Project Report: Financial Statement Analysis of the

Industrial Co-operative Bank Limited.

Presenter Name : Nilotpal Kumar Saikia

MBA 4th Sem
Roll No:- 521013505

Conducted at:- Industrial Co-operative Bank Ltd.

Lakhtokia, Panbazar,
Guwahati-781001

Project Overview
What is the project about?
It is about analyzing the financial statement of the Industrial Cooperative Bank.

What is the goal of this project?

The goal of the project is to know about financial situation of the
firm i.e. about two factors:- (1) Profitability and (2) Financial
Soundness.

Aims & Objectives

1.

To study the short-term and long-term solvency position of

Industrial Co-Operative bank Ltd.

2.

To study the profitability of Industrial Co-Operative Bank Ltd.

3.

To study the efficiency with which resources are used.

4.

To study the capital structure of Industrial Co-Operative Bank Ltd.

Methodology

Sample Size:-

The sample size is data of the following years i.e. 2008-2009, 2009-2010 and 2010-11.

Data Collection:-

Two types of data were considered for the study i.e.- (a) Primary data and (b)
Secondary Data.

Data Analysis:Tools & Techniques used:- 1) Ratio analysis & 2) Comparative & Common Size
Statement.
Data Representation:- Collected data will be presented in tabular format and will also
be represented using bar diagram and pie chart.

Overview

Current Ratio

Current Ratio
1.6
1.4

1.37

1.35

1.2
0.98

1
0.8
0.6

0.4
0.2
0
2009

2010

2011

Interpretation: From the above analysis, it reveals that Current Ratio is

decreasing from year 2009 onwards.

Quick or Acid Test Ratio

YEAR

2008-2009

ACID TEST RATIO

1.36

2009-2010

2010-2011

1.34

0.98

Acid Test Ratio

1.6
1.4
1.2

1.36

1.34

1
0.98

0.8

Acid Test Ratio

0.6
0.4
0.2
0
2008-2009

2009-2010

2010-2011

Interpretation: From the above analysis, it reveals that acid test

ratio is on decreasing trend from 2008-09 onwards.

LONG TERM SOLVENCY POSITION

EQUITY RATIO
YEAR

EQUITY RATIO (%)

2008-2009

2009-2010

2010-2011

13.42

11.24

10.90

Equity Ratio
16%
14%

12%
10%
8%
6%

4%
2%
0%
Equity Ratio

2008-2009
13.42

2009-2010
11.24

2010-2011
10.9

Interpretation: From the above analysis it is clear that the equity

ratio is decreasing from year 2008-09 onwards.

RATIO OF CURRENT ASSETS TO PROPRIETORS FUND

YEAR
Ratio of Current
Assets to Proprietors
Fund (%)

2008-2009

2009-2010

2010-2011

426.96

489.95

385.71

Ratio of Current Assets to

Proprietor's Fund
2010-2011
2009-2010
2008-2009
0.00%
Ratio of Current Assets to
Proprietor's Fund

200.00%

400.00%

600.00%

2008-2009

2009-2010

2010-2011

426.96

489.95

385.71

Interpretation: From the above analysis it reveals that ratio of current assets to
proprietors fund increased from 2008-09 to 2009-10 but decreased from 200910 to 2010-11.

OVERALL PROFITABILITY RATIO

RETURN ON SHAREHOLDERS INVESTMENT OR NET WORTH
YEAR

RETURN ON
SHAREHOLDERS
INVESTMENT (%)

2008-2009

2009-2010

2010-2011

5.06

6.01

5.08

Return on Shareholder's Investment

6.20%
6.00%
5.80%
5.60%
5.40%
5.20%
5.00%
4.80%
4.60%
4.40%
Return on Shareholder's
Investment

2008-2009

2009-2010

2010-2011

5.06

6.01

5.08

Interpretation: From the above analysis, it reveals that Return on

Shareholders investment or net worth increased from year 2008-09 to 2009-10
before decreasing from 2010-2011.

RETURN ON EQUITY CAPITAL

YEAR

2008-2009

RETURN ON EQUITY
CAPITAL (%)

102.35

2009-2010

115.84

2010-2011

106.84

Return on Equity Capital

120.00%
115.00%
110.00%
105.00%
100.00%
95.00%
Return on Equity Capital

2008-2009

2009-2010

2010-2011

102.35

115.84

106.03

Interpretation: From the above analysis, it reveals that Return on Equity

Capital increased by 13.49% from year 2008-09 to 2009-10 but decreased by
9.81% from year 2009-10 to 2010-11.

EARNING PER SHARE

2008-2009

2009-2010

22.51

24.90

2010-2011, 21.3

2010-2011
21.30

2008-2009, 22.51

2009-2010, 24.9

Interpretation: From the above analysis, it reveals that Earning per Share
(EPS) was high in the year 2009-10 but declined in the next year 2010-11.

CAPITAL STRUCTURE
RATIO OF CURRENT LIABILITIES TO PROPRIETORS FUND
YEAR
RATIO OF CURRENT
LIABILITIES TO
PROPRIETORS FUND

2008-2009

2009-2010

3.12

3.62

2010-2011
3.90

3.9

2010-2011

3.62

2009-2010

3.12

2008-2009

0.5

1.5

2.5

3.5

Ratio of Current Liabilities to Proprietor's Fund

Interpretation: From the above analysis, it is clear that Ratio of

Current Liabilities to Proprietors Fund is on increasing trend from year 200809 onwards.

RATIO OF RESERVE TO EQUITY CAPITAL

YEAR
RATIO OF RESERVE
TO EQUITY CAPITAL
(%)

2008-2009

2009-2010

2010-2011

1819

1711

1879

Ratio of Reserve to Capital

1879

1900.00%
1850.00%

1819

1800.00%
1750.00%

1711

1700.00%
1650.00%

1600.00%
Ratio of Reserve to Capital

2008-2009
1819

2009-2010
1711

2010-2011
1879

Interpretation: From the above analysis, it reveals that the Ratio of

Reserve to equity Capital decreased from year 2008-09 to 2009-10 but increases
from 2009-10 to 2010-11.

COMPARITIVE BALANCE SHEET

OF INDUSTRIAL CO-OPERATIVE BANK LTD.
for the year ending 31st March 2008-09 and 2009-10

PROPERTY & ASSETS

2008-2009
INCREASE/
INCREASE/
(In Rs.)
DECREASE
DECREASE (%)
Current Assets:
Cash
Balance with Banks
Short Term Loan
Interest Receivable
Bills Receivable
Other Current Asset

2009-2010
(In Rs.)

15,01,37,278.36
7,79,57,893.00
66,30,84,834.00
31,47,526.00
74,80,145.00
13,61,562.00

17,55,87,266.70 + 254,49,988.70
29,96,65,076.11 +221,707,183.11
67,76,16,468.60 + 14,531,634.50
4,42,000.83 - 2,705,525.17
56,07,314.48 - 1,872,830.52
20,07,447.77 + 645,885.77

+ 16.95
+ 284.40
+ 2.19
- 85.96
- 25.04
+ 47.43

903,169,238.36

1,160,925,574.49 + 257,756,335.40

+ 28.53

Fixed Assets:
Land & Building
Furniture & Fixture

Investment
Advance

8,64,46,017.00
59,21,186.00

8,59,38,617.00
69,48,738.30

-507,400.00
+ 1,027,552.30

- 0.58
+17.35

92,367,203.00

92,887,355.30

+ 520,152.30

+ 16.77

30,05,65,026.00
102,184,014.00

40,11,19,224.25 + 100,554,198.25
223,389,340.00 +121,205,326.00

+ 33.45
+ 118.61

157,55,67,411.00

2,10,74,59,896.14 +531,892,485.14

+ 33.75

COMMON SIZE INCOME STATEMENT

for the year ending 2008-2009 and 2009-2010

2008-2009
Rs.
Total Income
14,80,35,530
Less:1) Interest on deposits and borrowings 7,64,31,054
2) Salaries, allowances & staff
provident fund
4,12,74,209
3) Rent, Taxes, Insurance & Lighting

10,21,002

2009-2010
%

Rs.

100.00

16,68,88,827

100.00

51.63

9,23,14,199

55.31

27.88

3,05,59,772

00.68

11,23,032

18.31
00.67

4) Deposit Insurance Premium

11,17,258

00.75

15,83,866

00.94

5) Directors & Local Committee

Members fees and allowances

1,49,000

00.10

1,11,000

00.06

6) Law Charges

2,67,232

00.18

1,84,064

00.11

7) Postage, Telegram & Telephone

charges

1,57,803

00.10

1,04,367

00.06

8) Audit Fees

3,38,903

00.22

3,87,800

00.23

9) Depreciation & Repairs to Property

23,07,183

01.58

23,89,258

01.43

10) Printing, Stationery &

Advertisement

6,11,844

00.41

8,86,495

00.53

11) Other Expenditure

1,36,51,651

09.22

2,30,05,456

13.78

12) Balance of Profit

1,07,08,392

07.23

1,42,39,518

08.53

COMPARITIVE BALANCE SHEET

OF INDUSTRIAL CO-OPERATIVE BANK LTD.
for the year ending 31st March 2009-10 and 2010-11

PROPERTY & ASSETS

2009-2010
INCREASE/
INCREASE/
DECREASE
Current Assets:
Cash
Balance with Banks
Short Term Loan
Interest Receivable
Bills Receivable
Other Current Asset

2010-2011

DECREASE (%)
17,55,87,266.70
9,56,83,079.25 - 79,904,187.45
29,96,65,076.11 28,03,36,994.31
-19,328,081.80
67,76,16,468.60 71,93,96,258.20 + 41,779,789.60
4,42,000.83
4,42,000.83
0.00
56,07,314.48
55,71,582.37
- 35,732.11
20,07,447.77
24,20,663.45
+ 413,215.68

- 45.50
- 6.45
+ 6.16
0.00
- 00.63
+ 20.58

1,160,925,574 .49 1,103,850,578.41

-57,074,996.08

-4.91

8,59,38,617.00 8,54,43,902.00
69,48,738.30
81,61,421.30

- 494715.00
+ 1,212,683.00

- 00.57
+ 17.45

92,887,355.30

+ 717,968.00

+ 00.77

Fixed Assets:
Land & Building
Furniture & Fixture

Investment
Advance

93,605,323.30

401,119,224.25 668,057,297.85
223,389,340.00 234,605,738.12
624,508,564.25

+ 266,938,073.60
+ 11,216,398.12

+ 66.54
+ 05.02

902,663,035.97 + 278,154,471.72

+ 44.53

CAPITAL & LIABILITIES

2009-2010

2010-2011

INCREASE/
DECREASE

INCREASE/
DECREASE (%)

Current Liabilities
Deposits &
Other Accounts

839,883,528.00 1,086,827,941.34 +246,944,413.34

Bills Payable
Dividend Payable
Audit Fees
Sundries
Service Tax Payable

1,00,31,717.00
20,00,232.00
90,000.00
71,76,140.00
2,071.00

Capital
Reserve Fund &
Other Reserves

Bills for collection

Branch Adjustment
Overdue Interest
Reserve
Interest Payable
Other Liabilities
Profit & Loss A/c

Long Term Liabilities

+ 305,715.92
+ 860,890.87
+ 56,462.00
+ 11,201,724.99
- 1,443.00

+ 3.04
+ 43.04
+ 62.73
+ 156.09
- 69.67

859,183,688.00 1,118,551,452.12 + 259,367,764.12

+ 30.18

122,91,625.00

1,03,37,432.92
28,61,122.87
1,46,462.00
1,83,77,864.99
628.00

+ 29.40

1,37,22,425.00

+ 1,430,800.00

+ 11.64

21,04,13,557.00 25,79,13,679.57

+ 47,500,122.57

+ 22.57

222,705,182.00

+ 48,930,922.57

+ 21.97

56,07,314.00
-----------

271,636,104.57

55,71,582.37
- 35,731.63
-------------------

4,42,000.00
3,68,20,250.00
2,04,45,890.00
1,42,39,517.00

4,42,000.00
3,38,78,033.64
3,24,21,510.78
1,45,50,356.12

0.00
- 2,942,216.36
+ 11,975,620.78
+ 310,839.12

77,554,971.00

86,863,482.91

+ 9,308,511.91

96,73,16,214.40

97,10,42,825.80

+ 3,726,611.40

- 00.63
--------0 .00
- 7.99
+ 58.57
+ 2.18
+ 12.00
+ 00.38

2009-2010
Rs.

2010-2011
%

Total Income
16,68,88,827.00 100.00
Less:1) Interest on deposits and borrowings 9,23,14,199.00 55.31
2) Salaries, allowances & staff
provident fund
3,05,59,772.00 18.31
3)

Rent, Taxes, Insurance & Lighting

4) Deposit Insurance Premium

11,23,032.00
15,83,866.00

Rs.

22,58,09,300.33 100.00
12,23,59.097.77 54.18
3,32,65,245.12

14.73

00.67

12,40,398.50 00.54

00.94

18,74,994.00

00.83

5) Directors & Local Committee

Members fees and allowances

1,11,000.00

00.06

2,91,750.00

00.12

6) Law Charges

1,84,064.00

00.11

2,31,800.00

00.10

7) Postage, Telegram & Telephone

charges

1,04,367 .00

00.06

1,05,345.44

00.04

8) Audit Fees

3,87,800 .00

00.23

4,53,108.00

00.20

23,89,258.00

01.43

37,67,654.00

01.68

8,95,080.50

00.39

9) Depreciation & Repairs to Property

10) Printing, Stationery &
Advertisement
11) Other Expenditure

12) Balance of Profit

8,86,495 .00

00.53

2,30,05,456.00 13.78

142,39,518.00 08.53

4,67,74,470.88 20.71

1,45,50,356.12 06.44

FINDINGS

From the data analysis it was found that:a)

Current ratio of the Industrial Co-operative Bank Ltd. is not satisfactory

because the ratio in last 3 years i.e. 1.37, 1.35, 0.98 is below than the
acceptable standard of 2:1.

b)

Quick or Acid Test Ratio on the other hand in previous years of 2009
and 2010 was more than normal standard of 1:1 but falls below the
normal standard in the year 2011 i.e. 0.98 which is a cause of concern.

c)

Equity

Ratio

of

the

Industrial

Co-operative

Bank

Ltd.

is

not

satisfactory, for sound long term solvency position it should be high. It is

declining from the last 3 years i.e. from 13.42% it has reached 10.90%.
d)

The Return on Shareholders investment or Net Worth is not very high

but increased from 5.06% to 6.01% in the year 2010 but again decreased
in the next year to 5.08%.

e)

The Proprietary Ratio increased from 426.96% in year 2009 to 489.95%

in year 2010 which indicates a sound financial position but decreased to
385.71% in the year 2011 which is a danger signal for long term lenders.

f)

The Return on Equity Capital in last 3 years i.e. 102.35%, 115.84%,

106.84% is satisfactory but it had a decline in the year 2011.

g)

The Earning per Share (EPS) increase from 22.51 (2008-09) to 24.90in
the year 2009-10 but it had again decreased in the year 2010-11 to 21.30.

a)

Ratio of Reserve to Equity Capital shows a sound capital structure of

the Industrial Co-operative Bank Ltd. Though it decreased from 1819%
(2008-09) to 1711% (2009-10) it increased to high ratio of 1879% in year
2010-11. High ratio shows a strong capital structure.

b)

From the Comparative Balance Sheet I found that the current assets has
been increased from year 2008-09 to 2009-10 but decreased in the next
year 2009-10 to 2010 -11. Although the current liabilities has been
increasing from the last 3 years.

c)

From the Common-Size statement I found that the rate of profitability

increased from 7.23 to 8.53 during the year 2008-09 to 2009-10 but
decreased in the year 2010-11 to 6.44 due to increase in banks operating
and other expenses.

RECOMMENDATION

1) From the data analysis, I found that the Current Ratio is not satisfactory,
and so is the Quick or Acid Test Ratio which has fallen under the normal
standard in the last year. So, the Industrial Co-operative Bank Ltd. needs
to improve its short-term financial position.
2) After the analysis of Equity Ratio, I found that the ratio is not satisfactory
but they are improving. The bank needs to emphasize on the
improvement of its long term solvency position.
3) Return on Shareholders investment or Net Worth reveals how well the
resources of a firm being used, higher the ratio better the results. But the
ratio is not very satisfactory; the bank needs to improve it as this ratio is
of great importance to the present and prospective shareholders as well as
the management of the bank.

1) From the above analysis, I found out that the shareholders are not getting
good return .On the other hand Industrial Co-operative Bank Ltd. has
sufficient funds in the Reserves. The bank should give shareholders a
good return on their investment so that they dont get demoralized.
2) From the above analysis I found out that the rate of profitability has
decreased in the last year due to increase in banks operating and other
expenses. So the bank should try to control and reduce its expenses so
that it will help the organization to gain more profit from its business.
3) From the above analysis I found that the current liabilities are increasing.
The banks position will improve if it carefully manage its current
liabilities and put more finds in current assets.