Kcubl: BANK LIMITED. in The Financial Analysis A Ratio Used As An

Financial statement analysis at
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1.1 INTRODUCTION
Finance is the life blood of business. It is rightly
as the science of money. Finance is very essential for smooth
running of business. Finance is very essential for smooth
running of the business. Finance controls the policies, activities
and decision of every business.
Financial analysis is the analysis of financial statement
of a company to assess its financial and soundness of its
management. ‘Financial Statement Analysis’ involves a study of
the financial statements of a company to ascertain its prevailing
state of affairs and the reasons thereof. Such a study would
enable the public and the investors to ascertain whether one
company is more profitability than the other and also to state
the causes and factors that are probably responsible.
Financial analysis can be defined as a study of
relationship between many factors as disclosed by the
statements and the study of the trend of these factors.
The objectives of financial analysis is the pinpointing
of strength and weakness of a business undertaking by
regrouping and analyzing of figures obtained from financial
statement and balance sheet by the tools and techniques of
management accounting. Financial analysis is as the final step
of accounting that result in the presentation of final and the
exact data that helps the business managers, creditors and
investors.
Based on this reasoning, this project is an attempt to
analyze the financial performance of CO-OPERATIVE URBAN
BANK LIMITED. In the financial analysis a ratio used as an
index for evaluating the financial position and performance of
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REGIONAL INSTITUTE OF CO-OPERATIVE MANAGEMENT
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The firm. The absolute accounting figures reported in the financial

statement do not provide a meaningful understanding of the
performance the financial position of the firm.
The essence of the financial soundness of a
company lies in balancing its goals, commercial strategy and
resultant financial needs .The company should have financial
needs, financial capability and financial flexibility to pursuer
its commercial strategy.
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1.2OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVES
 To develop a complete picture about financial
performance of the bank.
 Detect the performance trend through comparative
study.
SECONDARY OBJECTIVES
 To analyze liquidity position of the bank
 To analyze long term solvency condition.
 To measure the over all efficiency of management and
profitability of the bank.
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1.3SCOPE OF THE STUDY
This study undertakes to find out financial performance

of the banks. This covers comparison and analysis of the
performance of the bank and to point out the trends of the bank
in its different areas. This covers the analysis of financial
performance by using various tools like Liquidity ratio,
Solvency ratio, Management ratio, Profitability ratio.
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1.4 RESEARCH METHODOLOGY
RESERCH DESIGN
Research design is the arrangements of
conditions for the collection and analysis of data in manner that
aims to combine relevance to the research purpose with
relevance to economy. There are various designs, which are
descriptive and helpful for analytical research.
In brief research design contains
 A clear statement of the research problems.

 A specification of data required.
 Procedure and techniques to be adopted for data
collection.
 A method of processing and analysis of data.
SOURCE OF DATA
Data is defined as group of non-random symbols in the

form of text, image, or voice responding quantities, action as
objects. Data is processed into a form that is meaningful to the
recipient and is of real and perceived value in the current or
prospective actions or decisions of the recipient.
Data are mainly classified into two groups;
 Primary Data
 Secondary Data
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Primary data
An investigator originally collects the data or agency for
the first time for any statistical investigation and used by them
in the statistical analysis are termed as primary data.
In this study the primary data has been collected from General
Manager of Co-Operative urban bank limited.
Secondary data
The data published or unpublished , which have already
been collected and processed by some agencies for their
statistical work are termed secondary data as far as second
agency is concerned.
In his research secondary data is collected from details
published in the annual reports, books and documents provided
by the banks.
Tools used for analysis

 Ratios
 Comparative Balance Sheet
Period of study
The study was undertaken for a period of 30 days
from 15th march to 15th April 2009. The study covers the five
year performance of the bank for a period of 2004 to 2008.
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1.5 LIMITATIONS OF THE STUDY

• The study is based on the secondary data, so that
it is affected by the inherent limitations of the
secondary data.
• Data used for analysis is annual report of the

bank, we can not assure the reliability of data
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2.1 FINANCIAL STATEMENT ANALYSIS

Financial analysis is the analysis of financial
statement of a company to assess its financial and soundness of
its management. ‘Financial Statement Analysis’ involves a study
of the financial statements of a company to ascertain its
prevailing state of affairs and the reasons thereof. Such a study
would enable the public and the investors to ascertain whether
one company is more profitability than the other and also to
state the causes and factors that are probably responsible.
Financial analysis can be defined as a study of
relationship between many factors as disclosed by the
statements and the study of the trend of these factors.
The objectives of financial analysis is the pinpointing
of strength and weakness of a business undertaking by
regrouping and analyzing of figures obtained from financial
statement and balance sheet by the tools and techniques of
management accounting. Financial analysis is as the final step
of accounting that result in the presentation of final and the
exact data that helps the business managers, creditors and
investors.
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RATIO ANALYSIS
Ratio analysis is defined as the systematic use of accounting
ratios in order to weigh and evaluate the operating performance
of a firm. It is the process determining and interpreting various
ratios for helping in making certain decisions.
Accounting ratios are relationship expressed in
mathematical terms between two related figures in the financial
statement, e.g. ratio between current assets and current
liabilities. A single figure by itself has no meaning but when
expressed in terms of related figure, it yields valuable
information.
Ratios can be expressed in three ways. It may be
expressed in three ways. It may be expressed as the quotient of
one number divided by another. Then it is said to be expressed
in ‘times’. If the quotient is multiplied by hundred, it is
expressed as ‘percentage’. It may also be expressed in terms of
‘proportion’ between figures. Thus times, percentage and
proportion are the three ways of expressing ratio.
TYPES OF RATIOS
i. Short – term solvency ratio
ii. Long – term solvency ratio
iii. Profitability ratio
iv. Management ratio
v. Earnings quality ratio
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SHORT- TERM SOLVENCY RATIO

These are ratios, which measure the short-term
solvency of financial position of a firm. These ratios are
calculated to comment upon the short – term paying capacity of
a concern or the firm’s ability to meet its current obligations.
The various ratios are;

1. Current ratio
2. Absolute liquid ratio
CURRENT RATIO
It may be defined as the relationship between the
current assets and current liabilities. Current ratio indicates the
firms abilities to meet short term liabilities. It also indicates
the working capital. The higher the current ratio, greater will be
the firms ability to meet short term debts. An unusually high
current ratio indicates that funds are not being economically
used in the firm. A ratio of 2:1 is considered satisfactory as a
rule of thump.
CASH RATIO (ABSOLUTE LIQUID RATIO)

Cash ratio may be defined as the relationship between
Absolute Liquid Assets and Current Liabilities .Absolute liquid
Assets include cash in hand and cash at bank and marketable
securities . This ratio considers only the absolute liquidity
available with the firm. The acceptable norm of this ratio is 5:1.
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LONG – TERM SOLVENCY RATIO

Leverage refers to the extent to which a firm uses debt for its
operation. Leverage ratios are important for the firm’s
shareholders, debenture ho etc to understand the long term
financial position of the firm. Solvency is the ability of the firm
to play the interest on loans on loans etc regularly and reply the
principal amount on time.
The various ratios are:
 Proprietary Ratio
 Solvency Ratio
 Debt-Equity Ratio
 Fixed Asset to Net Worth Ratio
PROPRIETARY RATIO
This ratio establishes the relation ship between shareholder’s
funds and total assets. It indicates the proportion of total assets
financed by shareholders. This gives result relating to capital
structure of the company. A high proprietary ratio indicates a
relatively favorable position to the creditors at the time of
liquidation.
SOLVENCY RATIO
Solvency Ratio is used to test the solvency of a firm. Solvency
means the ability to meet the outside liabilities out of total
assets. This ratio indicates the relationship between the total
liabilities to outsiders to total assets of a firm. Generally
lower the solvency ratio, more satisfactory or stable is the
long term solvency position of a firm.
DEBT-EQUITY RATIO
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Debt equity ratio, also known as external internal Equity
ratio is calculated to measure the relative claims of outsiders
and the owners (ie, share holders) against the firms assets.This
ratio indicates the relationship between the external equities or
outsiders fund and the internal equities or share holders funds.
A debt equity ratio of 1:1 may be usually considered to be a
satisfactory ratio although there cannot be any rule of thumb or
standard norms for all types of business.
FIXED ASSETS NET WORTH RATIO

This ratio establishes the relationship between fixed
asset and shareholders funds. This ratio indicates the extent to
which share holder’s funds are sunk in the fixed assets.
Generally the purchase of fixed assets should be financed by
the shareholders equity, which includes reserve, surpluses and
retained earnings.
If the ratio is less than 100%, it implies that owner’s funds
are more than fixed assets and a part of working capital is
provided by the shareholders. When the ratio is more than
100%, it implies that owners of fund are not sufficient to
finance the fixed assets and the has to depend upon outsiders
fixed assets. There is no ‘rule of thumb’ to interpret this ratio
in case of industrial undertaking.
PROFITABILITY RATIO
The primary objective of a business undertaking is
to earn profits. The profit earnings considered essential for the
survival of the business. ‘Profit is the engine that drives the
business’. A firm should earn profit to survive and grow over a
period of time. A business enterprise can discharge its
obligations to the various segments of the society only through
earnings of profits.
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Various Ratios are;

 Return on Equity
 Return on Investment
 Earnings per share
RETURN ON EQUITY
It indicates how the firm has used the resources of
owners. This ratio is one of the most important ratios in
Financial analysis. The earnings of a satisfactory return are one
of the most desirable objectives of a business. The ratio of net
profit to owner’s equity reflects the extent to which the
objectives have been accomplished.
RETURN ON INVESMENT
Return on shareholders investment popularly known as
ROI or Return shareholders fund. It is the relationship between
Net profit (after interest & tax) and shareholders fund.
EARNINGS PER SHARE

The ratio establishes the relationship between profits
after tax to number of equity shares. The earnings per share is a
good measure pf profitability and when compared with E.P.S of
Similar other companies, it gives a view of the comparative
earnings or earnings power of a firm. E.P.S calculated of a
number of years indicated whether or not earnings power of the
company has increased.
ADVANCED YEILD RATIO
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Yield on advance, is another important ratio, which helps
us to measure the quality of advances. Here yield means interest
income received on advances of the bank. Increase in advance
yield ratio is an indicator of sound asset quality.
MANAGEMENT RATIO
Management is the most important ingredient that ensures sound
functioning of banks .With increased competition in the Indian
banking sector; efficiency and effectiveness have become the
rule as banks constantly strive to improve the productivity of
their employees. The ratio in this segment measures the
efficiency and effectiveness of management.
TOTAL ADVANCES TO TOTAL DEPOSITS RATIO

This ratio measures the efficiency of the management in
converting deposits into advances. Total deposits include
demand deposits, saving deposits of other banks.
PROFIT PER EMPLOYEES

This ratio is another indicator of the management. It
is arrived at by dividing by PAT (Profit after Tax) earned by the
total number of employees. Higher the ratio, higher the
efficiency of management.
BUSINESS PER EMPLOYEES.

This ratio also shows the efficiency of the management
of the management. It is arrived at by dividing total business by
total number of employees. Business includes the sum of total
advances and deposits in a particular year. Increase in business
per employee is an indicator of efficient management.
EARNINGS QUALITY
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In the recent past banks have been criticized for
making most of their earnings from treasury operations and
other investments rather than core lending operations. This
section, assesses the quality of income in terms of income of
income generated by core activity i.e., income from lending
from operations.
SPREAD
It is the difference between the interest income and
interest expended as a percentage of Total assets. Interest
expended includes interest paid on deposits, loan from RBI and
other short term and long-term loans. Spread indicates a bank’s
ability to with stand pressure on margins and higher the spread,
the better.
NON INTEREST INCOME TO TOTAL INCOME

This measures the income from operations, other than
lending as a percentage of total income. Non-interest income is
the total income earned by the bank excluding income on
advances, deposits with RBI and including on investments.
INTEREST INCOME TO TOTAL INCOME

This ratio measures the income from lending
operations as a percentage of total income generated by the
bank in the year. Interest income includes income on advances,
interest on deposits with RBI, and income on investments.
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COMPARITIVE BALANCESHEET.
A comparative Balance sheet shows the assets,
liabilities, and owner’s equity of a business enterprise at the
beginning and at the end of the accounting period with increase
s and decreases in the absolute data in terms of rupees and
percentage. The single balance sheet focuses on the financial
status of the firm as on a particular date, while the comparative
balance sheet focuses on the changes that have taken place in
one accounting period. The changes in the balance sheet items
are the result of acquisition or sales of assets, changes in
current assets and current liabilities, issue of shares, profit or
loss etc.
A comparative balance sheet has two columns is used to
show increase or decrease in figures. A fourth column may be
added for giving percentages of increases or deceases.
Comparative balance sheet indicates whether the business is
moving in a favorable or unfavorable direction.
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3.1 INDUSTRY PROFILE
BANKING- DEFENITION
Banking Regulation Act-1949, defines the term
banking company as “any company Which transacts the business
of banking in India” and the banking as “accepting for the
purpose of lending or investment of deposits of money from
public, repayable on demand or otherwise, and withdrawal by
cheque, draft, order or otherwise”.
Crowther defined as “Bank collects money from those
who have it to spare or who are saving it out of their incomes,
and lends this money to those who require it”.
A bank is a financial institution which deals with money
and credit money and credit. Banks plays an immeasurable role
in the development of a society. Banks act as an elixir of the
economic dearth. It is acting as the intermediary between those
who are having surplus money and those who are need it. It the
central point of the entire economic system will be ruined. The
business of banking is as old as authentic history banking is as
old as authentic history. Banking is the crude from existed our
country as early as the Vedic pried. The writing of Manu and
Koutilya and the teaching of of Christ contained reference of
banking.
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COMMERCIAL BANKS
Commercial banks are organized on a joint stock
company system, primarily for the purpose of earning a profit.
The two essential functions of the commercial bank may best be
summarized as the lending of money. Commercial bank
mobilizes the savings of the society. The primary function of
commercial bank is that of a broker and a dealer in money.
CO-OPERATIVE BANK
Co-operate banks, another component of the Indian
banking system originated with the enactment of Co-operative
Credit Societies Act of 1904, which provided for the formation
of co-operative credit societies. The co-operative banking
system in India is characterized by a relative comprehensive
network extending to the grass root level. What distinguishes
the co-operative banking sector from the commercial banking
sector is the focus of the former on the local population and
micro banking among middle and low income strata of the
society.
URBAN CO-OPERATIVE BANK

Urban co-operative banks are registered under co-
operative societies Act of the respective State Governments.
Prior to 1966, UCBs were exclusively under the purview of
State Governments. Effective March 1, 1966 certain provisions
of the Banking Regulation Act have been made applicable to
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these banks. Consequently, the RBI became the regulatory and
supervisory authority of UCBs for their banking related
operations. Managerial aspects of such banks continue to remain
with State Government
under the respective Co-operative Societies Act. UCBs with

multi presence are regulated by Central Government and
registered under the Multi-state co-operative societies Act.
The high power committee on urban co-operative
banks made a number of recommendations concerning the
regulatory aspects in relation to UCBs. These are discussed in
detail under the main heading “Regulatory and Supervisory
Framework”. The reader’s attention is invited to that section.
REFINANCE FACILITIES
The RBI extends refinance to UCBs at bank rate against their
advances to tiny and cottage industrial units. Sanctioned limit
for such refinance amounted to Rs. 3 crore during 2000-o1,
NABARD has designated refinance in respect of loans issued for
rural non-farm sector, including rural housing and for other
agricultural activities.
SCHEDULED UCBs
UCBs are included in the Second Schedule of the RBI Act, if
their net demand and time liabilities are at least Rs. 100 crores
and their overall functioning in terms of select parameters are
satisfactory. As on March 31, 2002 there were 52 scheduled
UCBs.
PRIMARY AGRICULTURAL CREDIT SOCIETIES
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Primary agricultural credit societies deal directly with
individual farmers, provide short and medium-term credit,
supply agricultural inputs, distribute consumer articles and also
arrange for the marketing of products of its members through
cooperative marketing society.
CENTRAL CO-OPERATIVE BANK

Central co-operative banks form the middle tier of co-operative
credit institutions. CCBs are independent units in as much as
the state co-operative banks have no control to control or
supervise their affairs. They are of two kinds, pure and mixed.
STATE CO-OPERATIVE BANK (STCBs)

State co-operative banks are at the apex of the three tier co-
operative structure dispensing mainly short/medium –term
credit. The principal function of StCBs is to assist the CCBs .
This function of the apex bank to act as a ‘balancing centre’ is
important since direct lending is not allowed among the CCBs.
The Urban Banks Department of the Reserve Bank of India is

vested with the responsibility of regulating and supervising
primary (urban) cooperative banks, which are popularly known
as Urban Cooperative Banks (UCBs).
While overseeing the activities of 1926 primary (urban)
cooperative banks, the Urban Banks Department performs three
main functions : regulatory, supervisory and developmental.
The Department performs these functions through its 17
regional offices.
I. Regulatory Functions
(i) Licensing of New Primary (Urban) Cooperative Banks
For commencing banking business, a primary (urban)
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cooperative bank, as in the case of commercial bank, is

required to obtain a licence from the Reserve Bank of India,
under the provisions of Section 22 of the Banking Regulation
Act, 1949 (As Applicable to Cooperative Societies).
(ii) Licensing of Existing Primary (Urban) Co-operative Banks
In terms of sub-section (2) of Section 22 of the Banking

Regulation Act, 1949 (As Applicable to Cooperative Societies),
the primary (urban) cooperative banks existing in the country
as on March 1, 1966, (when some banking laws were applied to
UCBs), were required to apply to the Reserve Bank of India.
They were given three months to obtain a licence to carry on
banking business. Similarly, a primary credit society which
becomes a primary (urban) cooperative bank by virtue of its
share capital and reserves reaching Rs. one lakh (Rs.1,00,000)
and above was to apply to the Reserve Bank of India for a
licence within three months from the date on which its share
capital and reserves reach Rs. one lakh. The existing
unlicensed primary (urban) cooperative banks can carry on
banking business till they are refused a licence by the Reserve
Bank of India.
(iii) Branch Licensing
Under the provisions of Section 23 of the Banking Regulation
Act, 1949 (As Applicable to Cooperative Societies), primary
(urban) cooperative banks are required to obtain permission
from the Reserve Bank of India for opening branches.
(iv) Statutory Provisions
The regulatory functions of Urban Banks Department relate to
monitoring compliance with the provisions of the Banking
Regulation Act, 1949 (As Applicable to Cooperative Societies)
by urban cooperative banks. These provisions include :
a. Minimum Share Capital
Under the provisions of Section 11 of the Banking Regulation
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Act, 1949 (As Applicable to Cooperative Societies), no primary

(urban) cooperative bank can commence or carry on
banking business if the real or exchangeable value of its paid-

up capital and reserves is less than Rs.one lakh.
b. Maintenance of CRR and SLR
As in the case of commercial banks, primary (urban)
cooperative banks are also required to maintain certain amount
of cash reserve and liquid assets. The scheduled primary
(urban) cooperative banks are required to maintain with the
Reserve Bank of India an average daily balance, the amount of
which should not be less than 5 per cent of their net demand
and time liabilities in India in terms of Section 42 of the
Reserve Bank of India Act, 1934. Non-scheduled (urban)
cooperative banks, under the provision of Section 18 of
Banking Regulation Act, 1949 (As Applicable to Cooperative
Societies) should maintain a sum equivalent to at least 3 per
cent of their total demand and time liabilities in India on day-
to-day basis. For scheduled cooperative banks, CRR is required
to be maintained in accounts with Reserve Bank of India,
whereas for non-scheduled cooperative banks, it can be
maintained by way of either cash with themselves or in the
form of balances in a current account with the Reserve Bank of
India or the state co-operative bank of the state concerned or
the central cooperative bank of the district concerned or by
way of net balances in current accounts with public sector
banks. In addition to the cash reserve, every primary (urban)
cooperative bank (scheduled/non-scheduled) is required to
maintain liquid assets in the form of cash, gold or
unencumbered approved securities which should not be less
than 25 per cent of the total of its demand and time liabilities
in accordance with the provisions of Section 24 of the Banking
Regulation Act, 1949 (As Applicable to Cooperative Societies).
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Out of the prescribed SLR, the UCBs have been advised to

maintain a certain amount in the form of SLR Securities as
under :
Minimum SLR holding in

Government and other
Category of
Sr.No. approved securities as
bank
percentage of Net Demand
and Time Liabilities (NDTL)
Scheduled
1. 25%
banks
Non-
Scheduled
banks
a) with NDTL
2. of Rs.25 crore 15%
& above 10%
b) with NDTL
of less than
Rs.25 crore
II. Supervisory Functions
To ensure that the UCBs conduct their affairs in the interests
of the depositors and also comply with the regulatory
framework prescribed by the Reserve Bank of India, the
department undertakes on site inspection of these banks with
frequency ranging from one to two years depending upon the
financial condition / status of banks. The thrust of supervision
is to ensure that banks' affairs are not conducted in a manner
detrimental to the depositors' interest and also to assess the
solvency of the bank vis--vis its liabilities, besides examining
the banks' compliance with the existing regulatory framework.

The department also undertakes off-site surveillance of
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scheduled banks and non-scheduled banks with a deposit base

of Rs 100 crore and above based on a set of quarterly and
annual returns.
III. Developmental Functions
With a view to extending institutional credit support to tiny
and cottage units, the Reserve Bank of India grants refinance
facilities to urban cooperative banks under the provisions of
Section 17 of the Reserve Bank of India Act, 1934. The
refinance is given at the Bank Rate.
Training is imparted to the middle and top management of
urban cooperative banks through College of Agricultural
Banking, Pune.
IV. Sections / Divisions of Urban Banks Department
1. Administration
This Section handles staff matters of the department.
2. New Bank Licensing and Branch Licensing
This section frames policies for issue of bank licence /allots
centres for opening of branches and authorizes regional offices
to take action accordingly. It also deals with conversion of
cooperative credit societies into urban banks.
3. Returns
Returns section at each of the regional offices is responsible
for monitoring receipt of various statutory returns under the
provisions of Banking Regulation Act, 1949, (AACS) and Sec
42of Reserve Bank of India Act 1934 in case of scheduled
UCBs. They also verify compliance with the provisions of the
Acts, ibid, and take suitable action against non-compliant
UCBs.
4. Banks Supervision
This division arranges inspection of urban cooperative banks
through regional offices and closely monitors the action taken
by the UCBs to rectify the irregularities / deficiencies pointed
out in inspection reports. The division also associates itself
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with the RCS of respective states in rehabilitation of

financially weak UCBs.
5. Banking Policy
This section frames policies on prudential norms, investment
policies, monitoring priority sector targets, refinancing, issue
of directives on interest rates, CRR/SLR, etc. Policies relating
to para banking activities such as merchant banking, hire
purchase, leasing, insurance business, etc. are also formulated
by this division. Besides, the section also attends to
compliance with the directions of Local Board / Central
Board / BFS, furnishes requisite material for Bank's
publications such as Annual Report, Report on Trend and
Progress of Banking in India, Currency and Finance, etc.
Further, the section interprets the provisions of Banking
Regulation Act 1949 (AACS), initiates amendments,
coordinates with the Government, corresponds with various
State Governments on matters pertaining to amendments of
State Cooperative Societies Acts, coordinates with DICGC on
matters pertaining to banks under liquidation, maintains and
updates the list of urban cooperative banks, monitors
cooperative credit societies having paid up capital above Rs
one lakh, watches compliance to Sec 9, 29 & 31 of Banking
Regulation Act, attends to cooperative banks going out of the
purview of Banking Regulation Act etc.
3.2 A PROFILE OF CO-OPERATIVE URBAN BANK

LTD.KUTTIADY.
The Kuttiady Co-Operative urban bank is the bank in kuttidy
area.The bank established on 22nd may 1996 under the Kerala
Co-Operative society ACT 1967.The bank was generated license
by RBI on 27th January 2003 as on UBS: KER 005 P Bank
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started its function on 1st May 2003 with a share capital of
Rs.1256000 and 2507 member.
The bank maintains a good relationship to its customers. So it

makes a prominent position in banking sector as compared to
others. This relationship creates more deposits in bank. Now its
total deposits reached at 6 crores. The bank was started with
fully computerized and very systematic. It facilitates the
truncation very easily.
Bank has increased its share capital and members in each year.
In 2007-08 its share capital was Rs.2673990 . And the number
of ‘A’ class members was 3350. The bank provides various
loans and overdraft facilities to its members. So the bank has
attained a profit of Rs 259737. During this year. The bank’s
well-documented procedures, high levels of automation ,
intensive training of personal and ongoing audit review of
Reserve Bank had enabled them to improve the reliability of
their operational processes.
NAME AND ADDRESS OF THE BANK

The Kuttiady Co-Operative Urban Bank Limited
Register No: D 2650
Ph.0496-2598070
Kuttiady P.O
Kozikode Dt.Kerala.
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LOCATION
The registered office is situated at Kuttiady near BSNL office,
Kozhiokode dist Kerala.
Area of operation
Area of the bank covers the following:

: Kavilumpara panchayath
: Kayakkody panchayath
: Kuttiady panchayath
: Maruthonkara panchayath
: Naripatta panchayath
MANAGEMENT& ADMINISTRATION
Management of Kuttiady co-operative urban is vested in
the board of directors elected by its general body elections are
periodically held in accordance with co-operative societies act.
There are 11 elected directors of ‘A’ class member including a
Chairman . The consisting of 10 Directors including one should
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be women and one from SC/ST. In current year the board should
include a Professional for its members. Now the total Directors
of members of the bank is 12.
ADMINISTRATION CHART
Chairman
Vice-Chairman
Directors
OBJECTIVES OF THE BANK

1. To accept deposit of money from the public repayable on
demand or otherwise and withdrew by cheque, draft,
orders, otherwise for the purpose of lending on
investment.
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2. To lend or to advance either on or without security to

members and others as permitted by Registrar.
3. To encourage thrift, self help and Co-Operation among

members.
4. To borrow and raise money.
5. To provide safe deposit vaults.
6. To collect and transit money and securities .
7. To provide financial and technical assistance to a self-

employed person for setting up of their business.
8. To receive all kinds of bonds, scripts or deposits for safe

custody or otherwise.
9. To negotiate money and securities.
MEMBERSHIP
Urban Bank provides three type of memberships ‘A’ class, ‘B’
class membership will be available to each and every individual.
The membership holders are the equity share holders and they
have voting right of the bank. ’B’ class membership is the
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government share; there is no government share in this bank .’C
‘class membership is the nominal membership given by the
bank. It is a temporary membership for the temporary bank
dealings like; Gold loans etc…..
ELIGIBILITY OF MEMBERSHIP
1. The persons should have completed the age of 19 years.
2. They should not be an unsound mind.
3. They must be a resident with owning land or carrying his
profession in the area of operation.
4. The members should not be a member of any primary co-
operative bank or co-operative society.
5. The member must be qualified under the rule 16(2) Kerala
Co-operative Act and rules.
MEMBERSHIP DETAILES OF BANK
Table 3.1
YEAR MEMBERS
2003-2004 2838
2004-2005 2927
2005-2006 2998
2006-2007 3173
2007-2008 3350
C h a r t 3 .3300
1
3200
3100
3000
2900
2800
2700
2600
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
30
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SHARE CAPITAL
The authorized share capital of the bank is Rs.3000000/- In
most cases its share value is Rs.25/- each.
SHARECAPITAL POSITION OF THE BANK

Table 3.2
YEAR ANNUAL INCREASE PERCENTAGE
PAID UP OF INCREASE
CAPITAL
2003-2004 1382850 ___ ___
2004-2005 1512300 129450 9.36
2005-2006 1584250 71950 4.75
2006-2007 1946500 362250 22.86
2007-2008 2364700 418200 21.48
Chart 3.2
2400000
2200000
2000000
1800000
0RGANISATIONAL STRUCTURE
1600000
1400000
31
REGIONAL
1200000 INSTITUTE OF CO-OPERATIVE MANAGEMENT
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
KCUBL
ORGANISATION STRUCTURE
The organizational structure is generally showed as an
organization chart. The structure provides a basis of frame work
for managers and other employees for performing their various
functions. It facilities work flow in the organization and help in
finding out the authority and responsibility. The better
organization structure provides internal cooperation between the
employees.
The organization structure of Kuttiady Co-operative Urban
bank Ltd comprises of General Manager , Accountants, Clerks
and other staffs. The overall administrative team leading by
Board of directors and the day-to-day operations are managed
by the chairman .The following diagram shows the organized
structure of the bank.
ORGANISATION CHART
GENERAL MANAGER
SENIOR ACCOUNTANT
SENIOR CLERK
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JUNIOR ACCOUNTANT
JUNIOR CLERK
PEON / ATTENDER
WORKING CAPITAL
Working capital is the capital requires for the day-to-
day working of an enterprise. It means ability of the firm to
meet its short term obligations from its short term or current
assets. In short, working capital is the excess of current assets
over current liabilities.
Working capital= Current assets - Current liabilities
WORKING CAPITAL POSITION OF THE BANK

Table 3.3
YEAR CURRENT CURRENT WORKING
ASSETS LIABILITES CAPITAL
2003-2004 14427705 8279010 6148695
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2004-2005 21402130 9251497 12150633
2005-2006 30412600 14065585 16347015
2006-2007 50433325 26596961 23836364
2007-2008 65535211 32024114 33511097
Chart 3.3
40000000
35000000
30000000
25000000
20000000
15000000
10000000
5000000
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
In the above table and chart the working capital shows an

increasing trend so we can say that the banks working capital
position is good.
FUNCTIONS OF BANK
(1)ACCEPTANCE OF DEPOSITS
Banks accept deposits from customer. People
keep deposit of money for safety, interest, easy to transfer
cheques. So they accept following types of deposits.
1. Current account deposits
These deposits constitute major portion of banks
circulating medium of exchange. Normally business people keep
money in his accounts as they can withdraw and issues cheques
in any time. In the case of partnership firms, partnership deed
must be needed to open an account. Overdraft facilities and cash
34
KCUBL
credit facilities are available in this account .Bank does not pay
any type of interest for these deposits.
2. Saving Bank Account Deposits
This is a kind of demand deposit with limited
number of withdrawals during any specific period. Savings
Accounts provide principal security and a modest interest rate.
Now banks also put some restriction on the minimum balance. If
customer don’t maintain the minimum balance customer has to
pay a penalty.
3. Fixed Deposits Account
Under this scheme money is deposited for a
fixed period of time so it is also called Fixed Deposit. Investor
can withdraw the money only after the time period. Premature
withdrawals are also allowed by paying a penalty. Interest is
Calculated on monthly, quarterly or yearly depends on the bank
and scheme. Banks offers loan or overdraft facility as added
features with fixed deposits. Term deposits are a safe
investment and it is therefore a very good option for

conservative, low-risk investors.
4. Daily Deposit
Daily Deposits the deposits through the daily
collection agents. The agent collects cash daily from different
areas of the bank. The depositor can deposit their small
earnings through the agent without go to the bank. The normal
period of these deposits is 1 year and the bank provided 2%
interest on that period. The depositor can withdraw his money
after 6 months without any interest.
(2) ADVANCES OF LOANS
The deposits received are invested by advancing
loans to needy borrowers for higher rate of interest. This
function is source of profits for bank.
1. Overdrafts
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KCUBL
This facility is extended to current account holders
where they are allowed to overdraw more than the credit
standing in their account. Since the facility is only for
respectable and reliable customers, banks may not insist on
security. The security will also be taken in the form of fixed
deposits. Bank allows his ability up to Rs.5 lakhs. The interest
is charged on overdrafts at 12%.
2. Cash credit
Under this account bank gives loans to borrowers
against certain security. The entire loan amount will not be
given at one time. It will allow the borrower to withdraw from
time to time depending on the values of stock goes-down. The
interest rate is charged the amount withdrawn.
3. Deposits loans
The bank provides loans to its depositors on
their deposits. Mainly there are two types of deposits loans,
Daily deposits loans and fixed deposits loans .Daily deposits
loan is allowing in his daily deposits and FD loan is allowing in
his fixed deposits. The interest rate of these loan is more than
1% on his deposits rate of interest.
4. Personal loans
It is a short term loan for a period of 18 months.
The main specialty of this loan is the applicant must be an A
class member and A class member’s support, otherwise one
should be a Government employee and others must be an A class
member.
5. Gold loans
Gold loan is a type loan provides by the bank on
the security of gold. This minimum period of gold loan is 1
month and maximum of 6 months. The bank charge interest of
these periods 10% and 12% respectively.
6. Mortgage loan
36
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Mortgage loan is the medium term loan provided
by the bank for a maximum period of 5 years. The loan
applicant must be an A class member. The rate of interest on
this loan is 12% . The maximum amount of the loan is given by
the bank is Rs.5 lakhs.
3) OTHER SERVICES
1) Safe deposit locker
The bank safe deposit lockzer facilities to its
customers. T hey can cheque their locker at the office time by
registering in visitors book. The bank charges a nominal fee for
these locker facilities.
RATIO ANALYSIS
Ratio analysis is defined as the systematic use of
accounting ratios in order to weigh and evaluate the operating
performance of a firm. It is the process determining and
interpreting various ratios for helping in making certain
decisions.
Accounting ratios are relationship expressed in mathematical
terms between two related figures in the financial statement,
e.g. ratio between current assets and current liabilities. A single
figure by itself has no meaning but when expressed in terms of
related figure, it yields valuable information.
Ratios can be expressed in three ways. It may be
expressed in three ways. It may be expressed as the quotient of
one number divided by another. Then it is said to be expressed
37
KCUBL
in ‘times’. If the quotient is multiplied by hundred, it is
expressed as ‘percentage’. It may also be expressed in terms of
‘proportion’ between figures. Thus times, percentage and
proportion are the three ways of expressing ratio.
TYPES OF RATIOS
1. Short – term solvency ratio
2. Long – term solvency ratio
3. Profitability ratio
4. Management ratio
5. Earnings quality ratio
SHORT- TERM SOLVENCY RATIO

These are ratios, which measure the short-term
solvency of financial position of a firm. These ratios are
calculated to comment upon the short – term paying capacity of
a concern or the firm’s ability to meet its current obligations.
The various ratios are;

1. Current ratio
2. Absolute liquid ratio
CURRENT RATIO
It may be defined as the relationship between the
current assets and current liabilities. Current ratio indicates the
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KCUBL
firms abilities to meet short term liabilities. It also indicates
the working capital. The higher the current ratio, greater will be
the firms ability to meet short term debts. An unusually high
current ratio indicates that funds are not being economically
used in the firm. A ratio of 2:1 is considered satisfactory as a
rule of thump.
Current ratio = Current Asset (C A)

Current liabilities(C L)
TABLE SHOWING CURRENT RATIO

Table 4.1
YEAR CURRENT CURRENT RATIOS
ASSETS LIABILITES
2003- 14427705 8279010 1.74
2004
2004- 21402130 9251497 2.31

2005
2005- 30412600 14065585 2.16

2006
2006- 5043325 26596961 1.896

2007
39
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2007- 65535211 32024114 2.046

2008
CHART SHOWING CURRENT RATIO

Chart 4.1
2.5
1.5
0.5
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
The current ratio shows a slight increase from 0.57 in
the year 2004-2005 and shows a decrease of 0.15 in the year
2005-2006 and 0.264 in the year 2006-2007. There is a slight
increase from 0.15 in the year 2007-2008. The bank needs to
maintain more current assets in order to meet it’s short term
obligations. The ideal current ratio is 2:1. We can conclude that
the ratio is favorable, because the asset is slightly more than
the current liabilities
CASH RATIO(ABSOLUTE LIQUID RATIO)

Cash ratio may be defined as the relationship between
Absolute Liquid Assets and Current Liabilities .Absolute liquid
Assets include cash in hand and cash at bank and marketable
securities . This ratio considers only the absolute liquidity
available with the firm. The acceptable norm of this ratio is 5:1.
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Absolute liquid ratio = Cash & Bank

Current Liabilities
TABLE SHOWING CASH RATIO

Table 4.2
YEAR CASH CURRENT RATIO
LIABILITES
2003- 911447 8279010 0.11
2004
2004- 1585944 9251497 0.17

2005
2005- 2158660 14065585 0.153

2006
2006- 6719971 50433325 0.133

2007
2007- 6308129 32024114 0.196
41
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2008
CHART SHOWING CASH RATIO

Chart 4.2
0.2
0.18
0.16
0.14
0.12
0.1 Series1
0.08
0.06
0.04
0.02
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
`
INTERPRETATION
The absolute liquid assets to current liabilities recorded are
0.11, 0.17, 0.153, 0.133, and 0.196 in the year 2003-2004, 2004-
2005, 2005-2006, and 2006-2007. Here we can see an increasing
trend and the highest ratio were recorded in the year 2007-2008.
SUMMARY
Table 4 A SHORT TERM SOLVENCY RATIO

2003- 2004- 2005- 2006- 2007-
RATIO 2004 2005 2006 2007 2008
1.74 2.31 2.16 1.89 2.05

CURRENT
RATIO
CASH 0.11 0.17 0.15 0.13 0.19
RATIO
42
KCUBL
LONG – TERM SOLVENCY RATIO

Leverage refers to the extent to which a firm uses debt for
its operation. Leverage ratios are important for the firm’s
shareholders, debenture ho etc to understand the long term
financial position of the firm. Solvency is the ability of the firm
to play the interest on loans on loans etc regularly and reply the
principal amount on time.
The various ratios are:

1. Proprietary Ratio
2. Solvency Ratio
3. Debt-Equity Ratio
4. Fixed Asset to Net Worth Ratio
PROPRIETARY RATIO
This ratio establishes the relation ship between shareholder’s
funds and total assets. It indicates the proportion of total assets
financed by shareholders. This gives result relating to capital
43
KCUBL
structure of the company. A high proprietary ratio indicates a
relatively favorable position to the creditors at the time of
liquidation.
Shareholders Funds *100

Proprietary ratio= Total Assets
TABLE SHOWING PROPRIETARY RATIO Table 4.3
YEAR SHAREHOLDERS TOTAL RATIO

FUND ASSEST
2003- 1410951 17247453 8.18
2004
2004- 1540401 25584531 6.02

2005
2005- 1612351 34604336 4.66

2006
2006- 2100679 56423286 3.74

2007
2007- 2673990 75722298 3.58

2008
44
KCUBL
CHART
SHOWING PRORITARY RATIO
Chart 4.3
9
8
7
6
5
Series1
4
3
2
1
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
Higher the ratio indicates the long term solvency and
financial health of the firm.In the initial stage bank has a
increased solvency. From the year 2003-2004 to 2007-2008 it
shows a decreasing trend. So we can conclude that the solvency
of the bank reduces from year to year.
SOLVENCY RATIO
45
KCUBL
Solvency Ratio is used to test the solvency of a firm.
Solvency means the ability to meet the outside liabilities out of
total assets. This ratio indicates the relationship between the
total liabilities to outsiders to total assets of a firm. Generally
lower the solvency ratio, more satisfactory or stable is the long
term solvency position of a firm.
Total Liabilities to outsiders
Solvency Ratio = Total Assets *100
TABLE SHOWING SOLVENCY RATIO
Table 4.4
YEAR TOTAL LIABILITES TO TOTAL RATIO
OUTSIDES ASSETS
2003- 6948496 17247453 40.28

2004
2004- 13354112 25584531 52.19

2005
2005- 17224065 34604336 49.77

2006
2006- 25327440 56423286 44.89

2007
CHART SHOWING SOLVENCY RATIO

Chart 4.4
46
KCUBL
60
50
40
30 Series1
20
10
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
From the data analysis we can understand that the solvency
ratio of the company shows only small fluctuations through out
the year. From 2003 to 2008 we can see only, nominal
fluctuation in the ratio.
DEBT-EQUITY RATIO
Debt equity ratio, also known as external internal Equity
ratio is calculated to measure the relative claims of outsiders
and the owners (ie, share holders) against the firms assets. This
ratio indicates the relationship between the external equities or
outsiders fund and the internal equities or share holders funds.
A debt equity ratio of 1:1 may be usually considered to be a
satisfactory ratio although there cannot be any rule of thumb or
standard norms for all types of business.
Outsiders Fund
Debt-Equity Ratio= Shareholders fund
TABLE SHOWING DEBT-EQUITY RATIO

Table 4.5
YEAR OUTSIDERS SHAREHOLDERS RATIO
47
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FUND FUND
2003- 14906280 1382850 10.78
2004
2004- 21860311 1540401 14.19

2005
2005- 30033010 1612351 18.63

2006
2006- 50115896 2092679 23.95

2007
2007- 68076814 2673990 25.46

2008
CHART SHOWING DEBIT-EQUITY RATIO

Chart 4.5
30
25
20
15
10
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
The debt equity ratio normally shows an increasing
tendency. The rule of thumb is 1:1 is considered as satisfactory.
This ratio is not satisfied in this position.
48
KCUBL
FIXED ASSETS NET WORTH RATIO
This ratio establishes the relationship between fixed
asset and shareholders funds. This ratio indicates the extent to
which share holder’s funds are sunk in the fixed assets.
Generally, the purchase of fixed assets should be financed by
the shareholders equity, which includes reserve , surpluses and
retained earnings
If the ratio is less than 100%, it implies that owner’s funds
are more than fixed assets and a part of working capital is
provided by the shareholders. When the ratio is more than
100%, it implies that owners of fund are not sufficient to
finance the fixed assets and the has to depend upon outsiders
fixed assets. There is no ‘rule of thumb’ to interpret this ratio
in case of industrial undertaking.
Fixed Assets( After Depreciation)

Fixed Assets Ratio = Net worth(Share holders Fund)
TABLE SHOWING FIXED ASSETS RATIO

Table 4.6
YEAR SHARE HOLDERS FIXED RATIO
FUND ASSETS
2003- 1382850 169549 12.26
49
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2004
2004- 1540401 149008 9.67

2005
2005- 1612351 126545 7.85

2006
2006- 2092679 123948 5.92

2007
2007- 2673990 313946 11.74

2008
CHART SHOWING FIXED ASSETS RATIO

Chart 4.6
13
12
11
10
5
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
The fixed assets to net worth are very low. The rule of
thumb of 60% to 65% is considered as satisfactory. In this chart
shows a very low position of fixed asset of the bank.
SUMMARY
SOLVENCY RATIOS
50
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Table 4.B
RATIO 2003- 2004- 2005- 2006- 2007-

2004 2005 2006 2007 2008
1.74 2.31 2.16 1.89 2.05

CURRENT
RATIO
CASH RATIO 0.17 0.15 0.13 0.19

0.11
PROPRIETARY 8.18 6.02 4.66 3.74 3.53

RATIO
SOLVANCY 40.28 52.19 49.77 44.87 49.88

RATIO
DEBT-EQUITY 10.78 14.19 18.63 23.95 25.46

RATIO
FIXED ASSET 12.26 9.67 7.85 5.92 11.74

RATIO
PROFITABILITY RATIO
The primary objective of a business undertaking
is to earn profits. The profit earnings considered essential for
the survival of the business. ‘Profit is the engine that drives the
business’. A firm should earn profit to survive and grow over a
period of time. A business enterprise can discharge its
51
KCUBL
obligations to the various segments of the society only through
earnings of profits.
Various Ratios are;
1. Return on Equity
2. Return on Investment
3. Earnings per share
RETURN ON EQUITY
It indicates how the firm has used the resources of
owners. This ratio is one of the most important ratios in
financial analysis. The earnings of a satisfactory return are one
of the most desirable objectives of a business. The ratio of net
profit to owner’s equity reflects the extent to which the
objectives has been accomplished.
Profit after tax *100

Return on Equity = Equity share capital
SHOWING RETURN ON EQUITY

Table 4.7
YEAR N P AFTER EQUITY SHARE RATIO
TAX CAPITAL
2003- -523216 1382850 -37.84
2004
52
KCUBL
2004- 28461 1540401 1.88
2005
2005- 380401 1612351 24.01

2006
2006- 286049 2092679 14.69

2007
2007- 259737 2673990 10.98

2008
Chart 4.7
30
25
20
15
10
5
0
-5 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
-10
-15
-20
-25
-30
INTERPRETATION
Return on equity capital helps share holders to know the
profit earned by the company and the amount of prof
its made available to pay dividend. The higher ratio provides
the better result of the firm. In the above analysis after the year
2003-2004 there starts an increase in the rate and it reaches
highest in the year 20005-2006 and after that we can see a
decline in the ratio.
53
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RETURN ON INVESMENT
Return on shareholders investment popularly known as
ROI or Return shareholders fund. It is the relationship between
Net profit (after interest & tax) and shareholders fund.
Net profit (after interest &tax)

Return on Investment = Shareholders fund *100
TABLE SHOWING RETURN ON INVESTMENT

Table 4.8
YEAR NP AFTER SHAREHOLDER RA
INTEREST &TAX S FUND TI
O
54
KCUBL
2003- -523216 1382850 -
2004 37.
08
2004- 28461 1540401 1.8
2005 5
2005- 380401 1612351 23.

2006 59
2006- 286049 2092679 13.

2007 61
2007- 259737 2673990 9.7

2008 1
CHART SHOWING RETURN ON INVESTMENT

Chart 4.8
30
25
20
15
10
5
0
-5 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
-10
-15
-20
-25
-30
INTRPRETATION
In the above analysis the return on investment increased to
23.59 in the year 2005-2006 from a negative rate of -37.08 in
the year 2003-2004. now it shows a falling trend as the rate
reduced to 9.71 in the year 2007-2008. This indicates that
availability of profit after interest and tax to share holders is
reducing.
55
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EARNINGS PER SHARE

The ratio establishes the relationship between
profits after tax to number of equity shares. The earnings per
share is a good measure pf profitability and when compared
with E.P.S of similar other companies, it gives a view of the
comparative earnings or earnings power of a firm. E.P.S
calculated of a number of years indicated whether or not
earnings power of the company has increased.
Profit after Tax

Earnings per Share = Number of Equity shares
TABLE SHOWING EARNINGS PER SHARE

Table 4.9
YEAR NP AFTER TAX NO EQUITY RATIO
SHARES
2003- -523216 55314 -9.46
2004
56
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2004- 28461 60492 0.47
2005
2005- 380401 63370 6.03

2006
2006- 286049 77860 3.67

2007
2007- 259737 94588 2.75

2008
Chart 4.9
8
6
4
2
0
-2 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
-4
-6
-8
-10
-12
INTERPRETATION
In the above analysis the ratio is -9.46 in the year 2003-
2004, from the next year onwards the ratio got increased and
reached the highest in the year 2005-2006. The ratios are 3.65
and 2.75 in the year 2006-2007 and 2007-2008 respectively. The
ratio shows decreasing tendency but still it hold good.
ADVANCED YIELD RATIO
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Yield on advance, is another important ratio, which helps us
to measure the quality of advances. Here yield means interest
income received on advances of the bank. Increase in advance
yield ratio is an indicator of sound asset quality.
Advanced yield ratio= Interest on advances *100

Advances
TABLE SHOWING ADVANCE YIELD RATIO
Table 4.10
YEAR INTEREST ADVANCES RATIO
ON
ADVANCES
2003-2004 615240 1207942 5.09
2004-2005 1984292 1618574 12.26
2005-2006 2138831 21421050 9.99
2006-2007 3224228 33928813 9.50
2007-2008 4214005 33928813 12.42
Chart 4.10
13
12
11
10
9
8
7
6
I N T E R P R5E T A T I O N
4
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
58
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In the above analysis the advance yield ratio is lower in
the year 2003-2004. From the next year onwards it start rising
from the year 2003-2004. In the year 2004-2005 the ratio was
12.26 and reduced to 9.99 and 9.5 in the years 2005-2006 and
2006-2007 respectively and reached at a ratio of 12.42 in the
year 2007-2008 which holds the highest. Now it shows an
increasing trend.
SUMMARY
PROFITABILITY RATIO
Table 4.C
RATIO 2003- 2004- 2005- 2006- 2007-
2004 2005 2006 2007 2008
RETURN - 1.88 29.01 14.69 10.88

ON 37.84
EQUITY
RETURN - 1.85 23.59 13.61 9.71
ON 37.08
INVEATME
59
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NT
-9.46 0.47 6.03 3.67 2.75

EARNINGS
PER
SHARE
5.09 12.26 9.98 9.5O 12.42
ADVANCE
YIELD
RATIO
MANAGEMENT RATIO
Management is the most important ingredient that
ensures sound functioning of banks .With increased competition
in the Indian banking sector , efficiency and effectiveness have
become the rule as banks constantly strive to improve the
productivity of their employees. The ratio in this segment
measures the efficiency and effectiveness of management.
TOTAL ADVANCES TO TOTAL DEPOSITS RATIO

This ratio measures the efficiency of the management in
converting deposits into advances. Total deposits include
demand deposits , saving deposits of other banks.
Advances
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Total advances to Total deposits ratio = Deposits
*100
TABLE SHOWING TOTAL ADVANCES TO TOTAL
DEPOSITS RATIO
Table 4.11
YEAR ADVANCES DEPOSITS RATIO
2003-2004 12079692 14906280 81.08
2004-2005 16184574 21860311 74.04
2005-2006 21421050 30033010 71.33
2006-2007 33928813 50115896 67.70
2007-2008 36217501 68076814 53.20
CHART SHOWING TOTAL ADVANCES TO TOTAL

DEPOSITS
Chart 4.11
85
80
75
70
65
60
55
50
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
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Total advances to deposit ratio shows a decreasing
tendency from the year 2003-2004 to 2007-2008. In the year
2007-2008 the ratio is 53.2, which indicates that the
management is able to convert more than 50% of its deposits to
advances.
PROFIT PER EMPLOYEES

This ratio is another indicator of the management.
It is arrived at by dividing by PAT (Profit After Tax ) earned
by the total number of employees . Higher the ratio, higher the
efficiency of management.
NET PROFIT
PROFIT PER EMPLOYEE = NO OF EMPLOYEES
TABLE SHOWING PROFIT PER EMPLOYEES (Table 4.12)

YEAR NET NO OF PROFIT
PROFIT EMPLOYEES PER
EMPLOYEE
S
2003- -523216 11 -47565
2004
2004- 28461 11 2587

2005
2005- 380401 11 34581

2006
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2006- 286049 11 26004
2007
2007- 259737 11 23612

2008
CHART SHOWING PROFIT PER EMPLOYEES

Chart 4.12
40000
INTERPRETATION 30000
Profit per employees shows a decreasing trend .In the
year 2003-2004 the bank was under loss after that it attained
20000
profit and profit per employees increased. But now it shows a
reducing trend as the amount in the year 2007-2008 is 2312.
BUSINESS PER EMPLOYEES

This ratio also shows the efficiency of the management
10000
of the management. It is arrived at by dividing total business by
total number of employees. Business includes the sum of total
advances and deposits in a particular year. Increase in business
per employee is an indicator of efficient management.
0
Advances + Deposits
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Business per employees = No of employees
TABLE SHOWING BUSINESS PER EMPLOYEES (Table 4.13)

YEAR TOTAL NO OF BUSINESS PER
BUSINESS EMPLOYEES EMPLOYEES
2003- 26985972 11 2453270
2004
2004- 38044885 11 3458625

2005
2005- 51454060 11 4677641

2006
2006- 84044709 11 7640428

2007
2007- 104294315 11 9481301
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2008
CHART SHOWING BUSINESS PER EMPLOYEES

Chart 4.13
10000000
9000000
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
The business per employees shows an increasing trend .
It is increasing year to year. It shows a good trend to the bank.
SUMMARY
MANAGEMENT RATIO
Table 4.D
RATIO 2004 2005 2006 2007 2008
TOTAL 81.04 74.04 71.33 67.70 53.20

ADVANCE
S TO
TOTAL
DEPOSITS
PROFIT -47565 2587 34581 26004 23612

PER
EMPLOYE
ES
BUSINESS 2453270 38044885 24151323 7640428 94813

PER 01
EMPLOYE
ES
65
KCUBL
EARNINGS QUALITY
In the recent past banks have been criticized for making
most of their earnings from treasury operations and other
investments rather than core lending operations. This section,
assesses the quality of income in terms of income of income
generated by core activity i.e., income from lending from
operations.
SPREAD
It is the difference between the interest income and
interest expended as a percentage of Total assets. Interest
expended includes interest paid on deposits, loan from RBI and
other short term and long-term loans. Spread indicates a bank’s
ability to with stand pressure on margins and higher the spread,
the better.
Interest income-Interest expended
Spread = Total assets
Table 4.14
YEAR INTEREST INTEREST SPREAD TOTAL
INCOME EXPENDE ASSETS RATI
D O
66
KCUBL
2003- 615240 531485 83755 17247453 0.49
2004
2004- 1984292 864596 1119696 25584531 4.38

2005
2005- 2138831 1117079 1021752 34604336 2.95

2006
2006- 32242228 1830808 1393420 56423286 2.47

2007
2007- 4214005 2776313 1437692 25584531 4.38

2008
Chart 4.14
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
During the year 2003-2004 the spread was 0.49. In the year
2004-2005 it increased to 4.38. after that it became reduced to
2.95 and 2.47 in the years of 2005-2006 and 2006-2007
respectively. Now it shows an increasing trend as it touched the
rate of 4.38 in the year 007-2008.
NONINTEREST INCOME TO TOTAL INCOME
67
KCUBL
This measures the income from operations, other
than lending as a percentage of total income. Non-interest
income is the total income earned by the bank excluding income
on advances, deposits with RBI and including on investments.
Non interest income *100

Total income
Table 4.15
YEAR NON I TOTAL RATIO
NTEREST INCOME
INCOME
2003-2004 440364 1055604 41.72
2004-2005 500396 2484688 20.14
2005-2006 105920 3200058 33.09
2006-2007 1584015 4810280 32.92
2007-2008 2770566 6996087 39.60
45
40
Chart 4.15
35
30
25
20
15
10
0
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
68
KCUBL
INTERPRETATION
Non interest income to total income of the bank shows
an increasing trend now. In the year 2003-2004 it was 41.72
which was the highest. In the year 20042005it was reduced to
20.14 and then increased to33.09 in the year 2005-2006. In the
year 2006-2007 it slightly reduced to 33.92. Now it shows an
increasing trend as the ratio in the year 2007-2008 is 39.6.
INTEREST TO TOTAL INCOME

This ratio measures the income from lending operations as
a percentage of total income generated by the bank in the year.
Interest income includes income on advances, interest on
deposits with RBI ,and income on investments.
Interest income *100
Total income
Table 4.16
YEAR INTEREST TOTAL RATIO
INCOME INCOME
2003- 615240 1055604 58.28
2004
2004- 1984292 2484688 79.86

2005
69
KCUBL
2005- 2140849 3200058 66.90
2006
2006- 3226265 4810280 67.07

2007
2007- 4225521 6996087 60.40

2008
Chart 4.16
85
80
75
70
65
60
55
50
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
INTERPRETATION
In the year 2003-2004 the interest income to total income is
58.28 and after that it was increased to 79.86 which were the
highest. During 2005-2006 it was reduced to 66.90 and in the
year it was slightly increased to 67.07 in the year 2006-2007.
Now it shows a decreasing tendency as the rate is 6.40 in the
year 2007-2008. Even if the trend is falling in nature the net
result hold good.
70
KCUBL
SUMMARY
EARNINGS QUALITY RATIO

Table 4.E
RATIO 2004 2005 2006 2007 2008
SPREAD 0.49 4.38 2.95 2.47 1.89
NON 41.72 20.14 33.09 32.92 39.60

INTEREST
INCOME TO
TOTAL
INCOME
INTEREST 58.28 79.86 66.90 67.07 60.40
INCOME TO
TOTAL
INCOME
71
KCUBL
COMPARITIVE BALANCE SHEET

A comparative Balance sheet shows the assets,
liabilities, owner’s equity of a business enterprise at the
beginning and at the end of the accounting period with increase
s and decreases in the absolute data in terms of rupees and
percentage. The single balance sheet focuses on the financial
status of the firm as on a particular date, while the comparative
balance sheet focuses on the changes that have taken place in
one accounting period. The changes in the balance sheet items
are the result of acquisition or sales of assets, changes in
current assets and current liabilities , issue of shares , profit or
loss etc.
A comparative balance sheet has two columns is used to
show increase or decrease in figures. A fourth column may be
added for giving percentages of increases or deceases.
Comparative balance sheet indicate whether the business is
moving in a favorable or unfavorable direction.
72
KCUBL
Table 4.17
COMPARTIVE BALANCE SHEET AS ON 31'ST MARCH 2004 &2005

FIGURES AS ON 31ST
PARTICULARS MARCH INCREASE/DECREASE
ASSETS 2004 2005 AMOUNT PERCENTAGE
Cash in hand 338428 408757 70329 20.78108194
Cash at bank 1803019 4029661 2226642 123.4952044
Investments 1300250 2318852 1018602 78.33893482
Advances 12079692 16184574 4104882 33.98167768
Interest
Receivable 206629 393902 187273 90.63248624
Fixed assets 169549 149008 -20541 -12.11508178
Other fixed
assets 1349886 1714540 364654 27.01368856
Bills receivable ____ 385236 385236

TOTAL
ASSETS 17247453 25584530 8337077 48.33801837
LIABILITES
Share capital
&reserves 1410951 1540401 129450 9.174663046
Reserve fund&
Other Reserves 513263 1320443 807180 157.2644044
Deposits 14906280 21860311 6954031 46.6516864
Bills for
collection ________ 385236
Interest
payable 216931 315650 98719 45.50709673
Other
liabilities 200028 162489 -37539 -18.76687264
17247453 25584530 8337077 48.33801837
73
KCUBL
INTERPRETATION
In the initial year the bank did not get profit but loss. during
the year 2004-2005 the bank started to earn profit. In the above
analysis it shows that the cash in hand is increased by more than
20% and in bank is increased by 123.4%. Except fixed assets all
other items in the balance sheet shows increasing. The bank
could increase it’s reserve at more than 50%. The share capital
is also increased in the year 2004-2005. As far as the bank
concerned 2004-2005 was a profitable year as compared to the
previous.
74
KCUBL
Table 4.18
COMPARTIVE BALANCE SHEET AS ON 31'ST MARCH 2005&2006
FIGURES AS ON 31'ST
PARTICULERS MARCH INCREASE / DECREASE
Cash in hand 408757 794783 386026 94.438994
Cash at bank 4029661 6843218 2813557 69.821183
Investments 2318852 2570889 252037 10.869042
Advances 16184574 21421050 5236476 32.354735
Interest
Receivable 393902 577077 183175 46.502683
Fixed assets 149008 126545 -22463 -15.07503

Other fixed
assets 1714540 1494301 -220239 -12.84537
Bills receivable 385236 776472 391236 101.55749
TOTAL AEETS 25584530 34604335 9019805 35.254918
LIABILITES
Sharecapital
&reserves 1540401 1612351 71950 4.6708617
Reserve fund&
Other Reserves 1320443 1516269 195826 14.830326
Deposits 21860311 30033010 8172699 37.386014

Bills for
collection 385236 776472 391236 101.55749
Interest payable 315650 479338 163688 51.857437
75
KCUBL
Other liabilites 162489 186895 24406 15.020094

TOTAL
LIABILITES 25584530 34604335 9019805 35.254918
INTERPRETATION
In the above analysis the cash in hand is increased by more
than 94% and cash at bank at 69.8%. In this year also the fixed
assets are decreasing by more than 15%. In this year reserves,
deposits, bills for collection, interest payable and other
liabilities are also increasing. The year 2005-2006 also showing
profitability of the bank.
76
KCUBL
Table 4.19
COMPARTIVE BALANCE SHEET AS ON 31'ST MARCH 2006 &2007
FIGURES AS ON 31ST
PARTICULARS MARCH INCREASE/DECREASE
Cash in hand 794783 3105087 2310304 290.68362
Cash at bank 6843218 11545783 4702565 68.71862
Investments 2570889 4376503 1805614 70.233059
Advances 21421050 33928813 12507763 58.390056

Interest
Receivable 577077 683561 106484 18.452304
Fixed assets 126545 123948 -2597 -2.0522344

Other fixed
assets 1494301 1489508 -4793 -0.320752
Bills receivable 776472 1170081 393609 50.691976
TOTAL AEETS 34604335 56423284 21818949 63.052646
LIABILITES 0
Share capital
&reserves 1612351 2092679 480328 29.790536
Reserve fund&
Other Reserves 1516269 2104709 588440 38.808417
Deposits 30033010 50115896 20082886 66.869375

Bills for
collection 776472 1170081 393609 50.691976
Interest
payable 479338 638424 159086 33.188689
Other liabilities 186895 301496 114601 61.318387

TOTAL
LIABILITIES 34604335 56423285 21818950 63.052649
77
KCUBL
INTERPRETATION
In the above analysis the cash in hand is increased by more
than 290% and cash at bank at 68%. In this year also the fixed
assets are decreasing by more than 2%. In this
year reserves,deposits,bills for collection,interest payable and
other liabilities are also increasing. The year 2005-2006 also
showing profitability of the bank.
78
KCUBL
Table 4.20
COMPARITIVE BALANCE SHEET AS ON 2007-2008
79
KCUBL
FIGURES AS ON 31'ST
PARTICULERS MARCH INCREASE / DECREASE
Cash in hand 3105087 3429820 324733 10.45809667
Cash at bank 11545783 24089033 12543250 108.6392322
Investments 4376503 8165569 3789066 86.57747978
Advances 33928813 36217501 2288688 6.745558708

Interest
Receivable 683561 1009878 326317 47.73780248
Fixed assets 123948 313946 189998 153.2884758

Other fixed
assets 1489508 1707571 218063 14.6399348
Bills receivable 1170081 788979 -381102 -32.57056563
TOTAL AEETS 56423284 75722297 19299013 34.20398749
LIABILITES
Share capital
&reserves 2092679 2673990 581311 27.77831669
Reserve fund&
Other Reserves 2104709 2780234 675525 32.09588594
Deposits 50115896 68076814 17960918 35.83876461
Bills for
collection 1170081 788979 -381102 -32.57056563
Interest
payable 638424 934938 296514 46.44468253
Other
liabilities 301496 467341 165845 55.00736328
56423285 75722296 19299011 34.20398334
INTERPRETATION
In the above analysis it shows that the cash in hand is
increased by more than 10% and in bank is increased by 108%.
80
KCUBL
Except bills receivable all other items in the balance sheet
shows increasing. The bank could increase it’s reserve at more
than 30%. The share capital is also increased in the year 2007-
2008. The main difference as compared to the previous is the
increase in fixed assets at 153.2%. The bills for collection is
decreased by 32.5%. This year is also a profitable year for the
bank.
5.1 FINDINGS
81
KCUBL
1. Liquidity of the bank is favorable, and the bank has
required amount of liquid assets in order to meet it’s short
term needs.(Table 4.1)
2. The solvency of the bank is not satisfactory in all aspects
that is the ratios proprietary ratio, debt equity ratio and
fixed assets to net worth ratio is not satisfactory. The
solvency ratio is satisfactory.(Table 4.7, Table 4.6)
3. The ability of the bank to pay dividend is reducing
because the return on equity of the bank is declining.
(Table 4.8)
4. Availability of profit after interest and tax to share
holders is reducing.(Table 4.9)
5. Quality of advances of the bank is high.(Table 4.10)
6. The efficiency of the management in converting deposits
into advances is very good.(Table 4.11)
7. The earnings of the bank through lending function is high.
8. The bank has not accepted the new generation banking
system like ATM’s and Money transfer, etc...
9. Bank provides loans and other services only it’s members,
not public.
10. The bank employees are qualified and experienced: they
are working as a team to the success of the bank and its
customer’s satisfaction.
5.2 SUGGESTIONS
82
KCUBL
1. Urban bank should include the new generation banking
facilities in its banking system.
2. The bank should take measures to strengthen the solvency.
3. For better service to the customers, measures should be
taken to strengthen the liquidity.
4. Increase the short term deposit and long term deposits
through higher interest rate.
5. Provide the facilities of Agricultural and vehicle loan.
5.3 CONCLUSIONS
83
KCUBL
The study entitle “A Study on financial statement
analysis of Co-operative Urban Bank Limited” has been
undertaken with the objective to analyze and interpret the
bank’s financial performance. The analysis of the bank was
undertaken with the help of ratios, which are important tools of
financial analysis.
In general, the bank has achieved tremendous
progress over the recent years. The bank has a healthy financial
performance. The bank has been able to achieve average growth
across the multiple parameters, including customer’s
acquisition, geographical spread, business volumes and
revenues.
Co-operative banks generally focuses on the local
population and micro banking among middle and low income
strata of the society. During the initial year the bank was under
loss. But now it running with satisfied level of returns. The
bank is successful in majority of it’s functions. The bank is
efficient in it’s liquidity position, converting the deposit into
advances, attaining spread efficiency, etc. But the solvency
position of the bank is not in good position.
The bank is not at all adopting new technologies and
facilities since the industry involves such increased rate of
competition. The management of the bank is very effective that
the bank attained profit during the functioning of it’s second
year from loss. The bank is efficient in different areas of it’s
functions and certain improvements is also required for it’s
better future. With the efficient management and staffs, it is
sure that the future will hold good to the bank in order to attaint
all of its objectives.
84
KCUBL
INCOME STATEMENTS.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.3.2004

EXPENDITURE INCOME
Interest on Deposits 531485 Interest on loans and advances 615240
Salaries 15850 Interest on R F
Directors Fee 3070 Commission 36482
Rent, Rates and Taxes 100624 Subsidies &Donation
Postage,Telegram 10419 Interest on investments 344655
Stationery 68834 Other Receipts 59227
Audit Cost 24470 Over due
Other expenses 303229 NPA
Depreciation 22611 Standard assets
Affiliation fee 12500 Gratuity
Provision for NPA 99591 Leave salary
Provision for furniture 299725 Bonus
Reserve for OD Interest 72860 Income Tax
Provision for Std assets 13552 DD diff.
Provision for Bonus
Provision for Gratuity
Provision for income tax
Provision for leave salary
Res.for list difference
Res.for Dep.loan diff.
TOTAL 1578820 TOTAL 105560

Loss for the year 523216
Grand Total 1578820 Grand total 1578820
85
KCUBL
EXPENDITURE INCOME
Salaries Interest on R F
Postage, Telegram 9696 Interest on investments

Audit Cost 21420 Over due 225956
Other expenses 442553 NPA 12500
Depreciation 22841 Standard assets 13552
Affiliation fee 800 Gratuity 72800
Provision for Bonus 35911
Provision for Gratuity 530
TOTAL 2456226 TOTAL 2484688

Profit for the year 28461
86
KCUBL

EXPENDITURE INCOME
Salaries 316383 Interest on R F 2037
Postage,Telegram 18399 Interest on investments
Provision for NPA 264785 Leave salary 341001
Provision for Std assets 52891 DD diff. 335
Provision for Bonus
Provision for Gratuity
TOTAL 2819656 TOTAL 3200058

87
KCUBL

EXPENDITURE INCOME
Intterest on Deposits 1830808 Interest on loans and advances 3224228
Provision for income tax 122592
Provision for leave salary 38107
Res.for list difference 20
TOTAL 4524231 TOTAL 4810280

88
KCUBL

EXPENDITURE 2008 INCOME 2008
Intterest on Deposits 2776313 Interest on loans and advances 4214005
89
KCUBL
Affiliation fee 900 Gratuity 28134
Provision for NPA 761889 Leave salary 38107
Provision for furniture 29891 Bonus 22500
Reserve for OD Interest 519404 Income Tax 122592
Provision for Std assets 83758 DD diff. 195
Provision for income tax 50000
Provision for leave salary 66085
Res.for Dep.loan diff. 1605
TOTAL 6736350 TOTAL 699608

BALANCE SHEET
BALANCE SHEET AS ON 31'ST MARCH 2004
LIABILITIES ASSETS
90
KCUBL
Share capital &reserves 1410951 Cash in hand 338428

Reserve fund& Other Reserves 513263 Cash at bank 1803019
Deposits 14906280 Investments 1300250
Bills for collection ________ Advances 12079692
Interest payable 216931 Interest Receivable 206629
Other liabilities 200028 Fixed assets 169549
Other fixed assets 1349886
Bills receivable ____
TOTAL 17247453 TOTAL 17247453
LIABILITES ASSETS 2005

Share capital &reserves 1540401 Cash in hand 408757
91
KCUBL
Bills for collection 385236 Advances 16184574

Other liabilities 162489 Fixed assets 149008

Bills receivable 385236
TOTAL 25584530 TOTAL 25584530
LIABILITIES Amount ASSETS Amount
Sharecapital &reserves 1612351 Cash in hand 794783

92
KCUBL
Other liabilitIes 186895 Fixed assets 126545

34604335 TOTAL AEETS 34604335
LIABILITIES ASSETS 2007

93
KCUBL

Other liabilites 301496 Fixed assets 123948
TOTAL 56423285 TOTAL 56423284
LIABILITIES ASSETS
94
KCUBL

Other liabilites 467341 Fixed assets 313946
TOTAL 75722298 TOTAL 75722298
BIBLIOGRAPHY
For the purpose of the study the following books have been referred.
s/no Title of books Authors Publishers Edition

1 Financial I.M. Pandey professor, IIM, Vikas publishing 2002
Management Ahmedabad house pvt ltd
2 Financial Shashi.k. Gupta, Kalyani 2006
95
KCUBL
Management theory R.K.Sharma publishers pvt ltd

and practice
3 Co-operation T.N.Hajeela Former joint Kerala publishers 6th Edition
(principle, problems secretary pvt ltd
practice)
4 Co-operation (credit E.O. Thakappan(Rt. Jt Sterling print 2000
& non credit) Registrar of house Pvt Ltd
co.op.societies)& k.Suresh.
5 Research C.R.Kothari New age Revised
Methodology international second
statistical inference publishers edition
96

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Financial statement analysis at

The firm. The absolute accounting figures reported in the financial

1.2OBJECTIVES OF THE STUDY

1.3SCOPE OF THE STUDY

This study undertakes to find out financial performance

1.4 RESEARCH METHODOLOGY

In brief research design contains

 A clear statement of the research problems.

Data is defined as group of non-random symbols in the

Data are mainly classified into two groups;

Tools used for analysis

1.5 LIMITATIONS OF THE STUDY

• Data used for analysis is annual report of the

2.1 FINANCIAL STATEMENT ANALYSIS

SHORT- TERM SOLVENCY RATIO

The various ratios are;

CASH RATIO (ABSOLUTE LIQUID RATIO)

LONG – TERM SOLVENCY RATIO

FIXED ASSETS NET WORTH RATIO

Various Ratios are;

EARNINGS PER SHARE

ADVANCED YEILD RATIO

TOTAL ADVANCES TO TOTAL DEPOSITS RATIO

PROFIT PER EMPLOYEES

BUSINESS PER EMPLOYEES.

NON INTEREST INCOME TO TOTAL INCOME

INTEREST INCOME TO TOTAL INCOME

3.1 INDUSTRY PROFILE

URBAN CO-OPERATIVE BANK

under the respective Co-operative Societies Act. UCBs with

PRIMARY AGRICULTURAL CREDIT SOCIETIES

CENTRAL CO-OPERATIVE BANK

STATE CO-OPERATIVE BANK (STCBs)

The Urban Banks Department of the Reserve Bank of India is

cooperative bank, as in the case of commercial bank, is

In terms of sub-section (2) of Section 22 of the Banking

Act, 1949 (As Applicable to Cooperative Societies), no primary

banking business if the real or exchangeable value of its paid-

Out of the prescribed SLR, the UCBs have been advised to

Minimum SLR holding in

the banks' compliance with the existing regulatory framework.

scheduled banks and non-scheduled banks with a deposit base

with the RCS of respective states in rehabilitation of

3.2 A PROFILE OF CO-OPERATIVE URBAN BANK

The bank maintains a good relationship to its customers. So it

NAME AND ADDRESS OF THE BANK

Area of the bank covers the following:

OBJECTIVES OF THE BANK

2. To lend or to advance either on or without security to

3. To encourage thrift, self help and Co-Operation among

4. To borrow and raise money.

5. To provide safe deposit vaults.

6. To collect and transit money and securities .

7. To provide financial and technical assistance to a self-

8. To receive all kinds of bonds, scripts or deposits for safe

9. To negotiate money and securities.

SHARECAPITAL POSITION OF THE BANK

2004-2005 1512300 129450 9.36

2005-2006 1584250 71950 4.75

2006-2007 1946500 362250 22.86

2007-2008 2364700 418200 21.48

WORKING CAPITAL POSITION OF THE BANK