a study on the mananthavady urban co-operative society ltd. no: w 221 a study on the mananthavady...

8/11/2019 A STUDY ON THE MANANTHAVADY URBAN CO-OPERATIVE SOCIETY LTD. NO: W 221 A STUDY ON THE MANANTHAVA

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In order to avoid the drawbacks of the 1904, another act was passed in the year 1912, which

provided for establishment of co-operative central bank by a union of primary credit societies

and individuals.

The chief functions of the bank are:

1. Attracting deposits from non agriculturist

2. Using excess fund of some societies temporarily in make up for shortage is other and,

3. To supervise of guide the affiliated societies.

In order to ensure that the progress of the movement was on sound lines, the govt. of India

appointed the imperial committee in the year 1914. The made for reaching proposals for the

future development of the movement. The committee to create co-operators and then create co-

operatives.The committee stressed the need for a pyramid structure of co-operative credit with

PACS at grass root level and apex bank at top level.

Co-operative banking is federal in its structure. At the lower rang, there are primary credit

societies then there are the central unions of central co-operative banks and at the top there are

the provincial co-operative banks or state co-operative banks, otherwise known as apex banks.

The primary societies may be compared with joint banks. There much function is that of lending

money to villagers on easier terms. They have their own fond supplemented by funds drawn

from the central co-operative banks through the banking union where such union exists. The

banking union is federation of primary societies and they act as either co-ordinating unions or

Supervisory union between primary societies and central co-operative bank. The central co-

operative bank obtains the funds from share capital, deposits. Loans from apex bank and while

apex bank do not exists from RBI and commercial bank. The apex banks if state co-operative

bank obtain their funds from share capital deposit, loan from commercial bank, the RBI and the

Govt.

CO-OPERATIVE MOVEMENT IN KERALA


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Co-operative movement has successful in many fields in Kerala especially in credit sector.

In the credit movement Kerala has achieved the highest position. Kerala has also got notable

growth in other sector like processing marketing consumers, employees, co-operative hospital,

co-operative canteen societies etc. 60% of total deposit of credit societies in India is collected by

the primary credit societies in Kerala.

Before the organization of Kerala state there was a province, namely Cochin State and

Travancore State. They had separate Act namely Cochin co-operative Act of 1913 and

Travancore co-operative societies Act of 1914. When Cochin and Travancore state merged, they

acts were merged into Travancore-Cochin co-operative societies Act of 1951 prior to

reorganization of Kerala state, the present Malabar area was a part of Madras state of under the

Madras co-operative societies Act 1932. When Kerala state come into existence the two acts

were merged into Kerala co-operative society act of 1969 with the area of operation of them

whole state.

GENESIS OF URBAN SOCIETY

As stated earlier the urban co-operative movement had found their path from the

experience of German urban credit movement that was developed by Schulz. He was a judge

Delitzsch. He had seen the miserable condition of the people, especially of with low means. In

1849, the organized a friendly society for relief in sickness and later established an association of

shoe markers for the purchase of raw materials in well-off and who did not require any financial

help. Two years later in 1852, Schulz founded a society at Delitzsch which was based on co-

operative principle. He obtained the required capital through the sale of shares. He published a

book in 1856, which contained the principle of co-operative banking as formulated by him

increased rapidly and in 1859. He organized a congress of these banks which in turn leads to the

settings up of The General Union of German Industrial Societies. He was also responsible for

securing from Prussia, the first co-operative law in 1867, which later on was made applicable to

the entire country in 1889.

THE URBAN SOCIETY IN INDIA


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Like Germany, the urban credit movement in India started for catering to the banking and

credit of the urban middle class, i.e., the traders and the business man, artisans and factory

cooked and salaried people with fixed income in urban and semi-urban areas. If also provides

opportunities for investment and thus help the people of low means to cover up the period of

difficulties.

The seed of urban co-operative movement was by the Maclayan committee (1915). The

committee said, the credit societies might serve useful purpose in training the upper and middle

class to understand ordinary banking principle. Although, the first non-agricultural credit society

was organized at Baroda in and the first co-operative credit societies, but practically, no progress

was made till 1915. In 1913 the Central Banking Enquiry co-operative societies, generally

known as urban bank, should be established where ever necessary facilities and conditions exist,

for the benefit of these classes of the population.

The co-operative planning committee (1946) recommended that in view of the usefulness

of the urban banks to people of small means, these should be organized in all towns. The RBI in

it review on co-operative movement during 1939-40 asserted the importance of urban credit

societies and banks are the most important feature of the urban co-operative movement in India

and make up to some extent for the absence of joint stock banking facilities in smallest towns.

STATEMENT OF THE PROBLEM

Deposits are the main source of fund, savings habit, growth of deposits, and classification

of deposits are the main streams to be considered whether the growth of deposits is achieved or

not, is analyzed through this study. Attitude of public towards loans and advances which are

granted to different groups of society, interest rates to various loans etc. are going to understood

through this study. More over the savings habit of the public are also can understand through this

study. Hence the performance and the financial activities of the Mananthavady urban co-

operative society as a problem to be studied upon.


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IMPORTANCE OF THE STUDY

The urban co-operative societies are formed mainly for the purpose of providing cheap

credit to the people residing in urban and semi-urban areas. Among the non-agricultural credit

societies co-operative urban society occupy a prominent place. Actually they are primary credit

societies working in the urban areas. The members of urban co-operative are mostly small trends,

merchants and salary earned. An urban society provides short term, medium term and long term

loans to its members for non-agricultural purpose. It also extends various kinds of banking

facilities to its members and customers.

The urban societies have become a great importance in recent years Among the co-

operative society in Wayanad District. In this context, I think it is necessary to make a study on

the working of urban co-operative society. For this purpose I select the Mananthavady co-

operative urban society Ltd. No. W. 221.

OBJECTIVES OF THE STUDY

The main purpose of the study is to understand the loans and deposit Ltd. No. 221. The

main objectives of the study are given below:

1. To know about the different types of deposit and loans.

2. Profitability of the bank.

3. To increase the practical knowledge of the financial statements.

4. To know the profile of the Mananthavady co-operative urban society.

5. Making sent able suggestions based on the findings of the study.

SCOPE OF THE STUDY

The inducement behind the selection of this study is to know the financial performance of the co-

operative urban society Mananthavady. There are large number of co-operative urban society are

situated in Wayanad District. But this study is limited to Mananthavady Panjayath.

METHODOLOGY


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The present study, a study on urban co-operative society Ltd. No. W 221 is designed as a

case study. The books of account maintained by the society have been the major source of

information, necessary data for the purpose of analysis taken these books. Both primary and

secondary data has been used for this purpose.

Source of Primary Data

The primary data, necessary for the study has been collected from the general manager,

senior accountant, office staff and from other related person of the bank.

Source of Secondary Data

The study was mainly based on the secondary data. These are collected from the financial

statements, Annual reports, and other relevant reports of the society.

1. Annual report of the bank

2. The Kerala journals of co-operation

3. Various books, circular etc.

TOOLS OF ANALYSIS

1. Ratio Analysis

2.

Comparative Balance Sheet

LIMITATION OF THE STUDY

In the process of collection and analysis of primary and secondary data, proper and

possible care has been taken. The shortage of time is a major limiting factor of the preparation of

this report. However, maximum effort is used to write this report with minimum resources.

PRESENTATION OF THE STUDY / CHAPTERIZATION

Chapter I Introduction

Chapter II An overview of Mananthavady co-operative urban society Ltd. No. W 221

Chapter III Functions of Mananthavady co-operative urban society Ltd.


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Chapter IV Financial analysis

Chapter V Findings, suggestions and conclusions


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CHAPTERII

AN OVER VIEW OF MANANTHAVADY CO-OPERATIVE

URBAN SOCIETY-LTD. No.W.221

The Mananthavady co-operative urban society ltd. No.w.221 was registered on 10th July

1997 under the Kerala State Co-operative Society Act. 1969.The bank started its business on

24th September 1997 with a membership of 74 and paid up share capital of Rs.64,000/-.

To meet the non agricultural credit needs of people belong to urban area especially of

Mananthavady town and nearby semi cubs, it has found necessary to form a co-operative of their

own, and hence a meeting was convinced on 11-08-1996 at co-operative college Mananthavady

and promoting committee consist of 11 members were selected under the chairmanship of Sri.

K.V. Mohanan. The promoting committee was entrusted with the task of organizing the co-

operative and the society was registered on 10th July 1997.The first general body was convinced

of 15-07-1997 and the promoting committee was elected as the first managing committee for the

next three months, with the active participation of the people of mananthavady town, on a hind

building. The entered into the banking field with the effect from 24th September 1997 and the

society was inaugurated by the then Honorable Finance Minister Sri. T. Sivadasa Menon.

NAME AND ADDRESS.

The society is named after Mananthavady Co-operative Urban Society Ltd.No.w.221.

Registered address of the society is, the Mananthavady Co-operative Urban SocietyLtd.No.w.221, Mananthavady P.O, Wayanad, 670645.

REGISTERED OFFICE.

The Registered office of the society shall be situated as Mananthavady in the Mananthavady

amsom of Mananthavady Thaluk, Wayanad District.


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d) Borrowing of the society from the control financing agency and other

financial institutions.

e) Subscription and entrance fees received from its members.

f) Grants and subsides.

SHARE CAPITAL

a) AUTHORISED CAPITAL

The authorized share capital of the society was Rs. 1,01,00,000 made up of following

types

1. 5000 A class share of Rs. 1000 each.

2.

5000 B class share of Rs. 1000 each.

3. 10000 C class share of Rs. 10 each.

The A class shares are available to those who are residing and/or employed with in

the area of its operation and who are satisfied the eligibility criteria put forward by the

Act and Rule.

The B class shares are extended to Govt. and financing bank. The c class shares

holders are nominal members.


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Fig.no.2.1

PAID UP CAPITAL

The paid up capital of the society during the year 2007-08, 2008-09, 2009-10, 2010-11,

2011-12 was Rs. 1401390, 1436460, 1502730, 1580910, and 1656550 respectively.

MAXIMUM BORROWING POWER

The maximum borrowing power of the society shall not exceed 150 times the paid up share

capital and reserve minus bad debt and accumulated losses.

LIABILITY OF MEMBERS

The liability of members of the members is limited according to fall value of the share held by

them.

5000

5000

10000

No. of shares

A

B

C


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ORGANISATION AND MANAGEMENT

The supreme authority of the society is general body. This is expected to meet at least once in

a year. The quorum of the general body meeting is 50 or 1/5 of the total member whichever is

less.

The day to day affairs are managed by the board of directors consisting of 11 members of

which one members each should belong to ST(Scheduled Tribe) and women. The administration

of the society wasted with the executives of the society who have to work in line with the

directions issued from time to time by the board of directors. The administrative head is the

secretary who is the chief executive of the society. The secretary in the day to day affairs assisted

to staff.

GENERAL BODY

The supreme authority of society is general body. This is expected to meet at least once in a

year. The general body meeting shall be of two kinds, Annual general body meeting and special

general body meeting. The annual general body meeting shall be called once before the

completion of 15 days after the commencement of the accounting year with in such period as

many extended by Registrar.

The special general body meeting may called at any time by the board of directors. It shall also

be called on a written requisition made to the president of the board of directors by one fifth of

the share holders or on a requisition from the Registrar of co-operative society.

The annual general body meeting of the members of the bank shall be held on every year by a

notification through post among its members the quorum of the meeting must be 1/5th

of the total

members or members whichever is less.

POWER OF THE GENERAL BODY

1. To elect the board of directors.

2. To pass the annual budget and annual report of the bank.

3. To consider the annual a/c balance sheet and audit report.

4. To remote any members of the acted against the interest of the society.


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5. To recommended the board of directors to distribute profit.

QUORUM

So members or 1/5th

of the total number of share holder members which even is less shall

constituted the quorum for a general meeting. No business shall be transacted at any meeting

unless quorum of members is presented.

VOTING RIGHTS

Each share holder/member shall have one vote irrespective of the number of shares he/she

holds. The chairman presiding over the meeting shall have a casting vote in case is equality of

vote for and against any resolution but in the case equality of vote at an election the decision

shall be taken on the drawing of lots.

BOARD OF DIRECTORS

The board of directors shall consist of 11 members who shall be elected from among the

individual members under rule 35 of the KCS rules of this one seat shall be reserved for a

Scheduled case, Scheduled Tribe members and one seat to a women member. The member of the

board of directors shall be elected by the general body for a period of 3 years from among the

members.

POWER OF THE BOARD OF DIRECTORS

1)

To consider the applications for membership, Allotment, Transfer of shares and

registration.

2) Power to call general body meeting and to submit annual report, balance sheet, P&L

in the general meeting.

3) Power to borrow funds.


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4) Power to grant, loans and advances to members.

5) Power to do any act that is beneficial to the bank.

6) To consider proposals for opening branches.

7) To fix the rate of interest.

8) To approve appointment of brokers and agents and fix their remuneration.

OFFICE STAFF

The Mananthavady Urban Co-operative bank has four office staffs including secretary and

three collection agents.


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ORGANIZATION CHART

GENERAL BODY

BOARD OF DIRECTORS

PRESIDENT

SECRETARY

STAFF


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CHAPTER-3

FUNCTIONS OF MANANDAVADY CO-OPERATIVE SOCIETY

The Mananthavady co-operative urban society plays a very important role in

urban credit structure of Manandavady Taluk. The main objective of the society is to provide its

members non-agricultural credit, which is not met by the agricultural credit co-operatives and

other institutional credit agencies text incoming in the area of its operation. The society was

started during the year 1997 and after 13 completed years of its inception. The society has gained

confidence among its members and general public. The society is working satisfactory in line

with its objectives of providing short and medium term loans to its members.

The main function of the bank at present is accepting various kinds of

deposits and lending various non agricultural loans. The bank helps the members to improve

their economic conditions by rendering various services. The entire operation of Mananthavady

co-operative urban society in to following heads.

1. Accepting various deposits.

2. Borrowing of the bank.

3. Lending activities.

4. Other activities

DEPOSITS OF THE SOCIETY

One of the fundamental functions of the society is to receive deposit. The Mananthavady

urban co-operative society receives; deposits contribute major portions of the working capital of

the society.

TYPES OF DEPOSITS

1. Fixed deposit

2. Saving bank deposit

3. Daily deposits


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FIXED DEPOSITS

A fixed deposit is the deposits of a fixed amount of money for a fixed period of the

time. The deposit shall not be open for a less than 15 day small investors who wished to deposit

their money in bank and earn good and steady income.Introdution is necessary by person for

opening the amount.

The following table shows the details of fixed deposits of the society for the 5

years.

TABLE.NO.3:1

TABLE SHOWING THE TREND ANALYSYS OF FIXED DEOSIT

YEAR AMOUNT INCREASING/DECREASING INDEX BASE

YEAR(2007-

08)

2007-08 6033232 - -

2008-09 9285127 3251895 153.89

2009-10 16430700 7145573 272.34

2010-11 21872874 5442174 362.54

2011-12 31385035 9512161 520.20

From the above table it is clear that mobilization of fixed deposit of the society

improve by 350.08% from 2007-08 to 2011-12


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INTEREST RATE OF FIXED DEPOSIT

The rate of interest on fixed deposits varies according to the period of deposit as

shown bellow.

TABLE NO.3.2

PERIOD INTEREST

15-45 DAYS 7.50%

46-90 DAYS 8%

91-179 DAYS 8.75%

180-365 DAYS 9.25%

1 YEAR-2 YEAR 10%

3 YEAR AND ABOVE ,,

1/2 % Extra for senior citizen.

SAVINGS BANK DEPOSITS

Any person can starts savings on deposit with the bank by giving an application in

the prescribed form. Savings bank account is meant for middle and low income groups and earns

a free interest on their deposits.

The minimum amount that a person shall keep in the amount is RS

100. The depositor can with draw the amount at any time by keeping the minimum balance.

Current interest rate of savings deposit amount is 5%.Apass book will be given to

the saving bank account holder. It shows entire regarding the deposit and withdrawal of money.

The following tables show the savings bank deposit for the last 5 years.


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TABLE SHOWING TREND ANALYSES OF SAVING BANK DEPOSIT

TABLE NO.3.3

DAILY DEPOSITS

In the daily deposits scheme the depositor deposits an amount

daily with the banks. The collection agents collect the amount from the depositor. The bank

gives 3%commission is given to the collection agents as their remunerations. The board of

directors will determine the period of deposits.

The following table shows the daily deposits during the last five years

TABLE SHOWING THE TRENT ANALYSYS OF DAILY DEPOSITS

TABLE NO:3.4

YEAR AMOUNT INCREASE ORDECREASE

INDEX ( BASEYEAR-2007-08)

2007-08 4352532 - 100

2008-09 4555035 202503 104.65

Year Amount

Increase Decrease

Index(base year-2007-

08)2007-08 11022494 - 100

2008-09 12596931.18 1574437 114.28

2009-10 1733702 -10863229 15.72

2010-11 23090083 2135638 209.48

2011-12 15810605.96 -7279478 143.44


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2009-10 5018480 463445 115.30

2010-11 7206066 2187586 165.56

2011-12 9397524 2191458 215.90

ANALYSYS OF TOTAL DEPOSITS

Analysis of the total deposit mobilization of the bank is

apparent from the table given bellow;

THE TOTAL DEPOSIT FOR THE LAST FIVE YEAR

TABLE 3.5

YEAR AMOUNT INCREASE OR

DECREASE

INDEX(BASE

YEAR)

2007-082007-08 21408250 - -

2008-09 26437093.18 5028843 123.49

2009-10 23193882 -3243211 108.34

2010-11 56285032 33091150 262.91

2011-12 57154564.96 869532 266.97

Table 3.5 shows the index of the total deposit for the last five years of the society.

The deposit position of the society shows the increasing tendency but in 2009-10 .The deposit

position of the society shows a decreasing tendency.

II BORROWINGS

The bye law of the society cleanly provided that the society could borrow funds

towards its working capital to the extent of 35 times of its own fund. The society regularly

borrows from District co-operativebank.


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The bank mainly borrows funds from District co-operative bank. The maximum

amount of borrowing is limited to 35 times of paid up., plus reserve.

III. LENDING ACTIVITIES

Another important function of mananthavady urban society is lending

various non-agricultural loans to its members. Application for loans are submitted in the

prescribed form before the meeting of board of directors fixes the minimum amount of loan shall

be given only for productive purpose.

Different types of loan issued by the mananthavady urban co-

operative society are given bellow.

1. Short term loans.

2. Medium term loans.

3. Gold loan.

1. SHORT TERM LAONS

These loans are provided only for the non-agricultural purpose. These types of loan

are available to the farmers against the security of the loans and personal bailment with regards

to loans and advances the growth rate is tremendous. The repayment period of short term loan is

restricted to be one year.

2. MEDIUM TERM LOANS.

Medium term loan is also provided by the urban co-operative society. Time

duration of medium term loan is 3 year.

3. GOLD LOAN.

Gold loan is a short term loan. Duration of gold loan is 6 months. Interest of

gold loan is


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CHAPTER IV

FINANCIAL ANALYSIS

Accounting process involves recording, classifying and summarizing various

business transactionsfinancial statements are the outcome of the summarizing process of the

accounting. Financial statements are interim reports, presented annually and reflect a division of

the life of an enterprise in to more or less arbitrary accounting period. Its purpose in to convey an

understanding of some financial aspect of a balance sheet, or May revel a serious of activities on

given period of time as in the case of income statements.

According to John N Mayer The financial statements provide a summary of the

accounts of a business enterprise, the balance sheet reflecting the assets, liabilities and capital

as on a certain data and income statement showing the result of operations during a certainperiod. Smith and Ashburn define financial statements as the end of process of financial

accounting a set of financial statement prepared by an accounting of a business enterprise, that

purpose to revel the financial activities and an analysis of what has been done with earnings.

According to this definition financial statement reveal financial position and profitability of a

concern and the utilization of retained earnings

TYPES OF FINANCIAL STATEMENTS

There are different types of financial statements.

1. Income statement of profit and loss account

This is considered to be the most use of all financial statement. It is a statement

of revenue earned and the incurred earning that revenue. If there is excess of revenues

over expenditure it will show a profit and if theexpenditure are more than the income,then there will be loss. The income statements are prepared for a particular period,

generally a year. The income statements prepared in the form of a manufacturing account

to find out the cost of production and trading account is prepared to determine the net

profit or net loss.

2. Balance Sheet

It is an agreement of financial position of business at a specific moment of time. It

represent all asset owned by the business at a particular moment of time and the claim of

the owner and they consider against those assets at that time the balance sheet is prepared


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on a particular date. The right shows properties and assets and left hand side shows

liabilities.

3. Statements of retained earnings

Statement of retained earnings is also known as profit and loss appropriationaccount. If show appropriation of earnings. The balance shown by the income statements

is transferred to the balance sheet through this statement. The previous years balance is

first brought forward. The net profit during the current year is added to this balance on

the debt side appropriation like interim dividend paid proposed, dividend on preference

and equity share and shown. It is connecting link between balance sheet and the income

statements.

4. Funds flow statements

This statement is used to analysis the changes in financial position of a business

enterprise between two accounting proceeds. The statement show the sources from which

the funds are received and its application. This helps to get an idea about the source of

fund and their uses of a various purpose.

5 Cash Flow statements

The statement of changes in the financial position of a bank on cash basis is

called cash flow statement. It summaries the causes of change in cash position of a

business enterprise between data of two balance sheet. Cash Flow Statement describes

the source of cash and its uses.

6 Schedules are used as part of financial statements.

If number of schedules are prepared to supplements final assets etc. account

prepared to give details about these transactions.

MEANING ANALYSIS AND INTERPRETIONThe analysis and interpretations is essential to bring out of the mystery behind the figures

of financial statements. The analysis and interpretations if financial statements are anattempt to determine the significance and meaning of financial statement data so that

forecast may be made of the future earnings, ability to pay entrust and debt maturities ,

and profitability of a sound demand policy.

Analysis means methodical classification of the data in the

financial statements. The term interpretations means explain signature of the

simplified data.


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An object of financial analysis

Financial statement are the souse of information of the basis of which conclusions are drawn

about the profitability and financial position of a concern. The primary objectives of financial

analysis are to assist in decision making.

The following are the objective of financial analysis.

1) To estimate the earning capacity of the business.

2) To access the financial position and financial performance of the business.

3) To help in economic decision making

4) To ascertain the operating performance of the business

5) To determine the solvency and liquidity of the business

6)

To determine the debt paying capacity of the firm7) To make inter firm comparisons

8) To provide resalable financial information about the economic recourses and obligation

of business firm.

9) To provide other needed information about changes in such economic resources and

obligations.

10)To provide financial information that assist in estimating the earning potentials of

business.

11)The operational efficiency of the concern as whole of the various parts or departments.

12)The possibility of development in the future by making forecast and preparing budgets.

Types of financial analysis

There are four types of financial analysis.

External analysiThis type of analysis is done by those who are outside of the business

ie, the investors credit agencies , government agencies etc. The persons mainly depend

up on the published financial statement.


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Internal analysis

The internal analysis is done by person who are accesses to the internal record of the company,

such as executives, employs of the organization; affairs appointed for the purpose by the

government or court etc.

Horizontal analysis

This analysis is based on the financial statement for a number of years. The analysis

settlement contain for two or more years and changes are shown regarding each item from the

base year. Usually in the form of percentage. This helps to get considerable insight in to level

and areas of strength and weakness.

Vertical Analysis

In this type of analysis a study is made of the quantitative relationship of the various

items on the financial statements on a particular data. Single their analysis depends on the data

for one period, this is not very conductive to a proper analysis of the banks financial position. It

is also called static analysis because it is used for referring to ratio developed on one data for one

accounting period.

Tool or techniques of Analysis

There are various tools for analysis of financial statements. The following techniques can be

used in connection with analysis and interpretation of financial statements.

1.

Comparative Financial Statements

Here the element of financial position are shown in a comparative form, so to give as an idea of

financial position of two or more periods. The analysis is able to draw useful conclusion when

figures are given in a comparative position the two comparative statements are;

a) Comparative balance sheet

Comparative balance sheet as on two or more different datas can be used for

comparing assets and liabilities and finding out any degrease or increase in thes

items. Such balance sheet is very useful in studying the trends of an enterprise.

b)

Comparative income statement

The comparative income statements gives an idea of the progress of a business ones

a period of time. It shows the absolute figures for two or more periods, the absolute

change from one period to another, and if described the changes in terms of

percentages.


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2. Trend Analysis

This method determines the direction upwards or down ward and involve the

competition of the percentage relationship that each statements item leer to the same item in the

base year. Here any year may be taken as the base year. Each item of base year is taken as 100

and on that basis the percentage for each of the item of the year calculated.

3. Ratio Analysis

This is the most important tool available to financial analysis in accounting ratio

show the relationship in mathematical terms between inter related accounting figures. The

figures must have an enter relation. There are various type of accounting ratio for deferent

purpose.


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RATIO ANALYSIS

Ratio analysis is a powerful technique in hands of management for financial analysis. It is

used as device to analysis and interprets the financial strength of the enterprises. Profitability is

an mitigation of the efficient with which the operations of the business are carried on banks,

financial institutions and other creditors look at the profitability ratios and indicator whether ornot the firm earned substantially more than it pays interest for the use of borrowed fund.

1. Fixed asset ratio

F. A. K = Fixed asset (after depreciation) /

Long term fund

Long term fund can be computed in two way;

1. Share capital (equity and preference) + reserves and surplus + long term liability or ;

2. Fixed asset + investment + CA-CL

Table 4.1

Table showing fixed asset ratio

Year Fixed asset Long term fund F. A. R

2007-08 659701 1733432 0.38

2008-09 1223001 1791733 0.68

2009-10 1459176 2503168 0.58

2010-11 1511471 2662783 0.56

2011-12 1557606 1942697.6 0.80


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Interpretation

The objectives of this ratio is that to as ascertain the proportion of long term funds invested in

fixed assets. In 2008-09 and 2011-12, the financial position of the society is not sound and in

2007-08, 2009-10 and 2010-11, the ratio integrates better financial position and its considered as

satisfactory. This standard fixed assets ratio should not accede 1:1 or 100 %.

0

500000

1000000

1500000

2000000

2500000

3000000

2007-08 2008-09 2009-10 2010-11

Fixed Asset Ratio

Fixed asset

Long term fund

F. A. R


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2 Equity Ratio / proprietary ratio/ net worth ratio

This ratio establishes the relationship between share holders fund and total assets. This

ratio shows how much funds have been contributed by the share holders in the total assets of the

firm.

Table No:4.2

Year Share holders fund Total assets Equity ratio

2007-08 1401390 1813286 0.77

2008-09 1436460 2065729 0.69

2009-10 1502730 2669749 0.56

2010-11 1580910 2655745 0.59

2011-12 1656550 2584814 0.64

Equity Ratio = share holders fund / total

asset.


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Interpretation

This table integrates the proportion of total assets financial by share holders. The

relationship between shareholders fund and total assets shows the increasing tendency. Generally

a ratio of 5:1 or above 50 % is considered as ideal ratio.

0

500000

1000000

1500000

2000000

2500000

3000000

2007-08 2008-09 2009-10 2010-11 2011-12


32/41

3.Operational Ratio

Table 4.3

Year Interest earned Interest paid Ratio

2007-08 2264105 1612515 140

2008-09 3543311 1852948 161.2

2009-10 3789465 2462554 153.88

2010-11 5865520 3217808 18228

2011-12 8345794 5320200 156.86

Graph

Interpretation

This ratio shows the interest earned and interest paid of the firm. It shows increasing and

decreasing trend. In 2008-09, 2010-11 it shown increasing trend, but in 2008-09, 2011-12 and

2009-10 it may decreasing.

0

1000000

2000000

3000000

4000000

5000000

6000000

2007-082008-09

2009-102010-11

Interest earned

Ratio

Interest paid

Interest earned to interest paid = interest earned / interest paid *

100


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4.Ratio of total asset to total debt or solvency ratio

This ratio expresses the relationship between total assets and total liabilities of a

business. It measures the solvency of the business that is why this ratio is called solvency ratio.

Table Showing Solvency ratio

Table 4.4

Year Total assets Total debt Ratio

2007-08 1813286 29964426 .06

2008-09 2065729 75734918 0.22009-10 2669749 2519277 1.0

2010-11 2655745 9675966 0.27

2011-12 2584814 75734918 0.03

Solvency ratio = total assets / total debt


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INTERPRETATION

In 2009-10 ,the society is solvent because assets are sufficient to pay

off the liabilities .But in 2007-09,2010-11 and 2011-12 the solvency and the financial position ofthe society are weak

2. Trend percentages analysis

It means analyzing general tentences in each item of the financial

statements on the basis of the data of the base year. This analysis is an important tool of

horizontal financial analysis. This methord is helpful in making a comparative study of the

financial statements of several views.

Table showing the trend analysis FD and SB

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

2007-082008-09

2009-102010-11

Total assets

Total debt

Ratio


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Table 5.6

Year FD Trend% SB Trend%

2007-08 6033232 100.00 110224944 100.00

2008-09 9285127 15389 12596931 114.28

2009-10 16430700 272.33 1733702 15.73

2010-11 21872874 362.53 23090083 209.48

2011-12 31385035 520.20 1581060596 143.44

Interpretation

Fixed deposits shows increasing trend in all years, but savings

deposits shows decreasing trend in 2009-10 and increasing trend in 2008-09, 2010-11 and 2011-

12.

0

20000000

40000000

60000000

80000000

100000000

120000000

2007-08 2008-09 2009-10 2010-11

FD

Trend%

SB


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3.Comparative balance sheet

A comparative B/s shows the assets, liabilities and owners equity of

business enterprise at the beginning and at the end accounting period with increases and

decreases the absolute data in firms of rupees in percentage.

Comparative Balance sheet as on 31-03-2011 and 31-03-2012

particulars 2011 2012 Amount ofincrease or

decrease

% of increaseor decrease

AssetsFixed asset

Savings bank depositsFixed deposits

Loans and advances

Investment

Suspense accountGroup deposit scheme

Cash in hand

Total asset

151471

2691653.2025555

57892741

157700

12330995530

986574

74484533.62

1557606

1594986.5513318012.05

66073494

158200

14979887030

719210

83658336.55

46135

-1096666.72292457

8180753

500

26489-8500

-267364

9173803

3.05

-40.7420.78

14.13

.32

21.48-8.89

-27.10

12.32


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Capital and liabilities

Share capital

Reserve fundsDeposits

BorrowingsSecurity deposits

Group deposit schemeMis- suspense

liabilities

Total capital and

liabilities

1580910974231.04

5628503212195966

231620

24000418047

74484533.62

16565501489204

5715456418580354

265770

100000642116.39

83658336.55

75640514973

8695366384388

34150

76000224069.39

9373803

4.7852.85

1.5452.35

1474

3167453.59

12.32

Commends

Fixed deposits have increased by 20.7 % generally there is an overall

increase in total assets in 2012 over 2011 only by 12.32 % savings bank deposits, group

deposits scheme and cash in hand have decreased in 2012 when compared to 2010. Among the

current assets cash alone as declined by 27.10 % and savings bank it has decreased by 40.74 %

in 2012 it should be noted that the capital and liabilities of the company is increased in 2012 as

composed with 2011. The share capital of the company has increased in 2012 by 4.78 % whencomposed to 2011 among the liability the group deposit scheme has increased by 316.67 % and

brow wings and reserve funds have increased by 52.35 % and 52.85 % share capital has been

increased 75640.

Income statement Mananthavady co-operative Urban Society Ltd no W221 for

the year ending 31stmarch 2007, 2012 (comparison)

Particulars 2007 2008 2009 2010 2011 2012

Income

Interest receivedmiscellaneous income

Total

ExpenditureInterest paid

2026543234358

2960901

1497018

2264105247006

2511111

1612515

35433311338135

3881446

1852948

3788665716195

4504860

2462554

5865520730053

6595573

3217808

8345794868926

9214720

5320200


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Printing stationarySalary

Rent telephone

chargesAgent commission

WagesPostage

Travelling allowanceSitting fee

Medical allowanceGB expense

Audit fee

Audit low cost LS&PC

Bonus to staffInsurance

Affiliation

AdvertisementHonorarium

EWF person fundDonation

Level fee

Cost of sales officer

Electricity chargesEWF collection agent

Earned leaveComputer and

stationary

Subscription and

periodicalsAMC changes

Miscellaneous

expenses

IKSL purchaseKISK fund

Bonus to AgentsRepairs And

maintainsRates and Tax

24455281114

60000

3910309144

660011915

18207800

4050795

40571

1178917753

2102217870

24000

180018636

1000

852

804019549

24735353238

60000

4718333437

-22024

15709130

54001065

63759

130758750

159221600

29849

220001800

293187750

2000

-

-1800

2099613118

1290

-

--

-

-

--

--

20219324083

60000

3786389844

-24038

47508470

540011408

20911

308919250

15783800

42849

240003100

311812000

13000

-

-1800

243846975

1783

32535

70143-

-

-

--

--

14780449353

120000

4511474695

-20998

673010780

54001530

-

229726600

32843800

32400

220002560

589199500

-

-

249941890

2797419559

1330

24694

109687161118

36159

3750

11421250

--

-

42580577156

120000

8240586121

175448627

91305400

275062180

9040

3360037336

80073945

24000

216052002

350020500

-

23990

2880-

160321330

32442

97087

-1708

6750

7115

1520

20642869489

120000

6453693287

167503410

170707400

-80406

9264

750078010

80056845

33000

288073033

45006000

24153

2160

-14020

133041088

87804

-

-1708

3360

2350

17005719

--

-


39/41

TOTAL

Profit/Loss

2391603

-130702

2660859

-149748

3018529

862917

4172797

332063

5105273

1490300

7652876

1561844

CHAPTER

5FINDINGS, SUGGESTIONS AND CONCLUSIONS

Mananthavady Urban co-operative society started its functions in 1997 with several

objectives. It has been assisting in the economic development of the small scale industries, small

traders, etc.. of the Mananthavady from the study of deposits activities of the society shows an

increasing tendency in year. This chapter summarized by mentioning the findings, conclusions

and suggests suitable measures for improvement.

FINDINGS

1. The employees of the society are co-operative.

2. The society does not take necessary steps to check whether the borrowers are utilized the

-400000

-200000

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2007 2008 2009 2010 2011 2012


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funds for the purpose for which it granted.

3. 2010-2011,2011-2012 the profit of the society shows an increasing tendency.

4. If the members do not repay the loan orderly the society can not working smoothly.

5. The share capital of the society shows an increasing tendency.

SUGGESTION

Based on the above findings the following suggestions are recommended in order to improve the

performance of the Mananthavady co-operative urban society Ltd.,No. W 221.

1. More incentive efforts should be made to attractive deposit.

2. Branches of officer of the society should be opened in other to cons also within it justification

which in turn will help the society to attain maximum membership and share capital.

3. Efforts should be made to enlarge the membership of society to its maximum compared to the

urban. The present membership is very low . Adding more members to the society will certainly

string then the share capital base which in term will help the society to obtained the required

license from the RBI.

4. The management should necessarily make efforts to shifts the head office to a suitable place

for attracting customers and provide better service.

5. The society must check whether the borrowers utilizing the amount for the purpose for which

it is granted.

6. The society should maintain its profitability

CONCLUSION

Mananthavady co-operative urban society was established 1997 with several objectives. In

the 14 years the society could go a long ways in helping its members as well as non members in

many ways. Its maybe mentioned that non agricultural credits co-operatives especially urban

co-operative can make considerable contribution their members, to co-operative structure and to

general economic development. In so for and urban co-operative societies are concerned they can


41/41

organize and bring together middle and working classes in urban areas; small traders and weaker

section need the collective support and encouragement from the government and co-operative

sector. Therefore the existence of the society is more important than earning huge profit.

BIBILIOGRAPHY

1. Financial statement of the society.

2. Annual Report of the society.

3. Bylow of the society.

4. Budget Report .

5. Advanced Accounting- Jain and Narang.

6. Management Accounting Principles and practice - R.K Sharma , Sasi K Guptha.

a study on the mananthavady urban co-operative society ltd. no: w 221 a study on the mananthavady...

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