ranjit kumar sah (field work report)
TRANSCRIPT
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A REPORT ON FINANCIAL POSITION ANALYSISOFKIST BANK
BRANCH OFFICE, JANAKPUR DHAM (BHANU CHOWK)
SUMBITTED BY:
RANJIT KUMAR SAH
SYMBOL NO. : 250591
P.U. REGD NO. : 112-2-2-05291-2010
A FIELD WORK REPORTSUMBITTED TO:
MODEL PURBANCHAL COLLEGE JANAKPUR DHAMPURBANCHAL UNIVERSITY
In partial fulfillment of the requirement for the degree ofBachelor of Business Administration(B.B.A) of Purbanchal University.
JanakpurJuly/2013
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This is my immense delectation to present the report of Bachelor in Business
Administration ( BBA 5th semester ) assigned by Purbanchal University. This
fieldwork report entitled A REPORT ON FINANCIAL POSITION ANAYLSIS
OF KIST BANK LIMITED BRANCH JANAKPUR is prepared for the partialfulfillment of requirement for the Bachelor of Business Administration under
Purbanchal University. The objective of this report is to be familiar with the practical
and theoretical knowledge.
I would like to express my sincere gratitude and acknowledgement to all
supporters who provided me very informative and precious as well as proper
information on making of this report. I am highly obliged to lecturer Mr. Saroj Kumar
Thakur for his assignment and proper instruction.
I am also grateful to the staff of KIST Bank who have kindly more
available the data and related information required for the preparation of report.At last, my sincere thanks go to my all friends and staff members of
college for their kind co-operation and help for report preparation.
Name:- RANJIT KUMAR SAHSymbol No.:-250591
PU Regd. No.:-112-2-2-05291-2010
Model Purbanchal college Janakpur dham
Acknowledgement
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The Executive Summary
This is the report prepared on the KIST Bank branch office, Janakpur
Dham (Bhanu Chowk) Nepal. The main objective of this study is to
measured the ability of a firm to meet, its short-term obligations and
reflect the financial solvency of the firm.
In my report I have three categories: Part one deals with Introducation. I
have presented Introducation of banking, Purpose of study, Importance ofstudy, Organization Structure, Limitation of the study, and etc are also
presented in the part one.
The part two includes presentations and analysis of data. Analysis
comprises of Financial Ratios. This analysis is very helpful and plays a
vital role for the conclusion and recommendations that are needed to be
drawn out of this report.
The part three is concerned with the summary conclusion and
recommendations. This recommendation is very necessary for the bank to
overcome from its weaknesses and to built its advantage over the other
banks.
The bank has been successfully overcome from economic and competitive
barriers to establish it as a financially sound unit, skills, manpower, strong
organizational culture, strong top managerial team are some of its key
success indications.
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Chapter-1
Contents
TITLE
RECOMMENDATION
ACKNOWLEDGEMENT
EXECUTIVE SUMMARY
TABLE OF CONTENT
LIST OF TABLE
LIST OF FIGUREABBRIVIATION
1.1 Background of Bank1
1.2 Introduction of Kist Bank1
1.3 Purpose of Study3
1.4 Importance of Study..4
1.5 Organization Structure4
1.6 Limitation of Study5
1.7 The Field Work Procedure.6
1.8 Literature Review61.8.1 Review of Previous Study7
1.9 Data Collection..7
1.9.1 Primary Data..7
1.9.2 Secondary Data..7
S.N.
Page No.
Table of
ContentsCcontentCContents
INTRODUCATION
DATA PRESENTATION & ANALYSIS
Chapter-2
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2.1 Data Presentation and Analysis...8
2.2 Financial Analysis...8
A ) Balance Sheet..........................................................................8
B) Income Statement8
2.2.1. Financial Ratio Analysis..9
2.3 Types of Financial Ratios9
2.3.1 Liquidity Ratio .9
2.3.2 Assets Management Ratio12
2.3.3 Debt Management Ratio...13
2.3.4 Profitability Ratio18
2.3.5 Other Ratios.23
2.4 Comparison study of different ratios from the F.Y. 2064/65 to
2066/67252.5 Comparison study of different ratios from the F.Y. 2066/67 to
2068/6926
3.1 Summary28
3.2 Conclusion.29
3.3 Suggestion and Recommendation..30
Other Contents
BIBLIOGRAPHY
APPENDIX
Chapter-3
SUMMARY AND CONCLUSION & RECOMMENDATION
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List of tableTABLE NO.
PAGE NO.1. Current ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069102. Quick ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06911
3. AU Ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..13
4. Debt ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..14
5. FL ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069...16
6. LTD to TC ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..17
7. BEP ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06919
8. ROA of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.20
9. ROE of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.22
10. EPS of Kist Bank Ltd. From the F.Y.2064/065 to 2068/0692311. The comparison studies of diff. ratios from F.Y. 064/065 to 066/67...25
12. The comparison studies of diff. ratios from F.Y. 066/67 to 068/69.26
List of FigureFIGURE NO. PAGE
NO.
1. Current ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06910
2. Quick ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06912
3. AU Ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..13
4. Debt ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..15
5. FL ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069...16
6. LTD to TC ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..18
7. BEP ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06919
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8. ROA of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.21
9. ROE of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.22
10. EPS of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06924
A/C = Account
AUR = Assets Utilization Ratio
B.B.A. = Bachelor of Business Administration
B.S. = Bikram Sambat
BOD = Board of Director
BPS = Book Value Per Share
Diff. = Difference
DSO = Days Sales Outstanding
EBIT = Earning Before Interest and Tax
EPS = Earning Per Share
FL = Financial Leverage
FWR = Field Work Report
F.Y. = Financial Year
KBL = Kist Bank Limited
LTD = Long Term Debt
M.P.C. = Model Purbanchal college
MPS = Market Price Per Share
NEPSE = Nepal Stock Exchange Limited
NPAT = Net Profit After TaxNRB = Nepal Rastra Bank
P.U. = Purbanchal University
Pd = Preference dividend
ROA = Return on Assets
ROE = Return on Common Equity
TC = Total Capitalization
TIE = Time Interest Earned
ABBRIVIATION
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TOR = Total Operating Revenue
Chapter - 1
1.1 Backgroundof Bank :
A bank is an institution, which deals with money and credit. It acceptsdeposits from business institution and individuals, which mobilized into productive
sectors mainly business and consumer lending. The bank is also known as a dealer
of the money because it also provides remittance facility to transfer money from the
one place to another. Todays, bank is not only confined to accepting deposits and
disbursing loan it also may be engaged in different types of function i.e. remittance,
exchange currency, joint venture, underwriting, bank guarantee, discounting bill
etc.
Bank is a financial intermediary accepting deposits and granting loans. It
offers the widest menu of services of any financial institution. In fact, a modern
bank performs such a variety of functions that it is difficult to give a precise andgeneral definition of a bank. It is because of this reason that different economist
give different definition of bank. They are:
Prof. Kinley tells, A bank is an establishment which makes to individual such
advance of money as may be required and safely made and to which individual
entrust money when not required by them for use.
According to Oxford Dictionary, Bank is an organization or place that
provides a financial service.
Bank and Financial Institution Act (of Nepal), A commercial bank is a
bank which deals in exchanging currency, accepting deposits and giving loans anddoing commercial transaction.
In conclusion, Bank is an institution, which accepts deposits from the public
and provides, advance loan to business and personal customers. It is a financial
institution, which provides, wide range of banking service i.e. saving, credit
payment, remittance etc. So, a bank provides all kinds of monitory service, which is
necessary for the industrialization and economic development of a country.
1.2 Introduction of Kist Bank :-
INTRODUCATION
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With its vision of becoming the best bank on operational excellence and
superior financial performance, Kist Bank was initially incorporated as a C class
financial performance, Kist Bank was initially incorporated as Bank started
commercial banking activities from May 7,2009 after complying with all the
conditions of Nepal Rastra Bank (Central Bank of Nepal) for becoming a
Commercial Bank.A Field work Report
The Bank is a public limited company incorporated under the Bank and Financial
Institution Act 2006 and the Companies Act 2006. The Bank is licensed by NRB to
undertake commercial banking services and merchant banking activities in the
country. The Authorized Capital of the Bank is Rupees 5 Billion and the Issued and
Paid-Up Capital is Rupees 2 Billion. 60 Percent of the Paid-Up Capital is held by
the promoter and remaining 40% is held by the general public. The share of the
Bank is listed at Nepal Stock Exchange Limited (NEPSE), the only Stock Exchange
in the country, as A category share.
The Bank has a seven member Board of Directors (BOD) out of which three
represents the promoters group, two represents the general public and one
represents the Professional Director. Till the end of fiscal year 2066/67 (2009/10)
the bank has 51 branches across country.
Kist Bank stands for Customers convenience and support:
The Bank is driven by values of efficiency in operations, integrity and a
strong focus on catering the needs of every customer by offering high quality and
cost effective products and services. The professional management team along with
dedicated employees is always looking forward to serve the customers, understand
their needs and design tailored products. The Bank operates in highly automatedenvironment in terms of information technologies and communication systems, thus
enabling delivery of prompt and quality services. It has put in substantial efforts and
investments in acquiring the best technologies available to build necessary banking
infrastructure.
Future Plans of Kist Bank Ltd:
As the Kist Bank has set its vision to be the best bank in terms of
operational excellence and superior financial performance, it has action plan in
place in order to accomplish it. The Bank has given prime focus in physical
infrastructure and human resources development, acquiring of state of art
information technology to equip the Bank in order to make it competitive, satisfy
customers and have the most secured transactions, enhance the distribution outlet so
that the Bank could reach to the un-banked area and serve the needy people and
contribute to the economic development of the country. A few key future plans,
which the Bank has, are:
Have own Bank buildings at possible Branches locations. Currently, the Bank
has been providing services to customers from its own buildings located at
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Anamnagar, Birtamod, Damak, Biratnagar and Narayangarth. The Bank has
planned to construct own multi storey building equipped with modern
technology within Kathmandu Valley for its main Branch and Head Office.
The dream building should be spacious for more than 500 employees. This
dream building has been 60% completed at Anamnagar.A Field work Report
Develop own man power to take the higher responsibilities. Due to increase in
number of players, lack of quality human resources has been felt in the
market. The Bank has therefore planned to hire qualified individuals in large
quantity and train the staffs, in Kist Culture, both theoretically and practically
and prepare them to take the responsibilities. For this, the Bank has
established Training and Development Department at Head Office.
Increase customer base from existing 250 thousand to 300 by Fiscal Year
2068/69 (2011/12).
Launch international Debit and Credit Cards like Visa, Master and Others. Expand the remittance business making accessible to the large strata of
people.
Develop and launch innovative and customer friendly products to meet the
actual needs of the people who are deprived of banking services. For this,
Bank has established Research and Development Department to carry out
research and develop market oriented products and services.
1.3 Purpose of Study :-
A Field Work Report is a systematic study of specificsituation in financial organization. The main objective of this Field Work Report is
to fulfill its partial requirement of Bachelor of Business Administration (B.B.A.) 5 th
semester of Model Purbanchal College under concentration area which is designed
by faculty of management, Purbanchal University.
It provides first hand knowledge to students about the world of work and other
hand it develop interpersonal and communication skill through interacting with
people working in organization.
To every work of study there must be objective and goal. The general earning
ability, Profitability, Liquidity Position etc. through various financial statements and
reports i.e. Income Statement balance sheet of KBL. Beside this, it has followingobjectives:-
To know the financial Position of KBL.
To find out strength and weakness of KBL.
To simplifies accounting figures and facts.
To find liquidity position of KBL.
To compare performance
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To the banks organization structure.
To understand about the services that is provided by KBL.
To know about the different achievement and branch office of KBL.
To know how financial data can be used to analyze a banks past performance
and asserts its present financial strength. To develop research skill in the student.
A Field work Report
To identify the problem and probable reasons for the arise of problem.
To find the possible solution of the problem.
1.4 Importance of Study :-Writing of this report is the very crucial part of our
course, without this report we cant complete our 5 th semester of (B.B.A.) bachelor.
The study of this field work report is very important for student life. It provides to
know the opportunities of behavior knowledge i.e. how do a work, what do, where
do? It develops both the internal and external qualification of the student. By which,
a student can make easily a qualified field report in the future.
Effective management of organization requires effective management of
finance. Nepalese organization must give considerable attention to financial
function, if they want to improve performance and effectiveness of their
organization.
This report is not beneficial to us only but it also to the other sector of society
mentioned as bellow:-
Easy for bank to know their financial strength and to absorbed losses and
protect depositor and other creditor.
Easy for general public to know about the condition of bank where they are
gaining or bearing losses.
Easy for bank management to evaluate their efficiency in present competitive
environment.
Easy for stockholders to know the net benefit of bank that they have received
from investing their capital in banks.
Support for policy maker while changing their ambiguous policy. Reference for the coming student while preparing report in this subject.
1.5 Organization Structure :-Location
Kist Bank Ltd is a commercial bank and is competitor of several
other commercial banks like Nepal Bangladesh Bank, Nabil Bank, Everest Bank Ltd
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etc. This bank is located near in Bhanu chowk, Janakpurdham, by the right side of
Radio Mithila 100.8 MHz. There are many others commercial banks located in
Bhanu chowk as its competitor i.e. Nabil Bank, Laxmi Bank, Nepal Bangladesh
Bank, Citizens Bank & other commercial banks. The centrals organization structure
of KBL did not provided by the manager of janakpur branch because he told me that
it available only on head office and he provided me the organization structure ofjanakpur Branch that is given below:-
A Field work Report
The Organization Structure of Kist Bank Ltd, Janakpur Branch
1.6 Limitation of study :-
To complete any report writing we should be concentrated to the
subject matter or surrounded by the boundary. Similarly, this report writing have also
some boundary, besides the boundary the topic concentration is not diversified. These
boundaries are called limitation of the study.
Time constraint is the major issue of the present study. Due to lack of given
period of time the report could not be prepared of the expected quality. It has also
many limitations that are mentioned below:-
Branch Manager
Operating
Department
Credit
Department
Account
Department
Customer Service
Department Guard
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The topic must be unique.
The field work report must be within 2500-4000 words.
Necessary for partial fulfillment for degree of BBA 5th semester student.
The five years data must be available in continuous form for creating thisreport.
Not allowed to compare with the other organization.A Field work Report
Non availability of required books for the preparation of field work report in
spite of facilities of library.
Shortage of time, lack of source and means.
Non financial help in another problem. Every student is not financially strong to
expend heavy money for this work.
Even after getting authority letter, the firm and organizations hesitate to give
data due to the fear of violation of secrecy, so this report is likely to beincomplete.
Non availability of right person as right time.
Lack of knowledge and experience.
1.7 The Field Work Procedure:-The Field work is specially meant for the partial
fulfillment of BBA course it falls under the core course study area. It includes field
work report in titled core course area. The objective of BBA Programme is to develop
students into competent manager of any sector. Therefore for, the students are givenopportunities to obtain broad knowledge of the concepts and reality based skills,
reports writing also falls one of these.
For preparing this field work report, First of all orientation class is
conducted by our field work report lecturer Mr. Saroj Kumar Thakur till 48 teaching
hours period. Thereafter, I have selected topic for FWR and with this topic included
an application and a bill of Rs.300 also for registered this to subjected lecture Mr.
Saroj Kumar Thakur.
I got authority letter for my concerned Organization i.e. Kist BankLimited. With that letter I went to bank. Letter, the bank related persons provided me
various data is required for my work. Then I prepared field work report based on data
and informations provided by Kist Bank Ltd with consulting my teacher where
problem.
1.8 Literature Review:-
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Review of previous writing and study relevant to the problem being
explored and within the frame work of the theory structure which are called literature
review.
For preparing this report different kind of books of banking related area
has been followed. I also studied previous local, national and newspaper to collect
information about the Kist Bank Ltd.
A Field work Report
1.8.1 Review of Previous Study:-
K.R. Joshi in A study on Financial performance of commercial
banks has concluded the satisfactory liquidity position of the commercial banks.
Local commercial banks have been found relatively highly leveraged compared to
other joint venture bank. Loan and advance have been the main form of the
investment. Two third of the assets has been used for earning purpose.
1.9 Data Collection:-
For the purpose collection required information for the completion of
the report writing assignments, I have relied on both primary and secondary
information after as possible.
1.9.1 Primary Data:-
The data required for a statistical enquiry collected by the investigator
himself his agent for the first time and are original in are based on interview,
questionnaire, observation, employees, service provided, where receive through the
manager and accountant of KBL.
1.9.2 Secondary Data:-
The data used is once is called secondary data. It becomes easier to collected
secondary data from the primary once. The secondary data in this study are Annual
report i.e. Income statement and Balance sheet of Kist Bank Ltd and Newspaper.
In Secondary data 5 years consolidated balance sheet and income statement
of Kist Bank from F.Y. 2064/65-2068/69 are downloaded from banks website
(www.kistbank.com). Parts from this data are also collected from Kist Bank, Janakpur
branch. I also collected from different newspapers and magazines.
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During my study period secondary data becomes a supportive source to
conduct the result and analyze them. Thus annual balance sheet and income statement
was provided by bank through magazine; bulletins and the annual report; the required
data were collected. Therefore on over all contexts secondary data has been used in
maximum number.
A Field work Report
Chapter 2
2.1 Data Presentation and Analysis:-This chapter analyzes and interprets the financial performance of KBL.
In this regards various calculation have been completed in order to assets the strength
and weakness of the company with widely used tools of financial ratios analysis.
2.2 Financial Analysis:-The main objective of financial analysis is to evaluate the financial
strength and weakness of the company by calculating various types of ratios with the
help of the items of balance sheet and income statement. So we have to calculate
different types of ratios by taking the items of balance sheets and income statements.
A) Balance sheet:
Balance sheet shows the position of assets and liabilities at the end of
an accounting period or an interim period. It represents firms resources or assets on
one side and owners equity and liabilities on other side. At a particular point of time,
the balance sheet is prepared. Assets must be equal to sum of liabilities and share
holders equity. The assets and the liabilities side of balance sheet consists of current
assets, fixed assets and other assets and the liabilities side of balance sheet consists ofcurrent liabilities, long term liabilities and share holders equity.
B) Income Statement:
Income statement is a vertical sheet which provides the profit or loss
starting from sales or revenues. It represents a summary of revenues and expenses and
shows profit or loss of firm for the specific period such as a month, a quarter or a year.
It is also called profit and loss A/c. The income statement is co piled on accrual basis,
DATA PRESENTATION AND ANALYSIS
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which means that on attempt is made to match the firms revenues from the period of
operation with the expenses incurred in generating those revenues. Income statement
is important for the organization itself in order to evaluate its work performance as
well as also importance for investor because investors can take the decision that the
money will be invested in the organization or not the basis of analyzing the income
statement.
A Field work Report
2.2.1 Financial Ratio Analysis:-
The mathematical relationship between two numerical figure expressed in
same unit is known as ratio. It shows the relationship between two numerical figures.It can be expressed in proportion of percentage.
Financial analysis is a technique of evaluating and analysis the financial
statement by creating ratio between the figure of income statement and balance sheet.
Ratio analysis is helpful in evaluating the liquidity, solvency, profitability and
efficiency position of the firm. It provides essential information to takes decision. It is
helpful for creditors, owners, investors management, government etc.
2.3 Types of Financial Ratio:-
There are various types of financial ratio to analyze financial statements. They
can be grouped into following types:-
2.3.1 Liquidity Ratio:-
Liquidity ratios are calculated to judge the liquidity or shot term solvency
position of the firm. Liquidity position means the firms ability to pay short term
obligation. Generally, short term creditors are interested liquidity ratios. In liquidity
ratios includes current ratio and quick ratio.
A) Current Ratio:-
The relationship between current assets and current liabilities is known as
current ratio. High current ratio indicates better liquidity position. However, it also
indicates the excess investment in current assets which have less or no earning power.
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Current Ratio = Current Assets
Current Liabilities
(Standard = 2:1)
Where,
Current Assets = Cash Balance + Balance with NRB + Balance with BankCurrent Liabilities = Bills payable + Proposed & Dividend pay
A Field work Report
Table No.:-1
Current ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years Current Assets Current
Liabilities
Calculated
Ratios2064/065 466619283 10714616 4.35:1
2065/066 320516489 20957116 15.29:1
2066/067 948561213 42289746 22.43:1
2067/068 1228158215 93128203 13.19:1
2068/069 1675319537 109030316 15.37:1
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the current ratios of different F.Y. from 2064/065
to 2068/069 are higher than its standard. High current ratio is better for the banks. The
ratio is going an increasing trend per year till 2066/067 but thereafter it decreases and
again increases in last year 2068/069. High current ratio indicates better liquidity
position. However, it also indicates the excess investment in current assets which have
less or no earning power.
Figure:-1
Current ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069
Current Ratios
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Years from 2064/65 to 2068/69
In the given figure x-axis shows the years from 2064/65 to 2068/69 in which the
position of current ratios and y-axis shows the times of current ratios which is
calculated in above table. The current ratio is high in F.Y. 066/067. So, it means this
year the liquidity position of KBL is better.
A Field work ReportB) Quick Ratio
The relationship between quick assets and current liabilities is known as
quick ratio. Its also called liquid ratio or acid test ratio. This judges the firms ability
to pay current liabilities immediately. High quick ratio indicates better liquidity
position and vice-versa.
Quick Ratio = Current Assets
Current Liabilities
(Standard = 2:1)
Note: There is no available of Inventory, Prepaid expenses. So the current assets and
quick assets are the same.
Table No.:-2
Quick ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years Quick Assets Current
Liabilities
Calculated
Ratios2064/065 466619283 10714616 4.35:1
2065/066 320516489 20957116 15.29:1
2066/067 948561213 42289746 22.43:1
2067/068 1228158215 93128203 13.19:1
2068/069 1675319537 109030316 15.37:1
1
0
T
imes
10
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Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the Quick ratios of different F.Y. from
2064/065 to 2068/069 are higher than its standard. The ratio is going an increasingtrend per year till 2066/067 but thereafter it decreases and again increased in last year
2068/069. High quick ratio is good for the organizations. High quick ratio indicates
better liquidity position and vice-versa.
A Field work Report
Figure:-2
Quick ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069
Quick Ratios
Years from 2064/65 to 2068/69
In the given figure x-axis shows the years from 2064/65 to 2068/69 in
which the position of current ratios and y-axis shows the times of quick ratios which
is calculated in above table. The quick ratio is high in F.Y. 066/067. So, it means thisyear the liquidity position of KBL is better.
2.3.2 Assets Management Ratio:-Assets Management ratio is also called efficiency or activity turnover
ratio. Assets management ratios are calculated to test the efficiency of management in
managing the firms resources in generating sales revenue.
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A) Assets Utilization Ratio
Assets utilization ratio is the ratio of total operating revenue and
total assets. The high ratio is prefer for the company.
Assets Utilization Ratio = TOR
Total Assets
= .%
A Field work Report
Table No.:-3
Assets Utilization Ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years TOR Total Assets Calculated
Ratios
2064/065 46059164 896192608 5.14 %
2065/066 71468589 1740429848 4.11 %
2066/067 130622622 3972615135 3.29 %
2067/068 323765877 11151537301 2.90 %
2068/069 655911133 18946218662 3.45 %
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the assets utilization ratios of different F.Y. from
2064/065 to 2068/069 are 5.14%, 4.11%, 3.29%, 2.90% and 3.45% respectively.
Which indicates the ratios is going on decreasing trend from 2064/65 to 2067/68
which is not good for the KBL.
Figure:-3Assets Utilization ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069
Assets Utilization Ratios
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Years from 2064/65 to 2068/69
In the given figure x-axis shows the years from 2064/65 to 2068/69
and y-axis shows the percentage of assets utilization ratio which is calculated in above
table. The ratio is high in F.Y. 064/065, it reflect the better position of assets utilized.
2.3.3 Debt Management Ratio:-This ratio is also called capital structure or leverage or solvency ratio.Leverage ratios are calculated to test the solvency position or long-term financial
position of a firm. Solvency means companys ability to pay all creditors.A Field work Report
Leverage ratios are used to indicate the extent to which a firm has financed its
assets with borrowed funds. We will discuss leverage ratio in terms of two categories
i.e. Balance sheet based on ratio and coverage ratios. Balance sheet based ratio simply
indicate proportion of a firms assets financed by a particular source of fund, while
coverage ratio reflect the ability of the firms earning to convert its fixed finance
payment.
A) Debt ratio / Debt to total Assets Ratio
The relationship between borrowed capital and total assets is known as
debt ratio. This ratio measures the percentage of firms assets financed by creditors.
Creditors prefer low debt ratio since it provided security to their investment in event
of liquidation. On the other hand, share holders like high leverage either to get more
earning or selling new stock.
Debt Ratio (D/A ratio) = Total Debt = . %
Total Assets
Where,
Total Debt = LTD + Borrowing + Current Liabilities
High ratio is not preferable for the company because at some point of time, company
will not get loan without issuing new shares.
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Table No.:-4
Debt Ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years Total Debt Total Assets Calculated
Ratios
2064/065 104246073 896192608 11.63 %
2065/066 383104891 1740429848 22 %
2066/067 292553083 3972615135 7.36 %
2067/068 223128203 11151537301 2 %
2068/069 809030316 18946218662 4.27 %
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the debt ratio of different F.Y. from2064/065 to 2068/069. The high debt ratio is not preferable for the company. The
A Field work Report
Highest Debt ratio is 22% which incurred in the year 2065/066 and the lowest debt
ratio 2% which incurred in the year 067/068. Creditors prefer low debt ratio since it
provide security to their investment in event of liquidation.
Figure:-4
Debt Ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069
Debt Ratio
Years from 2064/65 to 2068/69
In the given figure x-axis shows the years from 2064/065
to 2068/069 and y-axis shows the percentage of debt ratio which is calculated in
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above table. The ratio is high in F.Y. 065/066, it means this year the bank is utilized
more debt than other years.
B) Equity Multiplier
It is also called financial leverage ratio. The relationship of total assets toequity of the firm is called equity multiplier. It measures the extend to which the total
assets of firm is greater than the firms equity capital.
Financial leverage ratio = Total Assets
Total Equity
Total Equity = Equity share + Reserve & Surplus
A Field work Report
Table No.:-5
Financial leverage Ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years Total Assets Total Equity Calculated
Ratios2064/065 896192608 101988764 8.79 times
2065/066 1740429848 219051845 7.95
2066/067 3972615135 826322511 4.81
2067/068 11151537301 2045118881 5.45
2068/069 18946218662 2089257112 9.09
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the equity multipliers of different F.Y.from 2064/065 to 2068/069 are 8.79, 7.95, 4.81, 5.45 and 9.09 times respectively. The
highest equity multiplier is 9.09 times in year 2068/069 and the lowest is 4.81 in year
2066/067.
Figure:-5Financial leverage Ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069
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Financial leverage Ratio
Years from 2064/65 to 2068/69
In the given figure x-axis shows the years from 2064/065
to 2068/069 and y-axis shows the times of equity multiplier which is calculated in
above table. The ratio in high in F.Y. 068/069, it means this year total assets of bank isgreater than the firms equity capital.
A Field work Report
C) Long term debt to Total Capitalization Ratio
The relationship between the long-term debts and total capitalization is
known as long term debt to Total Capitalization Ratio.
Long-term Debt to = Long-term Debt
Total Capitalization Total Capitalization
= . %
Where,
Total Capitalization = Share holders Equity + Borrowing
Table No.:-6
Long term debt to total capitalization Ratio of Kist Bank Ltd. from the year
2064/65 to 2068/069:
Years Long term Debt Total
Capitalization
Calculated
Ratios
2064/065 93531457 195520221 47.84 %
Times
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2065/066 362147775 581199620 62.23
2066/067 250263337 1076585848 23.25
2067/068 130000000 2175118881 59.77
2068/069 900000000 2989257112 30.11
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the ratio of long term debt to total
capitalization of different F.Y. from 2064/065 to 2068/069 are 47.84%, 62.23%,
23.25%, 59.77% and 30.11% respectively. The highest ratio is 62.33% in year
2065/066 and the lowest ratio is 23.55% in year 2066/067. The high ratio represent is
greater risk to creditors as well as to share holders. Where as the low ratio represents
security to creditors in extending credit.
A Field work Report
Figure:-6Long term debt to total Capitalization ratios of Kist Bank Ltd. from the financial year
2064/065 to 2068/069
Long term debt to Total capitalization Ratio
Years from 2064/65 to 2068/69
In the given figure x-axis shows the years from 2064/065
to 2068/069 and y-axis shows the percentage of long term debt to total capitalization
ratios which are calculated in above table. The ratio is high in F.Y. 064/065, and it
represent the bank has greater risk to creditors as well as to share holders in this year.
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2.3.4 Profitability Ratio
Profitability Ratios are used overall measures of the efficiency
effectiveness of the firms managements. Profitability ratios show the combined effect
of liquidity, assets management and debt management on operating results. It
measures the earning of the company for a short term period.
A) Basic Earning Power Ratio
This is the ratio of EBIT to total assets. The ratio indicates the
ability of firms assets to generate operating income.
Basic Earning = EBIT = . %
Power ratio Total Assets
(The increasing ratio is favorable.)
A Field work Report
Table No.:-7
Basic earning power ratios of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years EBIT Total Assets CalculatedRatios
2064/065 26505224 896192608 2.96%
2065/066 37460387 1740429848 2.15
2066/067 64893678 3972615135 1.63
2067/068 136863407 11151537301 1.23
2068/069 217551364 18946218662 1.15
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the ratio of basic earning power of different
F.Y. form 2064/065 to 2068/069 are 2.96%, 2.15%, 1.63%, 1.23% and 1.15%
respectively. The highest ratio is 2.96% in year 2064/065 and the lowest ratio is
1.15% in year 2068/069. The high ratio indicates ability of firms assets to generate
high operating income but there are low ratios of KBL.
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Figure:-7Basic earning power ratios of Kist Bank Ltd. from the financial year 2064/065 to
2068/069
Basic Earning Power Ratio
Years from 2064/65 to 2068/69
A Field work Report
In the given figure x-axis shows the years from 2064/065
to 2068/069 and y-axis shows the percentage of long term debt to total capitalization
ratios which are calculated in above table. The ratio is high in F.Y. 2064/065, and this
year indicates the ability of KBLs assets to generate operating income than otheryears.
B) Return on Total Assets
The ratio of net income to total assets is called return on total assets. It
measures the return on all firms assets after interest and tax. It also measures the
profitability of all financial resources invested in the firms assets.
ROA = Net income = . %
Total Assets
(The increasing ratio is favorable.)
Table No.:-8
Return on assets of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years Net income Total Assets Calculated
Percentage
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Ratios
2064/065 16505526 896192608 1.84%
2065/066 26058081 1740429848 1.50
2066/067 47270666 3972615135 1.19
2067/068 89663093 11151537301 0.80
2068/069 144138231 18946218662 0.76
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the ratio of return on assets on different F.Y.
from 2064/065 to 2068/069 are 1.84%, 1.50%, 1.19%, 0.80% and 0.76% respectively.
The highest ratio is 1.84% in year 2064/065 which implies that the available resources
and tools are employs efficiently. And the lowest ratio is 0.76% in year 2068/069
which implies that the available resources and tools are not employs efficiently.
A Field work Report
Figure:-8Return on assets of Kist Bank Ltd. from the financial year 2064/065 to 2068/069
Return on Assets
Years from 2064/65 to 2068/69
In the given figure x-axis shows the years from 2064/065 to 2068/069 and y-axis
shows the percentage of return on assets which are calculated in above table. The
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return on assets ratios of KBL are in decreasing trend per year which is not preferable
for the KBL.
C) Return on Common Equity
The ratio of net income to equity is known as return on common equity.
It measures the rate of return an equity holders investment.
ROE = Net income = . %
Total Assets
Where,
Equity = Share Capital + Accumulated profit + Reserve
(Increasing ratio is favorable for the company.)
A Field work Report
Table No.:-9
Return on common equity of Kist Bank Ltd. from the year 2064/65 to 2068/069:
Years Net income Common Equity CalculatedRatios
2064/065 16505526 101988764 16.18%
2065/066 26058081 219051845 11.90
2066/067 47270666 826322511 5.72
2067/068 89663093 2045118881 4.38
2068/069 144138231 2089257112 6.90
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the ratio of return on common equity on
different F.Y. from 2064/065 to 2068/069 are 16.18%, 11.90%, 5.72%, 4.38% and
6.90% respectively. The highest ratio is 16.18% in year 2064/065 which implies that
the rate of return an equity holders investment is good. And the lowest ratio is 4.38%
in year 2067/068 which indicates that the rate of return on investment is low.
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Figure:-9Return on common equity of Kist Bank Ltd. from the financial year 2064/065 to
2068/069
Return on Common Equity
Years from 2064/65 to 2068/69
A Field work Report
In the given figure x-axis shows the years from 2064/065 to 2068/069 and y-axis
shows the percentage of return on common equity which is calculated in above table.
The return on equity of KBL is in decreasing trend per year from 2064/065 to
2068/069 which is not preferable for the KBL but in year 2068/069 it is increased.
2.3.5 Other ratios:
A) Earning Per Share (EPS)
The relationship between net income after tax and number of equity
shares outstanding is known as EPS. It shows the rupee value of per share. High EPS
is preferable for the company.
EPS = NIAT = . times
No. of equity shares outstanding
Table No.:-10
Earning per share of Kist Bank Ltd. from the year 2064/65 to 2068/069:
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Years Net income No. of shares
Outstanding
Calculated
Ratios
2064/065 16505526 889950 Rs. 18.55
2065/066 26058081 2000000 13.03
2066/067 47270666 8000000 5.91
2067/068 89663093 20000000 4.48
2068/069 144138231 20000000 7.21
Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to
2068/069
The Above table shows that the ratios of return on common equity on
different F.Y. from 2064/065 to 2068/069 are Rs.18.55, Rs.13.03, Rs.5.91, Rs.4.48
and Rs.7.21 respectively. The highest EPS is Rs.18.55 in year 2064/065 which implies
that the good performance of KBL. And the lowest EPS is Rs.4.48 in year 2067/068
which indicates that the KBLs performance is low than other years.
A Field work Report
Figure:-10
Earning per share of Kist Bank Ltd. from the financial year 2064/065 to 2068/069
Earning Per share
Years from 2064/65 to 2068/69
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In the given figure x-axis shows the years from 2064/065 to 2068/069 and y-axis
shows the Rupees in Rs. of EPS which is calculated in above table. The more per
share return, the more excellent it is and less per share return, the worse it is. The
above EPS show that the KBL performance is getting low from 2065/066 to2066/067. But it managed to its figure last year because its EPS is increased from
Rs.4.4s to Rs.7.21.
A Field work Report
2.4 comparison study of different ratios from the F.Y.2064/65 to 2066/67
Table No.:-11
Comparison studies of different ratios from F.Y.2064/65 to 2066/67
Years
Ratios
2064/65 2065/66 2066/67
1. Current Ratios 4.35:1 15.29:1 22.43:1
2. Quick Ratios 4.35:1 15.29:1 22.43:1
3. Assets Utilization Ratios 5.14 % 4.11 % 3.29 %
4. Debt to Total Assets 11.63 % 22 % 7.30 %
5. Financial Leverage Ratios 8.79 times 7.95 times 4.81 times
6. Long term debt to TotalCapitalization Ratios
47.84 % 62.23 % 23.25 %
7. Basic Earning Power Ratios 2.96 % 2.15 % 1.63 %
8. Return on Assets 1.84 % 1.50 % 1.19 %
9. Return on Equity 16.18 % 11.90 % 5.72 %
10. Earning Per Share Rs. 18.55 Rs. 13.03 Rs. 5.91
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In above table, the current ratio is an increasing trend from F.Y.
2064/065 to 2066/067 and the highest current ratio is 22.43:1 in year 2066/067 it
indicates, better liquidity position in this year. The quick ratio is also same as current
ratio. Assets utilization ratio is in decreasing trend from 2064/065 to 2066/067 per
year by more than 1% which is not good for the KBL. The debt to total assets ratio is
increased by double in year 2065/066 and suddenly dropped 7.30% which is good forthe KBL because the creditors prefer low debt ratio since it provide security to their
investment in event of liquidation. For financial leverage ratio, it is high in year first
i.e. 8.79 times and there after it seems to be in decreasing trend. The LTD to total
capitalization ratio is more than year 2064/065 in year 2065/066 i.e. 62.23%>47.84%
which represent is greater risk to creditors as well as to share holders then it decreased
in 23.25% whereas in year 2066/067 shows the low ratio 23.25% which indicates
security to creditors in extending credit. Next, basic earning power ratios is in
decreasing trend per year, it shows the earning power on total assets is high in 1 st year
there after the ability of firms assets to generate operating income is getting low. TheROA is also in decreasing trend per year it indicates, the starting year was good for
the KBL because in that year the banks return on total assets 1.84%. In ROE, it is
also in decreasing way which indicates that the rate of return on investment is getting
low per year but the percentage indicates better return on last 2 year. And in last, the
A Field work Report
EPS is also in decreasing trend it is high in F.Y. 2064/065 i.e. Rs. 18.55 in this year
the KBL shares price was high because the high EPS is better performance for the
company and vice-versa.
After comparing above ratios, the KBLs performance is better in F.Y. 2064/065 thanother F.Y. 2065/066 and 2066/067 because all the ratios are preferable in this year.
2.5 comparison study of different ratios from the F.Y.2066/067 to 2068/069
Table No.:-12
Different ratios from F.Y.2066/067 to 2068/069 are explained below
Years
Ratios
2066/67 2067/68 2068/69
1. Current Ratios 22.43:1 13.19:1 15.37:1
2. Quick Ratios 22.43:1 13.19:1 15.37:1
3. Assets Utilization Ratios 3.29 % 2.90 % 3.45 %
4. Debt to Total Assets 7.30 % 2 % 4.27 %
5. Financial Leverage Ratios 4.81 times 5.45 times 9.09 times
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6. Long term debt to Total
Capitalization Ratios
23.25 % 59.77 % 30.11 %
7. Basic Earning Power Ratios 1.63 % 1.23 % 1.15 %
8. Return on Assets 1.19 % 0.80 % 0.76 %
9. Return on Equity 5.72 % 4.38 % 6.90 %
10. Earning Per Share Rs. 5.91 Rs. 4.48 Rs. 7.21
In above table, the current ratio on year 2067/068 and 2068/069
are less than year 2066/067. The highest current ratio is 22.43:1 in year 2066/067 it
indicates, better liquidity position in this year. The quick ratio is also same as current
ratio, the ratio on year 2066/067 is good for the KBL than other F.Y. The Assets
utilization ratio is high in F.Y. 2068/069 than other 2 year. The debt to total assets
ratio is 7.30% in F.Y. 2066/067 which is good for KBL because the creditors prefer
low debt ratio since it provide security to their investment in event of liquidation. For
financial leverage ratio, it is increasing trend 2066/067 to 2068/069 and it is high inyear 2068/069 i.e. 9.09 times which means the total assets of firm is greater than the
firms equity capital in this year. The LTD to total capitalization ratio is high in year
2067/068 than year 2066/067 and year 2068/069 i.e. 59.77%>23.25%>30.11%, the
high ratio represent is greater risk to creditors as well as to share holders in year 2067/
A Field work Report
068 and low ratio in year 2067/068 indicates security to creditors in extending credit.
Next, basic earning power ratios is in decreasing trend per year, it shows the earning
power on total assets is high in 1st year there after the ability of firms assets to
generate operating income is getting low. The ROA is also in decreasing trend peryear it indicates, the F.Y. in 2066/067 was good for the KBL because in that year the
banks return on total assets 1.19%. In ROE, it is high in year 2068/069 which
indicates better return between 2066/067 and 2067/068, ratio is good when it is more
than 1%. And in last, the EPS is in decreasing trend before 2068/069 but in F.Y.
2068/069 it increased in Rs.7.21 than Rs.5.91 and Rs.4.48. So, in year 2068/069 the
KBL shares price was high because the high EPS shows better performance for the
company and vice-versa.
After comparing above ratios, the KBLs performance is better in F.Y. 2067/068 than
other F.Y. 2066/067 and 2067/068 because all the ratios are preferable in this year.
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A Field work Report
Chapter - 3
3.1 SUMMARY :-A bank is a financial institution, which accepts deposits from the public
and in turn, advance loan to business and personal customer and also provides
banking service i.e. savings, credit payment, remittance etc.
Kist Bank was initially incorporated as a C class financial institution
in 2003 for undertaking limited banking activities and it commercial banking activities
from May 7, 2009 after complying with all the conditions of Nepal Rastra Bank
(Central Bank of Nepal) for becoming a Commercial Bank. The Authorized Capital of
the Bank is Rupees 5 Billion and the Issued and Paid-Up Capital is Rupees 2 Billion.
60 Percent of the Paid-Up Capital is held by the promoter and remaining 40% is held
by the general public.
It has a seven member Board of Directors (BOD) out of which three
represents the promoters group, two represents the general public and one represents
the Professional Director. Till the end of fiscal year 2066/067 (2009/10) the bank has
51 branches across the country.
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Its liquidity position, assets management position, debt management
position, profitability position and other ratios position have been thoroughly
calculated and evaluated. On the basis of analysis and finding specific suggestions are
provided which will be beneficial for the bank for improvement in their future
performance of KBL.
For financial position, financial analysis is the process of identifying thefinancial strength and weakness of the firm by properly establishing the relationship
between the items of balance sheets and income statements. In this study, statements
covering five years from 2064/065 to 2068/069 have been received, reviewed and
analyzed.
For analyze the financial data of the KBL. The financial ratios have
been used. As financial analysis is the most widely used tools for the financial
position, five categories of financial ratios i.e. liquidity ratios, assets management
ratios, debt management ratios, profitability ratios and other ratios has been
calculated, analyze and intercept to evaluate the financial performance of KBL. Thisstudy is based on secondary data like annual report of KBL, newspaper and reports
periodically published by various agencies.
A Field work Report
3.2 CONCLUSION :-On the basis of analysis of financial statement of KBL, the following
conclusions are adopted:-
The current ratios of the bank shows the highest ratio is 22.43:1 in F.Y. 2066/067
and in other year it is just more than its standards. It means, the company could
maintain the standard of 2:1. It depicts the company may have not the problem of
meeting immediate liabilities on time.
The liquidity position is high which is not good because higher liquidity position
shows the greater amount of ideal money, which cannot generate the revenue.
The assets utilization ratios is going in decreasing trend by more than 1% from
2064/065 to 2067/068 which is not good for the KBL but it increases last year i.e.2068/069 by 0.55% which is good for the KBL.
The Bank is not used more debt so the total debt is low in all year which is good
for the KBL. It indicates the bank has low risk.
The banks LTD to total capitalization ratio is very high in some year and the high
ratio represent is greater risk to creditors as well as to share holders.
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Ratio of return on total assets is in trend of decreasing by more than 0.30 per year
which implies that available sources and tools are not going to be employed
efficiently.
Return on equity capital ratio is in also decreasing trend per year which depicts
company employed their capital less effectively to earn more but in F.Y. 2068/069
it increased.
The ROE is an increased in last year by 2.42% than F.Y. 2068/069 which is good
for the company.
Basic Earning Power Ratios depicts the relationship between EBIT and total
assets. The ratio of basic earning power of KBL for respectively five years is
decreasing trend by more than 1%.
While going through the study, all the liquidity ratios, assets
Management ratios, debt management ratios, profitability ratios EPS of KBL are quit
better than the previous year. AUR, ROE and EPS are increasing slightly. At lastfrom the study of the financial position under financial analysis of the bank based on
the past years, we conclude that the KBL ltd. According to financial position of KBL,
it is going to be popular in the coming year soon.
A Field work Report
3.3 SUGGESTION AND RECOMMENDATION:-On the basis of financial analysis calculated in second chapter,
the following recommendations are made:-
In other to meet the else current obligation in the time the company should have
to increase in their current assets as well as liquid assets because current ratio is
just double than its standard 2:1.
Its AUR is in decreasing trend per year it means TOR of KBL does not increase
proportion to total assets. So it must be increase in order to better utilize of its
total assets.
The bank should increase its efficiency in utilizing its current assets, total assets
and shareholders fund.
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The ratio of basic earning power of KBL is getting low per year it means ability
of banks assets is to generate low operating income. So it must be high.
The ROA is also decreasing trend which implies that the available resources and
tools are not employs efficiently so, the manager of KBL should manage their
assets in time in order to get good performance.
Total debt of KBL is less; it is good for the bank. It indicates the bank has low
risk. Do not try to taking risk to use of more debt because more debt, more risk
and less debt less risk but it depends on bank what its require.
A Field work Report
Pant Prem Raj, Field Work Assignment and Report writing, Veena
Academic enterprises Pvt. Ltd. Kathmandu, 1997
Howard K. Wolf, Prem R. Pant, A Hand Book for Social Science Research
and Thesis writing, Budha Academic enterprises Pvt. Ltd., 1999
Singh Hriday Bir, Banking and Insurance, Asian Publication Pvt. Ltd,
September 2005
Bibliography
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Sing Hriday BIr, Organizational Behaviour and Human Resource
Managemet, Asmita Publication Kath.,2066
Bhandari Dilli Raj, Banking and Insurance, Ayush publication, January
2003
Kadka S.J & Singh H.B., Banking and Insurance (in Nepali), Asian
Publication, 2062
Bhandari, D.R. (2003). Banking & Insurance. Kathmandu: Aayush
Publication.
Previous 5 Years FIELD Work Report of Kist Bank.
Consulting from the manager of KBL, branch office, Janakpur dham for the
detail information of KBL.
Annual Report of KBL.
Various websites:
www.kistbank.com
www.nrb.gov.np
www.google.com
A Field work Report
Recommendation letter of KBL, branch office, Janakpurdham,Dhanusha.
Voucher and forms are used by KBL, branch office, Janakpur
Dham, Dhanusha.
Appendix
http://www.kistbank.com/http://www.nrb.gov.np/http://www.google.com/http://www.kistbank.com/http://www.nrb.gov.np/http://www.google.com/ -
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A Field work Report