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Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. The Bank was under private ownership and control till July 1969 when it was nationalised along with 13 other banks.

Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees, the Bank has made a rapid growth over the years and blossomed into a mighty institution with a strong national presence and sizable international operations. In business volume, the Bank occupies a premier position among the nationalised banks.

The Bank has 4038 branches in India spread over all states/ union territories including specialized branches. These branches are controlled through 50 Zonal Offices. There are 29 branches/ offices (including five representative offices) and 3 Subsidaries and 1 joint venture abroad.

The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions Placement in February 2008. . Total number of shareholders as on 30/09/2009 is 2,15,790.

While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of introducing various innovative services and systems. Business has been conducted with the successful blend of traditional values and ethics and the most modern infrastructure. The Bank has been the first among the nationalised banks to establish a fully computerised branch and ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a Founder Member of

SWIFT in India. It pioneered the introduction of the Health Code System in 1982, for evaluating/ rating its credit portfolio.

The Bank's association with the capital market goes back to 1921 when it entered into an agreement with the Bombay Stock Exchange (BSE) to manage the BSE Clearing House. It is an association that has blossomed into a joint venture with BSE, called the BOI Shareholding Ltd. to extend depository services to the stock broking community. Bank of India was the first Indian Bank to open a branch outside the country, at London, in 1946, and also the first to open a branch in Europe, Paris in 1974. The Bank has sizable presence abroad, with a network of 29 branches (including five representative office) at key banking and financial centres viz. London, Newyork, Paris, Tokyo, Hong-Kong and Singapore. The international business accounts for around 17.82% of Bank's total business.

OUR VISION Up market Retail Customer And Developmental Banking for Small Business. Mass Market and Rural Markets."

MISSION "To provide superior, proactive banking service lo niche markets globally while providing ion effective, responsive service to others in our role as a development bank, and in doing so, meet the requirement; of our QUALITY POLICY We, at Bank Of India, are committed to become (he bank of choke by providing SUPERIOR, PRO-ACTIVE, INNOVATIVE, SIATE-OF-THE-ART Banking services with an attitude of ore and concern for the customer and patron.


Ratio analysis is the most widely used tool of analysis. A ratio is a quotient to two numbers and is an expression of relationship between the two amounts. It indicates a quantitative relationship, which is used for a qualified judgment and decision-making. The ratios may be compared with the previous year or base year ratios of the same firm. The relationship between two accounting figures expressed mathematically is known as a financial ratio. British Institute of management has classified the ratios into two categories. Primary ratios Secondary ratios

PRIMARY RATIOS: Ratio indicating the relationship between profits and capital employed area primary ratio. SECONDARY RATIO: These ratios give the information about the financial position and capital structure of the company.

The objectives of working out ratios and consequential analysis are : To study the liquidity of the firm . To find the profitability of the organization . Leverage that is financing by debt or equity or preference shares . To know operating efficiency of the organization . To know Effective utilization of assets .


To identify the significant accounting data relationship. A ratio indicates trends in which will help in decision making and forecasting Ratio analysis helps in assessment of liquidity profitability and solvency of the firm To know the over all operating efficiency and performance of the firm. It helps in understanding financial statements. It provides basis not only for intra-firm comparison but also for inter-firm company. It helps the management in controlling the affairs of the firm.

ACCOUNTING RATIOS CAN BE EXPRESSED IN VARIOUS WAYS: Such as A pure ratio say ratio of current assets to current liabilities. A rate say current assets are two times of current liabilities. A percentage says current asset are 200% of current liabilities.


The essence of the financial soundness of a company lies in balancing its goal commercial strategy product, market choice and resultant financial needs. The company should have financial capability and flexibility to purpose its commercial strategy. Ratio analysis is a very useful analysis technique to raise permanent question on a number of managerial issues while assessing the financial wealth and health of the company with the help of ratio analysis answer to the following question may be sought. 1. How profitable is the company? What a accounting policies and practices does the company follow? Are stable? 2. Is the profitability of the company high/low/average? 3. Is the return on equity high/low/average? It is due to

b. Return on investment c. Financing Mix d. Capitalization of Resource 4. Can the company sustain its impressive profitability or improve its profitability given competitive and other environmental situations? 5. How effectively Does Company utilizes its assets in generating sales. 6. What are the trends in collection period inventory turnover and fixed assets turnover? 7. What is the level of current assets relative to current liabilities? It is reasonable given the nature of the companys business? 8. What is the Mix of current assets? Is the proportion of slow moving inventories high? 9. How promptly the company pays its creditors? The answer for all these questions can be known through the care observation of companys financial position through ratios.

The ratio analysis involves comparison for a useful interpretation of the financial statements. A single ratio in itself does not indicate favorable or unfavorable condition. It should be compared with some standards of comparison may consists of Ratio calculated from the past financial statements of the some firm. Ratio developed using the projected or performed financial statements of the same firm. Ratios of some selected firms especially most progressive and successful at the same point in time. Ratios of the industry to which the firm belongs some times future ratios are used as the standard of comparison ratio can be developed from the projected or performed financial statements. The comparison of past ratios with future ratios shows the firms relative strength and weakness in the past and future.

This kind of a comparison indicates the relative financial position and performance of the firm can easily resort such a comparison and it is not difficult to get the published financial statements of the similar firm.


The ratio analysis is on of the most powerful tools of financial Analysis. It is used as a device to analysis and inter-prate the financial health of an enterprise. 1. Managers : These are the persons who among the business. Financial ratios are important to managers for evaluating the results of their decisions. Financial ratio also helps the managers in decision forecasting and planning co-ordination and control of business activities. 2. Shareholders/Investors: Those who are interested in buying and selling the shares of a company are naturally interested in the financial ratios. These ratios are helps in knowing the safety of their investment. This ratios tells that the position of the firm whether it is good or not. 3. Creditors: The creditors are interested to know whether their loan principal and interest will be paid when due suppliers and other creditors are also interested to know their dues in time. 4. Workers: Generally the workers are entitled to payment of bonus in which depends on the size of profit earned. The knowledge also helps them in conducting negotiations for wages and bonus.

5. Government: The ratio analysis of a company or industry is useful to the management in framing the policies and then the financial ratios are useful to the government in taking decision relating to taxes. 6. Researchers: The financial ratios being a mirror of business condition of great interest to undertaking in accounting theory as well as business affairs and practices.

SIGNIFICANCE OF RATIO ANALYSIS: Ratio analysis stands for the process of determining and presenting the relationship items and groups of items in the financial statements. It is an important technique of financial analysis. It is a way by which financial stability and health of a concern can be judged. The following are the main points of importance of ratio analysis.

USEFUL IN FINANCIAL POSITION ANALYSIS: Accounting ratios reveal the financial position of the concern. This helps the banks, insurance companies and other financial institution in lending and making investment decisions.

USEFUL IN SIMPLIFYING ACCOUNTING FIGURES: Accounting ratios simplify summarizes and systematize the accounting figures in order to make them more understandable and in lucid form. They highlight the interrelationship, which exists between various segments of the business as expressed by accounting statements. Often the figures standing alone cannot help them to convey any meaning and ratios help them to relate with other figures.

USEFUL IN ASSESSING THE OPERATINAL EFFICIENCY: Accounting ratios helps to have an idea of the working of a concern. The efficiency of the firm becomes evident when analysis is based on accounting ratio. They diagnose the financial health by evaluating liquidity, solvency profitability the capabilities of various units.

USEFUL IN FORECASTING PURPOSE: If accounting ratios are calculated for a number of years, then a trend is established. This trend in setting up of future plans and forecasting. For Example: expenses as a percentage of sales can be easily forecasted on the basis of sales and expenses of the past years.

USEFUL IN LOCATING THE WEAK SPORTS OF THE BUSINESS: Accounting ratios are of great assistance in locating the weak spots in the business even though the overall performance may be efficient weakness in financial structure due to in correct policies in past are reveals through accounting ratios. If a firm finds that increase in distribution expenses is more than proportionate to the results expected for achieved it can be remedial measures to overcome this adverse situation.


Through accounting ratios comparison can be made between one department of a firm with another of the same firm in order to evaluate the performance of various department in the order to evaluate the performance of various departments in the firm manager is naturally interested in such comparison in order to know the proper and smooth functioning of such departments ratios also help him to make any change in the organization structure. Management has to protect the interest of all concerned parties. Their survival depends on their operating performance from time to time. Management uses ratios analysis to determine

the firms financial strength and weakness and according takes actions to improve the firms position. The various concerned parties include the owners, investors, creditors, customers, consumers etc, they are interested to know the firms operating performance to get their expected returns. The owners of the company will observe the profitability of the firm and the effective utilization of the assets of the firm. The investors can observe about the net profit tax, which can be available for them to get the desired, dividends; The creditors will think about the debt payment capacity of the firm. Ratio analysis is very useful yardstick to determine the financial position of the firm and it will protect the interest of the parties, through careful security of financial statements.


Ratio analysis provides an indication of companys profitability, liquidity, leverage and solvency, ratio do not provide answers, and they are a guide to management and others of the areas of weakness and strengths of a company. Many firms are much diversified and are engaged in number of different activities. This makes it difficult to developed meaningful set of averages in order to compare performance. No company or firm is content being average. They to be the best. Thus it may be argued that comparing a companys performance against an overage is not flattering or indicative of a companys position in an industry. Ratios can be purposely distorted by companies to make it look better than it actually is. A company could sell its receivable at a discount for cash. As a result, its collection ratio of account receivables would be low, leading one to believe its efficiency is better than it actually.

In order to state whether a ratio is good or bad it must be intelligently interpreted. A high current ratio may indicate a liquidity position, which is positive or excessive liquidity cash, which is negative. It is difficult to compare companies as they very often follow different accounting principles. A company may value inventory under Last in First out principle, where as another may depreciate under the straight-line method, while its competitor may use accelerated depreciation.


Several ratios calculated from the accounting data, can be grouped into various classes according to financial activity or function to be evaluated management is interested in evaluating every aspect of the firms performance. They have to protect the interests of all parties and see that the firm grows profitably. In view of requirements of the various users of ratios, we may classify them into the following four important categories. 1. Liquidity ratios 2. Leverage ratios 3. Activity ratios 4. Profitability ratios

1. LIQUIDITY RATIOS: Liquidity ratios are measures the firms ability to meet current obligations. It is externally essential for a firm to be able to meet preparation of cash budgets and cash flow and find flow statements. Its establishing a relationship between cash and current assets to current obligations. The failure of a company to meet its obligations due to lack of sufficient liquidity will result in poor credit worthiness cost of creditors confidence a very high degree of liquidity is also bad idle assets earn nothing. The most common ratios, which indicate the extent of liquidity a. Current ratio. b. Quick ratio or Acid test or liquid ratio. c. Absolute liquid ratio or cash position. Ratio

(a) CUURENT RATIO Current ratio may be defined as the relationship between the current assets and liabilities. This ratio is also known as working capital ratio. It is most widely used to make the analysis of a


short-term financial position. It is calculated by dividing the total of current assets by the total current liabilities. Current assets include cash and those assets that can be converted into cash within a year such as marketable securities debtors and inventories and prepaid expenses also considered as current assets. Current liabilities are those obligations which are payable within a short period generally within a year.

Current Ratio=current assets /current liabilities

(b) QUICK ASSETS RATIO: Quick ratio may be defined as the relationship between quick/liquid assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value and Inventories are considered to be less liquid. Quick Ratio=Quick assets/ Current liabilities (c) ABSOLUTE LIQUID RATIO OR CASH RATIO: Receivables, debtors and bills receivable are generally more liquid then inventories yet there may be doubts regarding their realization into cash immediately or in time.


1. To study the earning capacity of the; Bank. 2. To study the financial position and financial performance of the Bank. 3. To study the Operating efficiency. 4. To study the Overall profitability. 5. To know how fixed asset should be analised



For Every Comprehensive research a proper research methodology is indispensable & it has to be properly conceived. The methodology adopted by me is as follows:-

Research Design
Problem Identification Find out Bank of India and compare with other bank in same line. Find deviation of calculated ratios from standard or Norms Calculating the working capital requirement of Bank of India.

Information needed Information about firms assets, liabilities, revenue, expenditure, bankers, investment etc. Information about firms loan, security, stock level & other financial information.

Data Collection
My data collection source was secondary i.e. Annual reports of companies Balance sheet Profit & Loss Accounts

Analysis & Interpretation

The data collected and analysed subjectively as well as graphically where it is possible. The analysis is based upon available information & interpreted accordingly.

Limitation My scope of study is limited to the annual reports, Balance sheet of units & number of companies taken for analysis.



A hypothesis is made in order to find out correct explanation of the phenomenon through investigation. On the basis of hypothesis facts are observed and collected when by verification. In this project the following areas has been formulated:

The management of Long term finance is although a very important but proper management of ratio analysis is the most important in the company.

It is also a key to success of the overall working of any company.

It is our hypothesis that a Bank of India has adequate of proper management of Ratio Analysis.

According to this hypothesis Ratio Analysis and other methods of the analysis of working capital has been used as a measure tool to test the hypothesis.



Profit & Loss account of Bank Of India

------------------- in Rs. Cr. ------------------Mar '13 Mar '12 28,480.67 3,321.17 31,801.84 20,167.23 3,053.42 2,827.49 166.83 2,909.35 0.00 6,965.82 1,991.27 29,124.32 Mar '12 2,677.52 0.00 0.00 2,677.52 0.00 465.98 0.00 46.66 70.00 343.79 926.31 1,285.23 465.98 0.00 2,677.52

Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses Net Profit for the Year Extraordionary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Proposed Dividend/Transfer to Govt Balance c/f to Balance Sheet Total

31,908.93 3,766.04 35,674.97 22,884.93 3,130.52 0.00 183.89 6,726.29 0.00 5,331.55 4,709.15 32,925.63 Mar '13 2,749.35 0.00 0.00 2,749.35 0.00 697.09 0.00 46.14 100.00 401.38 1,018.70 1,033.56 697.09 0.00 2,749.35


Balance Sheet of Bank Of India

------------------- in Rs. Cr. ------------------Mar '13 Mar '12 574.52 574.52 0.00 0.00 19,151.38 1,235.89 20,961.79 318,216.03 32,114.23 350,330.26 13,243.43 384,535.48 Mar '12 14,986.71 19,724.54 248,833.34 86,753.59 4,628.22 1,905.26 2,722.96 48.64 11,465.69 384,535.47 165,173.07 45,255.10 343.79

Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities

596.64 596.64 0.00 0.00 23,321.51 0.00 23,918.15 381,839.59 35,367.58 417,207.17 11,477.39 452,602.71 Mar '13

Assets Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs)

21,967.04 32,868.82 289,367.50 94,613.43 2,870.13 0.00 2,870.13 0.00 10,915.80 452,602.72 174,208.24 51,372.78 401.38


Current Ratio The Current Ratio expresses the relationship between the firms current assets and its current liabilities.

Formula: -

Current Asset Current Liability

Year 2013 : 384535.47 = 384535.48


Year 2012: 351172.56 = 351172.56



Current Ratio

1 0.998 0.996 0.994 0.992 0.99 0.988 0.986 0.984 2013 2012

Current Ratio is 2:1 Thus from the above we can say that bank was almost in its ideal position in the year 2011 2012, but current ratio in 2013 has decrease.


Quick Ratio Formula: Quick assets Current liabilities

Year 2013 : 12702.66 = 280635.18


Year 2012 : 104703




Quick Ratio

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2013 2012

Quick Ratio is 2:1 Thus from the above we can say that bank was almost in its ideal position in the year 2011 20112, but current ratio in 2013 has increase.


Ratio of reserves to equity capital: It express the relationship between the Ratio of reserves to equity capital and equity share capital. Formula:Reserves Equity share capital

Year 2013:



Year 2012:

= 574.52



Ratio of reserves to equity capital:

33.35% 33.30% 33.25% 33.20% 33.15% 33.10% 33.05% 33.00% 32.95% 2013 2012

Ratio of reserves to equity capital is Thus from the above we can say that bank was almost in its ideal position in the year 2011 20112, but current ratio in 2013 has increase.


Capital Gearing Ratio:An investment Ratio that compare the borrowing made by a company with the finance contributed by the shareholders

Formula:- Preference Share + Long term Borrowings Equity Share Capital + Reserve Miss. Expenditure Year 2011 : 0.00+35,367.58


= Year 2012 :


0.00+32114.23 = 544.52+19151.38-29124.32

- 9913.962%


Administrative Expenditure:-

Formula:- Administrative Expenditure * 100 Net Sales

Year 2013: 2827.49 = 2477.52 X 100


Year 2012: 1720.85





Administrative Expenditure

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2013 2012

Administrative Expenditure ratio is 2:1 Thus from the above we can say that bank was almost in its ideal position in the year 2011 20112, but current ratio in 2013 has increase.


Ratio calculated from the past financial statements of the some firm. Ratio developed using the projected or performed financial statements of the same firm. Ratios of some selected firms especially most progressive and successful at the same point in time. Ratios of the industry to which the firm belongs sometimes future ratios are used as the standard of comparison ratio can be developed from the projected or performed financial statements. The comparison of past ratios with future ratios shows the firms relative strength and weakness in the past and future.


The suggestion to the Bank as follows:

Management of the Bank should use the corporate strategy.

Management of the Bank should concentrate on the financial aspects.

Management should utilize all resources properly.

Bank should evaluate the current financial position.

For the Inventory Maintenance Bank should use proficient method.

Management should also focus on research and development.

Bank should control manufacturing expenses.


In spite of precautions taken to make the study objective, it cannot be denied that there are certain procedural and technical limitations. It is not possible to judge all the parameter to evaluate the efficiency in a wide and dynamic area like financial analysis. Some of the limitations of this study are as under:


As the research has taken place in very short tenure, the shortage of time is one of the limitations of this study.


As the report is mainly based on secondary data, limitations of secondary data are the limitations of the study.



The Reference Books

Financial Management Financial Management Research Methodology

Khan & Jain I.M.Pandey C.R.Kothari