Chapter-V

Anarysis anciDiscussion

CHAPTER V
ANALYSIS AND DISCUSSION
Introduction
Analysis and discussion of financial statement, therefore refers to
such a treatment of the information contained in the profit and loss a/c and
balance Sheet as to afford full diagnosis of the profitability and financial
soundness of the business. However both "Analysis" and 'discussion' are
complementary to each other Discussion requires Analysis while Analysis is
useless without discuss. Most of the authors have used the term "Analysis"
only to cover the meanings of both analysis and discussion, since analysis
involves discussion. According to Myres, Financial statement analysis is
largely a study of relationship among the various financial factors in a set of
statement and a study of the trend of these factors as shown in a series of
statements.

Analysis and Discussion Chapter has been divided into three major parts;
A. Financial Position
B. Liquidity Position
C. Profitability Position

58

A. FINANCIAL POSITION
The balance sheet and the profit and loss account or income statement of
a business reveal the net effect of the various transaction on the operational
and financial position of the company. The balance sheet gives a static view of
the resources of a business and the uses to which these resources have been
put at a certain point of time. The profitanal loss account in a general way
indicates the resources provided by operations. The objective of this statement
is to show the movement of funds during a particular period.
The following are the techniques which are helps to find out the financial
position of the company during the particular financial year.
> Statement of progress.
> Comparative balance sheet.
> Comparative profit and loss account.
> Cash flow statement.

59

COMPARATIVE BALANCE SHEET

Balance sheet is the most significant financial statement. It
indicates the financial condition or the state of affairs of a business at a
particular moment of time. The single balance sheet shows assets and
liabilities as on a particular date. The comparative balance sheet shows the
value of assets and liabilities on two different dates. It helps in comparison.
Comparative balance sheet indicates whether the business is moving in a
favorable or unfavorable direction. It is very useful for studying the trends in
an enterprise.

60

Table No: 1

Comparative Balance Sheet

(Rs.in Lakhs)
Particulars

2001-02 .

2002-03

2003-04

2004-05

2005-06

Capital

1,15,088

1,15,088

1,15,088

1,15,089

1,15,089

Reserve Surplus

11,02,306

13,12,682

15,29,057

18,05,772

21,51,339

1,96,34,065

22776,440

24769,223

27705,016

3,29,58,191

9,94,976

6,86,549

3,33,498

6,41,143

3,02,285

12,70,328

12,26,880

17,00,376

17,00,376

26,86,602

2,31,16,759

2,61,17,639

2,84,86,992

3,19,67,369

3,82,13,506

19,63,013

20,30,589

15,89,592

16,60,558

23,03,940

10,41,912

3,68,509

8,65,202

6,69,193

4,97,313

76,75,677

78,20,392

8,65,202

6,69,193

4,97,313

1,15,00,468

1,48,02,333

1,56,52,519

1,76,36,982

2,03,87,040

Fixed Assets

2,82,269

2,66,647

2,89,500

2,98,975

3,13,135

Others Assets

6,53,420

8,29,169

10,48,052

13,35,936

13,30,397

2,31,16,759

2,61,17,639

2,84,86,922

3,19,67,396

3,82,13,506

Capital and Liabilities

Deposit

Borrowings
Other liabilities and
Provisions
Total
Assets:
Cash and balance with
Reserve bank of india
Balance with bank and
money at call and short
notice
Investment
Advances

Total

Source: Annual Reports

61

Table No.1 has presented that the comparative balance sheet of the
Lakshmi Vilas Bank Ltd during the study period 2001-2002 to 2005-2006.

Capital and liabilities includes Capital, Reserves and Surplus, Deposits,

Borrowings and other provisions and liabilities etc.,

Assetsare includes

cash and balances with Reserve Bank Of India, balance with bank and money
at call and short notice, Investments, Advances, Fixed Assets and other assets
etc.,Rs.1,15,088 lakhs as capital during the year 2001-2002 to 2003-2004 and
Rs.1,15,089 lakhs as capital from the year 2004 2005.Deposits consitute the
major liability of the lakshmi Vilas Bank Ltd during the study period.
Deposits started from Rs. 1, 96, 34,065 lakhs in 2001-2002 to Rs.3, 29, 58,191
lakhs in the year 2005-2006. Borrowings and other liability and provisions
also a part of the liabilities and capital.Cash and balance with Reserve bank of
India consitute major part of the assets of lakshmi vilas bank ltd Rs.19,63,013
lakhs in 2001-2002 and Rs. 23,03,940 lakhs in the year 2005-2006.Fixed
Assets records Rs.3,13,135 lakhs and other assets recorded Rs.13,30,397 in
2005-2006 but it was Rs.2,82,269 lakhs and Rs.6,53,420 lakhs respectively in
the year 2001-2002.

62

COMPARATIVE PROFIT AND LOSS A/C

The profit and loss account gives the results of the operations of
a business. The comparative profit and loss account gives an idea of the
progress of a business over a period of time. The change in absolute data in
money values and percentages can be determined to analyses the profitability
of the business. A comparative profit and loss account will show the absolute
figures for two or more periods, the absolute change from one period to
another and if desired the change in terms of percentages. Since, figures for
two or more periods are shown side by side, the reader can quickly ascertain
whether sales has been increased or decreased, whether cost of sales has been
increased or decreased, etc. Thus only a reading of data included in
comparative profit and loss account will be helpful in deriving meaningful
conclusions.

63

Table No .2

COMPARATIVE PROFIT AND LOSSA/C

Particulars

2001-02

2002-03

2003-04

(Rs.in Lakhs)
2004-05
2005-06

. Income:
nterest earned
)ther Income

22,24,588

25,10,951

27,15,016

7,09,840

28,59,544

5,97,125

5,88,350

8,59,744

8,42,299

8,68,624

28,21,713

30,99,301

35,74,760

35,52,139

37,28,168

16,25,250

18,45,424

20,97,313

20,27,632

20,25,139

6,42,032

6,53,164

7,03,805

7,23,957

7,92,997

2,90,870

3,33,265

4,71,431

4,58,917

4,99,547

25,58,152

28,31,853

32,72,549

32,10,506

33,17,683

2,63,561

2,67,448

3,02,211

3,41,633

4,10,485

Total
IL Expenditure:
nterest expended

Verating expenses
rovisions and

;ontingencies
Total
II. Net Profit
'or the year
Source: Annual Report

Table No.2 reveals that the comparative profit and loss a/c of the lakshmi
vilas bank ltd during the year 2001-2002 to 2005-06.Interest earned and other
income are the main sources of income of the lakshmi vilas bank ltd. In the
year 2001-02 income of lakshmi vilas bank ltd was Rs. 28, 21,713 lakhs and
increased to Rs.37, 28,168 in the year 2005-06.Interest expended operating
expenses and provisions and contigencies are the major expenditure of the
lakshmi vilas bank ltd.Rs.25, 58,152 lakhs was recorded as expenditure in the
year 2001-2002 but it has increased to Rs.33, 17,683 lakhs in the year 200506. There is a increasing trend of the expenditure from one year to another
year. Net profit of the lakshmi vilas bank ltd was Rs.2, 63,561 lakhs in 20012002 and increased to Rs. 4, 10,485 in the year 2005-06. Every year Net
profit has been increased from one year to another year.

65

CASH FLOW STATEMENT

A cash flow statement is a statement depicting change in cash position
from one period to another. For e.g., if the cash balance of a business is
shown by its balance sheet on 3 1st Dec 1978 at Rs.20,000 while the cash
balance as per its balance sheet on 31S` Dec 1979 is Rs.30,000. There has
been an inflow of cash of Rs.10, 000 in the year 1979 as compared to the year
1978. The cash flow statement explains the reasons for such inflows or out
flows of cash, as the case may be. It also helps management in making plans
for the immediate future. A projected cash flow statement or a cash budget
will help the management in ascertaining how much cash will be available to
meet obligations to trade creditors, to pay bank loans and to pay dividend to
the share holders. A proper planning of the cash resources will enable the
management to have cash available the whenever needed and put it to some
profitable or productive use in case there is surplus cash available.

66

Table No.3

CASH FLOW STATEMENT

(Rs.in Lakhs)
Particulars

2001-02

2002-03

2003-04

2004-05

2005-06

4,44,961

4,93,243

6,32,845

6,14,771

7,54,878

working

38,64,344

27,49,511

18,02,235

29,28,964

52,94,428

capital

41,09,229

37,56,047

24,56,171

34,49,896

59,57,236

1,11,115

-42,283

-80,840

-57,976

64,153

-50,251

1,57,627

-52,478

4,43,585

3,11,191

-6,05,827

55,696

-16,615

4,71,502

26,93,734

30,04,925

23,99,098

23,46,366

23,29,751

30,04,925

23,99,098

24,54,794

23,29,751

28,01,253

Income from
operations (or)
Cash flow
from operating
activities
Change in

Liabilities
Assets
Cash flow
from investing
activities
Cash flow
from financing
activities
Cash flow for
the year
Cash and cash
equivalent the
beginning of
the year
Cash and cash
'equivalent at
the end of the
year
Source: Annual Report
67

Table No.3 has presented the cash flow statement for the study period
during 2001-02 to 2005-06. In the year 2005-06 cash flow from operating
activities has been recorded Rs.7, 54,878 lakhs as against Rs.6, 14,771 lakhs
in the year 2004-05. Cash flow from operating activities has been increased
from Rs. 4,44,961 lakhs in 2001-2002 to Rs. 6,32,845 lakhs in 20032002.Cash flow from investing activities in 2001-2002 is Rs.1,11,115 lakhs
and Rs.64,153 lakhs in 2005 -06. But in between the ears (2002-03 to 200405) shows negative results. Cash flow for financing activities is also shown
the negative results during the year 2003-04 to 2004-05, but in the year 200506 it recorded Rs.4,71,502 lakhs.

68

Table No.3 has presented the cash flow statement for the study period
during 2001-02 to 2005-06. In the year 2005-06 cash flow from operating
activities has been recorded Rs.7, 54,878 lakhs as against Rs.6, 14,771 lakhs
in the year 2004-05. Cash flow from operating activities has been increased
from Rs. 4,44,961 lakhs in 2001-2002 to Rs. 6,32,845 lakhs in 20032002.Cash flow from investing activities in 2001-2002 is Rs.1,11,115 lakhs
and Rs.64,153 lakhs in 2005 -06. But in between the ears (2002-03 to 200405) shows negative results. Cash flow for financing activities is also shown
the negative results during the year 2003-04 to 2004-05, but in the year 200506 it recorded Rs.4,71,502 lakhs.

68

Table No 4

Statement of progress
(Rs.in Lakhs)
Particulars

Paid- up Capital
Reserves fund and
other Reserves
Deposits
Advances
Investment
Net profit

2001-02

2002-03

2003-04

2004-05

2005-06

1,150.88

1,150.88

1,150.88

1,150.89

1,150.89

11,023.06
1,96,340.65
1,15,004.68
76,756.97

13,126.82
2,27,764.40
1,48,023.33
78,203.92

15,290.57
2,47,692.23
1,56,525.19
90,420.57

18,057.72
2,77,050.16
1,76,369.82
1,03,657.52

21,513.39
3,29,581.91
2,03,870.40
1,33,816.81

2635.61

2674.48

3022.11

3416.33

4104.85

105.78

124.06

142.86

166.90

196.93

38.12
4.50

44.42
4.50

46.17
5.00

65.98
5.00

98.72
5.00

Book value
Market Price
Dividend per share
(Rs.)

Source: Annual Report

Table No.4 indicates that the statement of progress of the

Lakshmi Vilas Bank Ltd during the study period 2001-2002 to 2005-2006.
Statement of progress consists of overall financial position and
performance during the five years. There is no change in the paid up capital
in the year 2001-02 to 03-04. It has recoded only Rs.1150.88 lakhs but it has
slightly increased to Rs.1150.89 lakhs the year 2004-05 onwards.

69

B.LIQUIDITY POSITION
Liquidity refers to the ability of a concern to meet its current
obligations as and when these become due. The short-term obligations are met
by realizing amounts from current floating or circulating assets. The current
assets should either be liquid or near liquidity. These should be convertible
into cash for paying obligations be short-term nature. The sufficiency or
insufficiency of current assets should be assessed by companying them which
short-term liabilities. If current assets can pay off current liabilities, them
liquidity position will be satisfactory. On the other hands, if current liabilities
may not be easily met out of current assets then liquidity position will be bad.
The bankers, suppliers of goods and other short-term creditors are interested
in the liquidity of due concern.
The following are the ratio which are helps to find out the
liquidity position of the company during the particular financial year.

Current Ratio.
Liquid Ratio.
Operating Ratio
Composition of current Assets.
Composition of fixed Assets.
Current Assets to fixed Asset ratio.

70

Current Ratio
This ratio is a test of the ability of the firm to meet its short-term
commitments in time. Current ratio is the relationship between current assets
and current liabilities. Current liabilities mean those, which are repayable in a
year's time. Current assets' means assets converted into cash with in a year's
time. A current ratio of 2 1 is considered ideal.
Current Assets
The formula is
Current Liabilities
Current assets includes for this study is cash and balances with
Reserve bank of India, and balances with banks and money at call and short
notice.
Current liabilities includes for this study is other liabilities and
provisions.
Table No. 5
CURRENT RATIO
Year

Current assets

S.No

(Rs.in Lakhs)
Current
Current
liability

2001-2002

Ratio

30,04,925

12,70,328

2.36

2002-2003

23,99,098

12,26,880

1.95

2003-2004

24,54,794

17,40,056

1.41

2004-2005

23,29,751

17,00,376

1.37

2005-2006

28,01,253

26,86,602

1.04

Total

1,29,89,821

43,86,978

1.63

Source: Annual reports

71

Table No.5 reveals that the current ratio of the lakshmi vilas bank ltd
during the study period 2001-2002 to 2005-2006.1n the year 2001-2002
current ratio was records 2.36 percent but it has slowly decreased to 1.95
percent in 2002-2003 and 1.41 percent in the year 2003-2004 and 2004-2005
and again it has reduced to 1.37 percent in the year 2005-2006 again it has
reduced to 1.04 percent. Highest current ratio is 2.36 percent recorded in the
year 2001-2002 and lowest current ratio was 1.04 percent in the year 20052006.

Chart No.1

Current Ratio
3500000-

Current Ratio

300000025000002000000150000010000005000000
2001-2002

2002-2003

2003-2004

2004-2005

Year
0 Current Assets 0 Current Liability

73

2005-2006

LIQUID RATIO
Liquid ratio is also called quick ratio or Acid-Test Ratio because it
is the Acid Test of a concern's financial soundness. It is the relationship
between liquid assets and liquid liabilities. Liquid assets are those assets
which are readily converted into cash. It include cash and bank balances,
bills receivables, debtors, short term investments. Liquid liabilities
include creditors, bills payable, outstanding expenses.
Liquid Assets
The formula is
Liquid Liabilities
Liquid assets includes for this study is cash and balances with reserve
bank of India. Liquid liabilities includes for this study is other liabilities
and provisions.
Table No. 6
LIQUID RATIO

S.No

Year

Liquid
Assets

Rs.in Lakhs
Liquid
Liquid
Liabilities

Ratio

2001-2002

19,63,013

12,70,328

1.55

2002-2003

20,30,589

12,26,880

1.66

2003-2004

15,89,592

17,40,056

0.91

2004-2005

16,60,558

17,00,376

0.98

2005-2006

23,03,940

26,86,602

0.86

Total

95,47,692

86,24,242

1.19

Source: Annual report

74

The above table No.6 reveals that the liquid ratio of the lakshmi
vilas bank ltd during the study period 2001-2002 to 2005 2006.In the
year 2001-2002 liquid ratio has been recorded 1.55 percent but it is
slowly increased to 1.66 percent in 2002-2003 and 0.91 percent in the
year 2003-2004 and 2004-2005 and again it is increased to 0.98 percent
and decreased to 0.86 percent in the year 2005-2006. Highest liquid ratio
is 1.66 percent recorded in the year 2002-2003 and lowest liquid ratio is
0.86 percent in the year 2005-2006.

75

Chart No.2

Liquid Ratio

30000000 2500000-

L-40!

rt% 2000000-

7/

150000010000005000000

)777

2001-2002

Z777-77

2002-2003

2003-2004

./"7
_4777
2004-2005
2005-2006

Year

Liquid Assets ID Liquid Liability

76

OPERATING RATIO
Operating ratio establishes the 'relationship between cost of goods
sold and other operating expenses on the one hand and the sales on the
other.

Operating expenses
The formula is

x 100
Income

Operating expenses includes for this study is

Operating expenses =income - expenditure
Income includes for this study is other liabilities and provisions.

Table No . 7

Operating Ratio
S.No

Operating

Year

(Rs.in Lakhs)
Income
Operating

Expenses

Ratio 1

2001-2002

2,63,561

28,21,713

9.34

2002-2003

2,67,448

30,99,301

8.63

2003-2004

3,02,211

35,74,760

8.45

2004-2005

3,41,633

35,52,139

9.62

2005-2006

4,10,485

37,28,168

11.01

Total

15,85,338

1,67,76,081

9.41

Source :Annual report

77

The above table No.7 reveals that the operating ratio of the lakshmi
vilas bank ltd during the study period 2001-2002 to 2005 2006. The
operating ratio is during the year 2001-2002 reveals that 9.34 percent but
it has slowly decreased to 8.63 percent in 2002-2003 and 8.45percent in
the year 2003-2004 and it has slowly increased to 9.62 percent in the year
2004-2005 and during the year 2005-2006 increased in the ratio is 11.01
percent. Highest operating ratio is 11.01 percent in the year 2005-2006
and 8.45 percent is the lowest ratio was recorded in the year 2003-2004.

78

Chart No.3

Operating Ratio
4000000-

/
3500000Operating Ratio

300000025000002000000150000010000005000000
2001-2002

2002-2003

2003-2004
Year

0 Expenses 0 Incon;1

79

2004-2005

2005-2006

COMPOSITION OF CURRENT ASSETS

Composition of current assets consist of the lakshmi vilas bank ltd
are cash, in hand cash with other bank, cash and balance with Reserve
bank of India and balance with money at call and short notice etc.,

Table No . 8

Composition of Current Assets

S.No

Rs.in Lakhs
Composition
Total

Year

2001-2002

19,63,013

Balances
with banks
and money
at call and
short notice
10,41,912

2002-2003

20,30,589

3,68,509

23,99,098

2003-2004

15,89,592

8,65,202

24,54,794

2004-2005

16,60,558

6,69,193

23,29,751

2005-2006

23,03,940

4,97,313

28,01,253

Total

95,47,692

34,42,129

1,29,89,821

Cash and
Balance with
RBI

Source :Annual report

80

30,04,925

Table No.8 has presented the composition of current assets of the

lakshmi vilas bank ltd during the study period 2001-2002 to 20052006.Cun-ent assets of the lakshmi vilas bank ltd consists of cash and
balance with reserve bank of India and balances with banks and money at
call and short notice. Rs. 1963013 lalchs as cash and balance with reserve
bank India and Rs.10, 41,912 lakhs as balances with banks and money at
call and short notice in the year 2001-2002.

81

POSITION OF CURRENT ASSETS

All those assets that are converted into the normal course of business
within one year or within the operating cycle are known as "Current
Assets". The intention in acquiring such assets must be to convert them
into cash. The conversion to take place in the normal course of business.
The time span for the conversion should not exceed one year or the
operating cycle of the business. It includes cash and balance with Reserve
bank of India Balance with banks and money at call and short notice.
Table No .9
Position of Current Assets

S.No

Year

CurrentAssets

Index

2001-2002

30,04,925

100

2002-2003

23,99,098

79.86

2003-2004

24,54,794

81.69

2004-2005

23,29,751

77.52

2005-2006

28,01,253

93.24

Total

1,29,89,821

Source: Annual Report

25.97

Mean
Standard Deviation

5.811

Co efficient of Variation

10.00

82

Table No. 9 revals that current Assets of the lakshmi vilas bank ltd
during the study period 2001-2002 to 2005-2006. in the year 2001-2002
current assets is Rs.30,04,952 lakhs. Unfortunately, theer is a decrease
from Rs. 24, 54,794 lakhs to Rs.23, 99,098 in the year 2003-2004. The
decrease is repeated as Rs. 23, 29,751 lakhs in the year 2004-2005. In the
year 2005-2006 the current assets is increased to Rs.28, 01,253. The
mean and standard deviation of lakshmi vilas bank ltd during the study
period are 25.97 and 5.811 respectively. The current asset growth is not
satisfactory during the study period because the rate is decreased to 93.24
in the year 2005-2006.

83

COMPOSITION OF FIXED ASSET

Fixed assets consists of the lakshmi vilas bank ltd during the study
period 2001-2002 to 2005 2006.
Fixed assets of the banking company consist of land and building,
premises, lease assets, property and other fixed assets.
Table No 10

Composition of Fixed Assets

sin Lakhs
S.No.

Other
Fixed
Asset

Lease

1,37,816

1,07,428

37,025

2,82,269

Premises

2001-2002

Total

Composition

Year

2002-2003

1,38,167

1,06,287

22,193

2,66,647

2003-2004

1,63,209

1,17,905

8,386

2,89,500

2004-2005

1,61,730

1,30,757

6,488

2,98,975

2005-2006

1,58,463

1,48,184

6,488

3,13,135

Total

7,59,386

6,10,561

80,580

14,50,526

Source :Annual Report

84

Table No.10 shows that the composition of fixed assets of

the lakshmi vilas bank ltd during the study period 2001-2002 to 2005-06.
Premises, lease & other fixed assets are the major composition of the
fixed assets of the lakshmi vilas ltd. Total fixed assets of the lakshmi vilas
bank Its has recorded Rs.2, 82,269 lakhs in the year 2001-2002. It
includes Rs.1, 37,816 lakhs as premises, Rs.1, 07,428 lakhs as other fixed
assets and Rs.37, 02 lakhs as lease.

85

POSITION OF FIXED ASSETS

Fixed assets are those, which are acquired and held permanently in
the business fro the purpose of earning profits. These assets have two
characteristic they are required for use over relatively long periods for
carrying on the operations of the firm, and they are ordinarily not meant
for resale. It includes premises, Assets on lease, and other fixed assets.
Table No. 11

Position of Fixed Assets

S. No

Year

Fixed assets

2001-2002

2,82,269

Index
100
,

2002-2003

2,66,647

94.32

2003-2004

2,89,500

102.48

2004-2005

2,98,975

105.67

2005-2006

3,13,135

110.99

Total

14,50,526

Source :Annual Re ort

Mean

2.896

Standard Deviation

0.154

Co efficient of Variation

4.60

86

The table No. 11 shows that the position of fixed assets shows a
fluctuating trend and it is getting decreased in the 2002-2003 and again it
increased for three years during the study period.

The mean and standard deviation of lakshmi vilas bank ltd during
the study period are 2.896 and 0.154 respectively. The fixed assets
growth is better during the period because the index rate is increased to
110.93 during the year 2005-2006.

87

CURRENT ASSETS TO FIXED ASSETS RATIO

Current assets to fixed assets Ratio means the relationship between
the current assets and fixed assets.
Table No. 12
Current Assets to Fixed Assets Ratio

S.No

Current

Year

assets

(Rs.in Lakhs)
Fixed
Ratio
Assets

2001-2002

30,04,925

2,82,269

10.65

2002-2003

23,99,098

2,66,647

8.99

2003-2004

24,54,794

2,89,500

8.48

2004-2005

23,29,751

2,98,975

7.79

2005-2006

28,01,253

3,13,135

8.97

Total

1,29,89,821

14,50,526

8.98

Source: Annual report

The above table No. 12 shows that the current assets to fixed asset
ratio of. During the year 2001-2002 to 2005-2006 during the year 20012002 current assets to fixed asset ratio was recorded 10.65 percent but it
has slowly decreased to 8.99 percent in 2002-2003 and 8.43 percent in the
year 2003-2004 and in the year 2004-2005 the ratio was 7.79 percent and
also increased to 8.97 percent in the year 2005-2006. Highest ratio was
10.65 percent in the year 2001-2002 and lowest ratio was 8.48 percent in
the year 2002-2003.
88

Chart No.4

Current Assets to Fixed Assets Ratio

CurrentAssets to Fixed Assets

3500000300000025000000

2000000-

cc

150000010000005000000
2001-2002

2002-2003

2003-2004
Year

rEITurrent
I
Assets 0 Fixed Assets

89

2004-2005

2005-2006

C.PROFITABILITY POSITION
The primary objective of a business undertaking is to earn profits.
Profit earning is considered essential for the survival of the business.
Profits are, thus a useful measure of overall efficiency of a business.
Profits to due management are thetest of efficiency and a measurement of
control; to owners, a measure of works of their investment; to the
creditors, the margin of safety, to employees, a sources of fringe benefits;
to government, a measure of tax-paying capacity and the basis of
legislative action; to customers, a hint to demand for better quantity and
price cuts; to an outer prise, less cumber some sources of finance for
growth and existence and finanly to due country, profits are an index of
economic progress profitability rations are calculated to measure the
overall efficiency of the business.
The following are the ratio which are helps to find out the profitability
position of the company during the particular financial year.
Net profit ratio.
Fixed assets to income ratio.
Earning per share.
Debt equity ratio.
Market price per share.
Dividend per share.

90

NET PROFIT RATIO

Net profit ratio establishes a relationship between net profit (after
taxes) and sales, and indicates the efficiency of the management in
manufacturing, selling, administrative and other activities of the firm.
The formulais =

Net Profit
x100
Income

Net profit includes for this study is income and expenditure.

Income includes for this study is interest earned and other income.
Table No .13

Net Profit Ratio

(Rs.in Lakhs)
Income
Ratio

Net

Year
S.No

profit

2001-2002

2,63,561

28,21,713

9.34

2002-2003

2,67,448

30,99,301

8.63

2003-2004

3,02,211

35,74,760

8.45

2004-2005

3,41,633

35,52,139

9.62

2005-2006

4,10,485

37,28,168

11.01

Total

15,85,338

1,67,76,081

9.41

Source: Annual Report

91

From the above table No 13 reveals that net profit ratio is 9.34
percent in the year 2001-2002 and it has been slightly decreased 8.63
percent in the year 2002-2003 and 8.45 percent in the year 2003-2004
and slightly increased to 9.62 percent in the year 2004-2005 and during
the year 2005-2006 ratio is again increased 11.01 percent.

Highest ratio is 11.01 percent in the year 2005-2006 and lowest ratio
is 8.45 percent in the year 2003-2004.

92

Chart No.5

Net Profit Ratio

02001-2002
02002-2003
02003-2004
02004-2005
02005-2006

93

FIXED ASSETS TO INCOME RATIO

Fixed assets to income ratio is one of the important ratios which is
used to measure the relationship between the fixed assets of the bank and
income earned by the bank during the financial period. With this ratio we
can find out the relationship between the fixed assets and income of the
bank. Normally fixed assets should be less than the total income of the
business concern.
Table No. 14

Fixed Assets To Income Ratio

(Rs.in Lakhs)

Year

Income

Ratio

28,21,713

0.10

30,99,301

0.09

35,74,760

0.08

35,52,139

0.08

37,28,168

0.08

1,67,76,081

0.08

Net profit

S.No
1

2001-2002

2002-2003

2003-2004

2004-2005

2,98,975

2005-2006

3,13,135

Total

2,82,269
2,66,647
2,89,500

14,50,526

Source : Annual Report

94

The above table No.14 shows that the fixed assets to income of the
lakshmi vilas bank ltd during the study period 2001-2002 to 2005-2006.
In 2001-2002, fixed assets was records Rs.2, 82,269 lakhs and income is
recorded Rs. 28, 21,713 lakhs. Fixed assets to income ratio is 0.10 and
again it is reduced to 0.09 in the year 2002-2003. From 2003-2004 on
wards fixed assets to income ratio remains constant at 0.08, Average
fixed assets to income ratio is 0.086 during the study period.

95

Chart No.6

Fixed Assets to Income Ratio

Fixed Assets to Income Ratio

40000003500000300000025000002000000-,
15000007
10000007
500000-

0
2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Year
0 Fixed Assets 0 Income

96

EARNING PER SHARE

Earning per share is a small variation of return on equity capital
and is calculated by dividing the net profit after taxes and preference
dividend by the total number of equity shares.

Table No .15

Earning Per Share

S.No

Year

(Rs.in Lakhs
Earning per
share

2001-2002

22.90

2002-2003

23.24

2003-2004

2004-2005

29.68

2005-2006

35.67

Total

27.55

26.25

Source: Annual Report

From the above table No.15 shows that Rs.22.90 lakhs is earning
per share in the year 2001-2002 and Rs.23.14 lakhs in the year 20022003. It has been increased to Rs.26.25 lakhs in the year 2003-2004,
Rs.29.68 lakhs in the year 2004-2005, and again increased to
Rs.35.67 lakhs in the year of 2005-2006.

97

Char No.7

Earning per Share

02001-2002
02002-2003
02003-2004
02004-2005
02005-2006

98

DEBT-EQUITY RATIO
Debt-equity ratio, also known as external-Internal equity ratio
which is calculated to measure the relative claims of outsiders and the
owners(i,e.,share holders ) against the firm's assets. This ratio indicates
the relationship between the external equities or the outsider's funds and
the internal equities or the share holders funds.
Debt
The formula is
Equity
Debt includes for this study is other liabilities and provisions.
Equity includes for this study is capital and reserves and surplus.
Table No. 16
Debt -Equity Ratio
(Rs.in Lakhs)
S.No
1

Year
2001-2002

Debt
12,70,328

Equity
12,17,394

Ratio
1.04

2002-2003

12,26,880

14,27,770

0.86

2003-2004

17,40,056

16,44,145

1.06

2004-2005

17,00,376

19,20,861

0.89

2005-2006

26,86,602

22,66,428

1.19

Total

86,24,242

84,76,598

1.01

Source :Annual Report

99

The above table No.16 shows that the debt equity ratio of the
lakshmi vilas bank ltd during the study period 2001-2002 to 2005-2006.1n
2001-2002 debt-equity ratio is 1.04 percent but it has been slowly
decreased to 0.86 percent in 2002-2003 and 1.06 percent in the year
2003-2004 and 2004-2005 again it has been reduced to 0.89 percent and
1.19 percent increased in the year 2005-2006. Highest debt equity ratio
is 1.19 percent recorded in the year 2005-2006 and lowest debt equity
ratio is 0.86 percent in the year 2002-2003.

100

Chart No.8

Debt Equity Ratio

3000000-

2500000-

P 2000000%

1500000-1

Ui

loomo500000-

de-7:
2001-2002

2002-2003

2003-2004
Year

0 Debt 0 Equity

101

2004-2005

2005-2006

MARKET PRICE PER SHARE

Market Price per Share is the major indicator which reflect the
share price of the company. It is based on the financial performance,
dividend declared by the company and investor respons towards holding
and buying of the particular shares. MPS value should be more than the
face value of the shares.
Table No. 17

Market Price Per Share

(Rs.in Lakhs)
Year

Market price per

shares

2001-2002

38.12

2002-2003

44.42

2003-2004

46.17

2004-2005

65.98

2005-2006

98.72

S.No

Total

58.68

Source : Annual Report

102

The above table No.17 shows that the market price pershare of the
lakshmi vilas bank ltd during the study period 2001-2002 to 2005-2006.
In 2001-2002 market price per share is Rs.38.12 lakhs. It is was slowly
increased to Rs.44.42 lakhs in the year 2002-2003, Rs.46.17 lakhs in the
year. 2003-2004, and to Rs.65.98 lakhs in the year 2004-2005 and in the
year 2005-2006 the current market price is Rs.98.72 lakhs in the year
2005-2006 and lowest market price is Rs.38.12 lakhs during the year
2001-2002.

103

Chart No.9

Market Price per Share

02001-2002 112002-2003 02003-2004 02004-2005 02005-2006

104

DIVIDEND PER SHARE

The bank pays a certain fixed amount as dividend. This amount is
paid irrespective of the level of earnings of the bank year after year.
It is also one of the important factors which affect the market value
of shares and firms. Dividend per Share depends on the profit after tax
and company future expansion activities. Dividend Per Share is the
relationship between the Profit After Tax and no. of share
Profit After Tax
Formula for Dividend Per Share
No. of share
Table No. 18

Dividend Per share

(Rs.in Lakhs)
Year

Dividend per share

2001-2002

4.50

2002-2003

2003-2004

5.00

2004-2005

5.00

2005-2006

5.00

Total

4.80

S.No

4.50

Source: Annual Report

Table No 18 reveals that the dividend per share of the lakshmi vilas
bank ltd during the study period 2001-2002 to 2005-2006. In the year
2001-2002 and 2002-2003 the dividend per share Records Rs.4.50 but the
remaining three years dividend per share is Rs. 5.00 remain constant.

105

Chart No.10
Dividend per Share

02001-2002 02002-2003 02003-2004 02004-2005 02005-2006

106