

0.16

0.14
0.12
0.1

0.09

0.08

0.07

0.06

0.06
0.04

0.04
0.02
0
2009-2010

2010-2011

2011-2012

AVERAGE ASSETS TURNOVER RATIO

56

2012-2013

2013-2014

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

TABLE NO 3.14
AVERAGE ASSETS TURNOVER RATIO

57

YEARS
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

AVERAGE
TOTAL ASSET
192623
170280
142814
121357
90324

INCOME
85962.07
97218.96
120872.9
135691.94
154903.72
TOTAL
MEAN

AVERAGE ASSET
TURNOVER RATIO
2.24
1.75
1.18
0.89
0.58
6.65
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.

CHART NO 3.14

58

AVERAGE ASSEST TURN OVER Ratio

2.5
2.24
2

1.75

1.5
1.18
0.89

0.58
0.5

0
2009-2010

2010-2011

2011-2012

ACCOUNT RECEIVABLE TURNOVER RATIO

59

2012-2013

2013-2014

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

TABLE NO 3.15
ACCOUNT RECEIVABLE TURNOVER RATIO
60

YEARS

ACCOUNT

AVERAGE
ACCOUNTRECEIVABLE

2009-2010
2010-2011
2011-2012
2012-2013
2013-2014

18301
13948
17318
16237
9646

INCOME

RECEIVABLE TURN

85962.07
97218.96
120872.9
135691.94
154903.72
Total
Mean

OVER RATIO
0.21
0.14
0.14
0.12
0.06
0.68
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.

61

CHART NO 3.15

ACCOUNT RECEIVABLE TURN OVER RATIO

0.25

0.21
0.2

0.14

0.15

0.14
0.12

0.1

0.06
0.05

0
2009-2010

2010-2011

2011-2012

62

2012-2013

2013-2014

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 20092010 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 20132014.The fixed asset ratio shows a higher ratio during 2009-2010 and its Identify the
mean values.
Shareholders 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

63

 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.
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 its 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 its
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 its find out the mean values
64

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.
Outsiders 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.

65

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.

66

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7. PANIGRAHI Working capital management case of large Indian companies, the
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YADAV. S. JAIN .P.K AND ASHISH RASTOGI Working Capital

Management in oil industry in India, The management Accountant,41(7)July 2001 pp511527.

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
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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

69