ISSN XXXX XXXX © 2019 IJESC

Research Article Volume 9 Issue No.3

A Study on Financial Analysis of Punjab National Bank

Divya Sri. G1, Sathya. K2
B.Com Student1, Assistant Professor2
Department of Commerce
Sri Krishna Adithya College of Arts and Science, Coimbatore, India

I. INTRODUCTION internal factors. For the past three decades, India’s banking
system has several outstanding achievements to its credit. The
A financial institution is an establishment that conducts Banks are the main participants of the financial system in
financial transactions such as investments, loans and deposits. India. The Banking sector offers several facilities and
Almost everyone deals with financial institutions on a regular opportunities to their customers. All the banks safeguards the
basis. Everything from depositing money to taking out loans money and valuables and provide loans, credit, and payment
and exchanging currencies must be done through financial services, such as checking accounts, money orders, and
institutions. Here is an overview of some of the major cashier’s cheques. The banks also offer investment and
categories of financial institutions and their roles in the insurance products. As a variety of models for cooperation and
financial system. integration among finance industries have emerged, some of
the traditional distinctions between banks, insurance
BANK: companies, and securities firms have diminished. In spite of
A bank is a financial institution that provides banking and these changes, banks continue to maintain and perform their
other financial services to their customers. A bank is generally primary role is accepting deposits and lending funds from
understood as an institution which provides fundamental these deposits.
banking services such as accepting deposits and providing
loans. There are also nonbanking institutions that provide Classification of Banking Industry in India:
certain banking services without meeting the legal definition of Indian banking industry has been divided into two parts,
a bank. Banks are a subset of the financial services industry. A organized and unorganized sectors. The organized sector
banking system also referred as a system provided by the bank consists of Reserve Bank of India, Commercial Banks and Co-
which offers cash management services for customers, operative Banks, and Specialized Financial Institutions (IDBI,
reporting the transactions of their accounts and portfolios, ICICI, IFC etc). The 28unorganized sector, which is not
throughout the day. The banking system in India should not homogeneous, is largely made up of money lenders and
only be hassle free but it should be able to meet the new indigenous bankers.
challenges posed by the technology and any other external and

Reserve Bank of India: Indian rupee. Until the Monetary Policy Committee was
The Reserve Bank of India (RBI) is India's central banking established in 2016, it also controlled monetary policy in
institution, which controls the issuance and supply of the India.[6] It commenced its operations on 1 April 1935 in

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accordance with the Reserve Bank of India Act, 1934.[7] The Cooperative bank:
original share capital was divided into shares of 100 each fully Cooperative banks are owned by their customers and follow
paid, which were initially owned entirely by private the cooperative principle of one person, one vote. Co-operative
shareholders.[8] Following India's independence on 15 August banks are often regulated under both banking and cooperative
1947, the RBI was nationalised on 1 January 1949. [9] The RBI legislation. They provide services such as savings and loans to
plays an important part in the Development Strategy of the non-members as well as to members, and some participate in
Government of India. It is a member bank of the Asian the wholesale markets for bonds, money and even equities.
Clearing Union. The general superintendence and direction of Many cooperative banks are traded on public stock markets,
the RBI is entrusted with the 21-member central board of with the result that they are partly owned by non-members.
directors: the governor; four deputy governors; two finance Member control is diluted by these outside stakes, so they may
ministry representatives (usually the Economic Affairs be regarded as semi-cooperative.
Secretary and the Financial Services Secretary); ten
government-nominated directors to represent important Types of Cooperative banks:
elements of India's economy; and four directors to represent a) Primary Credit Societies- These institutions are formed at
local boards headquartered at Mumbai, Kolkata, Chennai and village level or town level. The operations of such banks are
the capital New Delhi. Each of these local boards consists of limited to a very small area
five members who represent regional interests, the interests of (b) District Central Cooperative Banks- These banks operate at
co-operative and indigenous banks. the district level. They act as a link between primary credit
societies and state cooperative banks
Scheduled Bank: (c) State Cooperative Banks- State Cooperative Banks are
Scheduled banks are covered under the 2nd Schedule of the biggest forms of cooperative banks. They operate at the state
Reserve Bank of India Act, 1934. A bank that has a paid-up level. Some of State Cooperative banks operate in multi States.
capital of Rs. 5 Lakhs and above qualifies for the schedule
bank category. These banks are eligible to take loans from RBI Banking services:
at bank rate. Banking services are regarded as one of the important service.
Banks provide financial services to the customers. Due to the
Commercial bank: rising competition and liberalization the banking industry has
Commercial Banks are regulated under the Banking become the buyer’s market. Banks need to create and develop
Regulation Act, 1949 and their business model is designed to the services which can satisfy the consumer needs. Customer
make profit. Their primary function is to accept deposits and satisfaction is a very important construct in today’s market and
grant loans to the general public, corporate and government. it is directly influenced by service quality as per earliest
Commercial banks can be divided into- studies. Therefore, the present research work has been carried
out to analyze the rural customers’ attitude towards public
Public sector banks: sector banks. Banking in India is so convenient and hassle free
These are the nationalized banks and account for more than 75 that one (individual, groups or whatever the case may be) can
per cent of the total banking business in the country. Majority easily process transactions as and when required. The most
of stakes in these banks are held by the government. In terms common services offered by banks in India are as follows 44
of volume, SBI is the largest public sector bank in India and Bank accounts: It is the most common service of the banking
after its merger with its 5 associate banks (as on 1 st April 2017) sector. An individual can open a bank account which can be
it has got a position among the top 50 banks of the world. either savings, current or term deposits. Loans: You can
approach all banks for different kinds of loans. It can be a
Private sector banks: home loan, car loan, personal loan, loan against shares and
These include banks in which major stake or equity is held by educational loans. Money Transfer: Banks can transfer money
private shareholders. All the banking rules and regulations laid from one corner of the globe to the other by issuing demand
down by the RBI will be applicable on private sector banks as drafts, money orders or cheques Credit and debit cards: Most
well. Given below is the list of private-sector banks in India- banks offer credit cards to their customers which can be used
to purchase products and services, or borrow money. Lockers:
Foreign banks:
Most banks have safe deposit lockers which can be used by the
A foreign bank is one that has its headquarters in a foreign
customers for storing valuables, like important documents or
country but operates in India as a private entity. These banks
jewellery.
are under the obligation to follow the regulations of its home
country as well as the country in which they are operating. Citi
STATEMENT OF PROBLEM:
Bank, Standard Chartered Bank and HSBC are some leading
Performance and efficiency of commercial banks are the key
foreign banks in India.
element of efficiency and efficacy of countries financial
Regional rural banks: system. The broad objective of the banking sector reforms in
A foreign bank is one that has its headquarters in a foreign India has been to increase efficiency and profitability of the
country but operates in India as a private entity. These banks banks. Prior to banking reforms, the industry was a near
are under the obligation to follow the regulations of its home monopoly dominated by public sector banks. However, the
country as well as the country in which they are operating. City banking reforms a number of private and foreign banks extend
Bank, Standard Chartered Bank and HSBC are some leading the market armed with greater autonomy. Operational
foreign banks in India. efficiency is an indicator, which will help not only the public
but to the management, regulators, and supervisors to
Non Scheduled banks: understand and judge the relative efficiency of the players
As per the Second Schedule of the Banking Regulation Act of competing in the banking sector. To overcome these this study
1965 a bank must satisfy the following conditions, to get fully has been undergone using various tools and analysis.
authorized to run banking business in India.

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OBJECTIVES OF THE STUDY: Sources of data
1. To analyze the financial performance of the bank. The data for this study are taken from the annual reports of
2. To examine the profitability position of the bank. Punjab National Bank. The other particulars were obtained by
3. To offer findings and suggestions to enhance the financial collecting the data in the official website of PNB. Since the
performance of the bank. information is based on the annual reports published by the
bank, the study is said to be based on the secondary data.
NEED AND SCOPE OF THE STUDY:
Financial statement analysis is used to identify the trends and Tool of study
relationships between financial statement items. Both internal Ratio analysis technique has been used in the course of
management and external users (such as analysts, creditors, analysis. The use of these tools at different places has been
and investors) of the financial statements need to evaluate a made in the light of nature and suitability of data available and
company's profitability, liquidity, and solvency. The most requirement of analysis.
common methods used for financial statement analysis are
trend analysis, common‐size statements, and ratio analysis. Ratio analysis
These methods include calculations and comparisons of the Ratio Analysis is a form of Financial Statement Analysis that
results to historical company data, competitors, or industry is used to obtain a quick indication of a firm's financial
averages to determine the relative strength and performance of performance in several key areas. The ratios are categorized as
the company being analyzed. Short-term Solvency Ratios, Debt Management Ratios, Asset
LIMITATIONS OF THE STUDY: Management Ratios, Profitability Ratios, and Market Value
The study is based on the secondary data and the Ratios.Ratio Analysis as a tool possesses several important
limitations of using secondary data may affect the results. features. The data, which are provided by financial statements,
The secondary data published in the website may vary with are readily available. The computation of ratios facilitates the
the original data. comparison of firms which differ in size. Ratios can be used to
compare a firm's financial performance with industry averages.
II. REVIEW OF LITERATURE In addition, ratios can be used in a form of trend analysis to
Mampilly (1980)[1]has made a attempt on the Cost and identify areas where performance has improved or deteriorated
profitability of commercial banks in India. These studies over time.Because Ratio Analysis is based upon Accounting
provide an analytical view of the trend in the components of information, its effectiveness is limited by the distortions
cost of earning s of different groups of Indian commercial which arise in financial statements due to such things as
banks since nationalization. The study mainly focuses on the Historical Cost Accounting and inflation. Therefore, Ratio
cost and profitability of banking industry as a whole rather Analysis should only be used as a first step in financial
than individual bank. Karkal.G.L. (1982)[2]has examined the analysis, to obtain a quick indication of a firm's performance
concept of profit and profitability in the banking industry and to identify areas which need to be investigated further.
parlance, and also the factors that determine the same.
Regarding the profits and the techniques used in profit ANALYSIS AND INTERPRETATION
planning, the author has suggested some measures to improve
the profitability of 10 banks under study. These include, INTRODUCTION:
increasing the margin between lending (advances) and Financial statement analysis (orfinancialanalysis) is the process
borrowing (deposits) rates, improving the profitability to staff, of reviewing and analyzing a company's financial statements to
and implementation of a uniform maximum services changes. make better economic decisions. These statements include
The study, however, has not touched upon the area of costing the income statement, balance sheet, statement of cash flows,
of banking services, and also the costing initiatives in the and a statement of changes in equity. Financial statement
Indian banking industry. Amandeep (1983)[3]conducted a analysis is a method or process involving specific techniques
study on various factors which affect the profitability of for evaluating risks, performance, financial health, and future
commercial banks with the help of multiple regression prospects of an organization.
analysis. She has tried to determine the share of each factor
which determines the profitability of commercial banks. The MEANING OF RATIO:
trend analysis, ratio analysis, multiple regression analysis was A ratio is a relationship between two numbers indicating how
effective used to know the profitability of commercial banks. many times the first number contains the second. It is a
Angadi and Devraj (1983)[4]found the factors determining the mathematical yardstick that measures the relationship between
profitability and productivity of public sector banks (PSBs) in two figures, which are related to each other and mutually
India. The study has been primarily based on published interdependent. Ratio is expressed by dividing one figure by
financial statements of respective banks. These authors have another related figure. Thus ratio is an expression relating one
observed that though PSBs have discharged their social number to another. It is simply the quotient of two numbers. It
responsibilities, their deficiencies in respect of effective can be expressed as a fraction or as a decimal or as a pure ratio
mobilization of funds at lower costs, attracting retail banking or in absolute figures as “so many times”. Thus, accounting
business, augmenting earnings from other sources, effective ratio is an expression relating two figures or accounts or two
cash and portfolio management etc., have contributed towards set of account heads or groups contained in the financial
the lower productivity and profitability of these banks. statements.

RESEARCH METHODOLOGY MEANING OF RATIO ANALYSIS:

Ratio analysis is the process of examining and comparing
Period of Study: financial information by calculating meaningful financial
This study undertakes the comparative financial performance statement figure percentages instead of comparing line items
analysis of Punjab national bank for the period of 4 years i.e., from each financial statement.Managers and investors use a
from 2014 to 2018. number of different tools and comparisons to tell whether a

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company is doing well and whether it is worth investing in. CURRENT RATIO
The most common ways people analysis a company’s The current ratio is a liquidity ratio that measures whether or
performance are horizontal analysis, vertical analysis, and ratio not a firm has enough resources to meet its short-term
analysis. Horizontal and vertical analyzes compare a obligations. It compares a firm's current assets to its current
company’s performance over time and to a base or set of liabilities. The current ratio is an indication of a firm's
standard performance numbers. Ratio analysis is much liquidity. Large current ratios are not always a good sign for
different. Ratio analysis compares relationships between investors. If the company's current ratio is too high it may
financial statement accounts. This means that one income indicate that the company is not efficiently using its current
statement or balance sheet account is being compared to assets or its short-term financing facilities.
another. These relationships between financial statement Current Asset= Cash and Bank, loans and Advances
accounts will not only give a manager or investor an idea of
the how healthy the business is on a whole, it will also give Current Ratio= Current Asset / Current Liability
them keen insights into business operations.
Table.4.1. Current ratio
YEAR CURRENT ASSET CURRENT LIABILITY CURRENT RATIO
2013-2014 403214.68 15093.44 27
2014-2015 448499.76 17204.89 26
2015-2016 504321.83 16273.94 31
2016-2017 527331.86 16016.21 33
2017-2018 559174.80 121678.86 26
Source: https://www.moneycontrol.com

INTERPRETATION: The current ratio is in decrease. This highest ratio is 33 in the year 2016-2017. The lowest ratio is 26
denotes that the current liability of the bank has increased. The in the year 2014-2015 and 2017-2018.

CURRENT RATIO
35 33
31.
30 27 26. 26.
25

20

15

10

0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

CURRENT RATIO

QUICK/ ACID TEST/ LIQUID RATIO company with a quick ratio of less than 1 cannot currently
In finance, the quick ratio, also known as the acid-test ratio is a fully pay back its current liabilities. This ratio is considered to
type of liquidity ratio which measures the ability of a company be much better and reliable as a tool for assessment of liquidity
to use its near cash or quick assets to extinguish or retire position of firms.
its current liabilities immediately. Quick assets include
those current assets that presumably can be quickly converted Quick Asset= Cash and Bank
to cash at close to their book values. It is the ratio between
quickly available or liquid assets and current liabilities. A Quick Ratio= Quick Asset / Current Liability

Table.4.2. Liquid ratio

YEAR QUICK ASSET CURRENT LIABILITY QUICK RATIO
2013-2014 45218.45 15093.44 3
2014-2015 55934.17 17204.89 3.25
2015-2016 73623.09 16273.94 4.52
2016-2017 88331.65 16016.21 5.51
2017-2018 95462.00 / 21678.86 4.40
Source: https://www.moneycontrol.com

INTERPRETATION: The quick ratio has decreased. This highest ratio is 5.51 in the 2017-2018 and the lowest is 3 in the
denotes that the current liability of the bank has increased. The year 2014-2015.

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 quick ratio
00:00 5.51

00:00 4.52 4.4

00:00
3.25
00:00

00:00

00:00
00:00
00:00
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

quick ratio

ABSOLUTE LIQUID / CASH RATIO: 50 percent. It means absolute liquid assets worth one half of
Absolute liquidratio extends the logic further and eliminates the value of current liabilities are sufficient for satisfactory
accounts receivable (sundry debtors and bills receivables) also. liquid position of a business.
Though receivables are more liquid as comparable to inventory
but still there may be doubts considering their time and amount Absolute Liquid Asset= Cash and Bank
of realization. Therefore, absolute liquidity ratio relates cash,
bank and marketable securities to the current liabilities. Since Absolute Liquid Ratio= Absolute Liquid Asset / Current
absolute liquidity ratio lays down very strict and exacting Liability
standard of liquidity, therefore, acceptable norm of this ratio is

Table.4.3. Absolute liquid / cash ratio

YEAR ABSOLUTE LIQUID ASSET CURRENT LIABILITY ABSOLUTE LIQUID RATIO

2013-2014 45218.45 15093.44 3

2014-2015 55934.17 17204.89 3.25
2015-2016 73623.09 16273.94 4.52
2016-2017 88331.65 16016.21 5.51
2017-2018 95462.00 / 21678.86 4.40
Source: https://www.moneycontrol.com

INTERPRETATION:The absolute liquid ratio has decreased. The highest ratio is 5.51 in the 2017-2018 and the lowest is 3
This denotes that the current liability of the bank has increased. in the year 2014-2015.

absolute liquid ratio

6 5.51

5 4.52 4.4

4
3.25
3
3

0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

absolute liquid ratio

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OPERATING PROFIT RATIO company controlling the costs and expenses associated with
The operating profit margin ratio indicates how much profit business operations. Furthermore, it is the return achieved
a company makes after paying for variable costs of production from standard operations and does not include unique or one
such as wages, raw materials, etc. It is also expressed as a time transactions.
percentage of sales and then shows the efficiency of a Operating Profit Ratio= Operating Profit / Sales *100

Table.4.4. Operating profit ratio

YEAR OPERATING PROFIT SALES OPERATING PROFIT
RATIO
2013-2014 7160.15 43223.45 16.56%
2014-2015 6434.25 46315.36 13.31%
2015-2016 5735.05 47424.35 12.09%
2016-2017 6038 .82 47275.99 12.77%
2017-2018 1989.50 47995.77 4.14%
Source: https://www.moneycontrol.com

INTERPRETATION: The operating profit has decreased. decreased. The highest ratio is 16.56% in the year 2014-2015.
This denotes that the operating profit of the bank has The lowest ratio is 4.14% in the year 2017-2018.

opertating profit ratio

18.00%
16.56%
16.00%

14.00% 13.31%
12.77%
12.09%
12.00%

10.00%

8.00%

6.00%
4.14%
4.00%

2.00%

0.00%
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

opertating profit ratio

PERSONAL EXPENSE RATIO: ratio include the size of the fund (small funds often have
The expense ratio of a stock or asset fund is the total higher ratios as they spread expenses among a smaller number
percentage of fund assets used for administrative, of investors), sales charges, and the management style of the
management, advertising, and all other expenses. Expense fund.
ratios are important to consider when choosing a fund, as they
can significantly affect returns. Factors influencing the expense Personal expense Ratio= Personal Expense / Sales *100

Table.4.5. Personal expense ratio

YEAR PERSONAL EXPENSE SALES PERSONAL EXPENSE RATIO
2013-2014 6510.45 43223.45 15.06%
2014-2015 7336.91 46315.36 15.84%
2015-2016 6425.95 47424.35 13.54%
2016-2017 5420.72 47275.99 11.46%
2017-2018 9168.80 47995.77 19.10%
Source: https://www.moneycontrol.com

INTERPRETATION: The operating profit has decreased. decreased. The highest ratio is 16.56% in the year 2014-2015.
This denotes that the operating profit of the bank has The lowest ratio is 4.14% in the year 2017-2018.

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 personal expense ratio
25.00%

20.00% 19.10%

15.84%
15.06%
15.00% 13.54%
11.46%

10.00%

5.00%

0.00%
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

personal expense ratio

SELLING EXPENSE RATIO: The expense ratio of Factors influencing the expense ratio include the size of the
a stock or asset fund is the total percentage of fund assets used fund (small funds often have higher ratios as they spread
for administrative, management, advertising, and all other expenses among a smaller number of investors), sales charges,
expenses. Expense ratios are important to consider when and the management style of the fund.
choosing a fund, as they can significantly affect returns. Selling Expense Ratio= Selling Expense / Sales *100

Table.4.6.Selling Expense Ratio

YEAR SELLING EXPENSE SALES SELLING EXPENSE RATIO
2013-2014 0 43223.45 0
2014-2015 0 46315.36 0
2015-2016 54.85 47424.35 0.11%
2016-2017 55.36 47275.99 0.11%
2017-2018 47.15 47995.77 0.09%
Source: https://www.moneycontrol.com

INTERPRETATION: 0.11% in the year 2015-2016 and 2016-2018. The lowest ratio
The selling expense ratio has decreased. This denotes that the is 0.09% in the year 207-2018.
selling expense of the bank has decreased. The highest ratio is

selling expense ratio

0.0012
0.11% 0.11%

0.001
0.09%

0.0008

0.0006

0.0004

0.0002

0 0
0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

selling expense ratio

ADMINISTRATIVE EXPENSE management, advertising, and all other expenses. Expense

The expense ratio of a stock or asset fund is the total ratios are important to consider when choosing a fund, as they
percentage of fund assets used for administrative, can significantly affect returns. Factors influencing the expense

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ratio include the size of the fund (small funds often have Administrative Expense= Administrative Expense / Sales
higher ratios as they spread expenses among a smaller number *100
of investors), sales charges, and the management style of the
fund.

Table.4.7. Administrative expense

YEAR ADMINISTRATIVE SALES ADMINISTRATIVE
EXPENSE EXPENSE RATIO

2013-2014 2475.37 43223.45 5.72%

2014-2015 2784.41 46315.36 6.01%
2015-2016 3075.93 47424.35 6.52%
2016-2017 3478.27 47275.99 7.35%
2017-2018 3716.96 47995.77 7.74%
Source: https://www.moneycontrol.com

INTERPRETATION: The administrative expense has increased. The highest ratio is 7.74% in the year 2017-2018.
increased. This denotes that the administrative expense has The lowest ratio is 5.72% in the year 2013-2014.

administrative expense
9.00%

8.00% 7.74%
7.35%
7.00% 6.52%
6.01%
6.00% 5.72%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

administrative expense

NET PROFIT RATIO: The net profit percentage is the when combined with an evaluation of how well it is using
ratio of after-tax profits to net sales. It reveals the its working capital. The measure is commonly reported on
remaining profit after all costs of production, a trend line, to judge performance over time. It is also used
administration, and financing have been deducted from to compare the results of a business with its competitors.
sales, and income taxes recognized. As such, it is one of Net Profit Ratio= Net Profit / Sales *100
the best measures of the overall results of a firm, especially
Table.4.8. Net profit ratio
YEAR NET PROFIT SALES NET PROFIT RATIO
2013-2014 3342.58 43223.45 7.73%
2014-2015 3061.58 46315.36 6.61%
2015-2016 -3974.40 47424.35 -8.38%
2016-2017 1324.80 47275.99 2.80%
2017-2018 -12282.82 47995.77 -25.6%
Source: https://www.moneycontrol.com

INTERPRETATION: The net profit ratio has increased. This highest ratio is 25.60% in the year 2017-2018. The lowest ratio
denotes that the net profit of the bank has increased. The is 2.80% in the year 2016-2017.

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 net profit ratio
30.00%
25.60%
25.00%

20.00%

15.00%

10.00% 7.73% 8.38%

6.61%

5.00% 2.80%

0.00%
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

net profit ratio

DEBT-EQUITY RATIO: The debt-to-equity ratio is a Outsiders Fund = Secured Loans and Unsecured Loans
measure of the relationship between the capital contributed by
creditors and the capital contributed by shareholders. It also Shareholders Fund = Capital, Reserves and Surplus
shows the extent to which shareholders' equity can fulfill a
company's obligations to creditors in the event of a liquidation. Debt-Equity Ratio= Outsiders Fund / Shareholders Fund

Table.4.9. Debt-equity ratio

YEAR OUTSIDERS FUND SHAREHOLDERS FUND DEBT-EQUITY RATIO
2013-2014 499431.16 34487.14 14.48
2014-2015 547049.19 37691.97 14.51
2015-2016 612806.37 35465.36 17.27
2016-2017 662467.36 38096.45 17.38
2017-2018 703076.94 37390.48 18.80
Source: https://www.moneycontrol.com

INTERPRETATION: The debt-equity ratio has increased. The highest ratio is 18.80 in the year 2017-2018. The lowest
This denotes that the outsiders fund of the bank has increased. ratio is 14.48 in the year 2013-2014.

debt equity ratio

20 18.8
17.27 17.38
18
16 14.48 14.51
14
12
10
8
6
4
2
0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

debt equity ratio

PROPRIETORY / EQUITY RATIO such provides a rough estimate of the amount of

The proprietary ratio (also known as the equity ratio) is the capitalization currently used to support a business. If the
proportion of shareholders' equity to total assets, and as ratio is high, this indicates that a company has a sufficient

International Journal of Engineering Science and Computing, March 2019 21024 http://ijesc.org/
amount of equity to support the functions of the business, operations (which may place the company at risk
and probably has room in its financial structure to take on of bankruptcy).
additional debt, if necessary. Conversely, a low ratio
indicates that a business may be making use of too much Proprietory / Equity Ratio= Shareholders fund / total
debt or trade payables, rather than equity, to support assets

Table.4.10. Proprietory / equity ratio

YEAR SHAREHOLDERS FUND TOTAL ASSETS PROPRIETORY /
EQUITY RATIO
2013-2014 34487.14 535326.48 0.06
2014-2015 37691.97 586128.71 0.06
2015-2016 35465.36 651116.51 0.05
2016-2017 38096.45 708064.86 0.05
2017-2018 37390.48 747835.07 0.04
Source: https://www.moneycontrol.com

INTERPRETATION: The proprietary / equity ratio has 0.06 in the year 2013-2014 and 2014-2015. The lowest ratio is
decreased. This denotes that the shareholders fund of the bank 0.04 in the year 2017-2018.
has decreased with increase in total assets. The highest ratio is

proprietary / equity ratio

0.07
0.06 0.06
0.06
0.05 0.05
0.05
0.04
0.04

0.03

0.02

0.01

0
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

proprietary / equity ratio

III. FINDINGS, SUGGESTIONS AND CONCLUSION highest ratio is 19.10% in the year 2017-2018. The lowest
ratio is 11.46% in the year 2016-2017.
FINDINGS: 6. The selling expense ratio has decreased. This denotes that
1. The current ratio is in decrease. This denotes that the the selling expense of the bank has decreased. The highest
current liability of the bank has increased. The highest ratio is 0.11% in the year 2015-2016 and 2016-2018. The
ratio is 33 in the year 2016-2017. The lowest ratio is 26 in lowest ratio is 0.09% in the year 2017-2018.
the year 2014-2015 and 2017-2018. 7. The administrative expense has increased. This denotes
2. The quick ratio has decreased. This denotes that the that the administrative expense has increased. The highest
current liability of the bank has increased. The highest ratio is 7.74% in the year 2017-2018. The lowest ratio is
ratio is 5.51 in the 2017-2018 and the lowest is 3 in the 5.72% in the year 2013-2014.
year 2014-2015. 8. The net profit ratio has increased. This denotes that the net
3. The absolute liquid ratio has decreased. This denotes that profit of the bank has increased. The highest ratio is
the current liability of the bank has increased. The highest 25.60% in the year 2017-2018. The lowest ratio is 2.80%
ratio is 5.51 in the 2017-2018 and the lowest is 3 in the in the year 2016-2017
year 2014-2015. 9. The debt-equity ratio has increased. This denotes that the
4. The operating profit has decreased. This denotes that the outsiders fund of the bank has increased. The highest ratio
operating profit of the bank has decreased. The highest is 18.80 in the year 2017-2018. The lowest ratio is 14.48 in
ratio is 16.56% in the year 2014-2015. The lowest ratio is the year 2013-2014.
4.14% in the year 2017-2018. 10. The proprietary / equity ratio has decreased. This denotes
5. The personal expense ratio has increased. This denotes that that the shareholders fund of the bank has decreased with
the personal expense of the bank has increased. The increase in total assets. The highest ratio is 0.06 in the year

International Journal of Engineering Science and Computing, March 2019 21025 http://ijesc.org/
 2013-2014 and 2014-2015. The lowest ratio is 0.04 in the [9]. Chandan, C.; and Rajput, P. K. (2002) “Profitability
year 2017-2018. Analysis of Banks in India – A Multiple Regression
Approach”, Indian Management StudiesJournal, June, pp.119-
IV. SUGGESTIONS: 129.
The bank’s current and liquid asset is sufficient to meet the
[10] Kumari H. (2003), Productivity in Public and Private
current liabilities of the bank which shows the sound liquid
Sector Banks, A Ph.D. Thesis, Submitted to Punjabi
position. This has to be maintained for the following years.
University, Patiala.
The fixed asset ratio has decreased. The bank has to take
necessary steps to maintain proper ratio. The liquidity position
of the bank is satisfactory. Further the bank can increase its
liquidity position by maintaining proper cash in hand and cash
in bank. The operating profit of the bank has decreased. In
order to increase the net profit the bank has to reduce the
expenses. Proper control over various expenses may increase
the net profit of the bank. The statutory reserve and capital
reserve is not satisfactory. The bank has to maintain proper
reserve for the profitability of the bank. The bank has to
maintain proper assets to have a good long term financial
position.
V. CONCLUSION
Analysis and interpretation of financial statement is an
important tool in assessing the banks performance. It reveals
the strength and weakness of the organization. According to
the study I came to know from the financial statement that the
financial position of the bank is satisfactory. The bank has to
take necessary steps to reduce the non performing assets of the
bank and to increase the net profit of the bank. This project
mainly focused on the study on the basis of different types of
financial statements like Balance sheet, Profit and loss account.
From the balance sheet the liquidity position of the bank is
found to be satisfactory. There is an increase in share capital of
the bank every year. This indicates that the bank has good
reputation. From this project I got to know about banking
services. It also helped enhance my knowledge in banking
sector.

VI. REFERENCE
WEBSITES
[1]. https://www.academicjournals.org
[2]. https://www.ijbmi.org

[3]. https://www.google.com

[4]. www.academicfoundation.com.

[5]. Nayar, N. (1992), “Profitability and Profit Planning in

Commercial banks”, A Doctoral Thesis submitted to Punjabi
University, Patiala

[6]. Vyas, R. (1992), “Profitability of Commercial Banks in

India: A Comparative Study of Public Sector Banks, Private
Sector Banks and Foreign Sector Banks Operating in India”, A
Ph.D. Thesis submitted to Institute of Management Studies,
Devi Ahilya Vishwavidyalaya, University of Indore, M.P.
Available at www.academicfoundation.com.

[7]. Satyamurty.B. (1994), ‘A study of Interest spread in

Commercial Banks in India’, Working Paper, National
Institute of Banks Management (NIBM), Pune.

[8]. Murty.P.V.R. (1996), “Cost and Profitability of Public

Sector Banks”, IBA Bulletin, Indian Banks Association,
Mumbai.

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