finacial mangment ...project....report
Post on 05-Apr-2015
433 Views
Preview:
DESCRIPTION
TRANSCRIPT
DENA BANK & ORIANTAL BANK OF COMMERCE
PROJECT GUIDE: PROF. RUPAL DESAI
SUBMITTED BY:
NAME : Pooja J. Soni ID NO : O8BBA062 CLASS : S.Y. B.B.A
SUBMITTED TO:
SANSKAR INSTITUT OF MANGMENT & TECHNOLOGUY
PREFACE
As a student of management, practical knowledge is a must with full theoretical concepts. Therefore in` order to acquire the knowledge we were given a this project as one of its subjects to include in our BBA syllabus by shree KSKV Kachchh University. So for this said purpose we have made this project of financial management in which we have compared the two banks .DENA BANK and ORIANTAL BANK OF COMMERCE.
I hope that my sincere efforts in this field of study would be considered and the honorable authorities accept this Report
2
“ EXPERIENCE IS THE BEST TEACHEREXPERIENCE IS THE BEST TEACHER ”
This Proverbs plays a guiding role in the curriculum of the
B.B.A. Programme of Kutchh University . Only theoretical
knowledge does not impart complete education, it is necessary
that practical exposure being accompanied to add meaning to
education.
I have prepared this project on DENA BANK OF INDIA and
ORINTAL BANK OF COMMERCE . as a part of the practical
studies. I have tried to discuss the firm’s financial information
details in detail
Through this acknowledgement, I express my sincere
gratitude towards all those people who helped me in the
preparation of my project, which has been a learning experience.
I would like to thank the Director, the Faculty, the
Librarians, & the Professors who helped me a lot in completing
this project.
“A Student is always incomplete without the
guidance of his teacher ”
3
By:- Pooja J.Soni
INDEX
PREFES ACKNOWLEDGMENT INTRODUCTIONHISTORY OF DENA BANK OF INDIA HISTORY OF ORIANTAL BANK OF COMMERCE BALANCE SHEET OF DENA BANKBALANCE SHEET OF ORIANTAL BANK OF COMMERCE RATION ANALYASIS MEANING OF RATIO ANALYASISOBJECTIVE OF RATIO ANALYSISCLASSIFICATION OF RATIOCURRENT RATIO DEBT EQUTY RATIO PRICE EARNING RATIO COMPARISION BETWEEN DENA BANK & ORIANTAL BANK OF COMMERCEIMPORTANCE OF RATIO ANALYSISPURPOSE OF RATIO ANALYSISSERVICE PROVIDED BY DENA BANKSERVICES PROVIDED BY ORIANTAL BANK OF COMMERCECONCLUSION
4
INTRODUCTION
To understand the information contained in financial statements with a view to know the strength or weaknesses of the firm and to make forecast about the future prospects of the firm and thereby enabling the financial analyst to take different decisions regarding the operations of the firm.
5
HISTORY OF DENA BANK
Dena Bank was founded on 26th May, 1938 by the family of Devkaran Nanjee under the name Devkaran Nanjee Banking Company Ltd.
It became a Public Ltd. Company in December 1939 and later the name was changed to Dena Bank Ltd.
In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized and is now a Public Sector Bank constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of the Banking Regulations Act 1949, in addition to the business of banking, the Bank can undertake other business as specified in Section 6 of the Banking Regulations Act, 1949.
6
HISTORY OF ORIENTAL BANK OF COMMERCE
Established on 19th Feb' 1943 in Lahore, Oriental Bank of Commerce (OBC) is one of the public sector banks in India. Its modest beginning is creditable to its founder Late Rai Bahadur Lala Sohan Lal, the first Chairman of the OBC. Within four years of coming into existence, the country partitioned, the Bank shifted its Registered Office from Lahore to Amritsar. The Oriental Bank of Commerce was nationalized on 15th April 1980, and paved its way to count amongst the strongest banks in India.
OBC has a network of 530 branches and 505 ATM's spread throughout India, out of which 490 branches offer, centralized banking solutions. With High Capital Adequacy Ratio, Oriental Bank of Commerce is known be a consistent profit-making bank. It offers various services and products, like current/ savings account, general loans, educational loans, agricultural loans, etc, for the benefit of customers. For its effective services, the National Institute of Bank Management (NIBM) rated OBC Bank as "Customer Friendly" Bank.
7
BALANCE SHEET OF DENA BANK
8
BALANCE SHEET OF ORIANTAL BANK OF COMMERCE
9
RATIO ANALYSIS:
Fundamental Analysis has a very broad scope. One aspect looks at the general (qualitative) factors of a company. The other side considers tangible and measurable factors (quantitative). This
10
means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results.
Ratio analysis isn't just comparing different numbers from the balance sheet, income statement, and cash flow statement. It's comparing the number against previous years, other companies, the industry, or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future.
MEANING OF RATIO:
A ratio is one figure express in terms of another figure. It is a
mathematical yardstick that measures the relationship two figures,
which are related to each other and mutually interdependent. Ratio
is express by dividing one figure by the other related figure. Thus a
ratio is an expression relating one number to another. It is simply
the quotient of two numbers. It can be expressed as a fraction or as
a decimal or as a pure ratio or in absolute figures as “so many
times”. As accounting ratio is an expression relating two figures or
accounts or two sets of account heads or group contain in the
financial statements.
MEANING OF RATIO ANALYSIS:
11
Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed, determined and presented.
Ratio analysis is an attempt to derive quantitative measure or
guides concerning the financial health and profitability of business
enterprises. Ratio analysis can be used both in trend and static
analysis. There are several ratios at the disposal of an analyst but
their group of ratio he would prefer depends on the purpose and the
objective of analysis.
While a detailed explanation of ratio analysis is beyond the
scope of this section, we will focus on a technique, which is easy to
use. It can provide you with a valuable investment analysis tool.
This technique is called cross-sectional analysis. Cross-
sectional analysis compares financial ratios of several companies
from the same industry. Ratio analysis can provide valuable
information about a company's financial health. A financial ratio
measures a company's performance in a specific area. For example,
you could use a ratio of a company's debt to its equity to measure a
company's leverage. By comparing the leverage ratios of two
companies, you can determine which company uses greater debt in
the conduct of its business.
12
A company whose leverage ratio is higher than a competitor's
has more debt per equity. You can use this information to make a
judgment as to which company is a better investment risk.
However, you must be careful not to place too much
importance on one ratio. You obtain a better indication of the
direction in which a company is moving when several ratios are
taken as a group.
OBJECTIVE OF RATIOS
13
Ratio is work out to analyze the following aspects of business
organization-
A) Solvency-
1) Long term
2) Short term
3) Immediate
B) Stability
C) Profitability
D)Operational efficiency
E) Credit standing
F) Structural analysis
G)Effective utilization of resources
14
15
Classification of Ratio
Profitability
Gross Profit Rattio
Net Profit RatioReturn on Capit
al Employed Ratio
Return on
Shareholders Fun
d
Return on Equity Ratio
Operating Ratio
Expenses Ratio
Earning Per Share Ratio
Dividend Per Ratio
Prise Earning Ratio
Liqudity Ratio
Current ratio
Liquid Ratio
Leverage Ratio
Debt Equity Ratio
Profitability Ratio
Capital
Gearing
Ratio
Long
Term
Funds to
Fixed
Assets
Activity Ratio
Stock Turn Over RatioTotal
Assets Turn Over Ratio
Debtors
Ratio
Creditor
s Rati
oBook Value Per Share
Working
Capital Turn Over Ratio
Coverage Ratio
Debentures
Service Coverage RatioInterest Covera
ge Ratio
CURRENT RATIO: -
Liquidity refers to the ability of a firm to meet its short-term
(usually up to 1 year) obligations. The ratios, which indicate the
liquidity of a company, are Current ratio, Quick/Acid-Test ratio,
and Cash ratio. These ratios are discus
This ratio compares the current assests with the current liabilities. It
is also known as ‘working capital ratio’ or ‘solvency ratio’. It is
expressed in the form of pure ratio.
16
Formula:
CURRENT RATIO = CURRENT ASSET CURRENT LIABILITY
The current assests of a firm represents those assets which can be,
in the ordinary course of business, converted into cash within a
short period time, normally not exceeding one year. The current
liabilities defined as liabilities which are short term maturing
obligations to be met, as originally contemplated, within a year.
Current ratio (CR) is the ratio of total current assets (CA) to total
current liabilities (CL). Current assets include cash and bank
balances; inventory of raw materials, semi-finished and finished
goods; marketable securities; debtors (net of provision for bad and
doubtful debts); bills receivable; and prepaid expenses. Current
liabilities consist of trade creditors, bills payable, bank credit,
provision for taxation, dividends payable and outstanding expenses.
This ratio measures the liquidity of the current assets and the ability
of a company to meet its short-term debt obligation.CR measures the
ability of the company to meet its CL, i.e., CA gets converted into
cash in the operating cycle of the firm and provides the funds
needed to pay for CL. The higher the current ratio, the greater the
short-term solvency. This compares assets, which will become liquid
within approximately twelve months with liabilities, which will be
17
due for payment in the same period and is intended to indicate
whether there are sufficient short-term assets to meet the short-
term liabilities. Recommended current ratio is 2: 1. Any ratio below
indicates that the entity may face liquidity problem but also Ratio
over 2: 1 as above indicates over trading, that is the entity is under
utilizing its current assets
18
RATIO OF DENA BANK
MARCH 2008 CURRENT RATIO
CURRUNT ASSET = 126648027
CURRUNT LAIBLITY= 25032668
CURRENT RATIO = CURRENT ASSET CURRENT LIABILITY
= 126648027
25032668
= 5.06
MARCH 2009 CURRUNT RATIO
CURRUNT ASSET = 88845858
CURRUNT LAIBLITY = 31872695
CURRENT RATIO = CURRENT ASSET CURRENT LIABILITY
= 88845858
31872695
= 2.79
19
COMENT ON CURRUNT RATIO OF DENA BANK
The current ratio of DENA BANK is 5.06 in 2008 and 2.79 in 2009.
It shows that the current ratio of DENA BANK have declined up to 2.27% during 2009.
It is also unsatisfactory during current year which shows that the working condition of DENA BANK is weak. The ratio is far away from the decided standard of current ratio that is 2:1 .according to this stander the current ratio of DENA BANK is sufficient in 2009.
20
RATIO OF ORIENTAL BANK OF COMMERCE
CURRUNT RATIO MARCH 2008
CURRUNT ASSET = 130152156
CURRUNT LAIBLITY=52328867
CURRUNT RATIO = CURRUNT ASSET
CURRUNT LAIBILITIES
= 130152156
52328867
= 2.49
CURRUNT RATIO MARCH 2009
CURRUNT ASSET = 150640939
CURRUNT LAIBLITY=60883366
CURRUNT RATIO = CURRUNT ASSET
CURRUNT LAIBILITIES
= 60883366
150640939
= 2.47
21
COMMENT ON CURRUNT RATIO OF ORIENTAIL BANK OF COMMERCE
The ORIANTAL BANK OF COMMERCE is 2.49 in 2008 & 2.47 in 2009. It shows that the current ratio of ORIANTAL BANK OF COMMERCE have increase up to 0.02% in 2009. So the banks working condition is better than previous year but the standard of current ratio is 2:1. So as per standard of current ratio, the ratio of ORIANTAL BANK OF COMMERCE is satisfactory. This shows that the working condition of ORINATAL BANK OF COMMERC is good in comparison of the standard.
22
DEBT EQUTY RATIO
Formula:
DEBT EQUTY RATIO = TOTAL LONG TERM DEBT
OWNER’S FUND
Debt equity ratio is also called as leverage ratio. Leverage means the process of the increasing the equity shareholders return through the use of debt. Leverage is also known as ‘gearing’ or ‘trading on equity’. Debt equity ratio shows the margin of safety for long-term creditors & the balance between debt & equity.
23
DEBT EQUTY RATIO OF DENA BANK
DEBT EQUTY RATIO MARCH 2008
TOTAL DEBT = UNSECURED LOANS = 33943.18
OWNER’S FUND =
1. EQUITY CAPITAL = 286.82 2. PREFRANCE CAPITAL = 1279.69
TOTAL OF OWNER’S FUND = 1566.51
DEBT EQUTY RATIO = TOTAL LONGTRME DEBT
OWNER’S FUND
= 33943.18
1566.51
= 21.67
DEBT EQUTY RATIO MARCH 2009
TOTAL DEBT = UNSECURED LOANS = 43050.61
OWNER’S FUND =
1. EQUITY CAPITAL = 286.822. PREFRANCE CAPITAL = 1662.09
TOTAL OF OWNER’S FUND = 1948.91
24
DEBT EQUTY RATIO = TOTAL LONGTRME DEBT
OWNER’S FUND
= 43050.61 1948.91
= 22.09
COMENT ON DEBT EQUITY RATIO OF DENA BANK
The debt equity ratio of DENA BANK is 21.67 in 2008 and 22.09 in 2009. IT shows that the debt equity ratio of the bank has increased upto 0.42 % in 2009. So we can see that the working condition of DENA BANK is good in 2009. It is satisfactory. It mean DENA BANK have more owner’s fund in comparison of their total debt which will help the bank to run the business very smoothly and satisfy the consumer of it .
25
DEBT EQUTY RATIO OF ORIANTAL BANK
OF COMMERCE
DEBT EQUTY RATIO MARCH 2008
TOTAL DEBT = UNSECURED LOANS = 77856.70
OWNER’S FUND =
1. EQUITY CAPITAL = 250.542. RESERVE SURPLUSE = 5525.36
TOTAL OF OWNER’S FUND = 5775.9
DEBT EQUTY RATIO =TOTAL DEBTS
OWNER’S FUND
= 5775.9
77856.70
= 13.48
DEBT EQUTY RATIO MARCH 2009
TOTAL DEBT = UNSECURED LOANS = 98368.85
OWNER’S FUND =
1. EQUITY CAPITAL =2505397 2. RESERVE SURPLUSE = 7152,90,73
3. TOTAL OF OWNER’S FUND =74034470
26
DEBT EQUTY RATIO =TOTAL DEBTS
OWNER’S FUND
= 9836885
74034470
= 0.13
COMMENT ON DEBT EQUITY RATIO OF ORIANTAL BANK OF COMMERCE
The debt equity ratio of ORIANTAL BANK OF COMMERCE is 13.48 in 2008 and o.13in 2009. Its shows that the debt equity ratio of the bank have decreased up to 13.35% in 2009. So we can see that the working condition of ORIANTAL BANK OF COMMERCE is poor in current year. It is not satisfactory. its mean ORINATAL BANK OF COMMERCE have more debt than owner’s fund in 2009 which will not help the bank to run the business very smoothly and not satisfy the consumer of it.
.
27
PRICE EARNING RATIO
It saws the relationship between the market price of share and earnings per share .it significance the price that is currently ruling in the market for each rupee of earnings being made by compny per share. As geral rule, the higher this ratio , the beter it is for owners . This ratio is widly used by the analyist to the value of firm’s performance as exepted by investor . The higher the P/E ratio, the better is for owners.
Formula:
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
28
PRICE EARNING RATIO OF DENA BANK
PRICE EARNING RATIO MARCH 2008
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
EARNING PER SHARE = NET PROFIT AFTER TAX
NUMBER OF EQUITY SHARES
= 329.87
28.6823
= 11.50
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
= 286.82
11.50
= 24.94
29
PRICE EARNING RATIO MARCH 2009
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
EARNING PER SHARE = NET PROFIT AFTER TAX
NUMBER OF EQUITY SHARES
= 423.37
28.6823
= 14.76
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
= 286.82
14.76
= 19.43
30
COMENT ON PRICE EARNING RATIO OF DENA BANK
The price earnings ratio of Dena bank 24.94 in 2008 and 19.43 in 2009. it shows that the price earnings ratio of the bank have declined in 2009 up to 5.51% it shows that the working condition of Dena bank according to P.E ratio is weak.
PRICE EARNING RATIO OF ORIANTAL BANK OF
COMMERCE
PRICE EARNING RATIO MARCH 2008
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
31
EARNING PER SHARE = NET PROFIT AFTER TAX
NUMBER OF EQUITY SHARES
= 353.22
2505.40
= 14.09
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
= 250.14
14.09
= 17.75
PRICE EARNING RATIO MARCH 2009
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
EARNING PER SHARE = NET PROFIT AFTER TAX
NUMBER OF EQUITY SHARES
= 905.42
2505.40
= 36.14
32
PRICE EARNING RATIO = MARKET VALUE OF SHARE
EARNING PER SHARE
= 250.14
36.14
= 6.93
COMENT ON PRICE EARNING RATIO OF ORIANTAL BANK OF COMMERCE
The price earnings ratio of ORIANTAL BANK OF COMMERCE 17.75 in 2008 and 6.93 in 2009. it shows that the price earnings ratio of the bank have declined in 2009 up to 10.82% it shows that the working condition of ORIANTAL BANK OF COMMERCE according to P.E ratio is weak.
33
COMPARISON BETWEEN DENA BANK & ORIANTAL BANK OF COMMERCE OF YEAR 2009
34
BANK CURRENT RATIO
DEBT EQUTY RATIO
PRICE EARNING RATIO
DENA BANK 2.79 22.09 19.43 ORIANTAL BANK OF COMMERCE
2.47 0.13 6.93
CURRUNT RATIO
As per the year 2009, the current ratio of DENA BANK is 2.79 and current ratio of ORIANTAL BANK OF COMMERCE is 2.47
Now by observing the current ratio of both the banks we can fine that the current ratio of DENA BANK is more than the ORIANTAL BANK OF COMMERCE it is high up to o.32%.
It shows that the current asset’s condition of DENA BANK is good than ORIANTAL BANK OF COMMERCE. It has more liquidity power.
As per the general standard of current ratio that is 2:1. So the desired standard can be maintained
35
DEBT EQUTY RATIO
As per the year 2009 the debt equity ratio of DENA BANK is 22.09 & debt equity ratio of ORIANTAL BANK OF COMMERCE bank is o.13
Now by observing the debt equity ratio of both the banks we can fine that the debt equity ratio of DENA BANK is more than the ORIANTAL BANK OF COMMERCE it is high up to 21.96%.
It shows that the owner’s fund or capital of DENA BANK is more than the ORIANTAL BANK OF COMMERCE. Which helps Dena bank to compete with its total debts? While in ORIANTAL BANK OF COMMERCE they have also more owners’ fund to compete with its total debts but it is less in comparison of DENA BANK. So the debt equity ratio of DENA BANK is satisfactory.
36
PRICE EARNING RATIO
As per the year 2009 the price earnings ratio of DENA BANK is 19.43 & P.E. ratio of ORIANTAL BANK OF COMMERCE is 6.93.
Now by observing the P.E. ratio of both the banks we can find that the P.E. ratio of DENA BANK is more than the ORIANTAL BANK OF COMMERCE it is high up to 12.5%.
It shows that the working condition of DENA BANK is better than the ORIANTAL BANK OF COMMERCE. It indicates that DENA BANK is more successful to handle the earning per share & market value of its shares in comparison of ORIANTAL BANK OF COMMERCE.
37
IMPORTANCE OF RATIO ANALYSIS:
As a tool of financial management, ratios are of crucial
significance. The importance of ratio analysis lies in the fact that it
presents facts on a comparative basis & enables the drawing of
interference regarding the performance of a firm. Ratio analysis is
relevant in assessing the performance of a firm in respect of the
following aspects:
1] Liquidity position,
2] Long-term solvency,
3] Operating efficiency,
4] Overall profitability,
5] Inter firm comparison
6] Trend analysis.
38
PURPOSE OF RATIO ANLYSIS:
1] To identify aspects of a businesses performance to aid decision
making
2] Quantitative process – may need to be supplemented by
qualitative
Factors to get a complete picture.
3] 5 main areas:-
Liquidity – the ability of the firm to pay its way
Investment/shareholders – information to enable decisions to
be made on the extent of the risk and the earning potential of a
business investment
Gearing – information on the relationship between the
exposure of the business to loans as opposed to share capital
Profitability – how effective the firm is at generating profits
given sales and or its capital assets
Financial – the rate at which the company sells its stock and
the efficiency with which it uses its assets
39
SERVICES PROVIDED BY DENA BANK
1. Core banking solution
2. Delivery channel
3. Dena ATM services
4. Dena India Remit
5. Value added services
6. Dena Bill pay
7. Inbound remittance
8. Direct tax collection
9. Banc assurance
10. Indirect Tax
11. Distribution of mutual fund
12. RTGS / NEFT
13. Dena e-tax pay Demat service
40
SERVICES PROVIDED BY ORIANTAL BANK OF COMMERCE
1.N.R.I. services
2.Premium Services
Internet Banking
R.T.G.S.
N.E.F.T.
Online Tax payment
3. Other Service Dmat Account Foreign Remittance Cash Management Service
\
41
ROLE OF RATIO ANALYSIS:
It is true that the technique of ratio analysis is not a creative
technique in the sense that it uses the same figure & information,
which is already appearing in the financial statement. At the same
time, it is true that what can be achieved by the technique of ratio
analysis cannot be achieved by the mere preparation of financial
statement.
Ratio analysis helps to appraise the firm in terms of their
profitability & efficiency of performance, either individually or in
relation to those of other firms in the same industry. The process of
this appraisal is not complete until the ratio so computed can be
compared with something, as the ratio all by them do not mean
anything. This comparison may be in the form of intra firm
comparison, inter firm comparison or comparison with standard
ratios. Thus proper comparison of ratios may reveal where a firm is
placed as compared with earlier period or in comparison with the
other firms in the same industry.
Ratio analysis is one of the best possible techniques available
to the management to impart the basic functions like planning &
control. As the future is closely related to the immediate past, ratio
calculated on the basis of historical financial statements may be of
good assistance to predict the future. Ratio analysis also helps to
locate & point out the various areas, which need the management
attention in order to improve the situation.
42
CONCLUSION
As we have given the project work to compare the two well known banks i.e. DENA BANK and ORIANTAL BANK OF COMMERCE .I came to know about the financial condition of both company are good. They are able to generate customer and these banks are providing new services to customers. At the end I can say that DENA BANK is good in financial position in compare to
ORINTAL BANK OF COMMERCE.
43
top related