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INTRODUCTION TO FINANCE Meaning Finance is that business activity which is consent with the acquisition and financial needs and overall objective of business enterprise. The word finance comes indirectly from Latin word FINIS under Roman law contract was not completed until there was a binding agreement for monetary or credit arrangements. Finances are defined as issuance of distribution and purchase of liabilities and equity claims issued for the purpose of generating review producing assets. Finance guides and regulates investment decision and expenditure and the expenditure decision my pertain to recurring expenditure or may relate to capital expenditure programmers or capital getting to get the best out of available funds is the tale of financial management thus finance objective of any corporate plan must be expressed in financial terms efficient management of its finance it is the basic foundation of all kinds of economic activities. Finance is the lifeblood of business: procuring and judicious of finance are the two important activities of financial managements. Adequate funds at disposal of business and funds of various types to carry out the business smoothly without the fear of losing funds.

FINANCIAL MANAGEMENT Financial management is managerial activity consent with planning controlling the firms financial resources, which is interest to acidification. As well as practicing managers to understand the theory of financial management is not merely accounting management. Besides accounting also involves, financial decision that is how to rise funds loans are retain profit investment decision utilization of funds is one activity are the other dividend decision quantum of retain to the investment
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The objective financial management is to find out the profitability and to information about financial position of the concern. Two principal statement of financial accounting are income and expenditure statement and balance sheet. Financial management is a measuring rod for success or failure of an organization financial management is an exclusive excericse in economic, which includes a) b) c) d) e) Funds management Control and reporting system Financial cost and management accounting Tax planning Budgets related disciplines

Importants of financial management Financial management is applicable to every type of organization irrespective of its size, kind or nature. The core of financial policy is to maximize earnings in the long run and optimize then in the short run. The reason for placing the finance function in the hands of top management may be attributed to any of these following reasons. Finance is needed to promote or establish the business acquire fixed assets; make investigations such as market surveys, development of products. Financial decisions are crucial to the survival of the firm. At no cost can a firm affords o threaten its solvency is affected by the flow of funds that is a result of various financial activities, top management being in position to co-ordinate those activates retains financial function in its control. It also deals with financial planning. Another important function of financial accounting is to make the information more useful and reliable. This is done

Functional areas of financial management Today, the changing business environment has widened the role of a financial manger. Some of the functional areas covered in financial management are

Determining financial needs This is done to ensure the availability of adequate funds. Financial needs must be assessed for different purposes. Money may be required for initial promotional expenses, fixed capital and working capital needs. Financial accounting is useful to management as well as to external users such as potential owners creditors government agencies and other interested person making summaries, dealing with financial transaction, interpreting financial information, communicating results of its operation. It provides information regarding the status of the business and result of its operation. The financial accounting is concerned with the preparation of final accounts that is P&L account and balance sheet.

Determining sources of funds The financial manager has to choose resources of funds. He may borrow from a number of financial institutions and the public. A firm is committed to the financial lenders and must meet the terms on which they offer credit. Financial analysis It is the evaluation and the interpretation of a firms financial position operations and involves comparison and interpretation of accounting data. Optimal capital structure The financial manager must establish an optimal capital structure and ensure the maximum rate of return on investment. The ratio between equity and other liabilities carrying fixed charges has to be defined. In the process, he has to consider the operating and financial leverages of the firm.
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 Cost volume profit analysis Fixed cost, variable coat and semi-variable cost have to be analyzed. It must be ensured that the income of the firm will cover its variable cost. Moreover, a firm must generate an adequate income to cover its fixed costs.

Indian banking industry The Indian banking industry which is governed by the banking regulation act of Indian, 1949 can be classified into two major categories, non schedule banks and schedule banks which comprise commercial banks and co-operative banks. N terms of ownership commercial banks can be further grouped not nationalized banks, the state banks of India and its group banks, regional rural banks and private sector banks(the old/new domestic and foreign) these banks have over 67000 branches spread across the country. Some of the co-operative banks are quite forward looking and have developed sufficient core competencies to challenge state and private sector banks, the total deposit & lending of co-operative banks is much more than oil private sector banks this exponential growth of co-operative banks is attributed mainly to their local reach, personal interaction. The first phase of financial reforms results in the nationalization of 14 major banks in 1969 and results in a shift from class banking to mass banking this in turn resulted in a significant growth in the geographical coverage of banks. Everyone had to earmark a minimum percentage of their deposits portfolio to sector identified as priority sector the manufacturing sector also grew during the 1970s in protected environs and the banking sectors was a crucial sources. Banking system occupies an important place in nations economy. A banking institution is indispensable in a modern society. It plays a pivotal role in the economic development of country and forms the core of the money market in an advanced country.

Bank plays a useful and dynamic role in the economic life of a modern society. They contribute to general welfare and prosperity of the nation. It is one of the results of the industrial revolution child of economic necessity.

Types of Banks
1. 2. 3. 4. 5. Commercial bank. Industrial bank. Foreign bank. Co-operative bank. Agricultural bank.

1. Commercial banks
Commercial bank also called as deposit bank, as they accept deposits from the public and lend them for short term. As they mainly finance commerce, so they are called as commercial banks. They accept deposits from various account of public and also lend hinds to the required party. E.g. SBI, PNB, etc.

2. Industrial banks
These are the banks which provide fixed capital to industries. These banks provide finance for a long term period to industries mainly, so they are called as industrial banks, They also subscribe shares or debentures along with underwriting for industrial concerns. They also advice government on development of industries. E.g. IDBI

3. Foreign banks
They finance mainly the foreign exchange business (i.e. the export impost) of any country. In India majority of exchange banks are foreign exchange business is done by Indian commercial banks.

4. Co-operative banks
It is a form of business organization, in which economically weak persons voluntarily associate together as human beings, on the basis of equality of opportunity and control, equity of distribution of profits and mutuality for the promotion of their common economic interests.

5. Agricultural bank
These banks provide finance for agriculture that is why they are called as agriculture banks. In India agriculture bank are organized and on co-operative basis.

THE ANALYSIS OF CO-OPERATIVE BANKS IN INDIA Co-operative movement as an economic system an as a best instrument or eradicate poverty of the people an to protect tem from the economic exploitation from the haves was introduced for the first time in the world the organization of consumers co-operative society in 1844 at London Later on the co-operative movement was introduced in Germany with an organization of agricultural credit co-operative societies in rural areas and with the organization of non- organizational credit co-operatives (Urban Co-operative Banks) in towns and cities. Hence, if the England is the mother land for the whole co-operative movement, the Germany is the cradle for the co-operative credit and banks organizations. The co-operative movement in India was introduced with the organization of Primary Agricultural Co-operative banks in towns and cities offer passing the Cooperative Credit Societies Act in 1904 with an objective to emancipate the poor people in the rural and urban areas from the clutches of money lenders and middlemen in the market and also to accelerate the pace of agriculture and industrial development s in these areas. With the passing the second act. Cooperative societies act, 1992: the co-operative movement in India entered into all
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spheres of economic activities besides organizing DCC banks and state Cooperative Apex Banks. Profiteering (at more prices) and usury (more interest) are the evils constantly grinding he poor people down and hang them till their death. To do way profiteering consumers marketing, processing industrial and other co-operative s were organized and to minimize the usury the co-operatives credit and banking organizations were organized to protect the poor people from the exploitation by middlemen in the market and to eschew them from the clutches form unbridled money lenders. Origin of the co-operative Bank Co-operative bank another component of the Indian banking system originated with the enactment of the co-operative credit societies act of 1904, which provided for the formation of co-operative credit societies. Under the act of 1904 a number of co-operative credits a new act was passed in 1912 which provide for the establishment of co-operative central banks by a union of primary credit societies or by a union of primary credit societies and individuals. The chief functions of these banks were (i) To attract deposit from non agriculturists (ii) To use excess funds of some societies temporarily to make for a shortage in another and (iii) To supervise and guide the affiliated societies. In 1914 the Mclagan committee was appointed to examine the co-operative movement and to make recommendations regarding the Improvement of Apex bank. On the basis of the recommendation a central co-operative bank was established in Bombay other provinces also took action on similar lines. Although these may considered as the early beginnings in the direction of establishing co-operative banks to meet the financial needs of agriculturists the movement only. After the Second World War it may be made clear at the very outset that under the banking regulation act 1994, only urban co-operative banks state co-operative banks and district central co-operative banks are qualifies to be called banks in the co-operative sectors. It may be noted that follows in this chapter also covers issues relating to other credit co-operative namely Primary agricultural credit
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societies (PACS) state co-operative agriculture and rural development banks (PACRDBDS) in short the organization structure as a whole. The co-operative banking system in India is characterized by a relatively comprehensive network extending to the grass not level. What distinguishes he co-operative banking sector form the commercial banking sector is the focus of the former on the local population and micro-banking among middle and low income strata of the society. RESERVE BANK OF INDIA POLICIES The RBI appointed a High Power committee in May 1999 under the chairman of shri K. Madhave Rao. Ex-Chief Secretary of Government of Andhra Pradesh to review the performance or Urban Co-operative Banks and to suggest necessary measures to strengthen this sector. With reference to the terms given to the committee identified five board objectives To preserve the co-operative character of urban co-operative Banks. To protect the depositors interest. To reduce the systematic risks to the financial systems. To put in place strong regulatory norms at the entry levels is as to sustain the operational efficiency or urban cooperative banks in a competitive environment and revolve measures to strengthen the existing urban cooperative banks structure particularly in the context of ever increasing number of weak banks. To align urban banking sector with the segments of banking sector in the context of application of prudential norms in Toto and removing the irritants of dual control regime.

Importants of banking in modern economy

To pay the wages, to incur business expenses in the marketing of goods etc. Bank encourages people saving them constitute the very lifeblood of modern trade commerce and industry as they provide the necessary funds for the working capital such as to buy the raw materials habits through their various savings deposit schemes. They also mobiles saving resources from household to business people for their production use. They transfer money from place to place with economy and safety.
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Essential features
1. 2. 3. 4. Acceptance of deposit from the public on fixed current or savings bank also. Allowing of chaques, drafts, orders or otherwise. Utilization of deposit in hands for the purpose of leading or investment. Performance of other activities called subsidiary services in addition to the principal activities of receiving of deposit & lending of hinds.

Main provision applicable to co-operative Banks The provisions of the Banking Regulation Act applicable to co-operative banks are laid down in part 1 of the act under section 56, the main provisions of the act applicable to co-operative bank are: Use of the word Banks and Banking Every co-operative bank governed by the banking regulating act must use a part it name, any of the words, banks, banker or banking.

Characteristics or features of Co-operative Banks

Voluntary association: A co-operative banks is essentially a voluntary association of individuals. Association of persons: A co-operative banks is an association of persons and not of capital or capitalist Open membership: Membership of co-operative banks is open to all adults irrespective of caste class religion etc. Unrestricted membership: There is no limitation on the membership of a cooperative bank Equal voting right: In co-operative bank each member has only one votes whatever may be the number of shares held by him. One member on vote and not one share on vote Democratic management: It as a fundamental principal of a co-operative bank
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Service motive: A co-operative bank is formed primarily for the purpose of rendering maximum service to its members and for earning maximum profits Equity of distribution of profits: The entire profits of co-operative banks are distributed proportionately to dividend among the members general reserve welfare funds bonus etc.

RATIO ANALYSIS Introduction

Ratio analysis is a very powerful and most commonly used tool of analysis and interpretation of financial statements. It concentrates on the interrelationship among the figure appearing in the financial statements. Ratio analysis helps to analyses the past appearing in the financial statements. Ratio analysis helps to analysis the past performance of company and to make future projections. It allow various interested parties like management shareholders, potential investors creditors governments and other analysts to make an evaluation of the various aspects of companies performance from their own point of view and interest for example managements and shareholders may be interested in the company profitability while creditors and debenture holders may be interested in the solvency of the company.

Meaning of Ratio and Ratio analysis

A ratio is simple one number expressed in terms of another number. In other words a ratio expresses mathematical relationship between one number and another. For example the ratio of 200 to100 is expressed as 2:1 or as 2 For example ratio of current assets to current liabilities is say 5.00.000:2,50,000 or 2:1 some analysts also express ratio as a rate or time. Ratio analysis: Is an important means of expressing the relationship between two numbers a ratio can be computed from any pair of number. To be useful a ratio
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must represent a meaningful relationship but use of ratio cannot take the place of studying the underlying data.

Interpretation of Ratios Broad speaking ratio may be interpreted in four different ways as follows
An individual ratio may have significance of its own Ratios may be interpreted by making comparison over time Ratio may be interpreted by considering a group of several related ratios

What do we need ratio analysis

Financial statements are prepared primarily for decision making. They play a dominant role in setting the framework of managerial decision. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However the information provided in the financial statements in of immense use in making decisions through analysis and interpretation of financial statement. Financial analysis the process of identifying. The financial strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. The various methods or techniques are used In analyzing financial statements such as comparative statements schedule of changes in working capital common size percentages funds analysis trend analysis and ratio analysis. The ratio analysis is the powerful tool of financial analysis ratio is the relation between tow numbers.
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Ratio provides clues to the financial position of concern. These are the pointers or indicators of financial strength soundness position or weakness of an enterprise. Once can draw conclusions about the exact financial position of a concern with the help of ratios.

Method of Ratio analysis

One of the most important techniques adopted by the management accountant in the analysis and interpretation of financial statements is the ratio analysis. The figures contained in these statements are absolute and sometimes unconnected with one another. Absolute and unconnected figures do not properly indicate the efficiency of performance but are also misleading if they are not brought together in a particular manner. The importance of figure in the financial statements can be appreciated only if. It is related to some other figure. The ratio method of analysis of financial statements is thus tool or technique, employed by the management accountant in studying between two figures and the useful conclusions.

Advantages of ratio analysis As one of the method of analysis of financial statements. Ratio analysis secures the following advantages

Simplifies complex data

Laymen and non accounting managerial personnel cannot understand accounting information conveyed though the medium of financial statements unless they are simplified and presented in a non technical way.

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Scanning device
The technical of ratio analysis enable the analyst to know the financial position of the undertaking which the financial statements do not by themselves reveal. It is true this technique make use of some facts and figures as disclosed by the statements.

Reveal operational efficiency

Ratio analysis is an effective diagnostic instrument for bringing to light operational inefficiency if any. With the help of this tool one can assess the profitability of the undertaking besides its solvency.

Planning device
In spite of the fact that the financial statements contain only historical accounting information and any analysis of such statements is only a postmortem examination of what occurred in the past in the life of an undertaking past being a guide to the immediate future.

Managerial tool
Besides being a forecasting and planning device the technique of ratio analysis is a managerial function such as coordination control etc

Disadvantages of ratio analysis

The technique of ratio analysis is a very useful and important device for making a study of the financial health of an undertaking. But yet it has its own limitation which must be recognized and kept in mind while computing the different ratios
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and interpretation the results thereof. The limitations to be kept in mind are as following

Techniques are based on historical information

Ratio analysis is tool or a technique of analyzing financial statements which provide vital accounting information but only historical in nature. It is true that information relation to the past may help management forecast and plan future course of action. However such planning is not likely to be accurate since in fast changing world complex factors which could not be anticipated with a reasonable degree of accuracy affect the credibility of planning based on past information and knowledge.

Not a fool proof method of judging financial soundness

Ratio analysis is only a method a means to an end the being financial soundness or otherwise of particular undertaking. In fact this method duffers form all the limitation of the financial statements. Ratio obviously will be only as reliable as the basic data on which they are based. If the balance sheet or profit and loss accounts figures are themselves unreliable.

Differing accounting practices

With considerable amount of latitude enjoyed by accountants different concerns follow different accounting policies with regard to the treatment of certain items such as method of charging depreciation inventory valuation distinction between capital and revenue expenditure and the like.

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Lack of standard of comparison

It is true that certain ratios to facilitate comparison. For instance ideal current ratio is said to be 2:1. If this taken as the standard for the purpose of comparing two or more concerns those with less than double the value of current assets will have to be declared to be less solvent in the short run.

Problem of window dressing

Some concerns may follow questionable methods of presenting their financial statements in a way better than what the financial position really is. If for instance no depreciation or low rate of depreciation is charged in item of revenue is treated as capital an item of revenue which should be written off in the year of occurrence is spread over a number of years the position of the concern may be made to appear much better that what it is.

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Research Design Tile of Project

A study on financial performance analysis by using ratio Analysis of Ananda Cooperative Bank Ltd

Background of the study

Ratio analysis is conducted to know the financial performance in terms of profitability solvency and growth in the business and overall performance of the organization Ratio analysis helps in knowing the financial position at different period of time. The elements of financial position are shown in the form of ratios so as to give the idea of financial position at two or more periods. Ratio analysis concentrates on the inter-relationship among the figures appearing in the financial statements.

Statement of the Problem

Ratio analysis is an important financial tool to know inner view of organization performance. This helps in knowing the effectiveness of the organization ability to grow and expand. Ratio analysis is also known as analysis and interpretation of ratios. This is referred to as process of determining financial strength and weakness of the firm by establishing strategic relationship between the items of the balance sheet profit and balance sheet and profit and loss account and other operating data that acts as a indicators reflecting performance.

Scope of the study

The purpose of doing this project is mainly to make a thorough study of the performance of the company from its inception till the date with reference to
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financial Management. Ratio analysis is a technique of analysis and interpretation of financial statements. The study is for a reference period of financial years from the year 2004-2005 to 2008-2009. The study covers entire financial operation of the company and does not include the analysis of managements or employees performance.

Objectives of the Study

To find out the various ratios through financial statements. To analyze the performance of the company. To bring out the strengths and weakness of Ananda Co-operative Bank.

Research Methodology
The study conducted by the researcher is an exploratory and descriptive Data source Data is collected from the secondary source. Secondary source most of the information is extracted from the organization. A few textbooks helps has been taken to complete this research. These constitute the secondary source of information used in this research. Method used in collecting data The researcher has collected the data by way of reference. Researcher referred various books Time frame of the data: Information and data collected by researcher is a period of five financial year (2004-2005 to 2008-2009)

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Mode of analysis and interpretation The data collected for the study is manually analysis and interpreted by the researcher. Ratio analysis is also known as analysis and interpreted of data. In other word it includes both Analysis and interpretation means explaining of significance of data. Ratio may be interpreted by calculating a group of related ratios. A single ratio supported by other related additional ratios becomes more understandable and meaningful for Example, the ratio of current liabilities may be supported by the ratio of liquid assets to liquid liabilities draw more dependable conclusions.

Tools used in analysis

The ratio analysis as used in the accounting includes at least two basic statements which are prepared by the concern at end of every financial year The income statements or profit and loss account The position statements or the balance sheet

Limitations of the Study

This study on ratio analysis is for the period of the 5 years only Time factor is one the limitations of the study The data collected information is limited neither is because of the much data nor provided by the bank.

CHAPTER SCHEME
Following are the chapter schemes of the project work such as,

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Chapter-1 Introduction of finance, Important of financial management, functional areas, Indian banking industry, Types of banks, analysis of co-operative banks in india, Origin Co-operative Bank, RBI Polices, important of modern banks, Essential features, Characteristic or features of Co-operative Banks, Ratio Analysis, Interpretation of Ratios, methods, advantages and disadvantages. Chapter-2 Research and design- title of the project, Background of the study, statement of the problem, object of the study, Scope of the study, research methodology, Data source ,Mode of analysis and interpretation, Tools used in analysis, limitations of the study, chapter schemes. Chapter-3 Bank profile, Aims and object of the bank, Rules and Regulations of the Bank, constitution of Board of Directors, General body meeting, function of General Body, KYC Guidelines of Principal, Management Structure of bank, Interest rate on deposit, Attractive silent feature, Broad of directors, Functions of Bank Chapter-4 Analysis and Interpretation of data- the Table or data has to be interpreted. Chapter-5 Summary of Findings Chapter-6 Suggestions &Conclusion Chapter-7 Bibliography

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BANK PROFILE ANANDA CO-OPERATIVE BANK LTD Formulation of Ananda co-operative bank Ltd. Ananda co-operative bank Ltd has registered by joint registrar of co-operative societies on 23rd August 1979 Reg No JRB/regn 7/4884179-80 and then later it is licensed by Reserve Bank of India on 3rd March 1989. Jurisdiction The area of the operation of bank shall extend to the whole of Bangalore City Corporation and Bangalore Development Authority. Aims and Objectives of the Bank The Aims and Objectives of the Bank Shall Be As Under 1. To encourage thrift self help and co-operation among the member nominal members and depositors of the bank 2. TO do banking business as defined in clause of section 6 the banking regulation Act 1949 (as applicable to co-operative societies and also engage in such other business as is permitted under) Section 6 of the said Act on co-operative principles.

3. To tend money to its members on hire purchase basis. 3.1Borrowing or raising money lending or advancing of money either on surety or security drawing accepting discounting buying selling colleting and dealing bills of exchange handiest drafts railway receipts debentures and other instruments and securities whether transferable or negotiable or not the granting and issuing of letter of credit travelers cheques receiving all kind of bonds scripts or valuables on deposit or for safe custardy providing safe deposit vaults collecting and transmitting of money and securities
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3.2To act as agent of any government or local authority or any other person or persons the carrying of agency business of any description including the clearing and forwarding of goods giving of receipts and discharges and otherwise acting as an attorney on behalf of the customer 3.3To recover the loans and advances those are issued. 3.4TO earn more profit by adopting the changes those are taken place in the banking industry. 3.5Transaction in public and private loans and negotiating and issuing the same. 4. To open branches sub branches offices etc., in whatever name called with in the area of operation of the bank with prior permission of the registrar and the Reserve Bank of India and to frame rules of their working. 5. To draw accept negotiable sale and collect bills of exchanged other negotiable instrument for and on behalf of the bank in accordance with the rules framed by the board

6. To sale purchase negotiate endorse pledge government securities bonds share etc of any co-operative societies guaranteed by the government for legitimate investment of surplus funds of the bank and do things incidental to such business.

Rules and regulations of the banks The banking regulating act 1949 as application to co-operative societies which had come into force from 1st march 1966. Has vested the reserve bank with various statutory powers of control of supervision over the co-operative bank. Service profile such as deposit insurance up to Rs.11lakhs per individual safe deposit locker facility cheque clearance facility.

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Section (5) In term of this section of primary co-operative bank means a co-operative society other then primary agriculture credit society. I. II. III. The primary object principal business of which on the transaction of banking business. The paid up share capital and reserves of which are not less than one lakhs of rupees. The bye laws of which do not permit admission of any other co-operative society on member.

Section (6) I. The government of India by a notification dated 12/12/1995 has specified hire purchase and equipment leasing as forms of business in which it is lawful for a co-operative bank of engage. The government of India by notification has notifies insurance as a form of business which may be undertaken by the co-operative bank

II.

Section (8) A co-operative bank cannot undertake trading activates

Section (9) I. II. A co-operative bank is prohibited from holding immovable property how so ever acquired except such as is required for its own use. Prohibits sanction of loans and advances on the security of its own shares and also unsecured loan and advances to direct or the firms of private companies in which they are interested.

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Section (20/A) Co-operative banks would have to obtained prior approval of the RBI to remit in whole or in part any debt due to by any of its past or present directors.

Section (29&31) In terms of the notification issued under amended section 29 the banks are now required to prefer their profit and loss and balance sheet at 31st march of each year.

CONSTITUTION OF BOARD OF DIRECTORS Since the directors are elected form amongst the members (except co-opted and nominated directors) The board of directors is primarily concerned with the formation of policies keeping in view the guidelines issued by RBI & State /central government The board should also excise overall supervision and control over the functioning of the bank leaving day administration to eh chief executive officer.

Duties and Powers of the Board To admit members and nominal members To allot share and sanction transfer of share To invest funds of the bank in government & approved securities To consider the annual report To hear and deal with complaints To regulate the interest on deposit To appoint appraisers and valuators To make the appointment of the staff of the bank
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 To provide better customer service To inter connect all the 2 branches

GENERAL BODY MEETING With three months from the date of registration of the bank the chief promoter shall convene the first general body meeting of registration of the bank. In the first general body meeting the following business shall be transacted. Element of a chairman among the members presents to preside over the meeting Admission of new members Elements of the members of the board Fixing up of the limit up go with the finds may be borrowed To earn more profits by adopting the change those are taking place in the banking industry To install ATM at all bank premises Quorum of the general body meeting 1/5th of the total members.

The functions of the general body meeting shall be 1. To approve the programmed activities of the bank repaired by the board for the ensuing year 2. To record the result of election of the member of the board 3. To receive the report from the B.O.D on the working of the bank together with the statements like receipts & payments assets & liabilities profit and loss account and also the budget for the coming year 4. To sanction distribution of profit and dividend 5. To appoint persons as local auditors duly qualifies to audit the accounts 6. To frame alter and revise the bye-laws 7. To increase the facility of lending loans to the member of the bank 8. Continuous up-gradation of skill by imparting training to the staff.

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KYC GUIDELINES OR PRINCIPAL (KNOW YOUR CUSTOMER) RBI has issued several guidelines relating to identification of depositors and advised the banks to put in place system and procedures to prevent financial frauds indentify money laundering and suspicious activates and for scrutiny monitoring of large value of cash transaction

ELECTONICS CLEARING SCHEME (ECS) credit clearing RBI has introduced ECS scheme effective from April 1995. The scheme is now available in all the major cities where there is electronics clearing

MICR Cheques (Magnetic ink character recognition) MICR is a technique using Ink containing magnetized particles to print character on cheques draft travelers cheques and paper documents. When the instrument comes under an electrical field this line gets magnetized and generates a wave pattern which is readable by computer. Encodes and readers sorters are used for this purpose. The MICR cheques are printed on a special paper and at the bottom of the cheque there in white bond (code line read bond) where the cheque number and branch code number are printed. The first code on the code lines in the serial no of the cheque

AUDIT AND INTERNAL INSPECTION Internal audit The banks should introduce a sound system of internal audit. The head of the inspection dept at the H.O should be a sufficiently senior person and should report directly to the chairman. The officer posted to this dept should have sufficient experience and exposure and the dept should be headed on official of sufficient experience and exposure and the dept should be headed on official of
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sufficient seniority and process integrity. The periodicity of the internal audit and the branches should be a least once in the every 12 months which should be really of purpose character.

Guidelines of the Reserve Bank of India for customer services

1. Commencement of employees working hours 15 minutes before

commencement of business hours can be made operative banks at head office and branches

2. The entire customer who enters the banking hail before the close of business
hours should be attended to

3. Loans for establishing small scale industries and for improvement of business 4. Staff at the counters should undertake the following transitions during the
extended business hours A) B) NON-VOUCHER GENERATING TRUNCATIONS Issue of pass book ,statements of accounts Issue of cheques book Delivery of term deposit receipts, draft Acceptance of clearing cheques , bills for collection VOUCHER GENERATING TRANSATION Issue of deposit receipts Acceptance of cheques for locker rent due Issue of traveler cheques Issue of gift cheques

5. To ensure that no counter remains unattended during the business gours and
uninterrupted service is rendered to the customers

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6. Unless the customer prefers not to nominate ( this may be recoded without
giving scope for conjecture of non-compliance) nomination should be a rule to cover all other existing and new account

7. Time norms for specialized business transactions should be display

predominantly in the banking hail.

MAGAGEMENT OF ANANDA CO-OPERATIVE BANK LTD Bank is entrusted to a committee known as board of directors. The members of the managing committee are elected directly by the member of the co-operative bank at the annual general body meeting

THE ANANDA CO-OPERATIVE BANK HAS THE FOLLOWING BEARERS President Vice-president Directors

The board of directors determines the detailed programmers and procedure of the bank. The office bearers are responsible for the conduct of the day to day affairs of the bank in accordance with the decision of the board of directors. They are accountable to the managing committee.

ANANDA CO-OPERATIVE BANK HAS THREE SUB COMMITTEE Audit sub committee Enrollment sub committee Loan sub committee

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Audit subcommittee: in this committee office bearers verify the receipts payments and balance sheet of the previous month. Enrollment subcommittee: In this office bearers approve the new membership application Loans subcommittee: In this committee office bearers are scrutinize the loan application and sanction the amount

Management Structure of the Ananda Co-Operative Bank Ltd

Board of director

President

Vice president

Audit sub committee

Membership Sub committee

Loan sub committee

Director

Director

Director

Director

Director

Director

Director

Director

Director

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Head office H.I.G -28 N.V Arcade, Pt cross 2nd stage KHB colony Basaveshwarnagar Bangalore: 560079. Branch 1: Dr B.R. Ambedkar medical college K.G hally Bangalore Branch 2: Sheshadripuram Bangalore

Interest rate on term deposit 30days to 90days 91days to 180days 181days to1year 1year to 2year 2year to 3year 7.50% 9.00% 9.25% 9.50% 10.00%

Note: For senior citizen 1% extra.

Interest rate on loans and advance I. II. Unsecured loans (surety loan)-16%
Secured loan 1) Construction loan-13% 2)Mortgage loan-14% 3) Vehicle loan-14% 4) Gold loan-13%

Attractive silent features Sale deposit locker facility. Attractive interest rates of deposit.
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1%more interest of deposit to senior citizen. Computerized and personalized available in all branch. Prompt and personalized service is out motto. All deposits are covered under DICGC.

BOARD OF DIRECTORS Sri L.Shivalingaiah Sri B.H Chandrashekar Sri Gangadharaiah Sri P.L Nanjundaswamy Sri C. Doddherahaiah Sri L. Boraiah Sri N. Mahadevswamy Sri M. Mllikarjllnaiah Sri C.N Mahadevappa Sri S. Siddarja Sri Nag chowdiaih Smt N M Madevi Sri Mahadevaiah Sri M K Balraj President Vice-president Director Director Director Director Director Director Director Director Director Director Director Director

Functions of Ananda co-operative bank Ltd Banking means accepting for the purpose of lending or investment of deposit of money form the public, repayable on demand or otherwise and withdrawabel by cheque draft and order otherwise. So the main function of the bank is to collect deposit firm the public and use these funds for lending and investment similarly interest is earned on lending and investment. The bank creates liabilities by way of deposits and borrowings and assets by way of lending and investment. For each rupee collected in form of deposits equal
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asset is created in the form of advances and investment is cash balance with banks. In the balance sheet of the banks the assets and liability position appears as under.

Liabilities Capital Reserve and surplus Deposits Borrowing Other lib&provision Main financial function of bank

Assets cash balance with RBI/other bank investment advance Fixed assets and other assets

The following functional area of Ananda Co-operative Banks Ltd 1. 2. 3. 4. Deposit mobilization Membership enrollment Loans issuing Investment

1. Deposit mobilization Bank mobilize the deposit though a) b) c) d) e) f) g) Fixed deposit Ananda nidhi deposit Recurring deposit A.C.P.P deposit Staff security deposit Saving bank account Current account

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Fixed deposit The deposit with the bank for fixed period specifies in advance fixed deposit are repayable on the expiry of the specified period chosen by the depositor t suit his purpose and to enable him to get back the money as and when he need it . As on 31/3/2008 deposits of Rs 18.00crores

Saving bank account Saving bank account is meant for the people of the lower and middle classes who which to save a part of their current income to meet their future needs and also intend to earn on income for their saving, As on 31/3/2008 bank has total of Rs 4.03 crores in saving bank account. These accounts are opened with a view to earn interest on deposits

Current account A current account is running and active account which may be operated upon any number of times during the working days. There is no restriction on the number and the amount of withdrawal from a current account. As on 31/3/2008 bank has Rs.1.33 crores in current account.

Recurring deposit As there is a regular deposits of money in to a recurring deposit account and there is no withdrawal from the account before the expiry of the fixed period At the end of the fixed period the banker pay the cumulative interest to the recurring deposit. The period of deposit is minimum one year and multiples of Rs 5 or 10.

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Loans issuing The major portion of the banks funds is employed by way of loans and advances which is the most profitable employed of this fund. The major part of the banks income is earned form the interest on the funds so lent. While lending this fund well known principles of sound lending in order to minimize the risks. The bank has issuing loans through secured unsecured loans and pledged loan.

Types of secured loan (Long term loans) Immovable property loan Vehicle loan Hypothecation loan

Types of unsecured loans (medium term loan) surety loan Salary credit loans Salary recovery

Pledged loans: advance against pledge of gold ornaments as on 31/3/2008 bank issued Rs 17.90 crores loans The formula for calculating EMI (equated Monthly installment)

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WHERE, L = loan amount I = interest rate (rate Per annum divided by ) A = to the power of N = loans period in months Assuming a loan of Rs. 1 Lakh at 13 per annum, repayable in 15 years, the EMI calculating using formula will be.

EMI = (1, 00,000*0.01083) *

(1+0.13/12) ^180__ [(1+0.13/12) ^180]-1

M = 1083 * 6.95123_= 1083* 1.16803 5.95123 EMI= Rs. 1264

Investments
The provisions of section 20 of the banking regulation Act of 1949 every primary co-operative bank is required to held investment in Government and approved securities.

Categorization of investment
Held to maturity (HTM) Availability for sale (AFS) Hold for Trading(HFT)

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Classifications of funds in Balance Sheet

Government securities. Approved securities Share and Bonds Others.

At present bank invest the amount in government securities, Apex Bank FDs & BDCC FDs. The total investment amount is as 31/03/2008 Rs. 8.71 crores. Asset-liabilities management Asset liability management is a tool that enables bank management to take business decisions in a more informed frame work. The ALM function inform the management which current market risk profiles of the bank and the impact that various alternate business decisions would have on the future risk profile. The management can than choose the best course of action depending on boards risk appetite for example CEO of the bank wants to know the kind of the deposit and the branches should be told to encourage Risk assessment and management Risk is inherent in banking and is unavoidable it is the task of ALM not avoid but to manage it and keep different type of risks with in acceptable level. This requires the continues mentoring of risk exposure including capacity of anticipate changes and to act so has to structure a bank business to profit from it are to minimize loss. The bank is exposed the different type of risk viz. I. II. III. IV. Credit risk Liquidity risk Interest rate risk Current risk

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Credit risk It refers to the risk of default on loans and advances granted by banks when timely repayment of principle and interest are both is threatened due to inability are unwillingness of the borrowers this causes cash flow problem and uncertainty

Liquidity risk It refers to the risk of maturing liabilities not finding enough maturing assets to meet these liabilities. This risk arises because bank borrows fund for different maturities in the form of deposits market operation etc

Interest rate risk It refers to the risk of changes in interest rates subsequent to the creation of the assets and liabilities at fixed rates. In the presence situation co-operative are permitted to fix up rate of interest on advances on their own.

Current risk This is the risk as a result of foreign currency exposure and change in the rate of exchange for a given currency in terms of both the domestic and other foreign currencies. Bank engaged in international markets operation is exposed to such risk.

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FUNCTIONAL STRUCURE OF ANANDA CO-OPERATIVE BANK LTD

Manager

Accountant

Saving banks and current account

Deposit account

Cash section

Loan section

Audit section

Clearing & Misc.section

Fixed deposit Saving bank Recurring deposit Current account

Voucher checking

Reconciliation

Clearing Others account Share section

D.D & Misc

Loan counter

Loan issuing

Recover section

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SAVING BANK AND CURRENT ACCOUNT SECTION The following function held in this section S.B and C.counter works Writing sub day books every day Issue of cheque book withdrawal slip and maintain the register To maintain token and after truncations the balance token to handed over to the cashier after verification To maintain cheque discount account accounts and register Issue of pass book To debit monthly cheque transfer like transfer to loan R.D etc To maintain cheque requisition

PROCEDURE TO BE FOLLOWED BY A BANK WHILE OPEINING A BANK ACCOUNT When a banker is required by a prospective customer to open an account in his name the banker should take certain steps they are

Receiving duly filled in account opening form Obtain 2 copies of photograph Obtaining introduction or reference and following it up Obtaining specimen signature Obtaining mandate Receiving initial deposit Handing over the pay in slip book and pass book

Deposit section The following functions held in this section To maintain the maturity register and send the maturity intimation to the depositors Writing the sub day books
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 Monthly transfer interest to the depositors account Writing of deposit certificate To put up and maintain deposit loan application with update entries. Deposit loan Application to be put up to the management for sanction of loan To maintain g the nomination file

Cash section The following function held in this section To attend all receipt and payment of the bank To maintain cashier scroll and denomination register every day To be the custodian of token and issue to the counter for transaction To make arrangements to exchange all soiled notes to reserve bank

Share section The following functions held in this section To attend counter work Registration of all share application and to maintain share suspense writing register To maintain nominal membership register Processing of membership application to the membership enrollment subcommittee though secretary / manager To maintain change of address file and note down in all out records Writing of share certification Making entries in share pass book To send membership approval intimation

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Loan sections The following functions held in this section Attend the counter work Writing of loan sub day book every day To prepare debit monthly transfer list form SIB CIA IPDs To maintains index To receive all loan application To maintain liability register Processing of loan application To attend loan of sub committee Scrutinize all loan application To receive the loan bonds and issues loans

Loan recovery sections The following functions held in this section To prepare defaulters list and to take steps for the recovery of the loan dues To send notices t loan defaulters regularly To attend recovery meeting To file and attend salary recovery arbitration and execution case regularly To prepare priority sector register To calculate NPA

Recent development in co-operative banking There are many recent in banking some of the recent development in banking are Core banking Tele banking Electronic fund t transfers
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Core banking Core banking is a type of banking in which a person who opens a bank account in a particular branch of a bank will be a customer of bank rather than being a customer of the particular branch and so he can transact banking transactions anywhere and at any time

Tele banking Is a banking under which a number of banking service are facilitate can be held by customer form this bank through telephone

Electronic and transfer EFT scheme is scheme of the Reserve Bank of India EFT is system by which cheque pay-in-slip and other financial paper are replaced by computer controlled invisible and immediate transfer of the funds form one account to another.

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45

Objective: 1 To find out the various ratios through financial statements.

ANALYSIS AND INTERPRETATION OF DATA FINANCIAL ANALYSIS Financial analysis is the analysis of financial statement of a company to assess its financial health and soundness of its management. Financial statement analysis involves a study of the financial position statements of a company to ascertain its prevailing state of affairs and reasons there of one. Such study would enable the public and the investors to ascertain whether one company is more profitable than they also to state the causes and factors that are probably responsible.

Ratio Analysis Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions.

Type of Ratio 1. 2. 3. 4. Liquidity Ratios. Capital Structure Ratios. Turnover Ratios. Profitability Ratios.

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Liquidity Ratios (Short Term Solvency) Liquidity Ratios or short term solvency analysis aims to determine the ability of a business to meet its financial obligations during the short term and to maintain its short-term debt-paying ability. The aim of Liquidity analysis is for a company to have adequate funds on hand to pay bills when they are due and to meet unexpected needs for cash. The Various Ratios are 1. 2. 3. 4. Current Ratios. Absolute Ratios. Turnover Ratios. Profitability Ratios.

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1. Table showing Current Ratio Current Ratio

This ratio is commonly used to perform the short term financial analysis. Also known as the working capital ratio, this ratio matches the current assets of the firm to its current liabilities.

Current Ratio =

Current Assets _ Current Liabilities

YEAR

CURRENT ASSESTS (IN LAKHS)

14776785 19396012 127173123 12526540 219119751

CURRENT LIABILITESES (IN LAKHS)

515107 564494 264494 4433746 6414639

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

28.68 34.35 48.00 29.21 34.15

CA = drs, cash balance, bank balance, B/R, A/C receivables, Stock CL = Crs, B/P, BOD, A/Cs Payable

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1. Chart showing the current Ratio

48 50 45 40 35 30 25 20 15 10 5 0 2004-05 2005-06 2006-07 RATIO 2007-08 2008-09 28.68 34.35 29.21 34.15

Interpretation
The ideal current ratio is 2:1. By viewing the above table and graph we can interpret that the current ratio is for more than ratio. So that the banks liquidity position is very high it not only shows the financial strength of the bank bid also shows inefficiency of portfolio management of the bank.

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2. Table showing Absolute Liquid Ratios

Absolute Liquid Ratio

It may be defined as the relationship between absolute liquid assets and current liabilities. Absolute liquid assets include cash in hand and cash at bank and marketable securities or temporary investments.

Absolute Liquid Ratio=

Cash +Marketable securities_ Current Liabilities

YEAR

CURRENT ASSESTS (IN LAKHS)

51,86,836.00 55,07,268.00 62,20,960.07 68,23,178.00 76,27,403.04

CURRENT LIABILITESES (IN LAKHS)

515107 564494 564494 643374 741463

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

10.06 9.93 11.02 10.60 10.28

Note: Marketable securities include bonds and debentures but Ananda Co-operative bank did not issued any bonds and debentures so we consider only other quick assets and cash.

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2. Chart showing Absolute liquid ratio

11.2 11 10.8 10.6 10.4 10.2 10 9.8 9.6 9.4 9.2 2004-05 2005-06 10.06 9.93

11.02

10.6 10.28

2006-07 RATIO

2007-08

2008-09

Interpretation
The liquid rate of the year 2004-05 was 10.06%, in 2005-06 it in decreases to 9.93% and again rises to 11.02% in the year 2006-07. But in the year 2007-08 it has decreased to 10.6% the rate which was the highest & indicated that the bank has ability to meet its current liabilities in time, while on other hand in the year 2008-09, there is a slant change decrease in the ratio is to 10.28% but even though co-operative bank as to concreter on marketable securities to settable size the liquidity position.

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Capital Structure Ratios or Gearing ratio Long term Solvency Long term solvency ratio conveys a firms to meet the interest cost and repayment schedule of its long term obligations. These ratios are helpful to management in proper administration of capital. It also helps the creditors to know the capacity of a business concern to pay debt in future. The Various ratios 1. 2. 3. 4. Debt equity ratio. Proprietary ratio. Interest covering ratio. Capital gearing ratio.

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3. Table showing Debt Equity Ratio Debt Equity Ratio

Debt Equity Ratio also knows as external and internal Equity Ratio is calculated to measure the relative claims of outsiders and the owners (i.e., shareholders) against the firms assets. This ratio indicates the relationship between the external equities or the long term debts and the internal equities or the share holders funds.

Debt Equity Ratio =

Long Term Debt__ Shareholders Funds

YEAR

LONG TERM SHAREHOLDERS RATIO DEBT (IN LAKHS) FUND (IN LAKHS)
44487889 55342992 115460296 152435418 179040404 15266215 16033075 17452025 17064700 17696400 2.91 3.45 6.61 8.93 10.11

2004-05 2005-06 2006-07 2007-08 2008-09

Long term Debt = Debentures + Long term Borrowings Share Holders Funds = Eq share capital+Pref Share +Reveres&Surplues+ undistributed Profit (Differed Exp Accumulated cost)

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3. Chart showing Debt Equity Ratio

12 10 8 6 4 2 0 2004-05 2005-06 2006-07 PERCENTAGE 2007-08 2.91 3.45 6.61 8.93

10.11

2008-09

Interpretation
As in 2004-05 and 2005-06 the debt equity ratio in 2.91%, 3.45% respectively. In 2006-07 the debt equity ratio has been increase to 6.61% and increase to 8.93% in 2007-08 on other hand increase at 10.11% in year 2008-09 the debt equity ratio of 1:1 is general acceptable from the point of view of the bank this ratio indicate the extent to which a bank as to depend upon outsider for its financial requirement. The debt equity ratio enjoys the same input as the current ratio in the analysis of short term financial position.

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4. Table showing Proprietary Ratio

Proprietary Ratio A variant to the debt equity is the Proprietary Ratio, which is also known as equity ratio or share holders to total equities ratio or net worth to total equities ratio. This ratio established the relationship between the share holder funds to total assets of the bank. The ratio of proprietors funds to total funds is an important ratio for determining long term solvency of a bank Share holders.

Proprietary Ratio =

Share Holder Fund___ Total Assets

YEAR

SHAREHOLDERS TOTAL ASSETS FUND (IN (IN LAKHS) LAKHS)

1,52,66,215.00 1,60,33,075.00 1,74,52,025.00 1,70,64,700.00 1,76,96,400.00 20,46,64,122.00 22,23,09,944.57 23,52,01,994.57 19,28,82,299.00 19,39,81,687.00

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

7.45 7.21 7.42 9.01 9.12

Share Holders Funds = Eq share capital+Pref Share capital + Reveres&Surplues+ undistributed Profit (Differed Exp Accumulated cost)

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4. Chart showing Proprietary Ratio

10 9 8 7 6 5 4 3 2 1 0 2004-05 2005-06 2006-07 RATIO 7.45 7.21 7.42

9.01

9.12

2007-08

2008-09

Interpretation
The above chart shows that the proprietary ratio is in constant range in 2004-05 ratios were 7.45. In 2005-06 it was decreased to 7.42. In the year 2006-2007 ratio was 7.45. In 2007-08 the preparatory ratio gradually increase to 9.01 and in the year 2008-09 it decease to 9.12 gradually due to increase in the value of total assets of the bank

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5. Table showing Interest Coverage Ratio Interest Coverage Ratio

This ratio indicates whether the business earns sufficient profit to pay periodically the interest charges.

Interest Coverage Ratio =

Earnings before tax & Interest (EBIT)__ Interest on debentures long term loans (i.e., Fixed Interest Charges)

YEAR

EBIT (IN LAKHS)

INTEREST ON DEBENTURE % LONG TERM LOAN (IN LAKHS)

4,44,87,889.00 5,53,42,992.00 8,92,96,257.00 7,54,95,677.00 1,76,96,400.00

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

16,88,889.00 20,30,514.68 26,22,072.80 31,07,058.89 24,45,945.70

0.07 0.036 0.037 0.041 0.19

EBIT = contribution- Variable Cost EBT = EBIT- Interest

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5. Chart showing Interest Coverage Ratio

0.2 0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2004-05 2005-06 2006-07 RATIO 2007-08 0.07 0.037 0.041

0.19

0.036

2008-09

Interpretation
The above graph shows the interest coverage ratio. In year 2004-05 the interest coverage ratio is 0.037 lakhs. In the year 2007-08 the bank earned the 0.041 lakhs interest. In the year 2008-09 the bank interest has gone down to 0.19 lakhs. As per the chart the Interest Coverage Ratio shows 0.07% which indicates that bank is not earning sufficient profit to pay periodically. The interest charges and in the year 2005-06 it was just 0.036% but there was decrease. In next year of 0.037% in the year 2007-08 the chart shows 0.041% on other hand on 2008-09 here is again increased to 0.19%. According to the lender the bank is not earning sufficient interest to pay the lender and shareholder. So the bank has to take some measures to quick interest coverage.
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6. Table showing Capital Gearing Ratio Capital Gearing Ratio

This is the ratio between the fixed interest bearing securities and equity share capital. Fixed income securities include debentures and preference capital Equity share holders fun Capital Gearing Ratio = Fixed income securities__ Equity Shareholders Funds

YEAR

FIXED INCOME SECURUTIES

EQUITY RATIO SHAREHOLDERS FUND (IN LAKHS)

1,52,66,215.00 1,60,33,075.00 1,74,52,025.00 1,70,64,700.00 1,76,96,400.00 2.69 2.86 3.02 3.45 5.12

2004-05 2005-06 2006-07 2007-08 2008-09

4,10,80,601.57 4,58,72,910.00 5,28,06,652.25 5,90,06,652.26 9,07,12,150.46

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6. Chart showing Capital Gearing Ratio

6 5.12 5

4 2.69 2.86 3.02

3.45

0 2004-05 2005-06 2006-07 RATIO 2007-08 2008-09

Interpretation
As per the data collect by bank the Capital Gearing Ratio in the 2004-05 it was 2.69% and increased to 2.86% in the year 2005-06. Mean while the rate has been reduced to 3.02% end of 3rd march 2007 and the slightly increase by 3.45% in 2007-08. At last in the year 2008-09 the Capital Gearing Ratio shows 5.12% i.e., 5.12:1 A bank is highly geared of his rate is more than one if it is less than one it is low geared. A highly geared bank has the advantage of trading equity. The above graph shows the capital gearing ratio. In the year 2004-05 the cap gearing ratio was 2.69. It has increased to 3.02 in the year 2006-07. In year 2008-09 it is 5.12.

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TURN OVER RATIOS (Performance ratio or Activity ratios)

Turnover ratios are used to indicate the efficiency with which assets and resources of the firms are being utilized. These ratios are known as turnover ratios. A higher turnover ratio generally indicates better use of capital resources which in turn has a favorable effect on the profitability of the firm. Types of Turnover ratio 1. Debtors Turnover ratio. 2. Working capital Turnover ratio. 3. Capital Turnover ratio.

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7. Table showing Debtors Turnover ratio Debtors Turnover ratio

This ratio indicates the relationship between net credit sales and debtors. It shows the rate at which cash is generated by the turnover of debtors. Debtors that do not arise from regular sales should be excluded, e.g. bill receivable from buyer of an old plant and machinery should be excluded.

Debtors Turnover ratio= Credit Sales (Long term Loans)_ Average Debtors

YEAR

NET CREDIT SALES ( IN LAKHS)

11,26,00,570.80 12,32,67,156.00 14,50,57,502.00 17,16,72,179.00 19,90,40,404.10

AVERAGE DEBTORS ( IN LAKHS)

53,03,591.55 55,66,902.55 60,05,604.56 70,66,902.55 80,70,657.45

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

21.23 22.14 24.15 24.29 24.66

Average DRs = Opening Drs + Closing Drs 2

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7. Chart showing Debtors Turnover ratio

25 24.15 24

24.66 24.29

23 22.14 22 21.23 21

20

19 2004-05 2005-06 2006-07 RATIO 2007-08 2008-09

Interpretation
In the above chart shows in the year 2004-05 Debtors Turnover ratio was 21.23% and it has been increase to 22.14% in the year 2005-06 and it increase to 24.15 in the year 2006-07. In the year 2007-08 the Debtors Turnover ratio had been increase to 24.29% and another hand in 2008-09 it increased to 24.66%. By this chart it can easily interpret that a higher Debtors Turnover ratio indicates that debts are being collected more quickly changes in this how the changes in the bank credit policy or changes in its ability to collect from its debtors.

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8. Table showing Working Capital Turnover ratio Working Capital Turnover ratio
This ratio indicates the efficiency or inefficiency in the utilization of Working Capital in making sales Working Capital Turnover ratio= Sales______ Net Working Capital

YEAR

NET CREDIT SALES ( IN LAKHS)

11,26,00,570.80 12,32,67,156.00 14,50,57,502.00 17,16,72,179.00 17,90,40,404.10

NETWORKING CAPITA ( IN LAKHS)

2,00,49,030.64 2,08,38,908.00 2,31,05,604.56 2,49,22,909.00 2,59,04,471.00

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

5.61 5.91 6.67 6.88 6.91

Sales = Cash + Credit Sales Working Capital = CA - CL

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8. Chart showing Working Capital Turnover ratio

7 6 5 4 3 2 1 0 2004-05 2005-06 5.61 5.91

6.67

6.88

6.91

2006-07 RATIO

2007-08

2008-09

Interpretation
The Working Capital Turnover ratio of the year 2004-05 was 5.61%. in 2005-06 it slightly increase to 5.91% and by the year end of 31st march 2007 there is a increase in the Working Capital Turnover ratio that is 6.27% and there is sudden increase in the ratio to 6.88% and by the year end of 2009 the ratio every 6.91 and there is no much different in the ratio and compare to the previous year ratio and this shows the efficient utilization of Working Capital in generating sales. A low ratio on the other hand may indicate excess of net working capital. This ratio thus shows whether working capital is efficient of utilized or not.

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9. Table showing capital turnover ratio Capital turnover ratio

This ratio shows the relationship between cost of sales (Loans &Advances) and the total capital employed (Deposit holders) Capital turnover ratio= cost of sales (Loans & Advances) ____ Total Capital Employed (Deposit Holders)

YEAR

COST OF GOODS CAPITAL SOLD EMPLOYED ( IN LAKHS) DEPOSIT HOLDER ( IN LAKHS)

11,26,00,570.80 12,32,67,156.00 14,50,57,502.00 17,16,72,179.00 17,90,40,404.10 17,49,69,475.00 18,35,93,845.00 20,32,66,651.45 23,66,03,233.55 23,66,03,233.55

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

0.64 0.67 0.71 0.72 0.75

Total Capital Employed = Share Capital + Reveres & Surplus

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9. Chart showing capital turnover ratio

0.76 0.74 0.72 0.7 0.68 0.66 0.64 0.62 0.6 0.58 2004-05 2005-06 2006-07 RATIO 2007-08 0.64 0.67 0.71 0.72

0.75

2008-09

Interpretation
The above ratio show 0.64% in the year 2004-05 and it has been increase to 0.67% in the year 2005-06 which indicates high capital turnover ratio is the possibility grater profit in this year. In the year 2006-07 it was 0.71% and in the year 2007-08 it increased to 0.72% by the year end 31/1/2009 the ratio has increase to 0.75% was have notice from the ratio calculate that they have remain about same in the year. So this low capital turnover ratio is a sign of in sufficient sale and possibility of low profit. Every business should earn sufficient profits to survive and grow over a long period of time. In fact efficiency of a business is measured in terms of profits.
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Profitability ratios are calculated to measure the efficiency of a business. Types of Profitability Ratios. 1. 2. 3. 4. 5. Gross profit ratio. Net profit ratio. Return on investments. Return on Equity. Earning per share (EPS).

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10. Table showing Gross profit ratio Gross profit ratio

This ratio expresses the relationship between Gross profit and sales. Gross profit ratio = Net Sales-Net Profit_ *100 Net Sales

YEAR
2004-05 2005-06 2006-07 2007-08 2008-09

NET PROFIT ( IN LAKHS)

12,26,36,641.30 14,50,57,502.00 17,16,01,509.10 17,65,94,458.40

NET SALES ( IN LAKHS)

12,32,67,156.00 14,54,19,564.00 17,16,72,179.00 17,43,40,404.10

RATIO
98.5 99.00 99.71 99.95 101.29

11,09,11,68,174.00 11,26,00,570.80

Net Sales = Credit sales + Cash Sales

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10. Chart showing Gross profit ratio

101.5 101 100.5 100 99.5 99 98.5 98 97.5 97 2004-05 2005-06 2006-07 RATIO 2007-08 98.5 99 99.71

101.29

99.95

2008-09

Interpretation
The gross profit to net profit are 98.50%,99%,98.19%,99.95% and 101.29% in the year 2004-05,2005-06,2006-07,2007-08&2008-09 respectively this ratio is in good position in all the 5 years. A high gross profit ratio indicates relatively lower cost and in the sign of good management.

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11. Table Showing Net Profit ratio Net Profit ratio

Net Profit ratio establishes the relationship between net profit (after tax) and sales. It indicates the efficiency of the management and other activities (non trading expenses and incomes) of the business. This ratio is the overall measure of the profitability of the business.

Net Profit ratio= Net Profit _*100 Net Sales

YEAR
2004-05 2005-06 2006-07 2007-08 2008-09

NETPROFIT (IN LAKHS)

6,88,889.01 7,30,514.68 9,62,272.81 15,66,989.00 24,45,945.68

NETSALES (IN LAKHS)

12,26,00,570.75 12,32,67,156.00 14,50,57,502.00 17,16,72,179.00 17,90,40,404.09

RATIO
0.56 0.59 0.66 0.91 1.36

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11. Chart Showing Net Profit ratio

1.36 1.4 1.2 1 0.8 0.56 0.6 0.4 0.2 0 2004-05 2005-06 2006-07 RATIO 2007-08 2008-09 0.59 0.66 0.91

Interpretation
The above Chart shows the net profit ratio is 0.56% in the year 2004-05 and increase in 2005-06 at 0.59% and it as increase to 0.66% and again increase in 2007-08 at 0.91% by the year ended off 31/1/2009 the net profit ratio is 1.36% it quit fluctuating. The net profit ratio is the overall measure of a bank ability to turn each Rs of Sales* Profit as per the data the bank maintain sufficient profit or good profit which is an advantageous position to service in the industry.

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12. Table showing Return on Investment Return on Investment

This is the most important test of profitability of a business. It measures the overall profitability. It is ascertained by comparing profit earned and capital (or funds) employed it to earn.

Return on Investment=

Net profit before Interest &Tax__ Capital employed (Deposit Holder)

YEAR

PROFITBEFORE INTEREST&TAX(IN LAKHS)

16,88,889.01 6,30,514.68 8,62,272.81 99,66,989.80 16,45,945.68

CAPITAL EMPLOYED(DEPOSIT HOLDER) ( IN LAKHS)

14,79,69,457.60 1,73,59,384.00 1,73,26,665.45 1,92,94,807.20 23,66,03,233.60

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

1.31 3.63 4.97 5.16 6.90

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12. Chart showing Return on Investment

6.9 7 6 4.97 5 4 3 2 1 0 2004-05 2005-06 2006-07 RATIO 2007-08 2008-09 1.31 3.63

5.16

Interpretation The ratio indicates the return on investment in the year 2004-05 was 1.31%. In the 2005-06 it was 3.63% it increased. in the year 2006-07 was incased to 4.97 and in 2007-08 there is again increase of 5.16% and in year 2008-09 it was incased by 6.9% . This shows a more fluctuating on return on investment as bank purchase more asset there is slight decrease in the return in the year 2004-05 and 2007-08. The advantage of this ratio is that the bank can also use this rate for decisions make purpose.

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13. Tables showing return on Equity capital Return on Equity capital

This ratio establishes the relationship between the net profit available to equity share holder and the amount of capital invested by them Net profit after interest & taxes.

Return on Equity capital=

Preference Dividend____ *100 Equity Share Holder Funds

YEAR

NET PROFIT AFTER, TAX & PREFERENCE DIVIDEND

7,63,311.00 13,20,662.00 13,65,176.00 17,06,699.00 1,93,87,48.00

EQUITY SHAREHOLDER FUNDS

1,52,66,215.00 1,60,33,075.00 1,70,64,700.00 1,70,64,700.00 1,58,18,881.74

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

5.00 8.23 9.17 10.00 12.25

Equity Share Holders Funds = share Capital + R&S + Profit Accumulated Loss

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13. Chart showing Return on Equity capital

14 12.25 12 10 10 8.23 8 6 4 2 0 2004-05 2005-06 2006-07 RATIO 2007-08 2008-09 5 9.17

Interpretation
This ratio establishes the relationship between the net profit available to Equity shareholder as per the data the return on equity capital in the year 2004-05 it was 5% and it increased to 8.23% in the year 2005-06. Again this ratio as increased to 9.17% in the year 2006-07. This may be due to less profit when compare to past 3years. In the year 2007-08 there is a increased to 10% and in the year 2008-09 huge increase at 12.25% this off because very good profit an d by the bank and this shows return on equity shareholder hinds is a favored by investors and high market valuation is placed on such share. This may attract more investors and shareholder.
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14. Table showing Equity per share Equity per share

This ratio measures the earning per equity share i.e., it measures the profitability of the firm on a per share basis. Equity per share= Net profit after tax-preference dividend__ Number of Equity share

YEAR

NET PROFIT AFTER, TAX & PREFERENCE DIVIDEND

7,63,311.00 8,20,662.00 9,65,176.00 11,20,669.00 1,23,87,48.00

NUMBER OF EQUITY SHARES

9544 9608 9649 9597 9603

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

79.97 85.40 100.02 116.77 128.99

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14. Chart showing Equity per share

140 116.77 120 100.02 100 79.97 80 60 40 20 0 2004-05 2005-06 2006-07 RATIO 2007-08 85.4

128.99

2008-09

Interpretation
These rates establish the relationship between profits after tax 2 members of equity shares. The earnings per share for the year 2004-05 was Rs 79.97 in the year 2005-06 is increase to 85.4% on another hand in the 2006-07 there is a huge increase at Rs 100.02 and in 2007-08 earning per share to equity share was 116.77% as again increase at 128.99% in the year 2008-09. This shows there is a very floating figure in the past five year. The earnings per share as got a very good response by the bank in all the years.

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15. Table showing Interest on Loan

This establishes the relationship between interests received and total loan Interest on Loan= Interest received_*100 Total Loan

YEAR

INTERST RECEIVED ( IN LAKHS)

1,23,68,551.00 1,51,15,707.00 1,81,97,411.00 2,15,94,009.00 2,10,72,111.68

TOTAL LOAN ( IN LAKHS)

11,26,00,570.00 12,32,67,156.00 14,50,57,502.00 17,16,72,179.00 17,90,40,404.00

RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

10.98 12.26 12.54 12.57 11.76

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15. Chart showing Interest on Loan

13 12.54 12.5 12.26 12.57

12

11.76

11.5 10.98 11

10.5

10 2004-05 2005-06 2006-07 RATIO 2007-08 2008-09

Interpretation
The interest on loan has been recorded at 10.98% in the year 2004-05 there is a slight decrease in the year 2005-006 at 12.26% and in the year 2006-07 the interest on loan has been again slightly increase at 12.54% the interest on loan has recorded has 12.57% in the year 2007-058 and decrease to 11.76%. in the year 2008-09 by this it can be interpreted that the interest on loan has been changed every year but this has not affected the profit level has we can see there is a little change in every year.

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16. Table showing Interest Payout Ratio Interest Payout Ratio

It established the relationship between paid and earnings before tax and interest. Interest Payout Ratio= Interest Paid_ EBIT

YEAR
2004-05 2005-06 2006-07 2007-08 2008-09

INTEREST PAID
1,52,66,215.00 1,60,33,075.00 1,70,64,700.00 1,70,64,700.00 1,58,18,881.74

EBIT
1,39,89,293.70 1,38,93,665.70 1,58,31,005.48 1,26,17,574.34 1,82,64,827.42

RATIO
1.09 1.15 1.07 1.35 1.25

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16. Chart showing Interest Payout Ratio

1.35 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2004-05 2005-06 2006-07 PERCENTAGE 2007-08 2008-09 1.09 1.15 1.07 1.25

Interpretation
In this year 2004-05 was 1.90% and in the year 2005-06 it increase to 1.15% and it interest pay out decrease to 1.07% in the year 2006-07. This ratio has been increase at 1.35% and in the year 2008-09 it was record has 1.25% this how the interest paid every year is more than interest earned on loan this is due to more investors and shareholder and bank is maintaining good financial position through all five years.

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Objective: 2 To analyze the performance of the company Table-17 Table shows The Ananda Co-operative bank as estimation on the deposit from the year 2006 to 2010 (InLakhs) Year 2004-05 2005-06 2006-07 2007-08 2008-09 Estimated 1500 1800 1900 2100 2300 Achieved 1587.29 1732.67 1929.48 2366.03 2414.90

Analysis
From the above table, the status of deposits on the year 2005 there estimation was 1500 lakhs the bank as achieved more than estimation. On the year 2006 the estimation was 1800 lakhs but bank as achieved less than estimated deposit. And in the year 2007 as 1900 also the bank achieved the estimated deposit and again in the year 2009 the bank as achieved more than the estimation 2100 lakhs and again in the year 2010 bank as achieved their 2300 lakhs estimation from above.

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GRAPH-17 Graph showing the Ananda Co-operative Bank as estimation on the deposit from the year 2006 to 2010

2500 2000 1500 1500 1000 500 0 2004-05 2005-06 2006-07 Estimated 1587.29 1800 1900 1929.48 1732.67

2366.03 2100

2300

2414.9

2007-08

2008-09

Achieved

Inference
Above graph indicates, deposits that aim by the Pragathi Co-operative Bank ltd has 1500 in 2005 in was achieved and in 2006 is 1800 but it does not achieved that , in year 2008, 2009 and 2010 it was achieved by the bank.

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Table-18 Table shows the Ananda Co-operative Bank as estimation on the Reserve and Funds from the year 2006 to 2010 (In Lakhs) Year 2004-05 2005-06 2006-07 2007-08 2008-09 Estimated 150 200 300 350 400 Achieved 185.62 202.54 358.67 360.23 373.35

Analysis
From the above table, the status of Reserve and Funds on the year 2005 there estimation was 150 lakhs bank as achieve it. In the year 2006 there estimation was 200 lakhs but bank success in achieving. In the year 2007 also there aimed to achieved 300 lakhsbank as successful in achieved it and again in the year 2008 bank as achieved the 350 lakhs of estimation and in the year 2010 bank was not successful in to achieve the estimated 400lakhs Reserve and Funds.

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GRAPH-18 Graph showing The Ananda Co-operative Bank as estimation on the Reserve and Funds from the year 2006 to 2010

400 400 350 300 250 200 150 150 100 50 0 2004-05 2005-06 2006-07 Estimated 2007-08 Achieved 2008-09 185.62 200 202.54 300 358.67 350 360.23 373.35

Inference
Above graph indicates Reserve and Funds that aim by the Ananda Co-operative Bank ltd has achieved its estimation (Aimd) in the year 2005,2006,2007,2008 and in the year 2010 bank was not successful in achieving it.

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Table-19 Table shows The Ananda Co-operative Bank as estimation on the loan and Advance from the year 2006 to 2010 (In Lakhs) Year 2004-05 2005-06 2006-07 2007-08 2008-09 Estimated 1200 1500 1700 1800 1900 Achieved 1241.32 1532.11 1724.15 1790.40 1929.48

Analysis
From the above table, the status of Loans and Advance on the year 2005 there estimation was 1200 lakhs the bank as achieved the estimation. On the year 2006 the estimation was 1500 lakhs bank as achieved the estimated on Loans and Advance. And in the year 2007 1700 Lakhs the bank as successful in achieving the estimated. But in the year 2008 the bank as not achieved the estimation 1800 lakhs and again in the year 2009 bank as achieved their 1900 lakhs estimation from above.

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GRAPH-19 Graph showing the Ananda Co-operative Bank as estimation on the loan and Advance from the year 2006 to 2010

2000 1800 1600 1400 1200 1000 800 600 400 200 0 2004-05 2005-06 1200 1241.32 1500 1532.11

1700 1724.15

1800 1790.4

1900 1929.48

2006-07 Estimated

2007-08

2008-09

Achieved

Inference
Above graph indicates, loan and Advance that aim by the Ananda Co-operative Bank ltd has 1200 in 2005 in was achieved and in year 2006, 2007 the bank as achieved that. In the year 2008 the bank as not successful in achieving the estimation. In the year 2009 Bank aim was achieved.

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 To bring out the strengths and weakness of Ananda Co-operative Bank.

Strengths
The Ananda Co-operative Bank has good progress in reserve funds. The Ananda Co-operative Bank is achieving its aims and goals. The team work of Ananda Co-operative Bank is very good. The communication system and response for customer problem of Ananda Co-operative Bank is nice comparing to other banks. The Ananda Co-operative Bank is competing with national banks. The interest rate is high for deposit compare to nationalized banks.

Weakness
The banking time different compare to nationalized banks. The Ananda Co-operative Bank is not fully computerized. The Ananda Co-operative Bank as less growth rate compare to other co-operative banks. The Ananda Co-operative Bank recovering capacity is less.

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Summary of Findings
The study entitle a study on Financial Statement Analysis of Ananda Co-operative bank limited has been undertaken with the objective analysis and interpret the banks financial performance. The analysis of the bank was undertaken with the help of the ratios, which are important tools of financial analysis. In general, the bank has achieved tremendous progress over the recent years. The bank has healthy financial performances. The bank has been to achieve heavy growth across multiple parameters, including customers acquisition geographical spread, business volumes and revenues. The bank needs to maintain more current assets in order to meet its short term obligations. The growth of the bank is not stable in maintenance of liquidity ratio as it are fluctuating every year because low rate investment in temporary and marketable securities. Cash position of the bank is good. The proprietary ratio of the bank is fluctuating higher rate. So, the bank growth is good. The solvency ratio of the bank remains almost the same in the five consecutive years. Increase in external debt and also shareholders funds and it is fluctuating every year. Price earning ratio has been good and the market share of the bank is increasing day to day. Return on equity has been fluctuating so, the bank as to maintain a portion of net profit for the shareholders. The bank is in good position in maintaining the total assets. The earning per share is in very good position. There has been a continuous increase for the four consecutive years. Interests on loans are well and good bank has more loans with less rate of interest.

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 There has been continuous increase in net profit for four years. This shows that the profitability of the bank is in very sound position. Deposits have been increasing day to day bank has sufficient deposits. The advance has been increased over the years and this shows that the bank is in around positional. The balance is maintaining good absolute liquidity ratio and this shows the good position and maintaining good liquidity to meet working capital requirements. As the balance is maintaining high Capital gearing ratio the shareholder will get receive sufficient income securities. The bank as good R.T.O.R balance to increase every year from 2004-05 to 2008-09. That indicate the debts are being collected more quickly. As bank is maintaining high working Capital Turnover ratio show the efficient of Working Capital in generation states. The bank is maintaining sound gross Profit ratio and it indicates relatively lower.

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Suggestions & Conclusion

The liquidity of the bank is being unfavorable, but the bank has to maintain more current assets in order to meet its short-term obligations. The bank can increase its market share in Indias expanding banking and financial services industry by following a disciplined growth strategy and delivering high quality customer service. The bank can service its customers through multiple channels that are phone banking, internet banking and mobile banking, if the bank has to attract more customers and deals with more truncation. The bank can provide advances and loans to the general public for the following purpose; Loan to small scale industries and cottage industries. Increase short-term deposits and long-term deposits for high rate of interest. The bank can also provide two wheelers and education loan which can boost income of the bank. The study carried out by the researcher has been done just using the tools of financial analysis, which focuses on a ser of financial ratio derived primarily form the accounting information. The ratios pertaining to various areas such as solvency operations, profitability and efficiency are presented for the period of financial years. The result of which is satisfactory solvency position, increasing operation loans to self employed person or young entrepreneurs expenses, increase in net profit. The factor with high frequency or need of attention in the cases of default and the other entire ratio can be adjusted by having a close and constant monitoring. There is a slight decline in liquid and current ratio, but this is not a bad sign. There is decline in gross profit ratio the year 2006-07 which needs close and constant monitoring.
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The study undertaken has helped the researcher to gain knowledge about conducting a research work. The difficulty of analyzing financial information has also come to light, but with the valuable guidance and support that researcher was provided which enable to complete this research. It also helped researcher in knowing financial information.

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Bibliography

BOOKS NAME
MANAGEMENT ACCOUNTING MANAGEMENT ACCOUNTING FINANCIAL MANAGEMENT MANAGEMENT ACCOUNTING FINANCIAL MANAGEMENT

AUTHOR
JAWAHARLAL M.N.ARORA I.M. PANDEY SHASHI. K.GUPTHA PRASANNACHANDRA

Reports Annual reports of Ananda Co-operative Bank

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