S.P.

MANDALI’S

R. A PODAR COLLEGE OF COMMERCE AND ECONOMICS

(AUTONOMOUS)

MATUNGA, MUMBAI-400 019.

Financial Statements Analysis of a Banking

Company with respect to State Bank of
India (SBI)
A Project Submitted

For partial completion of the degree of Master in

Commerce (Accountancy)

Under the Faculty of Commerce

By

Aditi Kamble (Roll No: 29)

Under the Guidance of

Ms. Nikita Tanksali
 S.P. MANDALI’S

R. A PODAR COLLEGE OF COMMERCE AND ECONOMICS

(AUTONOMOUS)

MATUNGA, MUMBAI-400 019.

CERTIFICATE
This is to certify that Ms. Aditi Anil Kamble of M.Com part II (Accountancy) Semester III
(2023-25) has successfully completed the project on Financial Statement Analysis of a
Banking Company with respect to State Bank of India (SBI) under the guidance of Prof.
Ms. Nikita Tanksali

Project Guide/Internal Examiner External Examiner

Prof. _______________________ Prof._____________________

Dr. (Mrs) Vinita Pimpale Dr.(Mrs) Shobana

Vasudevan
Course Co-ordinator Principal

Date of Submission Seal of the College

 S.P. MANDALI’S

R. A. PODAR COLLEGE OF COMMERCE AND ECONOMICS

(AUTONOMOUS)

MATUNGA, MUMBAI-400 019.

Declaration by learner

I, the undersigned Ms. Aditi Anil Kamble declare that the work embodied in this

project work hereby, titled “Financial Statement Analysis of a Banking Company with

respect to State Bank of India (SBI)”, forms my own contribution to the research work

carried out under the guidance of Ms. Nikita Tanksali is a result of my own research

work and has not been previously submitted to any other University for any other

Degree/ Diploma to this or any other University. Wherever reference has been made

to previous works of others, it has been clearly indicated as such and included in the

bibliography. I, here by further declare that all information of this document has been

obtained and presented in accordance with academic rules and ethical conduct.

Name of the learner: Aditi Anil Kamble

Signature: __________________

Certified by

Name of the Guiding Teacher: Ms. Nikita Tanksali

Signature: __________________________________
 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the

depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh

dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance

to do this project.

I would like to thank my Principal, Dr. Mrs. Shobana Vasudevan for providing

the necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Dr. Mrs. Vinita Pimpale, for her

moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Ms.

Nikita Tanksali whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference

books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly

helped me in the completion of the project especially my Parents and Peers who

supported me throughout my project.

 Executive Summary

This financial statement analysis focuses on the performance of State Bank of India
(SBI), one of India's largest public sector banks. By examining the bank's key
financial statements, including the balance sheet, profit and loss account, and cash
flow statements, this analysis evaluates its financial health over the last fiscal year.
SBI's balance sheet reveals a strong asset base, driven primarily by its robust loan
portfolio and investments in government securities. The bank’s asset quality has
shown improvement, with a reduction in non-performing assets (NPAs) due to
better credit monitoring and recovery mechanisms. This has positively impacted its
profitability.
SBI has demonstrated strong financial performance, supported by sound asset
management, profitability, and liquidity. Going forward, the bank's strategic focus
on digital transformation, credit expansion, and risk management is expected to
sustain its growth trajectory in the evolving banking landscape.
SBI’s financial performance has been further bolstered by its strategic initiatives
aimed at digital transformation and customer-centric innovations. The bank has
invested heavily in technology to enhance its digital banking services, streamline
operations, and improve customer experience.
Looking forward, SBI’s focus on expanding its credit portfolio, particularly in the
retail, small and medium enterprise (SME), and agricultural sectors, positions the
bank for sustainable growth. Coupled with continued efforts in risk management
and recovery of bad loans, the bank is well-placed to navigate the evolving
challenges of the banking industry.
 INDEX

Sr.No Particulars Page no

I Title Page I

II Certificate II

III Acknowledgement III

IV Executive Summary IV

V Index V

VI Chapter 1 Introduction 1

VII Chapter 2 Research Methodology 25

VIII Chapter 3 Review of Literature 31

IX Chapter 4 Data Analysis And Interpretation 37

X Chapter 5 Conclusion 57

XI Findings and Suggestions 59

XII Bibliography 61
 CHAPTER 1 INTRODUCTION

Introduction of Financial Statement Analysis

Financial statement analysis of the State Bank of India (SBI), one of India’s largest
public sector banks, provides valuable insights into its overall performance,
stability, and efficiency. This analysis involves evaluating key financial documents
such as the balance sheet, income statement, and cash flow statement. The balance
sheet reveals SBI’s financial position by detailing its assets, liabilities, and equity
at a specific point in time. Through this, analysts can assess the bank's financial
health and its ability to manage resources effectively. The income statement
highlights the bank's revenues, expenses, and net profit over a given period,
offering a clear view of how well SBI generates earnings from its core banking
activities, investments, and other income streams. Meanwhile, the cash flow
statement shows the movement of cash within the bank, divided into operating,
investing, and financing activities, which helps determine SBI’s liquidity and its
capacity to meet financial obligations.

Key ratios are also essential in this analysis. Profitability ratios, such as Return on
Assets (ROA) and Return on Equity (ROE), measure how efficiently the bank
converts its resources into profit. Liquidity ratios, like the current ratio and loan-to-
deposit ratio, gauge the bank's ability to meet short-term liabilities, while solvency
ratios, including the debt-to-equity ratio and capital adequacy ratio (CAR), help
assess its long-term financial stability. In addition to these, performance indicators
such as the Net Interest Margin (NIM) are vital for understanding SBI’s
profitability from lending operations, while non-performing assets (NPAs) give
insights into the quality of its loan portfolio and risk management practices.
Through the thorough evaluation of these financial metrics, stakeholders can gain
a comprehensive understanding of SBI’s operational efficiency, profitability, and
overall financial health, aiding in better decision-making for investors, regulators,
and management.

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Meaning of Financial Statements

Financial statements are formal records that provide a comprehensive overview of

a company's financial activities and position over a specific period. These
documents are essential for assessing the financial health of an organization and
typically include three key components: the balance sheet, income statement, and
cash flow statement. The balance sheet shows a company’s assets, liabilities, and
equity at a particular point in time, offering insights into its financial stability and
resource management. The income statement, also known as the profit and loss
statement, details the revenues, expenses, and profits, helping to evaluate the
company's operational performance and profitability. The cash flow statement
tracks the movement of cash in and out of the business, focusing on operational,
investing, and financing activities, and highlights the organization’s liquidity and
cash management. Together, these financial statements provide stakeholders, such
as investors, managers, and regulators, with the information needed to make
informed financial decisions and analyze the company’s overall performance.

Meaning of Financial Analysis

Financial analysis is the process of evaluating an organization’s financial data to

assess its performance, stability, and profitability. This involves examining
financial statements such as the balance sheet, income statement, and cash flow
statement to gain insights into various aspects of the company’s operations. By
analyzing key metrics like revenue, expenses, profits, and cash flows, financial
analysis helps determine the company’s financial health, efficiency, and growth
potential. It also involves using financial ratios and performance indicators to
compare the company’s performance over time or against industry benchmarks.
The goal of financial analysis is to provide stakeholders, including investors,
managers, and creditors, with the information needed to make informed decisions
about the organization’s financial future.

Features of Financial Analysis:

• Evaluation of Financial Statements

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• Profitability Assessment
• Liquidity Analysis
• Solvency and Leverage Evaluation
• Cash Flow Analysis
• Trend Analysis
• Comparative Analysis
• Risk Assessment

Purpose of Financial Analysis:

• Informed Decision-Making
• Identification of Financial Risks
• Investment Guidance
• Creditworthiness Assessment
• Valuation Determination
• Regulatory Compliance
• Budgeting and Forecasting Support

Procedure of Financial Statement Analysis

The procedure for financial statement analysis begins with gathering the essential
financial documents, such as the balance sheet, income statement, and cash flow
statement for the relevant period. Understanding the structure of these statements
is crucial for interpreting a company’s assets, liabilities, revenues, and expenses.
Following this, it is important to review the company’s accounting policies, such
as methods of revenue recognition and depreciation, to ensure that comparisons are
accurate and consistent. Horizontal analysis is then performed by comparing
financial figures over multiple periods to identify trends, while vertical analysis
involves evaluating each item in the financial statement as a percentage of a base
figure, such as total assets or revenue, to determine its relative significance.

After these analyses, ratio analysis is conducted by calculating financial ratios, such
as profitability, liquidity, solvency, and efficiency ratios, to assess the company’s

3
financial performance. These ratios provide insight into the company’s ability to
generate profit, meet short-term obligations, and manage long-term debt. The
company’s performance is then compared with industry benchmarks or competitors
to assess its position within the market. Finally, cash flow analysis is performed to
evaluate the company's ability to generate cash from operations and other activities,
giving a complete picture of its liquidity and financial health. This step-by-step
approach helps in understanding the company's overall financial condition and
supports effective decision-making.

Historical background of financial statement analysis in other countries

The historical background of financial statement analysis varies across countries,

reflecting differing accounting practices, regulatory environments, and economic
conditions.

In the United States, financial statement analysis has evolved significantly since the
early 20th century. The creation of the Securities and Exchange Commission (SEC)
in 1934 marked a pivotal moment, leading to standardized financial reporting
requirements and enhanced transparency. The introduction of Generally Accepted
Accounting Principles (GAAP) provided a framework for consistent financial
reporting. Over time, financial statement analysis in the U.S. has become
increasingly sophisticated, incorporating advanced techniques and a wide range of
financial ratios to assess company performance.

In the United Kingdom, financial statement analysis has similarly evolved from
historical practices. The Companies Act of 1948 introduced more rigorous
reporting requirements, and the establishment of the Financial Reporting Council
(FRC) in 1990 further enhanced oversight and standards. British financial statement
analysis emphasizes adherence to International Financial Reporting Standards
(IFRS), which were adopted in the early 2000s to harmonize global accounting
practices.

4
In Japan, financial statement analysis has been shaped by its unique corporate
culture and regulatory environment. Historically, Japanese companies followed
practices aligned with the Japanese Generally Accepted Accounting Principles (J-
GAAP). However, with the increasing globalization of financial markets, Japan
adopted IFRS in 2009 to align its reporting standards with international practices,
facilitating more transparent and comparable financial analysis.

In the European Union, financial statement analysis has been influenced by the
adoption of IFRS, which began in 2005 for listed companies. This shift aimed to
create consistency and comparability across member states. Prior to this, European
countries had diverse national accounting standards, which made cross-border
financial analysis more challenging.

In emerging markets, such as those in Latin America and Africa, financial statement
analysis is evolving as these regions increasingly adopt international accounting
standards and improve regulatory frameworks. Efforts are ongoing to enhance the
accuracy and comparability of financial reporting in these markets, driven by
globalization and the need for better financial transparency.

History of Financial Statement Analysis in India

The history of financial statement analysis in India has undergone significant

transformation, reflecting the country’s evolving economic landscape and
regulatory environment. Initially, before India’s independence in 1947, financial
statement analysis was quite basic, with limited formal practices and reliance on
British accounting standards. The establishment of the Institute of Chartered
Accountants of India (ICAI) in 1959 marked a pivotal shift, introducing formal
accounting practices and setting the stage for more structured financial analysis.
The Companies Act of 1956 further advanced financial reporting by mandating the
publication of annual financial statements, which laid the foundation for improved
transparency and accountability.

The economic liberalization of the 1990s was a turning point, as it spurred the need
for standardized financial reporting to attract foreign investment. During this period,

5
the Accounting Standards Board (ASB) was established by ICAI to develop and
issue accounting standards, enhancing the consistency and rigor of financial
analysis. The early 2000s saw India’s adoption of International Financial Reporting
Standards (IFRS), leading to the introduction of Indian Accounting Standards (Ind
AS) in 2016. This shift aimed to align India’s financial reporting practices with
global standards, improving the transparency and comparability of financial
statements.

In recent years, the focus has continued to evolve with further regulatory updates
and advancements in technology. The Companies Act, 2013, introduced stricter
requirements for financial reporting and corporate governance, reflecting a
commitment to enhanced compliance and transparency. Additionally, the
increasing use of digital tools and advanced analytics has refined financial
statement analysis, allowing for more detailed and accurate assessments of
financial performance. The history of financial statement analysis in India
illustrates a progressive journey from basic practices to a sophisticated and globally
aligned approach.

Types of Financial Statements

Companies use the balance sheet, income statement, and cash flow statement to
manage their operations and provide transparency to their stakeholders. These
financial statements are interrelated and each offers a distinct perspective on a
company’s financial condition and performance.

Balance Sheet: The balance sheet provides a snapshot of a company's financial

position at a particular point in time. It is divided into three sections: assets,
liabilities, and shareholders' equity. Assets are further categorized into current
assets, like cash and accounts receivable, and non-current assets, such as property
and equipment. Liabilities are classified as current liabilities, including accounts
payable and short-term debt, and long-term liabilities, like long-term loans and
bonds. Shareholders' equity encompasses common stock, retained earnings, and
additional paid-in capital. The balance sheet must balance, meaning that total assets

6
should equal the combined total of liabilities and shareholders' equity. This balance
reflects the company’s book value and is a key indicator of its financial health and
stability.

Income Statement: The income statement details a company’s revenues and

expenses over a specific period, culminating in the net profit or loss. It starts with
total revenue and subtracts the cost of goods sold (COGS) to determine gross profit.
Operating expenses, such as wages and rent, are then subtracted to calculate
operating profit. After accounting for interest expenses, taxes, and other non-
operating items, the net income is derived. Key metrics from the income statement
include gross profit margin, operating profit margin, and net profit margin, which
help evaluate the company’s efficiency and profitability at various stages of its
operations.

Cash Flow Statement: It starts with net income from the income statement and
adjusts for non-cash items and changes in working capital to determine cash flow
from operating activities. Investing activities include cash flows related to the
acquisition or sale of long-term assets, while financing activities cover cash flows
from transactions involving debt and equity, such as issuing shares or repaying
loans. This statement provides insight into the company’s liquidity and its ability
to generate cash to support operations, investments, and financing needs.

Users of Financial Statement Analysis

Financial statement analysis serves a diverse range of users, who can be categorized
into internal and external groups. Internal users primarily include the management
team of the company. These individuals analyze financial statements to make
informed decisions regarding the company’s operations, performance, and strategic
direction. By evaluating financial data, management can identify operational
strengths and weaknesses, set performance goals, and implement strategies to
improve efficiency and profitability. These users are elaborated on below:

7
1. Investors: Investors, whether individuals or institutional entities, rely on
financial statement analysis to assess the potential returns and risks of investing
in a company. They scrutinize profitability indicators like earnings per share
(EPS) and return on equity (ROE) to determine the attractiveness of the
investment. Investors also evaluate revenue trends, net income, and financial
ratios such as the price-to-earnings (P/E) ratio and dividend yield to make
informed decisions about buying, holding, or selling shares.
2. Creditors and Lenders: Creditors, including banks and other financial
institutions, examine financial statements to evaluate a company’s ability to
meet its debt obligations. They focus on liquidity ratios, such as the current ratio
and quick ratio, to assess the company's short-term financial health. Solvency
ratios, including the debt-to-equity ratio, help gauge long-term financial
stability and risk. These analyses help creditors decide on the terms of credit
and the likelihood of repayment.
3. Management: Company management uses financial statement analysis to
monitor and guide internal operations. By analyzing key performance indicators
(KPIs) and financial ratios, management can identify operational strengths and
weaknesses. They use these insights to set performance targets, implement
strategic changes, and optimize resource allocation to enhance overall
efficiency and profitability.
4. Shareholders: Shareholders review financial statements to understand how the
company’s performance affects their investments. They are interested in
profitability metrics, dividend distributions, and overall financial stability.
Shareholders analyze indicators such as return on assets (ROA) and return on
investment (ROI) to evaluate the value of their shares and the company’s
potential for future growth.
5. Regulators: Regulatory bodies, such as the Securities and Exchange
Commission (SEC) in the United States or similar entities in other countries,
review financial statements to ensure that companies adhere to accounting
standards and financial reporting requirements. They focus on the accuracy and

8
 completeness of financial disclosures to protect investors and uphold market
integrity.
6. Analysts: Financial analysts use financial statements to conduct in-depth
evaluations and provide recommendations. They perform comparative analyses,
forecast future earnings, and assess how economic and market conditions may
impact the company's performance. Analysts use various financial metrics and
ratios to offer insights and guidance to investors and financial institutions.
7. Suppliers: Suppliers examine financial statements to evaluate the financial
stability of their clients before extending credit or entering into contractual
agreements. They are interested in liquidity and solvency to ensure that their
customers can meet payment obligations. Assessing a customer’s financial
health helps suppliers manage the risk of delayed payments or defaults.
8. Customers: Large or strategic customers may review the financial statements of
suppliers to ensure their reliability and long-term viability. For customers with
ongoing or critical supply relationships, understanding a supplier’s financial
condition helps in making informed decisions about entering or continuing
contracts, ensuring that the supplier can consistently meet service and delivery
commitments.

Objectives of Financial Statement Analysis

Summarised the objectives as below:

1. Assessment of Past Performance: This involves analysing historical financial

data, such as sales, cost of goods sold, operating expenses, net income, and cash
flow. Evaluating past performance helps in understanding trends that may
indicate future outcomes, which is valuable for investors and creditors to gauge
a company's potential.
2. Assessment of Current Position: Financial statement analysis helps determine
an organization's current financial status by examining its assets, liabilities, and
other financial elements. This provides a snapshot of the company’s present
financial health.

9
3. Prediction of Profitability and Growth Prospects: By analysing financial
statements, stakeholders can forecast a company's earning potential and growth
opportunities. This information is crucial for investors seeking to compare and
select among various investment options.
4. Prediction of Bankruptcy and Failure: Financial statement analysis can help
predict the likelihood of a company facing bankruptcy or business failure. This
is achieved by evaluating financial stability and identifying warning signs.
5. Assessment of Operational Efficiency: This involves evaluating how
effectively an organization is managed. By comparing actual performance
against set standards or benchmarks, financial statement analysis reveals
deviations that may indicate management efficiency or inefficiencies.

Types of Financial Statement Analysis

1. Funds Flow Statement

The Funds Flow Statement is a financial document that tracks the movement of
funds within an organization over a specific period. It details how funds are
generated (sources) and utilized (applications), providing insights into changes
in the company's financial position. The statement highlights:

• Sources of Funds: Activities like issuing shares, taking loans, or generating

profit that contribute to available funds.
• Applications of Funds: Uses such as purchasing fixed assets, repaying loans, or
paying dividends.

By analyzing the Funds Flow Statement, stakeholders can understand how

effectively an organization manages its capital and operations.

2. Cash Flow Statement

The Cash Flow Statement provides an overview of cash inflows and outflows from
operating, investing, and financing activities over a period. The statement is divided
into three main sections:

10
 • Operating Activities: Cash flows from the core business operations,
including receipts from sales and payments for operating expenses.
• Investing Activities: Cash flows from the acquisition and disposal of long-
term assets and investments.
• Financing Activities: This statement helps in assessing the liquidity,
solvency, and overall cash management of an organization.
3. Common-Size Statement

A Common-Size Statement presents each line item of financial statements as a

percentage of a base figure, making it easier to compare financial data across
different periods or between companies. The base figure could be:

• For Balance Sheets: Total assets or total liabilities.

• For Income Statements: Total sales or total revenue.
• For Income Statements: Total sales or total revenue.

By expressing financial data as percentages, the Common-Size Statement allows

for:

• Comparative Analysis: Comparing financial performance and position of

different companies, regardless of their size.
• Trend Analysis: Assessing changes in financial metrics over time for a
single company.

Common Size Balance Sheet

Total assets serve as the basis value in a standard size balance sheet analysis. And

each balance-sheet item reflects a portion of the total assets. The balance sheet, as
we all know, displays the accounting equation:

This equation depicts the quantity of assets owned by the company. Also included
are the amounts owed to creditors and shareholders in the form of liabilities and
owner's equity. As a result, business owners and investors may utilize common size
analysis to better comprehend a company's capital structure in comparison to its
rivals.

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Steps to Prepare Common Size Balance Sheet

1. During the two years under examination, assets are categorized as fixed assets,

investments, current assets, and fictional assets. Additionally, liabilities are divided
into three categories: proprietor's money, long-term loan, and current obligations.
As a result, the sum of the assets and liabilities is considered as a common basis
equal to 100. These figures are shown in Columns I and II of the typical size balance
sheets.

2. Each asset item is calculated as a proportion of total assets. Similarly, each

liability item is calculated as a proportion of total liabilities.

3. The following formula is used to determine such a percentage: Percentage of 17

Base = (Individual Item Amount/Base Item Amount (Total Assets/Total Liabilities
in the event of a Balance)

Common Size Income Statement

The base in typical size income statement analysis is either entire revenue or total

revenue. This analysis assists the business owner in understanding:

• If profits are increasing in relation to sales or;

• Percentage change in cost of goods sold during the period;

• If there have been any changes in various expense items or;

• Whether the increase in retained earnings of the business is greater than the

proportionate change in profit of the business or.

• Compare income statements from two or more periods or two or more firms when
their sizes are not the same.

• Identify significant changes in the company’s financial statements. Such changes

Throughout time assist investors in determining whether to invest in the firm. For
example, a significant decline in a corporation’s earnings over time may indicate
that the company is in financial trouble.

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Steps to Prepare Common Size Income Statement:

• Enter the absolute values for each income statement line item for the two
accounting years under consideration. These figures are shown in Columns
I and II of the typical size income statement.
• Choose the quantity of sales as the common basis. This is the same as 100.
• Use the following method to get the base year percentage for each line item:
Percentage of Base = (Individual Item Amount/Base Item Amount (Sales in
the case of an Income Statement)) * 100
• Enter the above-calculated percentages in Columns III and IV of the
Common Size Income Statement.
4. Comparative Statement :

This enables one to have a comparative view of various parameter for two or more
time briefly. A comparison statement compares a specific financial statement to
those from earlier periods or to the identical financial report produced by another
company. The income statement, balance sheet, and cash flow statement are used
for comparison by analysts and corporate management. The procedure reveals
financial trends and contrasts the performance of different companies. Comparative
statements are preferred by analysts because they reveal how business actions affect
a company’s bottom line. Instead of reading individual financial accounts, analysts
can spot trends, assess the performance of managers, and assess new business
ventures and products in one report. A comparison statement, used to contrast
various businesses, demonstrates how a company responds to market circumstances
affecting an entire sector.

Steps To Prepare a Comparative Income Statement:

Step 1: Initially, identify absolute amounts for items such as cost of products sold,
net sales, selling expenditures, office expenses, and so on for the accounting periods
under consideration. These figures are shown in Columns I and II. The second
section of the comparative income statement.

Step 2: Determine the absolute change in the income statement items. This is

13
accomplished by deducting the prior year's item totals from the current year's totals.
Column III of the comparative income statement mentions this growth or reduction
in absolute numbers.

Step 3: Determine the percentage change in the current year's income statement
items compared to the prior year. Column V of the comparative income statement
shows the percentage change in items. With this, let us look at an example to see
how a comparison statement is evaluated. Examine the financial statements for
financial statement comparison

• Absolute figures may be revealed via analysis (rupee amounts).

• Absolute figure changes, i.e., a rise or reduction in absolute figures.14
• Percentage-based absolute statistics.
• Growth or decline in percentage terms

Features of Comparative Financial Statements Analysis:

• A comparison statement provides context for financial facts.

• It is utilized to efficiently measure the performance of corporate operations.
• Comparative statement analysis is employed in intra-firm and inter-firm
analysis.
• A comparative statement analysis shows a shift in both quantity and percentage.
• A positive change in amount and % represents an increase, whereas a negative
change in amount and percentage represents a decrease.
• If the figure in the first year is 0, no percentage change can be indicated. This
is a disadvantage of comparative statement analysis. Qualitative conclusions
must be taken while interpreting the data.
• It is a prominent instrument used by financial experts for analysis.

Key Takeaways:

(a) A comparative statement is a document that compares one financial statement

to those from previous periods.

14
b) Past financials are provided in side-by-side columns with the most recent
statistics, allowing investors to readily watch a company's progress and compare it
to rivals.

c) public corporations are required by the Securities and Exchange Commission

(SEC) to make comparable information in 10-K and 10-Q filings.

5. Trend Analysis:

Trend analysis is a technique based on the underlying premise. Trend analysis may
be undertaken in respect of two organization for the same period of two
organization for different period (two or more years). A trend is a series of
information from the financial statement, analyzed to arrive at some meaningful
conclusion.

How is Trends Analysis Used in Company Performance?

A trend analysis analyses an organization's financial data over time.

Amount of change = Current year amount – Base year amount

Calculating the % change is the only way to determine the real magnitude of a
change. The percent change is computed by subtracting the current year amount
from the base year amount and dividing the difference by the base year amount.

Percent change = (Current year amount – Base year amount) ÷ Base year
amount

Each line item on the income statement and balance sheet is frequently evaluated
using trend analysis. This study demonstrates why we undertake trend analysis: to
discover dollar amount rises and declines from one year to the next and to
investigate odd tendencies. A popular method is to use the oldest year as the basis
year and calculate subsequent years as a percentage of the base year.

6. Ratio Analysis:

Ratio analysis is a fashion of quantitative analysis by establishing connections

between two or combination of further than two particulars of fiscal statement. Viz.
15
 balance distance, income statement and/ or cash inflow statement. It is used to
estimate colorful aspects of a company operating a fiscal performance similar as its
effectiveness, liquidity, profitability, and solvency which is helpful for the
operation in making certain opinions.

Types of Ratio Analysis

The colorful kinds of fiscal rates available may be astronomically grouped into the
following six silos, grounded on the sets of data they give:

• Liquidity Ratios: Liquidity ratios measure a company’s capability to pay off its
short- term debts as they come due, using the company’s current or quick means.
Liquidity rates include the current rate, quick rate, and working capital rate.
• Solvency Ratios: Also called fiscal influence ratios, solvency rates compare a
company’s debt situations with its means, equity, and earnings, to estimate the
liability of a company staying round over the long haul, by paying off its long- term
debt as well as the interest on its debt. Exemplifications of solvency rates include
debt- equity rates, debt- means rates, and interest content rates.
• Profitability Ratios: These ratios convey how well a company can induce gains
from its operations. Profit periphery, return on means, return on equity, return on
capital employed, and gross periphery rates are all exemplifications of profitability
rates.
• Effectiveness Ratios: Also called exertion rates, effectiveness rates estimate how
efficiently a company uses its means and arrears to induce deals and maximize
gains. Crucial effectiveness rates include development rate, force development, and
days’ deals in force.
• Coverage Ratios: Coverage ratios measure a company’s capability to make the
interest payments, and other scores associated with its debts. Exemplifications
include the times interest earned rate and the debt- service content rate.
• Request Prospect Ratios: These are the most generally used rates in abecedarian
analysis. They include tip yield, P/ E rate, earnings per share (EPS), and tip payout
rate. Investors use these criteria to prognosticate earnings and unborn performance.

16
 Objectives of financial statements

The following are the primary goals of financial statements:

• Financial statements are meant to offer relevant and trustworthy information to

various stakeholders, such as investors, creditors, workers, and management,
regarding an organization’s financial performance, position, and cash flows.
• Assisting decision-making: Financial statements help stakeholders make educated
judgements about the organization’s prospects, such as investment and financing
decisions.
• Financial statements assist management in monitoring and evaluating the
organization’s financial performance and position over time, highlighting areas that
require improvement or further investment.
• Compliance with legal and regulatory requirements: By law, financial statements
must be prepared and presented in compliance with recognized accounting
principles and standards, as well as give transparency in the organization’s financial
affairs.
• Assuring accountability: Financial statements keep management accountable for
the organization’s financial performance and position by providing information on
how resources entrusted to the organization by stakeholders are used.
• Financial statements give information on an organization’s capacity to satisfy its
financial commitments in the short and long term, allowing stakeholders to assess
its solvency and liquidity.
• Financial statements may be used to compare an organization’s financial
performance and position with those of its peers or industry averages, allowing
stakeholders to evaluate its relative performance.
• Financial statements serve as a foundation for planning and projecting future
financial performance and position, allowing management to make strategic
decisions and define organizational goals.
• Financial statements are frequently used to assist tax compliance and to assess an
organization’s tax liability.

17
• Enabling communication: Financial statements are used to communicate financial
data to stakeholder.

Challenges Faced while preparing Financial Statements

There are several challenges that organizations may face while preparing financial
statements. Some of the familiar challenges include:

• Organizations may confront several obstacles while generating financial statements.

• Accounting standards’ complexity: Accounting standards may be complicated,
necessitating extensive knowledge and resources to achieve compliance. Producing
financial statements that meet these criteria can take time and need specialist
knowledge.
• Data quality and accuracy: The quality of financial statements is only as good as
the data used to create them. Companies must guarantee that their financial data is
correct, thorough, and up to date. This may be difficult, especially in large firms
with complicated financial operations.
• Data collection and consolidation: Because organizations frequently have data
dispersed across numerous systems and sources, it can be difficult to integrate and
display the data in a meaningful way for financial reporting.
• Financial reporting timelines can be tight, and firms may struggle to fulfil them,
especially if unanticipated issues arise during the preparation process.
• Balancing compliance and relevance: Financial statements must comply with
accounting rules and laws while also being relevant and useful to stakeholders. To
ensure that their financial statements fit the demands of their intended audience,
organizations must strike a balance between compliance and relevancy.
• Economic conditions, legislative changes, and other external variables can all have
an influence on financial reporting. Organizations must examine the influence of
these issues on their financial statements and ensure that stakeholders are
adequately informed.

18
Significance of financial statements

• Financial statements give relevant and trustworthy information to various

stakeholders, such as investors, creditors, workers, and management, regarding
an organization’s financial performance, position, and cash flows. This data
assists stakeholders in making educated decisions regarding the company.
• Financial statements let stakeholders make educated judgements about the
organization’s prospects, such as investment decisions, loan decisions, and
operational considerations.
• Financial statements highlight areas that require improvement or further
investment.
• Assuring accountability: Financial statements keep management accountable
for the organization’s financial performance and position by providing
information on how resources entrusted to the organization by stakeholders are
used.
• Fulfilling legal requirements: By law, financial statements must be prepared
and presented in compliance with established accounting principles and
standards, as well as give transparency in the organization's financial affairs.
• Financial statements are frequently used to assist tax compliance and to assess
an organization's tax liability.
• Financial statements may be used to compare an organization's financial
performance and position with those of its peers or industry averages, allowing
stakeholders to evaluate its relative performance.
• Financial statements serve as a foundation for planning and projecting future
financial performance and position, allowing management to make strategic
decisions and define organizational goals.
• Developing trust: Financial statements contribute to the development of trust
among stakeholders by offering openness and accountability.
• Financial statements give information on an organization's capacity to satisfy
its financial commitments in the short and long term, allowing stakeholders to
assess its solvency and liquidity.

19
• Financial statements are used to decrease information asymmetry between
management and external parties.
• Recruiting investment: Financial statements can be used to entice investors by
displaying the organization's financial stability, success, and potential for
expansion.
• Assessing management performance: Financial statements allow you to assess
management's performance in managing the financial affairs of your firm,
indicating areas for improvement, and emphasizing areas of strength.
• Increasing credibility: Financial statements prepared in line with accounting
rules and laws boost an organization's credibility and reputation, especially
when audited by an independent third party.
• Financial statements can be used to assist fundraising efforts, such as loan or
grant applications, by proving the organization's financial health, performance,
and ability to repay debts.
• Enabling mergers and acquisitions: Financial statements are vital in mergers
and acquisitions because they give a method of analyzing the target
organization's financial situation and performance.

Advantages of Financial Statement Analysis

The advantage of fiscal statement analysis is as follows:

1. Dimension of Short-Term Solvency: An organization capability to pay its short-

term arrears, is appertained to as it” short term solvency,” assessment of which
can be made through the’ fiscal statement analysis’ still, its creditors would. If
an organization has a positive” short term solvency” not vacillate in leading
finances to it.
2. Dimension of Long-Term Solvency: An Organization capability to repay its’
long- term arrears’ e.g., bonds and debentures issued by it and other secured
arrears, is appertained to as its’ long-term solvency.’ A company having similar
capability is said to be” detergent.” Therefore, status of an organization in terms
of long-term solvency is revealed through the analysis of fiscal statement.

20
3. Dimension of Operating effectiveness: Through the analysis of’ fiscal statement’
of an organization, the position regarding its profitability can fluently be caught
on. If a business organization is incurring losses, the reason thereof may also be
set up out through similar analysis and necessary corrective conduct.
4. Dimension of Profitability The being earning capacity of an organization as
well as soothsaying in respect of its unborn earning can be gathered through
the earning rate analysis, inputs for which are handed by the’ fiscal statements.’
Dimension of profitability’ is an important index, which helps in taking
opinions by the investors and lenders.
5. Comparison of Inter-Firm Position The comparison of the fiscal position of one
organization with that of another organization is an exercise accepted through
the’ fiscal analyses. Such a relative study is useful in deciding the course of
action to be taken by investors and other stakeholders.

Limitations of Financial Statement Analysis

The Limitation/ Disadvantages of fiscal statement analysis are as follows:

1. Absence of Standard Widely Accepted language: The fiscal statement analysis

is part of account, which is not an exact wisdom. The language used in it is,
thus not the bone which is standardized or widely accepted.
2. Overlooking Qualitative Aspects: Under the financial statement analysis there
is no consideration for qualitative aspects of a business. The entire exercise
concentrated on the quantitative aspects of the business while the quantitative
aspects, some of which may be significant, are completely overlooked.
3. Result in Absence of Absolute Data: As there's lack of the Absolute Data, the
conclusion arrived at through the fiscal statement analysis may not be correct
in absolute terms.
4. Overlooks Price Level Changes As the price of same commodity differ from
one time to another, the cost of product, deals as well as the value of asset are
affected. thus, the comity of rates decided on the presumption that the prices of
the goods is two contrasting times remain the same, may not hold good.

21
5. Suffering from Limitations of Financial Statement; There are some essential
sins prevailing in the fiscal statement, since the books of accounts are
maintained on the base of literal data. Analysis carried out on the base of
similar fiscal statements may not reflect the true picture.

Company Profile

The State Bank of India (SBI) is the largest and oldest bank in India, with a history
dating back to 1806. Headquartered in Mumbai, it operates as a multinational
financial services company offering a wide range of banking products and services.
SBI provides diverse services, including retail banking, corporate banking,
investment banking, and asset management, serving millions of customers across
India and globally. It boasts an extensive network of branches and ATMs, making
it a key player in the Indian financial sector. SBI's strong market presence is
supported by its robust financial stability, diverse portfolio, and commitment to
innovation and customer service. The bank plays a significant role in supporting
economic development and financial inclusion initiatives in India.

About State Bank of India

Particulars State Bank of India (SBI)

Year Of Foundation 1955

Founder John Mathai

Headquarters Mumbai

Industry Banking, financial services

Company Type Public company

Places Covered Worldwide

22
SBI Subsidiaries

• SBI Life Insurance Company Limited: Specializes in providing a diverse

array of life insurance products, including term life, endowment, and unit-
linked insurance plans.
• SBI General Insurance Company Limited: Offers a comprehensive range of
general insurance products, such as motor, health, home, and travel insurance,
catering to various customer needs.
• SBI Cards and Payment Services Limited: Focuses on the issuance and
management of credit cards and related payment solutions.
• SBI Capital Markets Limited: Provides investment banking services, including
advisory, underwriting, and syndication for capital raising activities.
• SBI Funds Management Private Limited: Engages in managing mutual
funds, offering investment solutions tailored to different financial goals.
• SBI Mutual Fund: Operates as a key player in the mutual fund sector, offering
a variety of investment funds to meet diverse investor requirements.
• SBI Properties Limited: Manages and oversees the sale and administration of
SBI’s surplus real estate holdings.
• SBI Asset Management Company Limited: Manages the assets and mutual
funds under SBI, offering investment management services.

Products offered by SBI

State Bank of India (SBI) offers a broad array of products and services.

• Savings Accounts: Diverse types, including regular savings, SBI Basic Savings
Bank Deposit Account, and special accounts for specific groups like senior
citizens and women.
• Current Accounts: Tailored for businesses and organizations, with features
suited to different operational needs.
• Fixed Deposits: Offers varying interest rates and terms for short- to long-term
investments.

23
• Recurring Deposits: Savings plan allowing monthly contributions with a fixed
interest rate.
• Loans: Includes home loans, personal loans, auto loans, education loans, and
business loans, each with different terms and conditions.
• Credit Cards: Various credit card options with different benefits, including
rewards, cashbacks, and travel benefits.
• Insurance: Life insurance, health insurance, and general insurance products in
partnership with insurance companies.
• Investment Products: Mutual funds, bonds, and government savings schemes.
• NRI Services: Specialized accounts and investment options for Non-Resident
Indians.
• Digital Banking: Online and mobile banking services for convenient access to
accounts, transactions, and services.

24
 CHAPTER 2 RESEARCH METHODOLOGY

INTRODUCTION TO RESEARCH METHODOLOGY

Research is the process of investigating out information, way of solving the

problem to issues, and solutions to problems. Research is the scientifically rigorous
and logical examination of a subject, problem, issue, or phenomenon. Careful
analysis of controlled observations, predictions, and potentially ultimate event
control could lead to the establishment of the generalization principle. An approach
to study that establishes the framework for data collection an analysis with the aim
of balancing effectiveness with relevance to the study purpose. Although there are
many distinct research strategies, descriptive and analytical designs might be more
advantageous for this study. From methodological research, various criteria are
employed to address or investigate the given research issue. Several sources use
various techniques to address the problem. When we think of "methodology," we
think of a procedure for identifying or fixing a problem.

Several methodologies were used in this research, which was primarily desk-based

a) To comprehend the theory underlying financial performance, you must first read
the required materials. It was agreed that the study period would extend for 5 years
in this case, from 2020 to 2024.

b) Collecting company-specific information for this research period, such as annual

reports and corporate biographies.

c) Created a balance sheet with a three-year comparison period and a common size.

d) financial ratios that have been calculated to accurately depict financial

performance in this scenario.

e) Putting up the Financial Analysis Statement for the previous three years so that
you can examine.

f) An ultimate step, let me pass along some recommendations and findings.

25
What is comparative study?

Comparative research does not have a special methodology. Some approaches are
far more frequently utilized in comparative research than others. The overwhelming
majority of comparative studies that make use of quantitative data show that
quantitative analysis is carried out much more frequently than qualitative analysis
Comparative research uses the same general comparison technique that we use
every day. When they are different, they are handled differently; the handling of
the cases depends on how distinct they are. The results of the study will not be
immensely helpful if it is possible to tell one carry from another clearly.

Secondary data refers to information that has been previously collected, processed,
and published by others for a purpose different from the current research. This type
of data can be sourced from books, academic journals, government reports,
websites, or databases. Secondary data is beneficial because it saves time and
resources since the data collection process is already done. Researchers use
secondary data to build a foundation for their studies, compare their findings, or
identify trends. However, the limitation of secondary data is that it may not be
entirely relevant or tailored to the specific needs of the research at hand.
Additionally, it is essential to evaluate the credibility, accuracy, and recency of the
data sources to ensure that the information is reliable and applicable to the current
research problem. Proper citation and acknowledgment of sources are crucial to
avoid plagiarism when using secondary data.

TYPES OF RESEARCH METHODOLOGY

Every type of study uses a range of techniques, including data gathering, designing
the research framework, data analysis, and other techniques. The word alludes to
the methodologically structured approach to carrying out research. Depending on
what kind of study it is, several research methodologies are used.

The two types of research techniques are Quantitative and Qualitative Techniques.

26
Advantages:

1. It concentrates more on suggesting connections, causes, and effects.

2. Although without use of statistical, its emphasis is sociological analysis requires

way too much sentimentality.

3. Several limitations apply to qualitative research: The research subjects may be

affected by the researcher's presence.

4. Identity and problem Confidentiality issues can provide challenges when

choosing a finding.

5. The validity and trustworthiness of the study could be seriously compromised.

Strengths of Quantitative Research Methodology:

1. As a result of their reliance on reliable measurement, quantitative approaches

provide precision.

2. Data sampling and design are employed to maintain control over the research
process.

3. It can generate causal hypotheses by carrying out controlled experiments.

4. Quantitative methods rely on statistical methodologies to help with complex

analysis.

OBJECTIVES OF THE STUDY

The research objective covers the purpose of a study and the types of knowledge
that will be gathered as a result. By examining the research's objectives, one can
forecast what it will achieve. The research goal mentions the study population, the
independent variable, and the dependent variable. Research objectives are concise
explanations of what the study hopes to achieve. They comprise a synopsis of the
objectives a researcher aims to achieve with the project, as well as the path the study
will take. A research objective must be feasible, which requires that it be built with
the time available, the infrastructure required for the research, and other resources

27
in mind. When choosing a research target and location, you should familiarize
yourself with all the changes in your field of study.

The project report has been developed with the following objectives in mind:

• The examination of "SBI’s" financial performance.

• To comprehend the soundness of the company's finances.

• To assess the feasibility of the company.

• To compare results with those from previous years (Inter-firm comparison).

• To utilize ratios for determining a company's profitability.

• To evaluate the financial effectiveness of management.

SCOPE OF STUDY:

The goal of study is understanding the short-term financial situations of company

and effectiveness of how money is spent. It is a project for a company study. The
topic of evaluating financial performance is well-established, and various research
have shown how useful and applicable it is. The managers of company in question,
present or potential investors, third parties like creditors, employees in certain
government sectors, as well as many others, could gain an understanding of how
the company performed during the study period by analyzing financial performance
using a set of chosen financial ratios.

The project has concentrated on discovering the general level of competition in this
sphere of endeavor as well currently. As a result, both insiders and outsiders of the
firms are included in the study's scope.

NEED FOR THE STUDY

The study on the financial analysis of the State Bank of India (SBI) is essential due
to its pivotal position in India's banking landscape. As the largest public sector bank,
SBI's financial performance significantly influences the country's economy and the
interests of various stakeholders, including investors, policymakers, and customers.
Analyzing SBI's financials offers a comprehensive understanding of its profitability,
28
liquidity, and overall financial stability. This assessment helps evaluate how
effectively the bank manages its assets, liabilities, and market risks. Additionally,
a detailed financial analysis provides insights into the bank’s competitive standing,
future growth potential, and its ability to navigate economic changes, making this
study valuable for informed decision-making and strategic planning.

LIMITATION

The study on the financial analysis of SBI has certain limitations. One of the
primary constraints is the reliance on historical financial data, which may not fully
reflect current market conditions or future performance. Additionally, external
factors such as economic shifts, regulatory changes, and global financial trends that
could impact SBI’s performance are difficult to quantify and predict within the
scope of this study. The analysis also depends heavily on publicly available
financial statements, which may not provide detailed insights into the bank's
internal operations or strategic decisions. Furthermore, the study focuses solely on
SBI, limiting the ability to make broad comparisons with other banks in the sector.
These factors may restrict the comprehensiveness and generalizability of the
findings.

SIGNIFICANCE OF THE STUDY

The significance of the study on the financial analysis of SBI lies in its ability to
provide a deeper understanding of the bank’s financial health and performance. As
SBI is a key player in India’s banking sector, analyzing its financial statements and
key ratios offers valuable insights into its profitability, efficiency, and stability.
This study is particularly important for investors, policymakers, and financial
analysts as it helps assess the bank’s ability to generate returns, manage risks, and
compete in the market. Additionally, the findings can guide decision-making
related to investments, policy reforms, and banking regulations, while also
shedding light on SBI’s role in the broader economy. Understanding the financial
position of SBI can contribute to better strategic planning and forecasting within
the banking industry.

29
DATA COLLECTION

The data collection for the study on the financial analysis of SBI primarily involves
gathering secondary data from publicly available sources. This includes financial
statements such as balance sheets, income statements, and cash flow statements,
which are obtained from SBI’s annual reports, official publications, and regulatory
filings. Additionally, relevant financial ratios, industry reports, and market data are
sourced from databases like RBI publications, financial websites, and stock
exchange filings. These data sets provide the foundation for analyzing SBI’s
performance over a specific period. Ensuring the accuracy and reliability of these
sources is critical for conducting a comprehensive and meaningful financial
analysis

30
 CHAPTER 3 REVIEW OF LITERATURE

INTRODUCTION TO REVIEW OF LITERATURE

A literature review's primary objective is to assess all prior research on a topic,

including the techniques employed, angles pursued, and conclusions reached. The
prior studies really serve as a guideline for the present research throughout,
preventing its conclusions from being corrupted by those of earlier investigations.
Thanks to the literature review, the author has gained a lot of knowledge on
financial concepts, words, and theories. The information was obtained from books
and articles consulted at the British Library, National Institute of Banking
Management, Jayakar Library (Pune University), and Sinha Gad Institute of
Management libraries. Two sizable databases of financial information, Front Rack
of the British Library and EBSCO of the CMIE, have been utilized (Centre for
Monitoring of Indian Economy). A few of the journals that have seen a lot of back-
and-forth reading are the Harvard Business Review (HBS), the Journal of Finance,
and Finance India. Research on the literature was conducted between 1985 and
2007.

The pages that follow provide descriptions of the readings from a variety of
publications, books, and websites. The four variables that were inferred from the
hypotheses are the only ones covered in the literature review for this study. They
include the capital structure, increasing shareholder wealth, and providing loans
that are both secured and unsecured. the method used and the conclusions reached.
The prior studies really serve as a guideline for the present research throughout,
preventing its conclusions from being corrupted by those of earlier investigations.
Thanks to the literature review, the author has gained a lot of knowledge on
financial concepts, words, and theories. The literature is derived from books and
papers consulted at the National Institute of Banking Management, British Library,
Jayakar Library (Pune University), and Sinha Gad Institute of Management
libraries. Front Rack of the British Library and EBSCO of CMIE are two enormous
databases of financial information that have been used (Centre for Monitoring of
Indian Economy). Harvard Business Review (HBS), the Journal of Finance, and

31
Finance India are a few of the periodicals that have seen a lot of back-and-forth
reading. From 1985 to 2016, the literature has been researched. The of the U.S.,
U.K., Indonesia, Taiwan, China, Japan, and Germany have also been included in
relation to this idea to confirm this kind of research in other nations. The pages that
follow provide descriptions of the readings from a variety of publications, books,
and websites. The four variables that were inferred from the hypotheses are the only
ones covered in the literature review for this study. These are the Capital Structure,
Unsecured Loans, Secured Loans, and Shareholders Wealth Maximization.

TYPES OF LITERATURE REVIEW

Narrative Literature Review

A narrative literature review analyzes and condenses the body of the literature. A
narrative review also identifies any gaps in the corpus of knowledge and draws
generalizations about the subject. You need a sufficiently focused research topic to
conduct a narrative literature review.

Systematic Literature Review

In contrast to most other kinds of literature reviews, systematic literature reviews

demand a more rigid and precise methodology. Information about the period over
which the literature was picked is part of a fully systematic literature evaluation.
Systematic literature reviews have two subcategories: meta-analysis and meta-
synthesis. Results from several studies on the same issue are gathered and put
through a standardized statistical analysis in a meta-analysis. Links and patterns are
identified in meta-analysis, and conclusions are drawn. The deductive approach to
research is related to meta-analysis. Meta-synthesis, on the other hand, utilizes non-
statistical techniques. This approach combines, evaluates, and interprets the
findings of numerous qualitative research projects. A met synthesis literature
review is often done when an inductive research approach is used.

32
Argumentative Literature

Review An argumentative literature review, as the name implies, uses a selected

analysis of the literature to support or refute a statement, a strongly held opinion,
or a philosophical paradox that has previously been established in the literature. It
should be noted that the likelihood of bias is a significant disadvantage of an
argumentative literature review.

Integrative Literature Review

To generate novel frameworks and perspectives, a thorough review of the literature

investigates, analyzes, and synthesizes secondary materials on the topic of the study.
If gathering and evaluating primary data is not part of your research, your only
choice is to use an integrative literature review.

Theoretical Literature Review

A theoretical literature review's focus is on the body of theory that has accumulated
regarding an issue, concept, theory, or phenomenon. Theoretical literature studies
enable the creation of new hypotheses to be tested as well as the identification of
existing theories, their linkages, and the depth of their examination.

How Literature Review Is Done?? Currently, conducting a literature review using

computerized keyword searches in online databases is widespread practice. This is
typically done in partnership with a competent librarian or information specialist.
You can combine terms to narrow or broaden the search results by using the
Boolean operators "and," "or," and occasionally "not." The researcher must
manually review the search title and abstract after forming a list of articles from the
keyword and subject heading search in order. Reviews of the literature should be
complete and not focus on a certain methodology, period, or small number of
articles. Tables can be used to summarize reviewed papers, and organizational
frameworks like concept matrices can be used to further organize them.

33
Authors Review

Nikkita Arora (2021): “Financial Statement Analysis of Tata Motors Ltd.

"Founded in 1945, Tata Motors is a global Indian automaker. Mumbai,
Maharashtra, India is where its headquarters are located. One of the top automakers
in the world, Tata Motors makes coaches, trucks, sports cars, and buses. Moreover,
it produces military vehicles. One of India's safest vehicles, made by this
manufacturer, has excellent safety features and is of a high caliber. Between 4.70
lakhs and 16.25 lakhs is the price range. Through a strong global network of 113
subsidiary and associate companies, including Tata Daewoo in South Korea and
Jaguar Land Rover in the United Kingdom, Tata Motors, a $35 billion company,
and a subsidiary of the USD 113 billion Tata group, has operations in South Korea,
the United Kingdom, Thailand, Indonesia, and South Africa. This study aims at
analyzing the overall financial position of the Tata Motors by using accounting
ratios. The analysis covers the years 2016-2017, 2017-2018, 2018-2019 and 2019-
2020 for examining financial statements such as income statements and balance
sheets. The Study’s scope includes the numerous variables that influence the
company’s financial position. The research considers data from the previous four
years. In conclusion, the Tata Motors Company continues to have a significant
impact on the sector. Tata Motors' decline is evident, but given its size, analysts
anticipate a comeback. This study shows that Tata Motors' willingness to fulfil its
contractual obligations has been seriously impacted. When all four years are
considered, 2016–2017 is thought to have had the strongest budget year. Since
Fallen, the company's current and quick ratios have been at their highest levels,
showing that liquidity has decreased over time. If the company manages its assets
efficiently and finances its debts adequately, it should be able to recover from the
loss. The company is losing money, or more precisely, its profitability is declining,
according to the results, but it has bright prospects. It must closely monitor prices,
cut spending, and manage its finances to prevent running into difficult financial
situations in the future. The given research is only limited for one year so there are

34
no changes in the financial statement so there is no research gap in the following
project of Tata motors.

Mrs.N.Ishvarya(2019): A Study on Comparative Statement of Balance Sheet of

Lakshmi Vilas Bank at Tiruchirappalli is the title of the project report. Finding out
the Bank's financial situation is the study's key goal. It is useful to understand how
Lakshmi Vilas Bank's balance sheet has changed during the last three years. Here
By determining the casual relation between comparisons, the data analysis and
interpretation are carried out. With some accounting instruments, percentage
analysis is used. The reader's ability to verify the accuracy of the data is the goal of
the list of limitations that is provided.To better understand the financial status of
the bank, the researcher chose the Lakshmi Villas Bank for the balance sheet
comparison portion of the study. This study sought to provide a comprehensive
picture of the balance sheet's financial performance. The study on Lakshmi Villas
Bank spans the calendar year from 2015 to 2016.The goal of the study, "A Study
of Comparative Statement of Balance Sheet," is to analyze and explain the financial
position of the bank. Only comparative statements, which are crucial instruments
for understanding financial situation, were used in the examination of the bank. The
Bank has made progress overall during the past year. The researcher made the
following recommendations to Lakshmi Villas Bank to market its services: To fulfil
its short-term obligations, the bank must hold more current assets. The bank needs
to keep more cash on hand to fulfil our Current Liabilities Requirement. As the
research is only limited to one year, there will not be any modifications between
data collections, and there will not be a research gap in the project.

R. Bhuvneshwari, S. Lakshmi (2105) A financial statement is a formal record of

a company's, persons, or other entity's financial activity. Important financial
information is given in a systematic and easy-to-understand way. A balance sheet,
also known as a statement of financial status, reflects on a company's assets,
liabilities, and ownership equity at a certain point in time. An income statement,
also known as a statement of comprehensive income, a statement of revenue and
expenses, or a profit and loss report, provides information on a company's revenues,

35
expenses, and profit over time. Several accounting practices and principles are used
to create the financial statements.

Ms.SamridhiKapoorBhelHaridwar(2019). The accounting department's major

aim in the organization is to compile trustworthy financial statements to create
legitimate balance sheets, income statements, and cash flow statements. The
purpose of this article is to examine financial accounts and measure performance
in terms of asset usage and profitability. The study's research technique was
exploratory research, which focused on the past and present performance of the
Heavy Electrical Equipment Factory (HEEP), Ranipur (Haridwar). The study is
entirely based on secondary data acquired over a seven-year period (2007-2013)
from the company's audited annual reports and data supplied for effective
periodical examination. To reach the research purpose, five financial ratio
categories were used to examine the study's premise. Profitability ratios, leverage
ratios, profit margin ratios, return on investment, and return on equity are all
examples of ratios. This analysis demonstrates that there were grey areas in the
HEEP's financial strength and weakness from June 2007 to June 2009, resulting in
a fall in all the concerned profitability measures and, as a result, the performance
of HEEP over the two years. Simultaneously, there is a poor link between
profitability and liquidity.

Gowsalyar Mohammed Hasanm Bharuch NiketanEnginneringcollege(2017)

The financial performance analysis of a company research. The goal of this study
is to compare the present financial performance to the previous five years and to
examine the Company's current financial condition. This study relied on secondary
data obtained from an annual report. The data utilised in this study, comparative
balance sheet, common size balance sheet, comparative balance sheet analysis,
show that the current obligations are greater than the current assets in every year,
implying that the firm should focus on growing the level of current assets. As a
result, the corporation improves its financial condition.

36
 CHAPTER 4 DATA ANALYSIS AND INTERPRETATION

Data analysis and interpretation refer to the process of systematically examining,

organizing, and evaluating data to draw meaningful conclusions. Data analysis
involves breaking down raw data into manageable components, identifying patterns,
trends, and relationships, and using various statistical or analytical methods to
derive insights. This step transforms raw data into useful information. Interpretation,
on the other hand, is the process of making sense of the analyzed data. It involves
explaining the significance of the findings, understanding what the results imply in
the context of the study, and linking the data back to the research objectives or
questions.

Balance Sheet of State Bank of India

Year Ending Mar 22 Mar 23 Mar 24

No. of Equity Shares 8,924.61 8,924.61 8,924.61

Face Value Rs 1 1 1
Equity Share Capital Rs m 8,925 8,925 8,925
Reserves Rs m 3,046,956 3,580,389 4,140,467
Networth Rs m 3,055,880 3,589,313 4,149,392
Borrowings Rs m 4,491,598 5,211,519 6,396,095
Other Liabilities Rs m 5,075,177 5,929,629 6,970,747
Total Rs m 53,608,835 59,544,183 67,337,788
Fixed Assets Rs m 392,295 440,238 441,373
Advances Rs m 27,940,760 32,679,021 37,842,727
Investments Rs m 17,764,899 19,131,079 21,105,482
Other Assets Rs m 0 0 0
Total Rs m 53,608,835 59,544,183 67,337,788
Net NPA Rs m 27,966 21,467 21,051
Net NPA to Advances % 0.1 0.1 0.1
Source: Accord Fintech, Equity master

37
 Overview of Balance Sheet

Income And Expenditure Statement of State Bank of India

Year Ending Mar 22 Mar 23 Mar 24

Interest Earned Rs m 2,899,727 3,508,446 4,391,885

Interest Expenses Rs m 1,561,943 1,899,808 2,597,360
Net Interest Income Rs m 1,337,783 1,608,638 1,794,525
NII Growth % 9.6 20.2 11.6
Net Interest Margin % 46.1 45.9 40.9
Other Income Rs m 1,170,004 1,225,336 1,553,864
Operating Expenses Rs m 1,743,634 1,898,145 2,358,938
Provisions Rs m 400,591 370,244 308,068
Profit before tax Rs m 363,562 565,584 681,383
Tax Rs m 133,794 188,399 230,920
Net Profit Rs m 353,739 556,482 670,847
Net Margin % 12.2 15.9 15.3
Diluted EPS (TTM) Rs 39.6 62.4 75.2

38
 Source: Accord Fintech, Equity master

Overview of Income and Expenditure Statement

Comparative Balance Sheet of Mar 23-24

Year Ending Mar-23 Mar-24 % Change

Networth Rs m 3,589,313 4,149,392 15.6%

Advances Rs m 32,679,021 37,842,727 15.8%

Deposits Rs m 44,685,355 49,665,375 11.1%

Yield on advances % 7.0 7.9

Cost of Deposits % 3.7 4.5

Investments Rs m 19,131,079 21,105,482 10.3%

Borrowings Rs m 5,211,520 6,396,095 22.7%

Total Assets Rs m 59,544,183 67,337,788 13.1%

Source: Accord Fintech, Equity master

39
 INTERPRETATION
• The bank's deposits during FY24 stood at Rs 49,665.4 billion as compared to
Rs 44,685.4 billion in FY23, thereby witnessing an increase of 11.1%.
• Advances for the year stood at Rs 37,842.7 billion as compared to Rs 32,679.0
billion during FY23, a rise of 15.8%.
• Cost of deposits for SBI rose 22.9% and stood at 4.5%, while yield on advances
rose to 7.9%.
• Borrowing stood at Rs 6,396.1 billion, a growth of 22.7% as compared to
previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 67,337.8 billion as
against Rs 59,544.2 billion during FY23, thereby witnessing a rise of 13.1%.

Comparative Income and Expenditure Statement of Mar 23-24

Year Ending Mar-23 Mar-24 % Change

Interest Income Rs m 3,508,446 4,391,885 25.2%

Other Income Rs m 1,225,336 1,553,864 26.8%

Interest Expense Rs m 1,899,808 2,597,360 36.7%

Net Interest Income Rs m 1,608,638 1,794,525 11.6%

Operating Expense Rs m 1,898,145 2,358,938 24.3%

Pre-provision
Rs m 935,828 989,450 5.7%
Operating Profit

40
 Provisions &
Rs m 370,244 308,068 -16.8%
Contingencies

Profit before tax Rs m 753,983 912,302 21.0%

Tax Rs m 188,399 230,920 22.6%

Profit after tax Rs m 556,482 670,847 20.6%

Minority Interest Rs m -21,017 -24,587 -17.0%

Net Interest Margin % 3.1 3.0

Net profit margin % 15.9 15.3

Source: Accord Fintech, Equity master

INTERPRETATION
• Interest income during the year rose 25.2% on a year-on-year (YoY) basis.
• Interest expenses were up by 36.7% YoY during the same period.
• Operating expenses increased by 24.3% YoY during the year.
• The bank's net interest income (NII) increased by 11.6% YoY during the fiscal.
Consequently, net interest margins (NIM) witnessed a decline and stood at 3.0%
in FY24 as against 3.1% in FY23.
• Other income increased by 26.8% YoY during the year.
• Net profit for the year increased by 20.6% YoY.
• Net profit margins during the year declined to 15.3% in FY24 from 15.9% in
FY23.

Ratio Analysis for FY 23-24

1. Efficiency Ratios
• Deposit Ratio: The bank's credit/ deposit rate bettered and stood at 76.2 x during
FY24, from 73.1 x during FY23. The credit/ deposit rate tells us how important
plutocrat a bank has raised in the form of deposits and has stationed as loans.

41
• Debt to Equity rate: The bank's debt to equity rate dropped and stood at 13.51 x
during FY24, from 13.90 x during FY23. The debt-to-equity rate of a bank tells
us how important debt a bank uses relative to its equity.
2. Liquidity ratios
• Capital Acceptability rate (CAR): SBI's capital acceptability rate (Auto) was at
14.3 as on 31 March 2024 as compared to 14.7 a time ago. This rate helps
measure the fiscal strength of the bank or any finance company to meet their
scores using their means and capital. A bank that has a good Auto has enough
capital to absorb implicit losses. therefore, it has lower threat of getting insolvent
and losing depositor's plutocrat.
• Provision Coverage rate (PCR): piecemeal from CAR, you also need to look at
the bank's PCR and LCR rates. Provisioning content rate (PCR) is the chance of
finances that a bank sets away for covering losses due to bad debts. So, a high
PCR rate means asset quality issues are under control and the bank is not
vulnerable.
• Liquidity Coverage rate (LCR): The LCR is designed to ensure that banks hold
a sufficient reserve of high- quality liquid means to allow them to survive a
period of significant liquidity stress lasting 30 timetable days.
3. Profitability ratios
• Return on Equity (ROE): The return on equity (ROE) rate for the bank bettered
and stood at 16.2 during FY24, from 15.5 during FY23. The ROE measures the
capability of an establishment to induce gains from its shareholders capital in
the company.
• Return on Assets (ROA): The return on asset (ROA) rate of the bank bettered
and stood at 1.00 during FY24, from 0.93 during FY23. The ROA measures how
efficiently the company uses its means to induce earnings.
• Return on Capital Employed (ROCE): The ROCE for the bank bettered and
stood at 13.20 during FY24, from 12.46 during FY23. The ROCE measures the
capability of a bank to induce gains from its total capital (shareholder capital
plus debt capital) employed in the bank.
4. NPA Ratios

42
 • Gross NPA rate: The gross NPA rate is the rate of a bank's gross NPAs to gross
advances. SBI's gross NPA rate stood at 2.2 as of 31 March 2024 compared to
2.8 in the same period a time ago.
• A high gross NPA rate is a dreadful thing as it indicates how important of a
bank's loans are in peril of not being repaid.
• Net NPA rate in simple language, net NPAs are simply the total non-performing
means minus the provision left away. It gives you the exact value of NPAs after
the bank has made vittles.
• The net NPA rate of SBI was 0.6 in fiscal time 2024. This compared with 0.7 a
time ago.

Comparative Balance Sheet of Mar 22-23

Year Ending Mar-22 Mar-23 % Change

Networth Rs m 3,055,880 3,589,313 17.5%

Advances Rs m 27,940,760 32,679,021 17.0%

Deposits Rs m 40,874,106 44,685,355 9.3%

Yield on advances % 6.4 7.0

Cost of Deposits % 3.5 3.7

Investments Rs m 17,764,899 19,131,079 7.7%

Borrowings Rs m 4,491,598 5,211,520 16.0%

Total Assets Rs m 53,608,835 59,544,183 11.1%

Source: Accord Fintech, Equity master

INTERPRETATION
• The bank's deposits during FY23 stood at Rs 44,685.4 billion as compared to
Rs 40,874.1 billion in FY22, thereby witnessing an increase of 9.3%.

43
 • The lender's investments rose to Rs 19,131.1 billion during the time from Rs
17,764.9 billion in FY22.
• Borrowing stood at Rs 5,211.5 billion, a growth of 16.0 as compared to former
time. Overall, the total means and arrears for FY23 stood at Rs 59,544.2 billion
as against Rs 53,608.8 billion during FY22, thereby witnessing a rise of 11.1.
INTERPRETATION Interest income during the time rose 21.0 on a time- on-
time (YoY) base.
• Interest charges were over by 21.6 YoY during the same period. Operating
charges increased by 8.9 YoY during the time.
• The bank's net interest income (NII) increased by 20.2 YoY during the financial.
Accordingly, net interest perimeters (NIM) witnessed a growth and stood at 3.1
in FY23 as against 2.9 in FY22.
• Other income increased by 4.7 YoY during the time. Net profit for the time
increased by 57.3 YoY.
• Net profit perimeters during the time increased to 15.9 in FY23 from 12.2 in
FY22.

Comparative Income and Expenditure Statement of Mar 22-23

% Change
Year Ending Mar-22 Mar-23

Interest Income Rs m 2,899,727 3,508,446 21.0%

Other Income Rs m 1,170,004 1,225,336 4.7%

Interest Expense Rs m 1,561,943 1,899,808 21.6%

Net Interest Income Rs m 1,337,783 1,608,638 20.2%

Operating Expense Rs m 1,743,634 1,898,145 8.9%

Pre-provision
Rs m 764,153 935,828 22.5%
Operating Profit

44
 Provisions &
Rs m 400,591 370,244 -7.6%
Contingencies

Profit before tax Rs m 497,356 753,983 51.6%

Tax Rs m 133,794 188,399 40.8%

Profit after tax Rs m 353,739 556,482 57.3%

Minority Interest Rs m -18,093 -21,017 -16.2%

Net Interest Margin % 2.9 3.1

Net profit margin % 12.2 15.9

Source: Accord Fintech, Equity master

INTERPRETATION

• Interest income during the year rose 21.0% on a year-on-year (YoY) basis.
• Interest expenses were up by 21.6% YoY during the same period.
• Operating expenses increased by 8.9% YoY during the year.
• The bank's net interest income (NII) increased by 20.2% YoY during the fiscal.
Consequently, net interest margins (NIM) witnessed a growth and stood at 3.1%
in FY23 as against 2.9% in FY22.
• Other income increased by 4.7% YoY during the year.
• Net profit for the year increased by 57.3% YoY.
• Net profit margins during the year increased to 15.9% in FY23 from 12.2% in
FY22.

Ratio Analysis for FY 22-23

1. Efficiency Ratios

45
• Deposit rate: The bank's credit/ deposit rate bettered and stood at 73.1 x during
FY23, from 68.4 x during FY22. The credit/ deposit rate tells us how important
plutocrat a bank has raised in the form of deposits and has stationed as loans.
• Debt to Equity rate: The bank's debt to equity rate dropped and stood at 13.90 x
during FY23, from 14.85 x during FY22. The debt-to-equity rate of a bank tells
us how important debt a bank uses relative to its equity.
2. Liquidity rates
• Capital Acceptability rate (CAR): SBI's capital acceptability rate (Auto) was at
14.7 as on 31 March 2023 as compared to 13.9 a time ago. This rate helps
measure the fiscal strength of the bank or any finance company to meet their
scores using their means and capital. A bank that has a good Auto has enough
capital to absorb implicit losses. therefore, it has lower threat of getting insolvent
and losing depositor's plutocrat.
• Provision Coverage rate (PCR): piecemeal from CAR, you also need to look at
the bank's PCR and LCR rates. Provisioning content rate (PCR) is the chance of
finances that a bank sets away for covering losses due to bad debts. So, a high
PCR rate means asset quality issues are under control and the bank is not
vulnerable.
• Liquidity Coverage rate (LCR): The LCR is designed to ensure that banks hold
a sufficient reserve of high- quality liquid means to allow them to survive a
period of significant liquidity stress lasting 30 timetable days.
3. Profitability Ratios
• Return on Equity (ROE): The return on equity (ROE for the bank bettered and
stood at 15.5 during FY23, from 11.6 during FY22. The ROE measures the
capability of an establishment to induce gains from its shareholders capital in
the company.
• Return on Assets (ROA): The return on asset (ROA of the bank bettered and
stood at 0.93 during FY23, from 0.66 during FY22. The ROA measures how
efficiently the company uses its means to induce earnings.
• Return on Capital Employed (ROCE): The ROCE for the bank bettered and
stood at 12.46 during FY23, from 8.77 during FY22. The ROCE measures the

46
 capability of a bank to induce gains from its total capital (shareholder capital
plus debt capital) employed in the bank.
4. NPA Ratios
• Gross NPA rate: the gross NPA rate is the rate of a bank's gross NPAs to gross
advances. SBI's gross NPA rate stood at 2.8 as of 31 March 2023 compared to
4.0 in the same period a time ago.
• A high gross NPA rate is a dreadful thing as it indicates how important of a
bank's loans are in peril of not being repaid.
• Net NPA rate in simple language, net NPAs are simply the total non-performing
means minus the provision left away. It gives you the exact value of NPAs after
the bank has made vittles.
• The net NPA rate of SBI was 0.7 in fiscal time 2023. This compared with 1.0 a
time ago.

Comparative Balance Sheet of Mar 21-22

Year Ending Mar-21 Mar-22 % Change

Networth Rs m 2,755,616 3,055,880 10.9%

Advances Rs m 25,005,990 27,940,760 11.7%

Deposits Rs m 37,153,312 40,874,106 10.0%

Yield on advances % 7.1 6.4

Cost of Deposits % 3.9 3.5

Investments Rs m 15,951,003 17,764,899 11.4%

Borrowings Rs m 4,337,962 4,491,598 3.5%

Total Assets Rs m 48,456,185 53,608,835 10.6%

Source: Accord Fintech, Equity master

47
INTERPRETATION

• The bank's deposits during FY22 stood at Rs 40,874.1 billion as compared to

Rs 37,153.3 billion in FY21, thereby witnessing an increase of 10.0%.
• Cost of deposits for SBI fell 9.9% and stood at 3.5%, while yield on advances
fell to 6.4%.
• Borrowing stood at Rs 4,491.6 billion, a growth of 3.5% as compared to
previous year.
• Overall, the total assets and liabilities for FY22 stood at Rs 53,608.8 billion as
against Rs 48,456.2 billion during FY21, thereby witnessing a rise of 10.6%.

Comparative Income and Expenditure Statement of Mar 21-22

%
Year Ending Mar-21 Mar-22
Change

Interest Income Rs m 2,781,155 2,899,727 4.3%

Other Income Rs m 1,072,224 1,170,004 9.1%

Interest Expense Rs m 1,560,102 1,561,943 0.1%

Net Interest Income Rs m 1,221,053 1,337,783 9.6%

Operating Expense Rs m 1,504,296 1,743,634 15.9%

Pre-provision
Rs m 788,981 764,153 -3.1%
Operating Profit

Provisions &
Rs m 546,184 400,591 -26.7%
Contingencies

Profit before tax Rs m 328,088 497,356 51.6%

Tax Rs m 85,291 133,794 56.9%

Profit after tax Rs m 224,055 353,739 57.9%

48
 Minority Interest Rs m -14,824 -18,093 -22.1%

Net Interest Margin % 3.0 2.9

Net profit margin % 8.1 12.2

Source: Accord Fintech, Equity master

INTERPRETATION

• Interest income during the year rose 4.3% on a year-on-year (YoY) basis.
• Interest expenses were up by 0.1% YoY during the same period.
• Operating expenses increased by 15.9% YoY during the year.
• The bank's net interest income (NII) increased by 9.6% YoY during the fiscal.
Consequently, net interest margins (NIM) witnessed a decline and stood at
2.9% in FY22 as against 3.0% in FY21.
• Other income increased by 9.1% YoY during the year.
• Net profit for the year increased by 57.9% YoY.
• Net profit margins during the year increased to 12.2% in FY22 from 8.1% in
FY21.

Ratio Analysis for FY 21-22

1. Efficiency Ratios
• Deposit rate: The bank's credit/ deposit rate bettered and stood at 68.4 x during
FY22, from 67.3 x during FY21. The credit/ deposit rate tells us how important
plutocrat a bank has raised in the form of deposits and has stationed as loans.
• Debt to Equity rate: The bank's debt to equity rate dropped and stood at 14.85 x
during FY22, from 15.06 x during FY21. The debt-to-equity rate of a bank tells us
how important debt a bank uses relative to its equity.
2. Liquidity rates

49
• Capital Acceptability rate (CAR): SBI's capital acceptability rate (Auto) was at
13.9 as on 31 March 2022 as compared to 13.8 a time ago. This rate helps
measure the fiscal strength of the bank or any finance company to meet their
scores using their means and capital. A bank that has a good Auto has enough
capital to absorb implicit losses. therefore, it has lower threat of getting insolvent
and losing depositor's plutocrat.
• Provision Coverage rate (PCR): piecemeal from CAR, you also need to look at
the bank's PCR and LCR rates. Provisioning content rate (PCR) is the chance of
finances that a bank sets away for covering losses due to bad debts
• So, a high PCR rate means asset quality issues are under control and the bank is
not vulnerable.
• Liquidity Coverage rate (LCR): The LCR is designed to ensure that banks hold a
sufficient reserve of high- quality liquid means to allow them to survive a period
of significant liquidity stress lasting 30 timetable days.
3. Profitability ratios
• Return on Equity (ROE): The return on equity (ROE) rate for the bank bettered
and stood at 11.6 during FY22, from 8.1 during FY21. The ROE measures the
capability of an establishment to induce gains from its shareholders capital in the
company.
• Return on Assets (ROA): The return on asset (ROA) rate of the bank bettered and
stood at 0.66 during FY22, from 0.46 during FY21. The ROA measures how
efficiently the company uses its means to induce earnings.
• Return on Capital Employed (ROCE): The ROCE for the bank bettered and stood
at 8.77 during FY22, from 7.08 during FY21. The ROCE measures the capability
of a bank to induce gains from its total capital (shareholder capital plus debt
capital) employed in the bank.
4. NPA Ratios
• Gross NPA rate: The gross NPA rate is the rate of a bank's gross NPAs to gross
advances. SBI's gross NPA rate stood at 4.0 as of 31 March 2022 compared to 5.0
in the same period a time ago.

50
• A high gross NPA rate is a dreadful thing as it indicates how important of a bank's
loans are in peril of not being repaid.
• Net NPA rate in simple language, net NPAs are simply the total non-performing
assets minus the provision left away. It gives you the exact value of NPAs after
the bank has made vittles.
• The net NPA rate of SBI was 1.0 in fiscal time 2022. This compared with 1.5 a
time ago.

51
CASH FLOW OF STATE BANK OF INDIA

CASH FLOW OF STATE BANK OF INDIA (in MAR 24 MAR 23 MAR 22

Rs. Cr.)

NET PROFIT/LOSS BEFORE 81,782.96 67,205.63 43,421.85

EXTRAORDINARY ITEMS AND TAX

Net Cashflow from Operating Activities 19,021.89 -91,351.82 58,415.45

Net Cash Used in Investing Activities -3,052.92 -3,297.04 -2,612.72

Net Cash Used from Financing Activities -13,855.37 5,201.76 -5,177.51

Foreign Exchange Gains / Losses 788.76 2,794.39 888.39

Net Inc/Dec In Cash And Cash 2,902.37 -86,652.70 51,513.61

Equivalents

Cash And Cash Equivalents Begin of Year 307,899.62 394,552.32 343,038.71

Cash And Cash Equivalents End of Year 310,801.99 307,899.62 394,552.32

Source: Dion Global Solutions Limited

Net Cashflow from Operating Activities

52
Cash from Operating Activity Annual growth is higher than historical averages.

Net Cashflow from Investing Activities

Cash from Investing Activity Annual growth is higher than historical averages.

Net Cashflow from Financing Activities

Cash from Financing Annual Activity is falling faster than historical averages.

53
Net Inc/Dec In Cash And Cash Equivalents

Interpretation

• Operating Activities: SBI consistently generated robust cash flow from its
core banking operations. Its net cash inflows from operating activities showed
growth, driven by increasing interest income and effective cost management.
• Investing Activities: SBI's cash flow from investing activities was primarily
influenced by fluctuations in its investment portfolio. The bank has invested
significantly in government securities, reflecting a conservative investment
strategy. However, the bank also saw outflows due to capital expenditures for
upgrading its technology infrastructure and expanding its branch network.
• Financing Activities: SBI’s financing activities involved managing its debt
and equity. The cash flow trends suggest that the bank has been repaying a
massive portion of its borrowings, which aligns with the strategy of reducing
overall debt. This is seen in its net cash outflows in this section, despite
occasional issuances of debt to maintain liquidity.
• Cash Position: Despite significant outflows for investing and financing, SBI’s
cash balance remained strong across the three years. The ending cash balance
for FY2023 was higher compared to the previous two years, indicating
prudent liquidity management.

54
Trend Analysis

1. Revenue and Profitability Trends: From 2021 to 2024, SBI has demonstrated a
consistent upward trajectory in revenue, driven by several key factors. The bank's
strategic focus on expanding its lending portfolio, coupled with favorable interest rate
environments, has significantly contributed to increased interest income. Additionally,
SBI’s efforts to diversify its revenue streams, including enhanced fee-based income from
digital banking services and other financial products, have bolstered overall revenue
growth. Profitability metrics, such as Return on Assets (ROA) and Return on Equity
(ROE), have shown a positive trend. These metrics reflect the bank’s effective utilization
of assets and shareholders' equity to generate profits. The steady improvement in net
interest income, alongside successful cost control measures, highlights SBI’s ability to
maintain robust financial performance amidst evolving market conditions.

2. Asset Quality Trends: The asset quality of SBI has exhibited a notable improvement
over the period. The bank has faced challenges with non-performing assets (NPAs) in
previous years, but through rigorous measures such as enhanced credit assessment
processes, restructuring of troubled loans, and proactive recovery efforts, SBI has
managed to reduce NPAs gradually. This trend towards improved asset quality is
indicative of the bank’s strong risk management framework and commitment to
maintaining a healthy and sustainable loan portfolio. The reduction in NPAs not only
reflects better credit quality but also contributes to enhanced financial stability and lower
provisions for loan losses.

3. Capital Adequacy Trends: SBI’s capital adequacy ratios have remained robust
throughout the analyzed period. The Capital Adequacy Ratio (CAR), which measures the
bank’s ability to absorb financial shocks and support its lending activities, has
consistently been above regulatory requirements. This stability in capital adequacy
underscores SBI’s effective capital management practices and its capacity to sustain
growth while maintaining a buffer against potential financial disruptions. The bank’s
efforts to strengthen its capital base, including capital raises and retention of earnings,
have reinforced its financial resilience and growth potential.

4. Digital Transformation Trends: The trend towards digital transformation has been a
major focus for SBI over the past few years. The bank has made significant investments
in technology, leading to a substantial increase in digital banking transactions and online
service adoption. The expansion of digital channels, such as mobile banking apps and
internet banking platforms, has not only enhanced customer convenience but also
improved operational efficiency. Metrics related to digital banking, including the volume

55
of online transactions, digital account openings, and mobile app usage, have shown
remarkable growth. This digital shift has allowed SBI to reach a broader customer base,
reduce transaction costs, and stay competitive in a rapidly evolving financial landscape.

5. Operational Efficiency Trends: SBI has demonstrated improvements in operational

efficiency, as evidenced by a favorable trend in the cost-to-income ratio. The bank has
implemented effective cost management strategies, such as optimizing operational
processes, reducing administrative expenses, and leveraging technology to streamline
operations. These efforts have resulted in a more efficient cost structure, enhancing the
bank’s ability to manage expenses while investing in growth initiatives. The
improvements in operational efficiency reflect SBI’s commitment to achieving greater
productivity and profitability.

6. Market Position and Competitive Trends: Throughout the period from 2021 to
2024, SBI has strengthened its market position, driven by strategic initiatives aimed at
expanding its reach and enhancing its competitive edge. The bank’s extensive branch
network, coupled with its diverse range of financial products and services, has reinforced
its leadership in the banking sector. Trends in market share, customer acquisition, and
competitive positioning highlight SBI’s successful efforts to grow its footprint and adapt
to market changes. The bank’s ability to leverage its scale, brand recognition, and service
innovation has contributed to its continued dominance in the Indian and global banking
markets.

7. Regulatory Compliance Trends: SBI has effectively managed regulatory

compliance, demonstrating a positive trend in adhering to evolving financial regulations.
The bank has adapted to new regulatory requirements and maintained transparency in its
operations, contributing to its strong reputation and operational stability. Compliance
with regulatory standards has helped SBI avoid potential penalties and maintain a
favorable standing with regulators and stakeholders.

56
 CHAPTER 5 CONCLUSION

In conclusion, throughout these years, SBI has demonstrated its ability to effectively
navigate a challenging economic environment, including the impacts of global
uncertainties, regulatory changes, and evolving market dynamics. The bank's robust asset
growth and steady revenue increase underscore its strong market position and operational
efficiency.

SBI's management of capital adequacy has been commendable, with the bank maintaining
solid capital ratios that provide a cushion against potential financial stresses. This is
indicative of SBI's prudent risk management practices and its ability to sustain operations
amidst economic volatility. The reduction in non-performing assets (NPAs) over this
period reflects the bank’s successful efforts in addressing asset quality issues and
strengthening its credit risk management framework.

Profitability metrics, including Return on Assets (ROA) and Return on Equity (ROE), have
remained strong, supported by a well-diversified revenue base that includes interest income,
fee-based services, and other financial products. This diversification has enabled SBI to
mitigate the impact of sector-specific downturns and maintain a stable income stream.

A significant highlight of SBI's performance during this period has been its commitment
to digital transformation. The bank has made substantial investments in technology to
enhance its digital banking capabilities, streamline operations, and improve customer
experience. These efforts have not only strengthened SBI's competitive position but also
expanded its customer base and increased operational efficiency. The implementation of
advanced digital solutions, such as mobile banking apps and online services, has been
crucial in adapting to changing consumer preferences and increasing digital engagement.

Operational efficiency has been a focal point, with SBI implementing cost management
strategies that have resulted in a favorable cost-to-income ratio. The bank's ability to
control operational expenses while investing in growth initiatives demonstrates its effective
management of resources and commitment to enhancing shareholder value.

Regulatory compliance has been another key area of focus. SBI has navigated a complex
regulatory environment by adapting to new regulations and maintaining transparency in its
operations. This compliance has helped the bank avoid potential penalties and maintain its
reputation as a reliable financial institution.

Looking forward, SBI's strategic initiatives and strong financial fundamentals suggest a
positive outlook for the future. The bank's focus on digital innovation, coupled with its

57
solid capital base and effective risk management practices, positions it well for continued
growth and stability. As SBI continues to adapt to the evolving financial landscape and
seize new opportunities, it is poised to sustain its leadership position in the banking sector.

Overall, the period reflects SBI's ability to balance growth with stability, leveraging its
strengths to navigate challenges and capitalize on emerging opportunities. The bank's
performance during these years underscores its resilience and strategic foresight, ensuring
its continued prominence in the financial industry.

58
 FINDINGS AND SUGGESTIONS

The financial statement analysis of the State Bank of India (SBI) for the fiscal years 2021
to 2024 reveals a robust and positive performance trajectory.

SBI has demonstrated consistent revenue growth, driven by increased lending activities
and diversified income streams, reflecting its ability to expand market presence and
leverage its extensive network effectively.

Profitability metrics, including Return on Assets (ROA) and Return on Equity (ROE), have
shown notable improvements, indicating efficient asset utilization and strong shareholder
value creation. The bank has successfully reduced non-performing assets (NPAs) and
maintained healthy provisions for bad loans, showcasing effective credit risk management.

SBI's strong Capital Adequacy Ratio (CAR) underscores its financial stability and ability
to absorb potential shocks.

The bank's liquidity ratios remain favorable, ensuring short-term obligations are met, while
improvements in the cost-to-income ratio highlight enhanced operational efficiency.

Revenue diversification has been a key strength, with significant growth in fee-based
income and digital banking services.

SBI's market position remains strong, bolstered by its extensive branch network and
competitive strategies, while its adherence to regulatory requirements ensures operational
stability.

Looking forward, SBI is well-positioned for continued growth, supported by its strategic
investments and market leadership, although it must remain vigilant to economic
fluctuations and competitive pressures.

Here are some key points:

Financial Performance Overview

Capital Adequacy and Risk Management

Asset Quality Analysis

Evaluate Profitability Metrics:

Revenue Diversification
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Digital Transformation and Technological Investments

Cost Management and Operational Efficiency

Market Position and Competitive Landscape

Regulatory Compliance and Challenges

Future Outlook and Strategic Recommendations

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 Bibliography

• https://sbi.co.in/web/corporate-governance/annual-report
• https://www.equitymaster.com/research-it/annual-results-analysis
• https://sbi.co.in/web/corporate-governance/annual-report-
• https://en.wikipedia.org/wiki/State_Bank_of_India
• https://in.investing.com/equities/state-bank-of-india-balance-sheet

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