account term paper

8/8/2019 account term paper

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CANARA BANK SUBJECT

ACCOUNT FOR MANAGERS

SUBMITTED TO:-

MR.VIKASH ANAND

(ACCOUNT) SUBMITTED BY:- MD.WASIM ALAM

ROLL NO :- A-64

` SECTION :- R1002

REG.N0-11012715

DATE OF SUB. :9NOV-2010

PROGRAMME CODE:- 3501


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SNO.INDEX PAGE NO.

1. Introduction to canara bank ------------------------------ 3 to 52. Introduction of common,comparative,trend&

Ratio analysis --------------------------------------------------- 6 to 22

3. Interpretation of comparative statement ---------------- 234. Trend analysis & its interpretation ------------------------ 24 to 285. Ratio analysis and its interpretation ----------------------- 29 to 306. Schedule & fund from operation ---------------------------- 317. Fund flow statement & cost sheet -------------------------- 328.

Cash flow statement -------------------------------------------- 33

9. References -------------------------------------------------------- 33


3/34

I NTRODUCT I ON

great visionary and philanthropist, in July 1906, at Mangalore, then a small port in

Karnataka. The Bank has gone through the various phases of its growth trajectory over

hundred years of its existence. Growth of Canara Bank was phenomenal, especiallyafter nationalization in the year 1969, attaining the status of a national level player in

terms of geographical reach and clientele segments. Eighties was characterized by

business diversification for the Bank. In June 2006, the Bank completed a century o

operation in the Indian banking industry. The eventful journey of the Bank has been

characterized by several memorable milestones. Today, Canara Bank occupies a

premier position in the comity of Indian banks. With an unbroken record of profit

since its inception, Canara Bank has several firsts to its credit. These include:

Launching of Inter-City ATM Network

Ob taining IS O Certification for a Branchs

Commissioning of Exclusive Mahila Banking Branch

Launching of Exclusive Su b sidiary for IT Consultancy

Issuing credit card for farmers

P roviding Agricultural Consultancy Services

Not just in commercial banking, the Bank has also carved a distinctive mark, in various

corporate social responsibilities, namely, serving national priorities, promoting rural

development, enhancing rural self-employment through several training institutes and

spearheading financial inclusion objective. Promoting an inclusive growth strategy,

which has been formed as the basic plank of national policy agenda today, is in facdeeply rooted in the Bank's founding principles. " A good bank is not only the

financial heart of the community, but also one with an obligation of helping in

every possible manner to improve the economic conditions of the common

people " . These insightful words of our founder continue to resonate even today i

serving the society with a purpose. The growth story of Canara Bank in its first century


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of global standards.

Vision:

To emerge as a Best Practices Bank by pursuing global benchmarks in profitability,

operational efficiency, asset quality, risk management and expanding the global reach.

M ission:

To provide quality banking services with enhanced customer orientation, higher valu

creation for stakeholders and to continue as a responsive corporate social citizen b

effectively blending commercial pursuits with social banking

I NTRODUCT I ON ABOUT ANA LY SI S

Common size statement:

A financial statement displaying all items as a percentage of a common base figure.

Such a statement may be useful for noting changes in the relative size of the various

elements.

Comparative statement:

Comparative statements are financial statements that cover a different time frame, but

are formatted in a manner that makes comparing line items from one period to those o

a different period an easy process. This quality means that the comparative statemen

is a financial statement that lends itself well to the process of comparative analysis.

Many companies make use of standardized formats in accounting functions that mak

the generation of a comparative statement quick and easy.

Trend analysis:

The term " trend analysis " refers to the concept of collecting information and

attempting to spot a pattern, or trend , in the information. In some fields of study, the

term "trend analysis" has more formally-defined meanings.Although trend analysis is

often used to predict future events, it could be used to estimate uncertain events in th

past, such as how many ancient kings probably ruled between two dates, based on dat

such as the average years which other known kings reigned.


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COMMAN SIZE

Profit loss

account

COMM

AN SIZE

M ar ' 10 %

M ar '

09 % M ar ' 08 %

I ncome

Operating

income 20,853.54

18,120.

85 100.00

15,524.1

9

100.

00

Ex penses 0.00

Material

consumed - - - 0.00

Manufacturing

expenses - - - 0.00

Personnel

expenses 2,193.70 10.52

1,877.1

5 10.36 1,661.28

10.7

0Selling expenses 19.86 0.10 23.83 0.13 45.65 0.29

Adminstrative

expenses 2,535.10 12.16

1,890.6

3 10.43 1,789.39

11.5

3

Expenses

capitalised - 0.00 - - 0.00

Cost of sales 4,748.66 22.77

3,791.6

1 20.92 3,496.32

22.5

2

Operating profit 3,033.45 14.55

1,928.0

0 10.64 1,364.92 8.79

Other recurring

income 1,082.20 5.19 901.24 4.97 750.34 4.83

Adjusted PBDIT 4,115.66 19.74 2,829.2 15.61 2,115.26 13.6


7/34

4 3

Financial

expenses 13,071.43 62.68

12,401.

25 68.44

10,662.9

4

68.6

9

Depreciation 155.13 0.74 173.64 0.96 169.97 1.09

Other write offs - 0.00 - - 0.00

Adjusted PBT 3,960.52 18.99

2,655.5

9 14.65 1,945.29

12.5

3

Tax charges 800 3.84 500 2.76 340 2.19

Adjusted PAT 3,018.65 14.48

2,071.5

9 11.43 1,563.92

10.0

7

Non recurring

items 2.78 0.01 0.83 0.00 1.09 0.01

Other non cash

adjustments - 0.00 - - 0.00

Reported net

profit 3,021.43 14.49

2,072.4

2 11.44 1,565.01

10.0

8

Earnigs before

appropriation 3,021.43 14.49

2,072.4

2 11.44 1,565.01

10.0

8

Equity dividend 410 1.97 328 1.81 328 2.11

Preference

dividend - 0.00 - - 0.00

Dividend tax 70 0.34 55.75 0.31 56 0.36

Retained

earnings 2,541.43 12.19

1,688.6

7 9.32 1,181.01 7.61


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COPRATATIVE

M ar '

10

M ar '

09

absol

ute

chan

ge

%

chan

ge

M ar '

09

M ar '

08

absol

ute

chan

ge

%

chan

ge

I ncome

Operating

income

20,85

3.54

18,12

0.85

2,732

.69 15.08

18,120

.85

15,52

4.19

2,596

.66 16.73

Ex penses 0.00 0.00 0.00 0.00

Material

consumed - - 0.00 0.00 - - 0.00 0.00

Manufactur

ing

expenses - - 0.00 0.00 - - 0.00 0.00

Personnel

expenses

2,193.

70

1,877.

15

316.5

5 16.86

1,877.

15

1,661.

28

215.8

7 12.99

Selling

expenses 19.86 23.83 -3.97

-

16.66 23.83 45.65

-

21.82

-

47.80

Adminstrat 2,535. 1,890. 644.4 34.09 1,890. 1,789. 101.2 5.66


9/34

ive

expenses

10 63 7 63 39 4

Expenses

capitalised - - 0.00 0.00 - - 0.00 0.00

Cost of

sales

4,748.

66

3,791.

61

957.0

5 25.24

3,791.

61

3,496.

32

295.2

9 8.45

Operating

profit

3,033.

45

1,928.

00

1,105

.45 57.34

1,928.

00

1,364.

92

563.0

8 41.25

Other

recurring

income

1,082.

20

901.2

4

180.9

6 20.08 901.24

750.3

4

150.9

0 20.11

Adjusted

PBDIT

4,115.

66

2,829.

24

1,286

.42 45.47

2,829.

24

2,115.

26

713.9

8 33.75

Financial

expenses

13,07

1.43

12,40

1.25

670.1

8 5.40

12,401

.25

10,66

2.94

1,738

.31 16.30

Depreciatio

n

155.1

3

173.6

4

-

18.51

-

10.66 173.64

169.9

7 3.67 2.16

Other write

offs - - 0.00 0.00 - - 0.00 0.00

Adjusted

PBT

3,960.

52

2,655.

59

1,304

.93 49.14

2,655.

59

1,945.

29

710.3

0 36.51

Tax

charges 800 500

300.0

0 60.00 500 340

160.0

0 47.06

Adjusted

PAT

3,018.

65

2,071.

59

947.0

6 45.72

2,071.

59

1,563.

92

507.6

7 32.46

Non

recurring

items 2.78 0.83 1.95

234.9

4 0.83 1.09 -0.26

-

23.85Other non

cash

adjustment

s - - 0.00 0.00 - - 0.00 0.00

Reported 3,021. 2,072. 949.0 45.79 2,072. 1,565. 507.4 32.42


10/34

net profit 43 42 1 42 01 1

Earnigs

before

appropriati

on

3,021.

43

2,072.

42

949.0

1 45.79

2,072.

42

1,565.

01

507.4

1 32.42

Equity

dividend 410 328 82.00 25.00 328 328 0.00 0.00

Preference

dividend - - 0.00 0.00 - - 0.00 0.00

Dividend

tax 70 55.75 14.25 25.56 55.75 56 -0.25 -0.45

Retained

earnings

2,541.

43

1,688.

67

852.7

6 50.50

1,688.

67

1,181.

01

507.6

6 42.99

Capital

and

Liabilities:

Mar

'09

Mar

'10

absol

ute

change

%

change

Mar

'08

Mar

'09

absol

ute

change

%change

Total

Share

Capital

Equ ity

Share

Capital 410 410 0 0 410 410 0 0

Share

Applicatio

n Money 410 410 0 0 410 410 0 0Preferenc

e Share

Capital 0 0 0 0 0 0 0 0

Reserves 0 0 0 0 0 0 0 0

Reval u atio

n

9,629

.61

12,12

9.11 2499. 25.957,885.

63

9,629.

61

1743.

98

22.1159

248


11/34

Reserves 5 6399

Net Worth

2,168

.16

2,132.

68

-

35.48

-

1.636

4112,204.

86

2,168.

16 -36.7

-

1.66450

478

Deposits

12,20

7.77

14,67

1.79

2464.02

20.18403

10,500

.49

12,20

7.77

1707.

28

16.2590

508

Borrowing

s

186,8

92.51

234,6

51.44

4775

8.93

25.55

4224154,07

2.42

186,8

92.51

32820

.09

21.3017

294

Total Debt

7,056

.61

8,440.

56

1383.

95

19.61

21082,517.

23

7,056.

61

4539.

38

180.332

349

Other

Liabilities

&

Provisions

193,9

49.12

243,0

92.00

4914

2.88

25.33

8027

156,58

9.65

193,9

49.12

37359

.47

23.8581

988

Total

Liabilities

13,48

8.91

6,977.

30

-

6511.

61

-

48.27

3813,438

.55

13,48

8.91 50.36

0.37474

281

ASSSET

219,6

45.80

264,7

41.09

4509

5.29

20.53

0914180,52

8.69

219,6

45.80

39117

.11

21.6680

85

Cash &

Balances

with RBI 0 0 0 0

Balance

with

Banks,

Money at

Call

10,03

6.79

15,71

9.46

5682.

67

56.61

840113,364

.79

10,03

6.79 -3328

-

24.9012

517

Advances

6,622

.99

3,933.

75

-

2689.

24

-

40.60

4624,513.

25

6,622.

99

2109.

74

46.7454

717

Investmen

ts

138,2

19.40

169,3

34.63

3111

5.23

22.51

1478107,23

8.04

138,2

19.40

30981

.36

28.8902

707

Gross

Block

57,77

6.90

69,67

6.95

1190

0.05

20.59

655349,811

.57

57,77

6.90

7965.

33

15.9909

234

Acc umu lat

ed

Depreciati

4,440

.07

4,480.

37 40.3

0.907

64334,254.

33

4,440.

07

185.7

4

4.36590

485


12/34

on

Net Block

1,510

.61

1,620.

99

110.3

8

7.306

98191,337.

46

1,510.

61

173.1

5

12.9461

816

Capital

Work In

Progress

2,929

.46

2,859.

38-70.08

-

2.39225

2,916.

87

2,929.

46 12.59

0.43162

705

Other

Assets 0 0 0 0 0 0 0 0

Total

Assets

4,060

.26

3,216.

92

-

843.3

4

-

20.77

0592,684.

17

4,060.

26

1376.

09

51.2668

721

219,6

45.80

264,7

41.09

4509

5.29

20.53

0914180,52

8.69

219,6

45.80

39117

.11

21.6680

85

COMMAN SIZE

Mar '08 % Mar '09 % Mar '10 %

Total Share

Capital 410

0.2271

11 410

0.1866

64 410

0.154868

29

Equ ity Share

Capital 410

0.2271

11 410

0.1866

64 410

0.154868

29

Share Application

Money 0 0 0 0 0 0

Preference Share

Capital 0 0 0 0 00

Reserves 7,885.63

4.3680

76 9,629.61

4.3841

54

12,129.1

1

4.581498

85

Reval u ation

Reserves 2,204.86

1.2213

35 2,168.16

0.9871

17 2,132.68

0.805571

96

Net Worth 10,500.4 5.8165 12,207.7 5.5579 14,671.7 5.541939


13/34

9 21 7 35 9 11

Deposits

154,072.

42

85.345

12

186,892.

51

85.088

13

234,651.

44

88.63431

06

Borrowings 2,517.23

1.3943

66 7,056.61

3.2127

22 8,440.56

3.188231

94

Total Debt

156,589.

65

86.739

48

193,949.

12

88.300

86

243,092.

00

91.82254

25

Other Liabilities &

Provisions

13,438.5

5

7.4439

97

13,488.9

1

6.1412

1 6,977.30

2.635518

35

Total Liabilities

180,528.

69 100

219,645.

80 100

264,741.

09 100

Assets

Cash & Balanceswith RBI

13,364.79 7.40

10,036.79 4.57

15,719.46

5.937672

92

Balance with

Banks, Money at

Call 4,513.25 2.50 6,622.99 3.02 3,933.75

1.485885

7

Advances

107,238.

04 59.40

138,219.

40 62.93

169,334.

63

63.96235

28

Investments

49,811.5

7 27.59

57,776.9

0 26.30

69,676.9

5

26.31890

27

Gross Block 4,254.33 2.36 4,440.07 2.02 4,480.37

1.69235913

Acc umu lated

Depreciation 1,337.46 0.74 1,510.61 0.69 1,620.99

0.612292

56

Net Block 2,916.87 1.62 2,929.46 1.33 2,859.38

1.080066

57

Capital Work In

Progress 0 0.00 0 0.00 0 0

Other Assets 2,684.17 1.49 4,060.26 1.85 3,216.92

1.215119

27

Total Assets

180,528.

69 100.00

219,645.

80 100.00

264,741.

09 100


14/34

Profit loss

accountM ar '

10

M ar '

09 M ar ' 08 M ar ' 0 7

M ar '

06

I ncome

Operating income

20,853.5

4

18,120.

85

15,524.1

9

11,571.8

5

9,099.0

8

Ex penses

Material consumed - - - - -

Manufacturing

expenses - - - - -

Personnel expenses 2,193.70

1,877.1

5 1,661.28 1,609.29

1,515.3

0

Selling expenses 19.86 23.83 45.65 39.28 21.61

Adminstrative

expenses 2,535.10

1,890.6

3 1,789.39 1,226.51

1,300.3

8

Expenses capitalised - - - - -

Cost of sales 4,748.663,791.61 3,496.32 2,875.08

2,837.29

Operating profit 3,033.45

1,928.0

0 1,364.92 1,359.04

1,131.7

9

Other recurring

income 1,082.20 901.24 750.34 668.65 619.13

Adjusted PBDIT 4,115.66

2,829.2

4 2,115.26 2,027.69

1,750.9

1

Financial expenses

13,071.4

3

12,401.

25

10,662.9

4 7,337.73

5,130.0

1

Depreciation 155.13 173.64 169.97 148.18 145.03

Other write offs - - - - -

Adjusted PBT 3,960.52 2,655.5 1,945.29 1,879.51 1,605.8


15/34

9 8

Tax charges 800 500 340 250 200

Adjusted PAT 3,018.65

2,071.5

9 1,563.92 1,420.32

1,342.8

3

Non recurring items 2.78 0.83 1.09 0.49 0.39

Other non cash

adjustments - - - - -

Reported net profit 3,021.43

2,072.4

2 1,565.01 1,420.81

1,343.2

2

Earnigs before

appropriation 3,021.43

2,072.4

2 1,565.01 1,420.81

1,343.2

2

Equity dividend 410 328 328 287 270.6

Preference dividend - - - - -

Dividend tax 70 55.75 56 48.78 38

Retained earnings 2,541.43

1,688.6

7 1,181.01 1,085.03

1,034.6

2

TRAND Analysis

Mar ' 10 M ar ' 09 M ar ' 08 M ar ' 07 M ar ' 06

229.1829

504

199.1503

537

170.6127

433

127.1760

442 100

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

144.7700

125

123.8797

598

109.6337

359

106.2027

321 100

91.90189

727

110.2730

217

211.2447

941

181.7677

001 100

194.9507

067

145.3905

781

137.6051

616

94.31935

28 100

0 0 0 0 0


16/34

167.3660

429

133.6349

122

123.2274

459

101.3319

047 100

268.0223

363

170.3496

232

120.5983

442

120.0788

132 100

174.7936621

145.5655517

121.1926413

107.9983202 100

235.0583

411

161.5868

32

120.8091

792

115.8077

8 100

254.8032

07

241.7392

949

207.8541

757

143.0353

937 100

106.9640

764

119.7269

53

117.1964

421

102.1719

644 100

0 0 0 0 0246.6261

489

165.3666

526

121.1354

522

117.0392

557 100

400 250 170 125 100

224.7976

289

154.2704

587

116.4644

817

105.7706

486 100

712.8205

128

212.8205

128

279.4871

795

125.6410

256 100

0 0 0 0 0

224.9393

249

154.2874

585

116.5118

149

105.7764

179 100

224.9393

249

154.2874

585

116.5118

149

105.7764

179 100

151.5151

515

121.2121

212

121.2121

212

106.0606

061 100

0 0 0 0

184.2105

263

146.7105

263

147.3684

211

128.3684

211 100

245.6389

786

163.2164

466

114.1491

562

104.8723

203 100


17/34

W hat Does Ratio Analysis M ean?

A tool used by individuals to conduct a quantitative analysis of information in a

company's financial statements. Ratios are calculated from current year numbers and

are then compared to previous years, other companies, the industry, or even the

economy to judge the performance of the company. Ratio analysis is predominately

used by proponents of fundamental analysis Ratio analysis is one of the techniques o

financial analysis to evaluate the financial condition and performance of a business concern .

Simply, ratio means the comparison of one figure to other relevant figure or figures

According to Myers , " Ratio analysis of financial statements is a study of relationship among

various financial factors in a business as disclosed by a single set of statements and a study of

trend of these factors as shown in a series of statements ."

Advantages and Uses of Ratio Analysis

There are various groups of people who are interested in analysis of financial position of

company . They use the ratio analysis to workout a particular financial characteristic of the

company in which they are interested . Ratio analysis helps the various groups in the following

manner: -

To workout the profitability: Accounting ratio help to measure the profitability o

the business by calculating the various profitability ratios. It helps the management to

know about the earning capacity of the business concern. In this way profitabilit

ratios show the actual performance of the business.

To workout the solvency: With the help of solvency ratios, solvency of the company

can be measured. These ratios show the relationship between the liabilities and assets.

In case external liabilities are more than that of the assets of the company, it shows the

unsound position of the business. In this case the business has to make it possible to

repay its loans.

H elpful in analysis of financial statement: Ratio analysis help the outsiders just like

creditors, shareholders, debenture-holders, bankers to know about the profitability and

ability of the company to pay them interest and dividend etc.

H elpful in comparative analysis of the performance: With the help of ratio analysis

a company may have comparative study of its performance to the previous years. In


18/34

this way company comes to know about its weak point and be able to improve them.

To simplify the accounting information: Accounting ratios are very useful as they

briefly summarise the result of detailed and complicated computations.

Limitations of Ratio Analysis

In spite of many advantages, there are certain limitations of the ratio analysis

techniques and they should be kept in mind while using them in interpreting financial

statements. The following are the main limitations of accounting ratios:

L imited Comparability: Different firms apply different accounting policies.

Therefore the ratio of one firm can not always be compared with the ratio of othe

firm. Some firms may value the closing stock on LIFO basis while some other firms

may value on FIFO basis. Similarly there may be difference in providing depreciation

of fixed assets or certain of provision for doubtful debts etc.

F alse Results: Accounting ratios are based on data drawn from accounting records. I

case that data is correct, then only the ratios will be correct. For example, valuation o

stock is based on very high price, the profits of the concern will be inflated and it will

indicate a wrong financial position. The data therefore must be absolutely correct.

E ffect of Price L evel Changes: Price level changes often make the comparison o

figures difficult over a period of time. Changes in price affects the cost of production,sales and also the value of assets. Therefore, it is necessary to make proper adjustment

for price-level changes before any comparison.

Q ualitative factors are ignored: Ratio analysis is a technique of quantitative analysis

and thus, ignores qualitative factors, which may be important in decision making. For

example, average collection period may be equal to standard credit period, but some

debtors may be in the list of doubtful debts, which is not disclosed by ratio analysis.

E ffect of window-dressing : In order to cover up their bad financial position som

companies resort to window dressing. They may record the accounting data according

to the convenience to show the financial position of the company in a better way.

Costly Technique : Ratio analysis is a costly technique and can be used by big

business houses. Small business units are not able to afford it.

M isleading Results : In the absence of absolute data, the result may be misleading. For

example, the gross profit of two firms is 25%. Whereas the profit earned by one is just


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Rs. 5,000 and sales are Rs. 20,000 and profit earned by the other one is Rs. 10,00,000

and sales are Rs. 40,00,000. Even the profitability of the two firms is same but the

magnitude of their business is quite different.

Type of Ratios:

liquidity ratio

solvency ratio

activity ratio

y profitability ratio L iquidity ratio

It is used to determine a company's ability to pay off its short-terms debts

obligations. Generally, the higher the value of the ratio, the larger the margin o

safety that the company possesses to cover short-term debts. A company's ability to

turn short-term assets into cash to cover debts is of the utmost importance when

creditors are seeking payment. Bankruptcy analysts and mortgage originators

frequently use the liquidity ratios to determine whether a company will be able to

continue as a going concern. There are following type of liquidity ratio.Current ratio,

quick ratio, cash ratio, interval measure ratio, net working capital ratio

current ratio

It is a measure of general liquidity and is most widely used to make the analysis for

short term financial position or liquidity of a firm. It is alculated by dividing the total

of the current assets by total of the current liabilities.

F ormula:

Following formula is used to calculate current ratio:

Current Ratio = Current Assets / Current L iabilitie

The two basic components of this ratio are current assets and current liabilitiesCurrent

assets include cash and those assets which can be easily converted intocash within a


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short period of time, generally, one year, such as marketable securities or readily

realizable investments, bills receivables, sundry debtors, (excluding bad debts or

provisions), inventories, work in progress, etc. Prepaid expenses should also be

included in current assets because they represent payments made in advance whic

will not have to be paid in near future.Current liabilities are those obligations which

are payable within a short period of tie generally one year and include outstandin

expenses, bills payable, sundry creditors, bank overdraft, accrued expenses, short term

advances, income tax payable, dividend payable, etc

Acid Test or Q uick Ratio:

It is the ratio of liquid assets to current liabilities. The true liquidity refers to th

ability of a firm to pay its short term obligations as and when they become due.The

two components of acid test ratio or quick ratio are liquid assets and liquid liabilities.

Liquid assets normally include cash, bank, sundry debtors, bills receivable and

marketable securities or temporary investments. In other words they are current asset

minus inventories (stock) and prepaid expenses. Inventories cannot be termed as liquid

assets because it cannot be converted into cash immediately without a loss of value. In

the same manner, prepaid expenses are also excluded from the list of liquid asset

because they are not expected to be converted into cash. Similarly, Liquid liabilities

means current liabilities i.e., sundry creditors, bills payable, outstanding expenses,short term advances, income tax payable, dividends payable.

F ormula

Q uick ratio = current asset inventory/ current liabilities

importance

The perfect ratio should be 1 :1 .The quick ratio/acid test ratio is very useful in

measuring the liquidity position of a firm. It measures the firm's capacity to pay of

current obligations immediately and is more rigorous test of liquidity than the current

ratio.


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Cash ratio

Cash ratio is useful to measure the amount of only liquid the company have. So, it is

the most liquid asset. It is also useful to find out the companys ability to pay its debt.

F ormula

Cash ratio = cash + marketable securities / current asset

Net working capital ratio

This ratio is the ratio between net working capital and total asset.

F ormula

Nwc ratio = net working capital/ total asset

I nterval measure ratio

It is the ratio which can be calculated to asses a firms ability to meet its regular cas

outgoings, is interval measure. It relates liquid asset with average daily operating asset

F ormula

I nterval measure ratio = current asset inventory/average daily operating

ex

penses.

L everage ratio

These ratio indicate mix of fund provided by owners and leaders. The short ter

creditors, like bankers and suppliers of raw materials are more concerned with th

firms current debt paying capacity. On the other hand long term creditors are mor

concerned with the firms long term financial strength. They are of following type.

Debt to E quity Ratio:

Debt-to- E quity ratio indicates the relationship between the external equities or

outsiders funds and the internal equities or shareholders funds.

I mportance

Debt to equity ratio indicates the proportionate claims of owners and the utsider


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against the firms assets. The purpose is to get an idea of the cushion available t

outsiders on the liquidation of the firm. Formula Debt to equity ratio = total debt/ net

worth

Total debt ratio

F ormula

Total debt ratio = total debt/ capital employed

Coverage ratio

It is use to test the firms debt servicing capacity.

F ormula

Coverage ratio = E bit/interest

Activity ratio

I nventory Turnover Ratio or Stock Turnover Ratio ( I TR):

Stock turn over ratio and inventory turn over ratio are the same. This ratio is a

relationship between the cost of goods sold during a particular period of time and the

cost of average inventory during a particular period. It is expressed in number o

times. Stock turn over ratio / Inventory turn over ratio indicates the number of time

the stock has been turned over during the period and evaluates the efficiency wit

which a firm is able to manage its inventory. This ratio indicates whether investment in

stock is within proper limit or not.

F ormula

I nventory Turnover Ratio = Cost of goods sold / Average inventory

I mportance

Inventory turnover ratio measures the velocity of conversion of stock into sales.

Usually a high inventory turnover/stock velocity indicates efficient management o

inventory because more frequently the stocks are sold, the lesser amount of money i

required to finance the inventory.


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Debtors Turnover Ratio

Debtors turnover ratio indicates the velocity of debt collection of a firm. In simple

words it indicates the number of times average debtors (receivable) are turned ove

during a year.

F ormula :

[Debtors Turnover Ratio = Credit Sales / Average Debtors]

I mportance

debtors turnover ratio indicates the number of times the debtors are turned over a year.

The higher the value of debtors turnover the more efficient is the management o

debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies

inefficient management of debtors or less liquid debtors.

F ix ed Assets Turnover Ratio:

Fixed assets turnover ratio is also known as sales to fixed assets ratio. This rati

measures the efficiency and profit earning capacity of the concern.

F ormula :

Fixed assets turnover ratio turnover ratio is calculated by the

following formula:

F ix ed Assets Turnover Ratio = Sales / F ix ed Assets

Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means

under-utilization of fixed assets.

Profitability ratio

These are as follows

G ross Profit Ratio ( G P Ratio):

G ross profit ratio ( G P ratio) is the ratio of gross profit to net sales expressed as a


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percentage. It expresses the relationship between gross profit and sales.

F ormula:

Following formula is used to calculate gross profit ratios:

G ross Profit Ratio = ( G ross profit / Net sales) 100

I mportance

gross profit ratio may be indicated to what extent the selling prices of goods per unit

may be reduced without incurring losses on operations. It reflects

efficiency with

which a firm produces its products. As the gross profit is found by deducting cost o

goods sold from net sales, higher the gross profit better it is. There is no standard GP

ratio for evaluation. It may vary from business to business

Net Profit Ratio (NP Ratio):

Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as

percentage.formula:

Net Profit Ratio = (Net profit / Net sales) 100

I mportance:

NP ratio is used to measure the overall profitability and hence it is very useful t

proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall

not be able to achieve a satisfactory return on its investment.This ratio also indicate

the firm's capacity to face adverse economic conditions such as price competition, low

demand, etc. Obviously, higher the ratio the better is the profitability

Operating e x penses ratio


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This is another type of ratio which indicate the expense in relation to net sales

F ormula

Operating e x pense ratio = operating e x penses/net sales

I mportance

This indicate the percentage of sale is consume by expenses.

Return on net asset Ratio:

It is the ratio of net profit tnet profit (after interest and tax) and shar

holder's/proprietor's fund.

F ormula

Return on net asset = profit after ta x / net asset

This ratio is one of the most important ratios used for measuring the overall efficiency

of a firm. As the primary objective of business is to maximize its earnings, this ratio

indicates the extent to which this primary objective of businesses being achieved.

Return on total asset

This ratio find out the return the company getting on their total asset.

F ormula

Return on total asset = profit after ta x / total asset

This ratio is also helpful for owners and outsiders to know the return of company for

their interest.

E arnings Per Share ( E PS) Ratio:

Earnings per share ratio (EPS Ratio) is a small variation of return on equity capital

ratio and is calculated by dividing the net profit after taxes and preference dividend by

the total number of equity shares.


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F ormula :

The formula of earnings per share is:

E arnings per share ( E PS) Ratio = (Net profit after ta x Preference dividend) /

No . of equity shares (common shares)

Dividend per share

This ratio find out the earning per dividend

F ormula

Dividend per share = dividend paid/ number of outstanding share

F und flow statement

A statement of Sources and Application of F unds is a technical device designed

to analyse the changes in the financial condition of a business enterprises between

two dates .

The funds-flow-statement is a report on financial operations

changes, flow or movements during the period. It is a statement which shows th

sources an application of funds or it shows how the activities of a business is financed

in a particulate period. In other

how the financial resources have been used during a particular period of time. It is,

thus, a historical statement showing sources and application of funds between the two

dates designed especially to analyse the changes in the financial conditions of an

enterprise

Funds Flow Statement is not an income statement .Income statement shows the items

of income and expenditure of a particular period, but the Funds flow statement is an

operating statement as it summaries the financial activities for a period of time. I

covers all movements that involve an actual exchange of assets. Various titles are used

for this statement such as 'Statement of sources and Application of Funds', 'Summary

of Financial operations,' 'Changes in Financial Position', 'Fund received and

Disbursed', 'Funds Generated and Expended', Changes in Working Capital,

Statement of Fund' etc. Title of Funds Flow Statement has been modified


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from time to time.

Statement of changes in working capital

It is the changes that happen in working capital measure byComparing Current asse

with current liabilities. So, we can knowthe actual increase or decrease in workin

capital.F und from operation

In fund from operation i will find out the actual change in fund. In fund from operation

we add the item which are not related to business and had minus from net profit. W

also minus the item which are not operating and had add in net profit.

F und flow statement

This statement helps to find out the use of money and application on money.

Cash flow statement

The Statement of Cash Flows is basically divided into 3 major categories: operatin

activities, investing activities, and financing activities. The statement is a basic

summary of these activities for a given period of time, usually 1 month, or quarterly or

annually.The format for reporting cash flow activity may be either direct or indirect. I

will use the direct method of reporting, as it is the most common formatused.

>> I NT E RPR E PTAT I ON O F CO M PARAT I VE STAT EME NT O F BANK:

BA L ANC E SH EE T:

Reserves and surplus: Reserve are increasing , bank may be in profit or custome

deposit their cash more in the bank.

increase , more customer deposits their cash in the canara bank.

Other liabilities and provisions: Increasing , bank increased the provision for tax.

PRO F I T AND L OSS ACCOUNT:

I nterest earned: Are increased bank in the profit.

Other income: Other income also will be increasing.

Total income: Incresed , bank give loans more or customer deposite more cash in the

bank.

Ratio analysis:-


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PROFITABILIT

Y RATIOS 10-M ar 9-M ar 8-

Mar

OPERATING

MARGIN(%)

OPERTING

PROFIT*100/OPERT ING

INCOME 14.546 10.64 8.792

GROSS PROFIT

MAGIN(%)

OPERATING PROFIT-

DEP*100/SALES 13.803 9.6814 7.697

NET PROFIT

MARGIN(%) NET PROFIT*100/SALES 18.992 14.655 12.53

ADJ. CASH

MARGIN(%) ADJ. PAT*100/SALES 14 .48 11 .43 10 .1

LEVERAGE

RATIOS

LONG TERM

DEBTS/EQUITY

LONG TERM

LOANS/PROPERA ITER

FUND 17.396 25.254 25.61

TOTAL DEBTS/EQUITY

EXTERNAL

LIABILITIES/PROPER ITER

FOND 17.459 29.093 31.75

FIXED ASSETS

TURNOVER RATIO sales / fixed asset 12.134 4.4672 3.649

LIQUIDITY

RATIOS

CURRENT RATIO CURRENT 0.8825 0.8817 0.536


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ASSEST/CURRENT

LIABILITIES

QUICK RATIO

QUICK ASSEST/CURRENT

LIABILITIES 0.3284 0.257 0.2

INVENTORYTURNOVER RATIO

SALES/AVERAGEINVENTORY -

PER SHARE

RATIOS

ADJ. EPS

ADJ. PAT*100/ NO. OF

SHARES 73.626 50.527 38.14

ADJ. CASH EPS

ADJ. PAT+DEP./ NO. OF

SHARES 77.409 54.762 42.29

REPORTED EPS

REPORTED NET PROFIT/ NO

OF SHARES 73.693 50.547 38.17

REPORTED CASH EPS

REPORTED NET

PROFIT+DEP./ NO OF

SHARES 77.48 54.78 42.32

DIVIDEND PER SHARE DIVIDEND/ NO, OF SHARES 10 8 8

OPERATING PROFIT

PER SHARE

OPERATING PROFIT/ NO. OF

SHARES 73.987 47.024 33.29

BOOK VALUE(EXCLREV RES)PER SHERS

PROPERITOR FUND/ NO. OFSHARES 345.15 450.37 458.4

BOOK VALUE(INCL

REV RES)PER SHERS

PROPERITOR FUND/ NO. OF

SHARES 345.15 450.37 458.4

NET OPERATING

INCOME PER SHARE SALES/NO. OF SHARES 5.0862 4.4197 3.786


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C OVERAGE

RATIOS

FINANCIAL CHARGES

COVERAGE RATIO ALES/FINANCIAL EXPENSES 1.5954 1.4612 1.456

FINANCIAL CHARGES

COV RATIO(POST TAX)

SALES-TAX/FINANCIAL

EXPENSES 1.5342 1.4209 1.424

INTERPRETATION

CURR E NT RAT I O :- This computation means that for every Rs 1 of debts that will

become due within a year, the company has 10.64percent in 2009 &8.792 percent in

2009 of assets that will be converted into cash or used up within the year with which to

pay those debts.

QUICK RATIO :- Quick ratio that is much smaller than a current ratio indicates tha

the company has quite a bit of resources tied up in inventory and/or prepaid expenses

DE BT-S E RV I CE - RAT I O:- This computation indicates that about 29.09 in 2008 &

31.75 in 2009 percent of the companys assets are financed by creditors. The lowe

this ratio is, the greater is the no risk that the company may have trouble meeting its

debt obligations

DE BT E Q U I T Y RAT I O :-- This computation indicates that the company has about

17.45times in 2008 & 31.75 times in 2009 as much debt as equity. Thus, the company

owes much more to others than the stockholders own. You probably can anticipate our next statement: This computation is more meaningful when compared with a

benchmark such as the industry average, a particular competitor, and/or this company

over time. Further, no single ratio will paint a complete picture.

RO E - RAT I O :- This computation indicates that for every Rupees of the


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stockholders have invested in the company,3.64 percents in 2008 & 29.18 percents in

2009 was earned this year; that is a fairly impressive return. However, as with all ratios

and other types of analysis, one will want to consider other benchmarks.

OPERATING EXPENCE RATIO:- (income) - Thus, for this period the companyearned 18.28 times in 2008 & 15.95 times in 2009 what it had to pay in interest

Although there is no single benchmark above which this ratio should be, one hopes the

ratio will be greater than 1. Otherwise, the company is earning late.

FUND FLOW STATEME N T:

SCHEDULE OF CHANGES IN WORKING CAPITAL:

Current assets 2009 2010 Inc. in

working

capital

Dec.in

working

capital

Cash & balance with

reserve bank of india

10036792

2

15719464

2

56826720 -------------

Balance with banks &

money at call

66229898 39337458 ------------

-

26892440

Other assets 40602558 32169178 ------------ 8433380

Total 20720037

8

22870127

8

Current liabilities

Borrowings 14000949

8

84405573 55603925 -----------

Other liabilities &

provision

65445771 69772989 ------------ 4327218

Total 20545526

9

15417856

2Wc(ca cl) 1745109 74522716 39653038

72777607Inc. in wc 72777607

Total 74522716 74522716 11243064

5

112430645


32/34


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Total 2665302050 Total 2688590095

COST S HEE

T:

PR I ME COST

EMPLOYEE COST 21936999

OPERATING EXPENSES 34776235

TOTAL 56713234

BANK OV E R H E AD

INTEREST EXPENDED 130714284

DEPRICIATION 1551324

TOTAL 132265608

SA L E S EX PE NS E S

OTHER EXPENSES 3588554

CAS H F L O W STAT EME NT:

OP E RAT I NG ACT I V I T I E S RSNE T PRO F I T 30214304

CASH FLOW FROM

OPERATING ACTIVITIES

INTEREST EARNED 187519623

OTHER INCOME 28579024 216098647

INTEREST EXPENDED 130714284

EMPLOYEE COST 21936999

OPERATING EXPENSES 34776235 187427518

NE T CAS H F L O W F RO M

OP E RAT I NG ACT I V I T I E S

403526165

I NV E ST I NG ACT I V I T I E S


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PURCHASE OF FIXED ASSETS 28593722

DIVIDEND FROM

SUBSIDIARIES

1042840

CASH FLOW FROM

INVESTING ACTIVITIES

29636562

R E F E R E NC E S:

http://www.canarabank.com/

http://www.moneycontrol.com/

http://www.accountingformanagement.com/

I M PANDEY ,the book of Accounting for management,

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