A PROJECT REPORT ON

FINANCIAL STATEMENT ANALYSIS OF HDFCBANK

SUBMITTED TO

Department of Commerce
I Year (2021-2022)

Under the Faculty of commerce

Submitted By

AMREEN FATHIMA 210330064051005

ARSHIY JABEEN 210330064051007
A CHANDRA SHEKAR 210330064051008
B SHIREESHA 210330064051009
B MOUNIKA 210330064051011
G SRI KANTH 210330064051024
J BALRAM 210330064051032

PROJECT GUIDE:
Dr.K.MANJULA

Dr.B.R.R Government Degree College

Jadcherla
ii
 THE PROJECT WORK ENTITLED ON “FINANCIAL STATEMENT ANALYSIS ON
HDFC BANK” IS A RECORD OF INDEPENDENT AND BONAFIDE WORK CARRIED
OUT BY US UNDER THE SUPERVISION AND GUIDANCE OF

Dr.K.MANJULA( LECTURER ) DEPT. OF COMMERCE, Dr.B.R.R GOVT DEGREE

COLLEGE, JADCHERLA.THE INFORMATION AND DATA GIVEN IN THE REPORT IS
AUTHENTIC TO THE BEST OF OUR KNOWLEDGE.THE REPOR THAS NOT BEEN
PREVIOUSLY SUBMITTED FOR THE AWARD OF ANY DEGREE,DIPLOMA.

AMREEN FATHIMA 210330064051005

ARSHIY JABEEN 210330064051007
A CHANDRA SHEKAR 210330064051008
B SHIREESHA 210330064051009
B MOUNIKA 210330064051011
G SRI KANTH 210330064051024
J BALRAM 210330064051032
 ABSTRACT

The main purpose of this study is to determine, forecast and evaluate the best of
economic conditions and company’s performance in the future. The other purpose of
this study is to analyze the financial statement and then give information for financial
managers to make through decisions about their business.

The financial statement applies tools, analytical techniques and required methods
for business analysis. It is a diagnostic tool for evaluating financing activities,
investment activities and operational activities as well as an assessment tool for
management decisions and other business decisions.

The analysis of financial statements, respectively the analysis of the financial

reports are used by managers, shareholders, investors and all other interested parties
regarding the company's state.

Managers use financial reports to see the situation in which the company stands
and then provide information to shareholders, to see how reasonable are the investments
made in the company.

To potential investors. The analysis of the financial statements of the company is

very important, because, first they want to know the actual state of the company and
then decide whether to invest or not.
 TABLEOFCONTENTS

SR.NO: ITEM PAGENO:

1. Cover Page i
2. College Certificate ii
3. Declaration by Student iv
4. Acknowledgement vi
5. Table of Content vii
6. Index viii
7. List Of Tables ix
8. List Of Figures x
9. Summary of Report xi
10. Chapter1:Introduction 1
11. Chapter2.Literature Review 5
12. Chapter3.Company Profile & Industry Back Ground 9
13. Chapter4.Research Methodology 33
14. Chapter 5.Data Analysis &Interpretation 37
15. Chapter6.Findings,Suggestions & Conclusions 39
16. Reference (Website ) 48
17. Bibliography 49-50
18. Annexure 51
Apex :A-Limitations of the study 52
Apex :B-Cost of the study 53
Apex :C-Map of the company 54
 INDEX

SR.NO CONTENT PGNO:

1.
Introduction: 1-4

1.1.Introduction To Topic 1-2

1.2Financial Products 3-4

1.3Objectives 4
2. 6-8
Literature Review:
3. Company Profile: 10-32
B Study of
3.1Company Background profit and
loss account
10
3.2Financial Statements and its analysis 15
A Study of balance sheet 15
21
C Financial statement analysis 24
Analysis of Financial Statements Of HDFC BANK 25-32
A Management Discussion & Analysis 25
B Comparative Income Statement 31
C Comparative Financial Position Statement 32
4. Research Methodology 34-36
5. Data Analysis &Interpretation 38-41
6. 43-46
Findings ,Suggestion Or Recommendations Conclusion
 List of tables

Table No. Table Title Page No.

Difference between Calculations

B1 &Interpretation. 22-23

5.1 Example Of Vertical Analysis 41

Apex-B Cost of the Study 53

 List of Figures

Figure No. Figure Title Page No.

1 Understanding P&LA/C 21

2 Profitability &Turnover 22
SUMMARY OF THE REPORT

The Report is about the Financial Statement Analysis, so it suggests the comparison of
the income and expenses of the particular company during a financial year on a YOY basis. For
example here HDFC bank shows the income statement and the financial position of the company
statement. Income statement shows the income source and from the revenue is generated and
where we have to decrease the expenses. Balancesheet shows the current position in the market
Goodwill. Also the loans which was taken by the bank and how much given to the customer.
And this all comparison has done from FY2014toFY2018.

Chapter1: Introduction:-
The introduction part suggests that how the financial statement is to be analyzed. Also it shows
the different financial products and also the various styles. It usually consist the balance sheet,
P&LA/C, cash flow etc.

Chapter2: Literature Review:-

It consists the different well known authors who gave their different opinions about the financial
statement analysis. Because of that the others get help to understand that statements and how to
use it in future also. The authors like K.CSharma, Dr.SGuruswamy etc.

Chapter3: Company Profile:-

The company is Crisis; it is a one of the best credit rating company in India. The main work of
the Crisis is to rate the different sector companies on the basis of their financial statements of the
latest financial years.

Chapter4: Research Methodology:-

It shows the research techniques of the study. And also here the main three objectives of the are
included. How the research is made through primary data or secondary all are included in
chapter4.
Chapter5: Data Analysis &Interpretation:-
After collecting all the data from the research methodology, all are interpreted by various
Methods

Chapter6:-Findings, Suggestions &Conclusions:-

Here the finding is made after the data analysis and interpretation. Also according to the three
main objectives their findings is mentioned in detail. Also the suggestion is there for future
betterment .Conclusion is forth ending of the study.

Annexure:-
Appendix A, B and C shows the Limitations of the study, Cost of the study and the Mapped
the Company respectively.
 CHAPTER 1
INTRODUCTION

3
 CHAPTER-1: INTRODUCTION
INTRODUCTION OF THE TOPIC:

Development of accounting standards involves a process, and the implementation

of any processed quire safe w guide lines. Taking this into perspective, the
Accounting Standards Board (ASB) of Institute of Charted Accountants of India
(ICAI), which is the nation’s most accomplished accounting body, came up with a
frame work which provides the fundamental basis for the development of new
standards and appraisal of the existing ones. In this article, we review some of the
fundamental concepts based on which financial statements are prepared and
presented.

Components of Financial Statements

Financial statements usually consist of the following:

1. Balance Sheet–A balance sheet depicts the value of economic resources

controlled by an enterprise, as well as the liquidity and solvency of an enterprise.
This is used to estimate the ability of the enterprise in meeting its financial
commitments.
2. Statement of Profit and Loss- Portrays the outcome of the functioning of the
organization.
3. Cash Flow Statement– Outlines the way of determination of income, as well as
its usage.
4. Notes and Schedules– Provides supplementary information explaining different
modules of financial statements. A few examples can be risks and uncertainties
affecting an enterprise, accounting policies etc.

Financial Statement Analysis is a method of reviewing and analyzing a company’ s

accounting reports (financial statements) in order to gauge its past, present or
projected future performance. This process of reviewing the financial statements
allows for better economic decision making.

Globally, publicly listed companies are required by law to file their financial
statements with their Levant authorities. For example, publicly listed firms in
America are required to submit their financial statements to the Securities and
Exchange Commission (SEC). Firms are also obligated to provide their financial
statements in the annual report that they share with their stakeholders. As financial
 Statements are prepared in order to meet requirements, the second step-in the
process is to analyze them effectively so that future profitability and cash flows
can before casted.
Another important purpose of the analysis of financial statements is to identify
potential problem areas and troubleshoot those.

USERS OF FINANCIAL STATEMENT ANALYSIS

There are different users of financial statement analysis. These can be classified
into internal and external users. Internal users refer to the management of the
company who analyzes financial statements in order to make decisions related to
the operations of the company. On the other hand, external users do not necessarily
belong to the company but still hold some sort of financial interest .These include
owners, investors, creditors, government, employees, customers, and the general
public. These users are laborite done below:
1. Management
The managers of the company use their financial statement analysis to make
intelligent decisions about their performance. For instance, they may gauge costper
distribution channel, or how much cash they have left, from their accounting report
sand make decisions from these analyst is results.
2. Owners
Small business owners need financial information from their operations to
determine whether the business is profitable. It helps in making decisions like
whether to continue operating the business, whether to improve business strategies
or whether to give up on the business altogether.
3. Investors
People who have purchased stock or shares in a company need financial
information to analyze the way the company is performing. They use financial
statement analysis to determine what to do with their investments in the company.
Side pending on how the company is doing, they will either hold onto their stock,
selector buy more.
 4. Creditors
Credit or sale interested in knowing if a company will be able to honor its
payments as they become due. They use cash flow analysis of the company’s
accounting records to measure the company’s liquidity, or its ability to make short
–term payments.
5. Government
Governing and regulating bodies of the state look at financial statement analysis to
determine how the economy is performing in general so they complain their
financial and industrial policies .T authorities also analysis company’ statements to
calculate that as burden that the company hast opal.
6. Employees
Employees need to know if their employment insecure and if there is a possibility
of a pay raise. They want to be abreast of their company’s profitability and
stability. Employees may also be interested in knowing the company’s financial
position to see whether there may be plans for expansion and hence, career
prospects for them.
7. Customers
Customers need to know about the ability of the company to service its clients into
the future. Then to know about the company’ stability of operations is heightened
if the customer (i.e. a distributor or procurer of specialized products) is dependent
wholly on the company for its supplies.
8. General Public
Anyone in the general public, like students, analysts and researchers, may be
interested in using a company’s financial statement analysis. They may wish to
evaluate the effects of the firm on the environment, or the economy or even the
local community. For instance, if the company is running corporate social
responsibility programs for improving the community, the public may want to be
aware of the future operations of the company.

FINANCIALPRODUCTS:

Types of financial products

• Shares: These represent ownership of a company. While shares are initially issued
by corporations to finance their business needs, they are subsequently bought and
sold by individuals in the share market. They are associated with high risk and
 high returns. Returns on shares can be in the form of dividend payouts by the
company or profits on the sale of shares in the stock market. Shares, stocks,
equities and securities are words that are generally used inter changeably.

• Bonds: These are issued by companies to finance their business operations and by
governments to fund budget expenses like infrastructure and social programs
.Bonds have a fixed interest rate, making the risk associated with them lower than
that with shares. The principal or face value of bonds is recovered at the time of
maturity.
• Treasury Bills: These are instruments issued by the government for financing its short
term needs. They are issue data discount to the face value. The profit earnedBy the
investor is the difference between the face or maturity value and the price at which the
Treasury bill was issued.

• Options: Options are rights to buy and sell shares. An option holder does not
actually purchase shares. Instead, he purchases the rights on the shares.

• Mutual Funds: These are professionally managed financial instruments that

involve the diversification of investment into a number of financial products, such
as shares, bonds and government securities. This helps to reduce an investor’s risk
exposure, while increasing the profit potential.

• Certificate of Deposit: Certificates of deposit (or CDs) are issued by banks, thrift
institutions and credit unions. They usually have a fixed term and fixed interstate.

• Annuities: These are contracts between individual investors and insurance

companies, where investors agree to pay an allocated amount of premium and at
the end of a pre-determined fixed term, the insurer will guarantee a series of
payments to the insured party.

OBJECTIVE OF THE FINANCIAL STATEMENTS

1. Knowing the Profitability of Business

2. Knowing the Solvency of the Business
3. Judging the Growth of the Business
 CHAPTER:
2.LITERATURE REVIEW

9
 CHAPTER-2: LITERATURE REVIEW
1. ManishMittalan ArunnaDhademade (2005) they found that higher
profitability is the only major parameter for evaluating banking sector
performance from the share holder’s point of view. It is for the banks to strike
a balance between commercial and social objectives. They found that public
sector banks are less profitable than private sector banks. Foreign banks top
the list in terms of net profitability. Private sector banks earn higher non-
interest income than public sector banks, because these banks offer more and
more fee based services to business houses or corporate sector. Thus there is
urgent need for public sector banks to provide such services to stand in
competition with private sector banks

2. I.M. Pander (2005): An efficient allocation of capital is the most important

financial function in modern times. It involves decision to commit the firm's
funds to the long term assets. The firm’s value will increase if investments are
profitable and add to the shareholders wealth. Financial decisions are
important to influence the firm’s growth and to involve commitment of large
amount of funds. The types of investment decisions are expansion of existing
business, expansion of new business sand
Replacement and modernization. The capital budgeting decisions of a firm
hastodecidethewayinwhichthecapitalprojectwillbefinanced.Thefinancingor
capital structure decision. The assets of a company can be financed either by
increasing the owners claims on the creditors’ claims. The various means of
financing represent the financial structure of an enterprise.

3. MedhatTarawneh (2006) financial performance is a dependent variable

andmeasuredbyReturnonAssets(ROA)andtheintentincomesize.Theindependent
variables are the size of banks as measured by total assets
ofbanks,assetsmanagementmeasuredbyassetutilizationratio(Operatingincomedi
videdbytotalassets)operationalefficiencymeasuredbytheoperatingefficiencyrati
o(totaloperatingexpensesdividedbynetincome)
4. Vasantdesai (2007): The Reserve Bank of India plays a very vital role. It is
known as the banker’s bank. The Reserve Bank of India is the head of all
banks. All the money formulations of commercial banks are done under the
Reserve Bank of India. The RBI performs all the typical functions of a good
central bank as it is involved in planning the economy of the country. The
main function is that the RBI should control their credit. It is mandatory for the
 Bank to maintain the external value of the rupee. Major function is that it
should also control the currency.

5. K. C. Sharma (2007)

Banking has entered the electronic era. This has been due to reforms
introduced under the WTO compliances. Private sector banks have been
permitted to open their shops in the country. These banks are either foreign or
domestic banks with foreign partnerships. Some of them have been set up by
Development Financial Institutions in order to embrace concept of universal
banking, as practiced in advanced countries. The private sector on the other
hand have began their high tech operations from the initial stage and made the
late of the country to taste the best banking practices that happens in the
western countries. They have foreseen the digital world and have seen the
emerging electronic market, which has encouraged them to have a better
customer service strategy that would be able to deliver the things as per
customer’s requirement.

6. Hr Michigan international publishers (2009):

Efficiency can be considered from technical, economical or empirical

considerations. Technical efficiency implies increase in output. In the case of
banks defining inputs and output is difficult and hence certain ratios of costs to
assets or operating revenues are used to measure banks efficiency. In the
Indian context public sector banks accounts for a major portion of banking
assets, it is necessary to evaluate the financial decisions of these banks and
compare them with private sector banks to know the quality of financial
decisions
 On its impact or performance of banks in terms of efficiency, profitability,
competitiveness and other economic variables.

7. DR.S. Gurusamy (2009):

One of the key elements of importance for shaping the financial system of a
country is the pension fund. The fund contributes to the development of social
security systems of a country is the pension fund. The fund contributes to the
development of social security system of a country. A fund is established by
private employers, governments, or unions for the payment of retirement benefits.
Pension funds are designed to provide for poverty relief, consumption smoothing
etc. Pension funds not only provide compensation for the loyal service rendered in
the past, but in a broader significance.

8. Dangwaland kapok (2010)

Also undertook the study on financial performance of nationalized banks in India

and assessed the growth index value of various parameters through overall
profitability indices. They found that out of 19 banks, four banks had excellent
performance; five banks had good performance and six bank shad poor
performance. Thus the performance of nationalized banks differs widely.
 CHAPTER:3
COMPANY PROFILE
 CHAPTER-3: COMPANY PROFILE

3.1. COMPANY BACKGROUND:

NAME: “CRISIL. LTD”LOCATION: “MAHABUBNAGAR”.CRISIL

(Formerly Credit Rating Information Services of India Limited) is a
Global analytical company providing ratings, research, and risk and policy
advisory services CRISIL’s majority shareholder is Standard &Poor's, a division of
Mc Graw Hill Financial and provider of financial market intelligence.

CRISIL Lt Disa global analytical company providing ratings, research, and risk
and policy advisory services. The company is India's leading ratings agency. They
are also the fore most provider of high-end research to the world's largest banks
and leading corporations. CRISIL is majority owned by S&P Global Inc., a leading
provider of transparent and independent ratings, bench marks, analytics and data to
the capital and commodity markets worldwide.

CRISIL operates through two segments: Ratings and Research. Rating services
include credit ratings for corporates, banks, small and medium enterprises (SME),
training in the credit rating field, credit analysis services, grading services and
global analytical services. Research segment provides equity research, industry
reports, customized research assignments, subscription to data services and initial
public offer grading. It operates from seven research centers worldwide.

CRISIL was incorporated in the year 1987 with the name Credit Rating
Information Services of India Ltd. The company was promoted by leading
financial institutions, nationalized banks, foreign banks and private sector banks.
During the year1995-96, they formed as trategicalliance with Standard &Poor's
Rating group, New York. They also made a tie up with International Information
Vendors for dissemination of CRISIL Ratings. The company launched CRISIL500
equity index during the year.

During the year 1996-97, the company introduced the ratings on mutual funds,
bank loan ratings and public finance ratings. During the next year, they developed
And launched municipal bond ratings and also launched financial strength rating
for insurance companies. The company with National Stock Exchange set up a
joint venture company with the name IISL for undertaking index business and
related activities. They also launched Crisil MNC Index and Crisil Indian Business
Groups Index during the year.

During the year 1999-2000, the company acquired the business of Information
Products and Research Services (India) Put Ltd, along with their brand INFAC.
During the next year, they introduced mutual fund ranking service for the domestic
mutual fund market. They also launched Crisil-Norelco ratings initiative for the
real estate sector.

During the year 2001-02, the company launched Crisil Market Wire which is a real
time financial news service. During the year 2002-03, they set up Investment and
Risk Management Services which is an independent division and also offer
evaluation services for film and TV software producers.

During the year 2003-04, the company name was changed from Credit Rating
Information Services of India Ltd to Crisil Ltd. They acquired Gas strategies
Group Ltd, a London based company, engaged in as consulting, information and
training/ conferences. Also, hey made an equity investment in the Caribbean
Information &Credit Rating Services Ltd which is the first regional rating agency
in the world.
During the year 2004-05, Irena group of companies was acquired by the company.
The company transferred the Advisory Business of the company to Crisil Market
Wire Ltd with effect from April 01, 2007. Crisil Research& Information Services
Ltd, Global Data Services of India Ltd and Irena Research Service Ltd merged
with the company with effect from April1, 2007.

In February 2008, the company reached a preliminary understanding with Equifax

Inc, USA and Tata Capital Ltd for setting up a Credit Information Company in
India. They also proposed to set up as subsidiary in Poland and Dubai through
their
Wholly owned subsidiary, Irena Ltd, UK.

In the year 2008, CRISIL Infrastructure Advisory was reorganized with this
operation of business development and delivery functions. They completed a large
number of international engagements. The company divested 90% of their equity
in their UK subsidiary, Gas Strategies Group Ltd (GSG), to the GSG management
team. The company now has a10% share holding in the company.

In the year 2009, the company launched a first-of-its-kind publication, India's Top
50 Micro finance Institutions, profiling the leading micro finance institutions in
India. They assigned India's first-ever rating for securitization of micro finance
receivables. They introduced Credit Alerts to provide Insights to market
participant son trends in specific sectors. They extended operations at Global
Analytical Centre to 24/6 to provide real- time support to Standard &
Poor's during Usmarkethour.

In the year 2010, the company launched Real Estate Star Ratings, a first-of-its-
kind service for retail investors in the real-estate sector. They expanded operations
At Global Analytical Centre (GAC) to support standard & poor’s (S&P). In
September 22, 2010, the company signed agreements for the acquisition of the
assets of Papal Research Corporation (PRC) including 100% of the share capital of
Papal Research Analytics and Information Services India Put Ltd. After

Completion of all conditions precedent, the transaction was completed with effect
from December3, 2010.
In the year 2011, the company launched Education Grading, Solar Grading and,
Gold and Gilt Index. CRISIL Global Research & Analytics received NASSCOM
Exemplary Talent Practices Award.

In 2012, CRISIL achieved a landmark of assigning its 10,000th bank loan rating.
In 2013, Mc Graw Hill Financial Increased Stake in CRISILto67.8%.During the
year, CRISIL launched CRISIL Incuse, India's most comprehensive financial
inclusion index which accurately measures the extent of financial inclusion in the
country, right down to each of the 632 districts.

In 2014, CRISIL assigned rating for India's first Commercial Mortgage Backed
Securities. During the year, CRISIL introduced Fund Management Capability
Ratings for the mutual fund industry.

In 2015, CRISIL approved the proposal to invest in financial technology

companies in areas/sectors that are deemed strategic for CRISIL. CRISIL Ltd. Has
approved the Scheme of Amalgamation of its three wholly owned subsidiary
companies, with the Company. During the year, CRISIL assigned rating to an
innovative partially guaranteed debenture issue of a passive infrastructure SPV
backed by first-loss partial guarantee from IIFCL.
In 2016, CRISIL launched the first hybrid issuance ratings in the insurance sector.
During the year, CRISIL launched first Infrastructure Rating on the
Expected Loss' scale.

In 2017, CRISIL launched same first, an online platform that allows SMEs easy
access to ratings and other related services. During the year, CRISIL acquired
8.9% stake in rival credit rating agency CARER ratings. During the year,
CRISIL launched India's first infrastructure invest ability index. Small Industries
Development Bank of India (SIDBI) and CRISIL signed a Moue to launch India's
first MSME Sentiment index named Crusade. During the year, CRISIL launched
rankings for unit linked insurance plans (ULIPs).Also during the year, CRISIL
entered into a definitive agreement to acquire100% stake in Pragmatic
Services Private Limited, a data analytics company. Head quartered in Mumbai,
Pragmatic provides analytics and solutions to retail and commercial banks,
financial institutions, asset managers, insurers and telecom companies. Pragmatic
provides solutions across the risk, sales, and finance domains in India, Middle East
and North America. Pragmatic’s intellectual property includes proprietary
enterprise at a analytics platform with pre-configured data models, KPI sand
algorithms that offer accelerated business solutions.

In 2018,CRISIL launched India's first index to bench mark performance o

investments of foreign portfolio investors(FPI) in the fixed-income market, in both
rupee and dollar versions.

On 21 May 2018, CRISIL announced that it has assigned India's first rating for
road projects based on the toll-operate- transfer (TOT) model. The rating,
Provisional CRISIL AA-(SO)/Stable1', was assigned to the bank facilities of nine
special purpose vehicles (SPVs) sponsored by Macquarie Asia Infrastructure Fund
2(MAIF2) under the TOT model.
 3.2FINANCIAL STATEMENT AND ANALYSIS:

A:-STUDY OF BALANCE SHEET MEANING:-

The balance sheet is one of the three fundamental financial statements and is key
to both financial modeling and accounting. The balance sheet displays the
company’s total assets, and how these assets are financed, through either debtor
equity. It can also sometimes be referred to as a statement of net worth, or a
statement of financial position. The balance sheet is based on the fundamental
equation: Assets
=Liabilities+Equity.7 Tips for Reading a Balance Sheet

Reading the Balance Sheet

A balance sheet, also known as a" statement of financial position," reveals a

company's assets, liabilities and owners' equity (net worth). The balance sheet,
together with the income statement and cash flow statement, make up the corner
one of any company's financial statements. If you are a shareholder of a company,
it is important that you understand how the balance sheet is structured, how to
analyze it and how to read it.
The Balance Sheet Equation

The main formula behind balance sheets is: Assets = Liabilities + Shareholders'
Equity

A company has to pay for all the things it owns (assets) by either borrowing
money (taking on liabilities) or taking it from investors (issuing shareholders'
equity).Total assets must equal the liabilities plus the equity of the company.

Know the Current Assets

Current assets have a life span of one year or less, meaning they can be converted
easily into cash. Such asset classes include cash and cash equivalents, accounts
receivable and inventory. Cash, the most fundamental of current assets, also
includes non-restricted bank accounts and checks. Cash equivalents are very safe
assets that can be readily converted into cash; U.S. Treasuries are one such
example. Accounts receivables consist of the short-term obligations owed to the
company by its clients. Companies often sell products or services to customers on
credit; these obligations are considered as current assets. When a client pays,
there' a transaction from accounts receivables to cash.

Non-Current Assets

Noncurrent assets are company long-term investments where the full value will not
be realized within the accounting year. They can refer to tangible assets such as
machinery, computers, buildings and land. Non-current assets can also be
intangible, such as good will, patents or copyright. While these assets are not
physical in nature, they are often there sources that can make or break a company
— For example the value of a brand name. Depreciation is calculated and
deducted from most of these assets, which represents the economic cost of the
asset over its useful life.

Different Liabilities

On the other side of the balance sheet equation are the liabilities. These are the
financial obligations a company owes to outside parties. Like assets, they can be
both current and long-term. Long-term liabilities are debts and other non-debt
financial obligations which are due after a period of at least one year from the date
of the balance sheet. Current liabilities are the company's liabilities which will
come due, or must be paid, within one year. This includes both shorter-term
borrowings, such as accounts payables, along with the current portion of longer-
term borrowing, such as the latest interestpaymentona10-yearloan.

Shareholder s 'Equity

Shareholders' equity is the initial amount of money invested into a business. If, at
the end of the fiscal year, a company decides to reinvest its net earnings into the
company (after taxes), these retained earnings will be transferred from the
incomestatementontothebalancesheetintotheshareholder'sequityaccount.Thisaccou
nt represents a company's total net worth. In order for the balance sheet to balance,
total assets on one side have to equal total liabilities plus share holders' equity on
the other.

Analyze With Ratios

Financial ratio analysis uses formulas to gain insight into the company and its
operations. For the balance sheet, using financial ratios (like the debt-to-equity
ratio) cans how you a better idea of the company's financial condition along with
its operational efficiency. It is important to note that some ratios will need
information from more than one financial statement, such as from the balance
sheet and the income statement.

CURRENTASSETS:-

The term current assets represents all the assets of a company that are expected to
be conveniently sold, consumed, utilized or exhausted through the standard
business operations which can lead to their conversion to the next one year.
The term contrasts with long-term assets, which represent the assets that cannot
be feasibly turned into cash in the space of a year. They generally include land,
facilities, equipment, copyrights, and other illiquid investments.

Key Components of Current Assets

While cash, cash equivalents and liquid investments in marketable securities (like
interest bearing short term Treasury bills or bonds) remain the obvious
Accounts receivable

Which represents the money due to a company for goods or services delivered
roused but not yet paid for by customers, are considered current assets as long as
they can be expected to be paid within a year. If a business is making sales by
offering longer terms of credit may not qualify for inclusion in current assets. It is
also possible that some accounts may never be paid in full. This consideration is
reflected in
 Inventory

This represents raw materials, components and finished products, is included as

current assets, but the consideration for this item may need some careful thought.
Different accounting methods can be used to inflate inventory, and at times it may
not be as liquid as other current assets depending on the product and the industry
sector. For example, there is little or no guarantee that a dozen unit sofa high-cost
heavy earth moving equipment may be sold for sure over the next year, but there is
relatively higher chance of successful sale of a thousand umbrellas in the coming
rainy season. Inventory may not be as liquid as accounts receivable, and it blocks
the working capital. If the demand shifts unexpectedly, which is more common in
some industries than others, inventory can become back logged.

Prepaid expenses

Which represent advance payments made by a company for goods and services to
be received in the future, are considered current assets? Though they cannot be
converted into cash, they are the payments which are already taken care of. Such
components free up the capital for other uses.

Current Assets Formula and Example

The current assets formula is a simple summation of all the assets that can be
converted to cash within one year:

CurrentAssets=Cash+CashEquivalents+Inventory+AccountsReceivables
+MarketableSecurities+PrepaidExpenses+OtherLiquidAssets
 Ratios using Current Assets or their Components

The following ratios are commonly used to measure a company’s liquidity

position with each one using a different number of asset components against the
current liabilities of a company.
The current ratio measures a company's ability to pay short-term and long-term
obligations and takes into account the current total assets (both liquid and illiquid)
of a company relative to the current liabilities.

The quick ratio measures a company's ability to meet its short-term obligations
with its most liquid assets. It considers cash and equivalents, marketable
Securities and accounts receivable (but not the inventory) against the current
liabilities.

The cash ratio measures the ability of a company to pay off all of its short-
immediately, and is calculated by dividing the cash and cash
While the cash ratio is the most conservative one as it takes only cash and cash
equivalents into consideration, the current ratio is the most accommodating and
includes a wide variety of components for consideration as assets. These various
measures are used to assess the company’s ability to pay outstanding debts and
cover liabilities and expenses without having to sell fixed assets.

NONCURRENTASSETS:-

Noncurrent assets are company long-term investments where the full value will not
be realized within the accounting year. Examples of noncurrent assets
Other Noncurrent Assets
Other noncurrent assets include the cash surrender value of life insurance. A bond
Sinking fund established for the future repayment.

LIABILITY:-
A liability is defined as a company's legal financial debts or obligations that arise
during the course of business operations. Liabilities are settled over time through
the transfer of economic benefits including money, goods or services. Recorded on
the right side of the balance sheet, liabilities include loans, accounts payable,
mortgages, and deferred revenues and accrued expenses.
Current versus Long-Term Liabilities
Businesses sort their liabilities into two categories: current and long-term. Current
liabilities are debts payable within one year, while liabilities are debts payable over
a longer period. For example, if a business takes out a mortgage payable over 15-
year period, that is a long-term liability. However, the mortgage payments that are
due during the current year are considered the current portion of long-
termdebtandare recorded in the short-term liabilities section of the balance sheet.

Ideally, analysts want to see that a company can pay current liabilities, which are
due within a year, with cash. Some examples of short-term liabilities include
payroll expenses and accounts payable, which includes money owed to vendors,
monthly utilities, and similar expenses. In contrast, analysts want to see that long-
term liabilities can be paid with assets derived from future earnings or financing
transactions. Debt is not the only long-term liability companies incur. Items like
rent, deferred taxes, payroll, and pension obligations can also be listed under long-
term liabilities.
 The Relationship between Liabilities and Assets

Assets are the things a company owns, and they include tangible items such as
buildings, machinery, and equipment as well as intangible items such as accounts
receivable, patents or intellectual property. If a business subtracts its liabilities
from its assets, the difference is its owner’s or stock holders’ equity. This
relationship can be expressed as assets - liabilities = owner's equity. However, in
most cases, this equation is commonly presented as liabilities + equity=assets.

B:-STUDY OF PROFIT & LOSS ACCOUNT:

MEANING:-

The account, through which annual net profit or loss of a business is ascertained, is
called profit and loss account. Gross profit or loss of a business is ascertained
through trading account and net profit is determined by deducting all indirect
expenses (business operating expenses) from the gross profit through profit and
loss account. Thus profit and loss account starts with the result provided by trading
account.
The particulars required for the preparation of profit and loss account are available
from the trial balance. Only indirect expenses and indirect revenues are considered
in it. This account starts from the result of trading account (gross profit or gross
loss). Gross profit is shown on the credit side of the profit and loss account and
gross loss is shown on the debit side of this account. All indirect expenses are
transferred on the debit side of this account and all indirect revenues on credit side.
If the total of the credit side exceeds the debit side, the result is "net profit" and if
the total of the debit side exceeds the total of the credit side, the result is net loss.

HOW TO UNDERSTAND P&L A/C?

The profit and loss account highlights the turnover accomplished over period given
(usually1year) from which it subtracts expense supported by the business during
the same period. The result of this subtraction shows the benefit or the loss made
by the company at the end of the financial year.
 Figure1

Turnoverandprofitabilityaretwokeyindicatorsforanybusiness,second one
Even more than the first one. As long as a business is profitable the risk of
insolvency is low. A turnover increase without profitability or strengthening of
shareholders equity weakens the business.

Why?

Simply because the need in cash rises with the increase of the turnover while
financial resources do not increase. Consequently, problems of financing of
growth and cash difficulties can appear which can be controlled only with thirds
contributions (banks, factoring, credit given by suppliers etc).

These indicators help to determine if the company is profitable and to understand

what are the main factors contributing to the net result (positive or negative). Is the
company's business is profitable or not? Is she burdened by financial costs or is her
net income improved temporarily by an exceptional profit?
This analysis will help you not to get fooled by an "artificial" positive result or to
not stop your analysis to a net loss but based on an intrinsically profitable and
viable business.

Table:B1

Intermediate Calculation Interpretation

balance
Trade margin Ales of goods- Relevant indicator to determine the
purchases of goods+ gross margin of an activity of
Goods inventory change reselling such distribution or
Trading.
Value added Trade marring Represents the creation of value the
+Production – purchases at the company provides to goods
of raw material – other and services purchased from third
purchases and external parties. The value added must be
charges sufficiently high to absorb all other
expenses of
The company.
Operating profit Value added-tax- Remaining amount after
before Wages and salaries- Deduction of operating expenses
 To value added. It is a key indicator o
f profitability and business
depreciation and performance as it is independent of
amortization(EBI Payroll taxes the financial policy of the company.
TDA) EBITDA should maintain and
develop the means of production and
pay the capital invested.
Operating profit includes the
EBITDA-
amortization of fixed assets and
Operating profit depreciations and
provisions for risk(egaccrualofbad
provisions
Debts).
This purely financial result is often
negative because firms are generally
consumers of financial products
(lines of bank overdrafts, bank loans,
Financial income -
Financial result factoring etc ...). A significant
financial charges
negative financial result often reflects
a weak financial structure and an
excessive course to banks.
Warning!

Final result calculated from operating

Operating profit income and expenses .It is
Result before tax
+financial independent of taxation and
result exceptional income and expenses.
This result relates to un usual
activity.
For example, a capital structure
Exceptional income- transaction can create an
Exception a
Exceptional exceptional result. Be careful
result
expenses because it can distort the true
profitability of the business and
distort an analysis that would be
Based solelyonnet income.
The net income represents the profit
or loss at the end of the year (the
difference between total revenue and
Result before tax total expenditure). It is increasing (if
Net
+exceptional result positive) or decreasing (if negative)
income(prof
-incometax the equity. If positive, it can remain
itorloss)
invested in the company or be
partially distributed to shareholders as
dividends.
 C:-FINANCIAL STATEMENT ANALYSIS:

Financial statement analysis (or financial analysis) is the process of reviewing

and analyzing a company's financial statements to make better economic decisions.
These statements include the income statement, balance sheet, statement of cash
flows, and a statement of changes inequity. Financial statement analysis is a
method or process involving specific techniques for evaluating risks, performance,
financial health, and future prospects of an organization.
It is used by a variety of stakeholders, such as credit and equity investors, the
government, the public,anddecision-
makerswithintheorganization.Thesestakeholders have different interests and apply
a variety of different techniques to meet their needs. For example, equity investors
are interested in the long- term earnings power of the organization and perhaps the
sustainability and growth of dividend payments. Creditors want to ensure the
interest and principal is paid on the organizations debt securities (e.g., bonds)
when due.
Common methods of financial statement analysis include fundamental analysis,
DuPont analysis, horizontal and vertical analysis and the use of financial ratios.
Historical information combined with a series of assumptions and adjustments to
the financial information may be used to project future performance.The Chartered
Financial Analyst designation is available for professional financial analysts.
HORIZONTAL AND VERTICAL ANALYSIS:
• Horizontal analysis compares financial information overtime, typically from past
quarters or years. Horizontal analysis is performed by comparing financial data
from a past statement, such as the income statement. When comparing this past
information one will want to look for variations such as higher or lower earnings.
• Vertical analysis is a percentage analysis of financial statements. Each line it
enlisted in the financial statement is listed as the percentage of another line item.
For example, on an income statement each line item will be listed as a percentage
of gross sales. This technique is also referred to as normalization or common-
sizing.
 A: MANAGEMENT DISCUSSION &ANALYSIS:

• Macroeconomic and Industry Developments

India’s economy recorded a growth rate of 7.6 per cent in terms of real Gross
Domestic Product (GDP) in 2015-16. This was the highest in five years despite the
continued slowdown in global growth and two consecutive years of deficient
monsoons in India. Inflation moderated, with the average level of Consumer Price
Inflation declining to 5 per cent in 2015-16 from 6 per cent in 2014-15. Domestic
manufacturing growth improved to a robust9.5percent compared to 5.5percent in
financial year 2014-15. It reflects stronger value addition due to subdued input
prices, which was a result of the declining global commodity cycle. Foreign Direct
Investment inflows (FDI) increased by 40 per cent in the April-December period
of2015 over the corresponding period of the previous year.
Arrange of supply side measures, including prudent food stock management,
appropriate monetary policy action and subdued global commodity price sided the
decline in inflation. Meanwhile, initiatives such as ‘Make in India, power sector
reforms, the liberalization of FDI rules and higher government capital expenditure
spending indicate an incipient revival in domestic investment activity. Going
forward, weakness in private investment cycle and asset quality strain in the
banking sector could prevent a full-fledged recovery, though some improvement in
the growth rate is quite likely. Risks on the external front continue to loom in the
form of a wider emerging market slowdown, especially on account of China and
the like volatility in global financial markets.
The growth in lotion mix should improve for 2016-17 as the Government is
expected to undertake more structural reforms and the RBI is likely to be more
accommodative in its monetary policy. Going by the Union Budget, the focus of
fiscal policy in the coming year will be the revival of rural economy and sustained
increase in capital expenditure. Besides, higher outlay on various social sector
programmers and implementation of Seventh Central Pay Commission
recommendations should boost consumption spending. Going forward, headline
GDP growth should increase to 7.8 percent in 2016-17 from 7.6 per cent in 2015-
16.
 Mission, Business Strategy and Approach to Business
Your Banks mission is to be a "World Class Indian Bank" benchmarking itself
against international standards and best practices in terms of product
Offerings, technology, customer service levels, risk management, audit and
compliance. The objective is to continue building sound customer franchises
across distinct businesses so as to be a preferred provider of banking services for

It stage retail and whole sale customer segments and to achieve a healthy growth in
profitability, consistent with the Banks risk appetite. Your Banks business
philosophy is based on five core values: Customer Focus, Operational Excellence,
Product Leadership, People and Sustainability. Based on these corner stones, it is
your Banks aim to meet the financial needs of customers while ensuring service of
the highest quality. Your Bank is committed to do this while ensuring the highest
level so ethical standards, professional integrity, corporate governance and
regulatory compliance. The Bank understands and respects its fiduciary role and
responsibility to all stakeholders and strives to meet their expectations. The
cardinal principles of independence, accountability, responsibility, transparency,
air and timely disclosures serve as the basis of your Banks approach to corporate
governance.
Your Bank believes that diversity and independence of the Board, transparent
disclosures, shareholder communication and effective regulatory compliance are
necessary for creating and sustaining shareholder value. Your Bank has infused
these principles into a llitsactivities.
Your Bank also has a well-documented Code of Ethics/ Conduct which defines the
high business responsibility and ethical standards to be ad hard to while
conducting the business of the Bank and mandates compliance with legal and
regulatory requirements. All employees, including senior management have to
affirm manually that they have adhered to the Code of Conduct rules.
Consistent with the mission and approach, your Banks business strategy
emphasizes the following:
Increase market share subject to striking an optimal balance between risk and
margin, in India’s expanding banking and financial services industry
Increase geographical reach
Cross-sell broad financial product portfolio across customer base
Continue investments in technology to support digital strategy
Maintain strong asset quality through disciplined credit risk management
Maintain a low cost of funds
 Integrating activities in community development, social responsibility and
environmental responsibility with business practices and operations
Financial Performance
The financial performance of your Bank during the year ended March 31,
2016remained healthy with total net revenues (net interest income plus other
income) increasing by 22.1 per cent to 38,343.2 core from 31,392 core in the
previous financial year. Revenue growth was driven by an increase in both Net
Interest Income and Other Income. Net Interest Income grew by 23.2 per cent due
to acceleration in loan growth coupled with a Net Interest Margin (NIM) of 4.3
percent for the year ended March31,2016.
Other Income grew 19.5 per cent over that of the previous year to 10,751.7 core
during the year ended March 31, 2016. The largest component of Other Income
was fees and commissions, which increased by17.8 percentto7,759 cores with
the primary drivers being commissions on debit and credit cards, transactional
charges, fees on deposit accounts, fees on retail assets and commission on
distribution of mutual funds and insurance products. Foreign exchange and
derivatives revenue was 1,227.7 core, gain on revaluation and sale of investments
was 731.8 core and recoveries from written-off accounts were 808 cores in
theyearendedMarch31, 2016.
Operating (Non-Interest) expenses increased to 16,979.7 core for the year under
review from 13,987.6 core in the previous year. During the year, your Bank
opened 506 new branches and 234 ATMs coupled with strong growth in retail
asset and card products, which resulted in higher in restructure and staffing
expenses. Staff expenses also increased on account of annual wage revisions.
Despite the addition to the infrastructure, your Bank maintained its Cost to Income
ratio at 44.3 per cent for the year ended March 31, 2016, as against 44.6 percent
for the previous year.
Total Provisions and Contingencies were 2,725.6 core for the year ended March31,
2016 as comparedto2, 075. 8croreduring the previous year. Your Banks
provisioning policies remain higher than regulatory requirements. The coverage
ratio based on specific provisions alone excluding write-offs was around 70
percent and including general and floating provisions was around 146 per cent as
on March 31, 2016. Your Bank made General Provisions of 440 core during the
yearendedMarch31, 2016.
You’re Banks Profit before Tax was18, 637. 9crore, an increase of 21.6per cent
over the year ended March 31, 2015.After providing for Income Tax of
6,341.7crore,the Net Profit for year ended March 31, 2016 was1 2,296.2 crore, up
20.4 per
cent over the year ended March 31,2015. Return on Average Net worth was 18
percent while the Basic Earnings per Share increased from 42.1to
48.8perequityshare.
As on March 31, 2016, your Banks total balance sheet stood at 708,846 cores, an
increase of 20 per cent over 590,503 cores in the previous year. Total Deposits
increased by 21.2 per cent to 546,424 cores as on March 31, 2016 from
450,796croreasonMarch31, 2015.
Savings Account Deposits grew by 18.4 per cent to 147,886 cores while Current
Account Deposits grew by 20.2 per cent to 88,425 cores as on March 31, 2016.
The proportion of Current and Savings Deposits to total deposits was at 43
percentasonMarch31, 2016.
During the financial year under review, Net Advances grew by 27.1 percent to464,
594 cores. The Bank had a market share of approximately 5.4percentand
5.8 per cent in total Domestic System Deposits and Advances respectively. Your
Banks Credit Deposit (CD) Ratio was 85 per cent as on March 31, 2016.
Business Segments Update
Consistent with its past performance, your Bank has achieved healthy growth
across various operating and financial parameters in the last financial year.
franchises - retail banking, wholesale banking and treasury and of its disciplined
approach to risk-reward management.
In addition to the aforementioned products, the Bank operates in the home loan
business in conjunction with HDFC Limited. Under this arrangement, the
BanksellsloansprovidedbyHDFCLimitedthroughitsbranches.HDFCLimitedapprove
s and disburses the loans, with the Bank receiving a sourcing fee for these loans.
The Bank has the option to purchase up to 70 per cent of the fully disbursed home
loans sourced under this arrangement either through the issue of mortgage backed
pass through certificates (PTCs) or by a direct assignment of loans. The balance is
retained by HDFC Limited. A fee is paid to HDFC Limited for the administration
and servicing of the loans. Your Bank originated, on an average, approximately
1,300 crore of home loans every month in the year under review. During the same
period, the Bank purchased from HDFC Limited home loansworth12,773 crore
under the "loan assignment" route.
Your Bank also distributes Life Insurance, General Insurance and Mutual Fund
products through its tie-ups with insurance companies and mutual fund houses
.Third Party Distribution Income contributed approximately 14 per cent of total fee
income for the year ended March 31, 2016, compared to 15 percent of the total fee
income for the previous year.
The Banks data warehouse, customer relationship management (CRM)and
 analytics solutions have helped it target existing and potential customers in a cost-
effective manner and offer them products appropriate to their profile and
needs.Apartfromreducingcostsofacquisition,thishasalsohelpedindeepeningcustome
rrelationshipsandgreaterefficiencyinfraudcontrolandcollectionactivities resulting in
lower credit losses. The Bank is committed to investing in advanced technology in
this area which will provide a cutting edge to its product and service offerings.
Working Capital, Term Finance, Trade Services, Cash Management,
Investment Banking services, Foreign Exchange and Electronic Banking
requirements.

You’re Banks Financial Institutions and Government Business Group (FIG)

offers commercial and transaction banking products to financial institutions, mutual
funds, insurance companies, public sector undertakings, central and state government
departments. The main focus for this segment remained the offering of various
deposit and transaction banking products besides deepening these relationships by
offering Funded, Non-Funded, Treasury and Foreign Exchange products. Your Bank
is authorized to collect Direct Taxes. It made at oat collection of nearly 1, 90, 000
core during the year and was ranked second in terms of total collections made by any
Bank. Your Bank is also authorized to collect Excise as well as Service Tax and
collected over 97,000 core, during the year. Governments of 13 States have
authorized your Bank to collect State Taxes /Duties. These mandates enable a greater
convenience to customers and help the exchequer in mobilizing resources in a
seamless manner.
The Bank continues to be the market leader in cash settlement services for major
stock and commodity exchanges in the country.
Your Banks Investment Banking Group has established itself as a leading player in
Debt Capital Markets and Project Finance. In recognition of the strong position
enjoyed by the Bank in the Debt Capital Market, Bloomberg ranked it No.
2amongst book runnersinINRbondsforCalendarYear2015.
Your Bank has executed a well thought out strategy of offering a full range of
banking products under one roof to the commercial vehicle and in restructure
equipment market. It has, in a short span of time, established itself as one of the
preferred and trusted brands in this segment with an enviable list of Mo Us and
Programmers with the leading commercial vehicles and Original Equipment
Manufacturers(OEMs).Your Bank offers under one roof,
Commercial Vehicle and Equipment Working Capital Loans, Bank Guarantee, Tax
Payments, Cash Management Services and other banking services enable ingot to
cut down on transaction time and costs for customers. Your Banks Cash
Management Business (CMS) (including all outstation collection, disbursement
tandem l tectonic fund transfer products across its various customer segments)
registered volumes of over 39 laky core. The Bank is one of the front runner’s in
making significant progress in web-enabling its CMS business.
 CHAPTER: 4
RESEARCH METHODOLOY
 CHAPTER-4: RESEARCH METHODOLOGY

MEANING:-

Research is an academic activity and as such the term should be used in a technical
sense. According to Clifford Woody research comprises defining and redefining
problems, formulating hypothesis or suggested solutions; collecting, organizing
and evaluating data; making deductions and reaching conclusions; and at last
carefully testing the conclusions to determine whether they fit the formulating
hypothesis. D. Steiner and M. Stephenson in the Encyclopedia of Social Sciences
define researches “the manipulation of things, concepts or symbols for the purpose
of generalizing to extend, correct or verify knowledge, whether that knowledge
aids in construction of theory or in the practice of an art.”It is actually voyage of
discovery. We all possess the vital instinct of inquisitiveness for, when the
unknown confronts us, we wonder and our inquisitiveness makes us probe and
attain full and fuller understanding of the unknown. This inquisitiveness is the
mother of all knowledge and the method, which man employs for obtaining the
knowledge of whatever the unknown, can be termed as research.

It is an empirical study, so researcher has followed scientific approach to design

the research methodology for investigation. For this study researcher is using
secondary data as a source of information for thus research e. g. the Annual
Reports, websites and other publications. The following tool & techniques have
been classification in the study
(A)Accounting Techniques (B) Statistical Techniques

ACCOUNTING TECHNIQUES:

The researcher picks up the techniques to suit their requirement and also basis to
data available to them. The accounting techniques which are used for the analysis
is as under. Ratio Analysis A ratio is a quotient of two numbers and the relation
expressed between two figures. Ratio analysis is a process of comparison of one
figure against another, which makes ratio. Ratio analysis is a very powerful. The
ratio analysis concentrates on the inter-relation-ship among the figures appearing
in
The financial statement.
 RESEARCH OBJECTIVES:-

1. Knowing the Profitability of Business

2. Knowing the Solvency of the Business
3. Judging the Growth of the Business SOURCES OF DATA:-
Primary Data Primary data refers to that data which has been obtained by the
researcher directly from the respondents for specific research work.

Secondary Data Secondary data refers to that data which is already in existence
and someone has obtained for specific purpose but reutilize by the researcher. The
said research work is based on the secondary Data of published financial statement
of selected Indian industries and the selected companies within them.
(1)The data of various financial parameters have been obtained from the Annual
Reports of the companies directly from the official websites of the company or
stock exchange website.(2)There sources at CMIE(Centre For Monitoring Indian
Economy)have also been utilized for the same purpose.

For accounting analysis ratio analysis has been used. Ratio Analysis the term
‘ratio’ refers to the mathematical relationship between any two inter-related
variables. According to J. Batty, Ratio can be defined as “the term accounting ratio
is used to describe significant relationship which exists between figures shown in a
balance sheet and profit and loss account in a budgetary control system or any
other part of the accounting management.” As per Myers,“ Ratio analysis is a
study of relationship among various financial factors in a business.” A ratio is a
relationship expressed between two different figures of the financial statement.
Ratio analysis is an art of determining relationship between different components
of financial statement so as to derive a meaningful understanding of profitability,
liquidity, solvency and efficiency of a Company. Profitability can be measured in
different ways-like income based, expense based and investment based. This study
is based on income based ratios and is confined to four ratios which are as follows:
Earning profit is one of the objectives of every business concern. A company must
have sufficient profits in relation to the capital employed by it. Profitability of a
company is indicated by the amount of profits earned in comparison to capital
invested in business.
Profitability is to be examined with reference to sales and capital employed.
 • Operating Profit Margin(%):Operating Income/Sales*10085 Operating
margin is a measurement of what proportion of a company's revenue is left over
after paying for variable costs of production such as wages, raw materials, etc. A
Healthy operating margins required for a company to be able to pay for its fixed
costs, such as interest on debt.

1. Profit Before Interest And Tax Margin (%) : PBIT / Sales *100 In other words,
EBIT is all profits before taking into account interest payments and income taxes.
An important factor contributing to the wide spread use of EBIT is the way in
which it nulls the effects of the different capital structures and tax rates used by
different companies. By excluding both taxes and interest expenses, the figure
hones in on the company's ability to profit and thus makes for easier cross-
company comparisons.
2. Gross Profit Margin (%) : (Sales - COGS) / COGS * 100 A financial metric used
to assess a firm's financial health by revealing the proportion of money left over
from revenues after accounting for the cost of goods sold. Gross profit margin
serves as the source for paying additional expenses and future savings. COGS
expand to Cost of Goods Sold.
3. Net Profit Margin (%) : Net Profit(after Interest & tax)/Sales* 100Profit margin is
very useful when comparing the performance of various companies whether they
belong to the same industries or different industries. A higher profit margin
indicates a more profitable company that has better control over its costs compared
to its competitors. Liquidity implies the short term flexibility of a company in
payment of obligation. To examine availability of current asset and liquidity of the
Company following two ratios are calculated with following formula:
4. Current Ratio: Current Assets / Current liabilities it helps to assess the short term
financial position of the business enterprise. It shows how many times
CurrentAssets are in excess of Current Liabilities. Higher the Current ratio, greater
is the rupee available for the purpose of current liability, more is the Company’s
ability to meet it scurf rent obligations and greater is the safety of Company’s short
term creditors.
 CHAPTER: 5
DATA ANALYSIS & INTERPRETATION
 CHAPTER-5: DATA ANALYSIS AND INTERPRETATION:-
MEANING:-
Analysis and interpretation of financial statements are an attempt to determine the
significance and meaning of the financial statement data so that a forecast may be
made of the prospects for future earnings, ability to pay interest, debt maturities,
both current as well as long term, and profitability of sound dividend policy.

The main function of financial analysis is the pinpointing of the strength and
weaknesses of a business undertaking by regrouping and analysis of figures
contained in financial statements, by making comparisons of various components
and by examining their content. The analysis and interpretation of financial
statements represent the last of the four major steps of accounting.

A business owner can use several methods to check the financial health of the
business. Three of the most used methods are:

Horizontal Analysis–analysis the trend of the company’s financials over a period

of time.
Each line item shows the percentage change from the previous period. Vertical
Analysis–compares the relationship between a single item on the Financial
Statements to the total transactions with in one given period.
It also shows the percentage of changes in the last period.
You can perform a Vertical Analysis on both an Income Statement and a Balance
Sheet.
Without analysis, a business owner may make mistakes understanding the firm’s
financial condition. Resulting in poor rather than strong decision- making. For
example, an Assets to Sales ratio is a measure of a firm’s productive use of Assets.
Whereas a low percentage rate compared to the average for the industry usually
indicates an efficient use of Assets. Likewise, a high percentage rate indicates the
need to improve the use of Assets. Check out our blog post on Ratio Analysis.
 The following sections give a detail explanation of Vertical and Horizontal
analysis:
Horizontal Company Financial Statement Analysis

With a Horizontal Analysis, also, known as a“ trend analysis, ”you can spot trends
in your financial data overtime.
For example, a $2 million profit year looks impressive following a $0.25 million
profit year, but not after a $10 million profit year. Horizontal analysis stresses the
trends in:
Earnings Assets Liabilities
1. Financial Statements often contain current data and the data of a previous period.
This way, the reader of the financial statement can compare to see where there was
change, either up or down.
2. Horizontal Analysis takes this comparison goes one step further. It depicts the
amount of change as a percentage to show the difference over time as well as the
dollar amount.
3. The following illustration depicts a Horizontal Analysis:
4. Note that the line-items are a condensed Balance Sheet and that the amounts are
shown as dollar amounts and as percentages and the first year is established as a
base line.
1. Multiplying by 100 to derive the percentage.
For example, if we let 2012 be the base year in the Balance Sheet of Learning
Company, Current Assets would be give non indexof100%.
Then for 2013, to derive the percentage of change, we look at each line item:
In this case,
Current Assets for 2013 are $210,000 subtract the base line amount of
$100,000:
$210,000–$100,000=$110,000
Determines the difference of $110,000.
Divide this difference by the base line amount, so
$110,000/$100,000=1.1
Multiplyby100tocalculate the percentage:
1.1*100=110%
And we can see that Current Assets grew by 110% from 2012 to 2013. To
calculate 2014,we DO NOT go back to the baseline to do the
calculations;instead,2013becomesthenew base line so that we can see percentage
growth from year-to-year.
In our illustration,
The calculation to determine the Current Assets 2014 percentage change
becomes:
$463,000–$210,000=$253,000 Determinesthedifferenceof253, 000.
Divide this difference by the base line amount, so
$253,000/$210,000=1.2
Multiplyby100tocalculate the percentage:
1.1*100=120%
And we can see that Current Assets grew by120%from2013to2014.
The following illustration depicts a Vertical Analysis of an
Income Statement::-
 CHAPTER: 6
FINDINGS, SUGGESTIONS, CONCLUSIONS
 CHAPTER-6: FINDINGS, SUGGESTIONS, CONCLUSIONS

FINDINGS:-
As per the financial statements of hdfc bank such as balance sheet and profit
account.
As we talk about the P&L a/c the income is increased year on year. Such as
from2014to2018. .
Secondly the balance sheet, the total shares capital of the company increased by
the issuing of shares.
The deposits in the bank increases because of the more and more investments by
the investors and the shareholders. On the other hank the negative point was that
the borrowing also increased means the loans from RBI by the bank itself.

On the other hand assets are also increased because of the increasing customers.
Facilities are main priority by the bank to the customers. Fixed assets, Current
Assets are also increased year on year basis. Also KPA (key performance area also
improved YOY basis.

1. Knowing the Profitability of Business

As we have seen the financial statements of HDFC bank from 2014 to 2018, we
can determined that the profit goes increase year on year basis. This statements
always shows the profits generations in the company. So the main objective is to
predict the future profits and the present profit of the organizations. Profits are
shown from net profits. Net profit means the expenses deducted from the revenue.
After that we got the exact net profit and we can determined that this organizations
is stand in the market or not. Because profit is the main aim of any organizations.
2. Knowing the Solvency of the Business

Second most important objective is to know the solvency of the business. As we

can assume profits from the financial statements, same way we can assume the
solvency also. Because in business if the expenses are more than income
That it results to the great loss to the organizations. Here if the net loss comes than
business gets in trouble, but here it is not that so. For Example if the net loss
comes YOY basis then the business may into bankrupt. So that profits are only the
way to tackle the solvency of the business.

3. Judging the Growth of the Business

Third and the last objective of the study is the growth of the company. There are so
many ways to judge the growth, but the simple way is to gain more and more
profits. Here if the bank is concern then they have to issue more loans to the
customer at low interest and provide user friendly services other customers.
Because the gaining the customer trust it leads to the great growth in future. Such
as the HDFC bank and other private banks. Although the growth is predict by the
services provided by the bank and the customer satisfaction.
SUGGESTIONS:

1. The company should increase the profit margin after the acquisition the profit
margin it’s continually lower then following years.
2. 2014taxratioalsoincreasedthecompanyshouldconstructprovisiontax.

3. The return on asset in HDFC Bank is in decreasing trend. The HDFC Bank should
take necessary steps to improve their turn on asset

4. Before acquisition the borrowing is low but in the year 2010 the borrowing level
of HDFC Bank it’s very high so HDFC Bank concentrates in this regard.
5. Banks should increase the rate of saving account.

6. Banks should provide loan at the lower interest rate and education loans should be
given with ease without much documentation. All the banks must provide loans
against shares.

7. Fair dealing with the customers. More contribution from the employee of the bank.
8. Internet banking facility must be made available in all the banks.

9. Banks should obey the RBI norms and provide facilities as per the norms, which
are not being followed by the banks. While the customer must be given prompt
services and the bank officer should not have any fear on mind to provide the
facilities as per RBI norms to the units going sick.
10. Prompt dealing with permanent customers and speedy transaction without
harassing the customers.

11. Each section of every bank should be computerized even in rural areas also.

12. Real time gross settlement can play a very important role.

13. More ATM coverage should be provided for the convenience of the customers.
 CONCLUSIONS:

Over the years the Indian Banking Sector has passed through various phases.
The first phase is considered as the‘infancy’ phase up to independence i.e.
1974. During this time period banking system developed on the privatized basis.
The total numbers of commercial banks have been 648 with total deposits of Rs.
1.80 cores, advances of Rs. 475 core and Credit Deposit ratio of 43.99 percent on
the eve of independence. For the development and the growth of banking sector
several important steps have been taken up such as nationalization of Reserve
Bank of India in 1948, enactment of Banking Regulation Act in 1949, emergence
of State Bank of India in 1955anditssubsidiary banks during 1959- 60 etc. In1967
Indian Government 338 initiated the scheme of social control and 14 major Indian
Scheduled Commercial Banks have been nationalized. It have been reported that
73 scheduled commercial banks having total deposits of Rs. 4661crore, advances
of Rs. 3599crore and credit-deposit ratio of 77.5 percent on thieve of
nationalization. Nationalization of banks has been considered as one of the bold
and major steps in the process of banking sector reforms in India. As are salt of
this Public Sector Banks control over 90 percent of banking business. Indian
banking structure emerged as strong and viable with rigorous control enforced by
the RBI during this period.

The post nationalization period has been earmarked with rapid branch expansion,
wide geographical penetration impressive growth in deposit mobilization as well
as in credit expansion. However, there have been several adverse factors such as
high reserve requirements deterioration in quality of loan assets, priority and
weaker section advances, high fixed and operating costs, organizational weakness,
lack of internal control, defective accounting policies, under capitalization,
political interference etc. which severely damaged productivity, profitability and
efficiency of banking sector.

Since Independence Banking Sector has been dominated by Private Sector Banks,
14 major scheduled banks were nationalized in the year 1969 and 6 more were
nationalized in the year 1980. But Reserve Bank of India has issued guide lines
immediately after liberalization, Privatization and a globalization. Policy adopted
by India in 1993 RBI has issued specific guidelines for Private Banks. Today
Private Sector Bank sari comparatively performing better than Public Sector Banks
therefore the study is mainly focusing on three private banks namely AXIS, HDFS
and ICICI Bank for the period 2005-06to2014-15.The following revelations have
 Appeared: As Compare to Public Sector Bank, Private Banks is having increasing trend
for deposits as well as for the growth of investment.

• Consolidation of players through mergers and acquisitions

• Development of new technology
• Globalization of operations
 REFERENCES:-

1. https://fmx.cpa.texas.gov/fmx/pubs/afrrptreq/notes/index.php
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Quality Service Delivery of Internal Auditors in the Northern Ghana by Aduwa A,
Atari bantam S and Joseph AA.

2. A Need for Theorizing Corporate: An Accounting Perspective by Al-A deem KR.

.
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Furan Tucker Griffith.

4. Impact of 2008 Financial Crisis On Earnings Quality: IFRS and USGAAPD

inferential Case of France and United States by Slaheddine T and F akhfakhH.

5. Accounting Factors Affecting the Capital Structure in the Asian Economic

Community by Matthias Nnadi.

RESEARCH PAPERS:

Marko S. Heine, Kevin Smith, Robert E.Verrecchia (2018), Risk-Factor Disclosure

and Asset Prices, the Accounting Review,

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