A PROJECT REPORT

ON

RATIO ANALYSIS ON AXIS BANK LTD

SUBMITTED:

By Kuldeep Shyam Sunder Singh

in partial fulfillment for the award of the degree

of

MASTER OF COMMERCE PART II

Under The Guidance Of

Prof. Aruna Singham

BUNTS SANGHA’S

S.M.SHETTY COLLEGE OF SCIENCE, COMMERCE AND

MANAGEMENT STUDIES

UNIVERSITY OF MUMBAI

OCTOBER 2015

[1]

Address: Opp. JalvayuVihar, Hiranandani Garden, Powai, Mumbai - 400076

Web site: http://smshettyinstitute.org Telephone:(91-22)61327321Email id: college@smshettyinstitute.in Telefax:(91-22) 61327304

EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the project

on “RATIO ANALYSIS ON AXIS BANK LTD ”, submitted by Kuldeep

singh student of M Com part – II.

This project is original to the best of our Knowledge and has been accepted for

internal assessment.

Internal Examiner External Examiner Principal Prof. Aruna Singham Dr.Sridhara Shetty

[2]

Address: Opp. JalvayuVihar, Hiranandani Garden, Powai, Mumbai - 400076

Web site: http://smshettyinstitute.org Telephone:(91-22)61327321Email id: college@smshettyinstitute.in Telefax:(91-22) 61327304

DECLARATION BY THE STUDENT

I, Kuldeep Singh, student of M Com Part – II hereby declare that the project for

the paper Financial Management, titled, “RATIO ANALYSIS ON AXIS

BANK LTD” submitted by me for semester – III during the academic year

2015-16, based on actual work carried out by me under the guidance and

supervision of Prof. Aruna Singham.

I further state that this work is original and not submitted anywhere else for any

examination.

Signature

(Kuldeep Singh)

[3]

ACKNOWLEDGMENT

Through this acknowledgment express my sincere gratitude to all those people

who have been associated with this assignment and have helped me to make it a

worthwhile experience.

Firstly I extend my thanks to the principle of the college, and vice principle Dr

Liji Santosh, who have given me the chance to prove myself, shared their

opinion through which I received the required crucial information’s for my

report.

Also I express my sincere thanks to my prof. Aruna Singham, who give these

opportunity to learn the subject in practical approach and provided me the

valuable guidance in preparing the project report.

Kuldeep Singh

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CONTENTSSr. No. TITLE Page No

1CHAPTER 1 :  

  Introduction 6

  A Study of Unit Lined Insurance Plans of ICICI Prudential Life Insurance

7

  Objectives of Study 11

Scope of Study 12 Statement of Problem  13

  Research Methodology 14

 

2 CHAPTER 2 : About the Company  15 ICICI Prudential Life Insurance 17 Objectives of LIC 20

3 CHAPTER 3 :

Ratio Analysis 22

4 CHAPTER 4 :  

  Ratios- What do they tell us? 25

5 CHAPTER 5 :  

  Balance Sheet 28 Profit and Loss Statement 29

6 CHAPTER 6 :

Calculation of Ratios 30

7 CHAPTER 7 :

Conclusion 35 Bibliography 36

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RATIO ANALYSIS

A financial ratio (or accounting ratio) is a relative magnitude of two selected

numerical values taken from an enterprise's financial statements. Often used in accounting,

there are many standard ratios used to try to evaluate the overall financial condition of a

corporation or other organization. Financial ratios may be used by managers within a firm,

by current and potential shareholders (owners) of a firm, and by a firm's creditors. Financial

analysts use financial ratios to compare the strengths and weaknesses in various companies.If

shares in a company are traded in a financial market, the market price of the shares is used in

certain financial ratios.

Ratios can be expressed as a decimal value, such as 0.10, or given as an equivalent

percent value, such as 10%. Some ratios are usually quoted as percentages, especially ratios

that are usually or always less than 1, such as earnings yield, while others are usually quoted

as decimal numbers, especially ratios that are usually more than 1, such as P/E ratio; these

latter are also called multiples. Given any ratio, one can take its reciprocal; if the ratio was

above 1, the reciprocal will be below 1, and conversely. The reciprocal expresses the same

information, but may be more understandable: for instance, the earnings yield can be

compared with bond yields, while the P/E ratio cannot be: for example, a P/E ratio of 20

corresponds to an earnings yield of 5%.

Values used in calculating financial ratios are taken from the balance sheet, income

statement, statement of cash flows or (sometimes) the statement of retained earnings. These

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comprise the firm's "accounting statements" or financial statements. The statements' data is

based on the accounting method and accounting standards used by the organization.

Financial ratios quantify many aspects of a business and are an integral part of the

financial statement analysis. Financial ratios are categorized according to the financial aspect

of the business which the ratio measures. Liquidity ratios measure the availability of cash to

pay debt.Activity ratios measure how quickly a firm converts non-cash assets to cash assets.

Debt ratios measure the firm's ability to repay long-term debt. Profitability ratios measure

the firm's use of its assets and control of its expenses to generate an acceptable rate of return.

Market ratios measure investor response to owning a company's stock and also the cost of

issuing stock. These are concerned with the return on investment for shareholders, and with

the relationship between return and the value of an investment in company’s shares.

Financial ratios allow for comparisons

between companies

between industries

between different time periods for one company

between a single company and its industry average

Ratios generally are not useful unless they are benchmarked against something else, like

past performance or another company. Thus, the ratios of firms in different industries, which

face different risks, capital requirements, and competition are usually hard to compare.

Financial ratios may not be directly comparable between companies that use different

accounting methods or follow various standard accounting practices. Most public companies

are required by law to use generally accepted accounting principles for their home countries,

but private companies, partnerships and sole proprietorships may not use accrual basis

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accounting. Large multi-national corporations may use International Financial Reporting

Standards to produce their financial statements, or they may use the generally accepted

accounting principles of their home country. There is no international standard for

calculating the summary data presented in all financial statements, and the terminology is not

always consistent between companies, industries, countries and time periods.

It refers to the systematic use of ratios to interpret the financial statements in terms of

the operating performance and financial position of a firm. It involves comparison for a

meaningful interpretation of the financial statements. In view of the needs of various uses of

ratios the ratios, which can be calculated from the accounting data are classified into the

following broad categories

A. Liquidity Ratio

B. Turnover Ratio

C. Solvency or Leverage ratios

D. Profitability ratios

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RATIOS – WHAT DO THEY TELL US?

CURRENT RATIO

The current ratio measures the short-term solvency of the firm. It establishes the relationship

between current assets and current liabilities. It is calculated by dividing current assets by

current liabilities. Current assets include cash and bank balances, marketable securities,

inventory, and debtors, excluding provisions for bad debts and doubtful debtors, bills

receivables and prepaid expenses. Current liabilities includes sundry creditors, bills payable,

short- term loans, income-tax liability, accrued expenses and dividends payable.

Current Ratio = Current Asset

Current Liabilities

DEBTOR TURNOVER RATIO

This indicates the number of times average debtors have been converted into cash during a

year. It is determined by dividing the net credit sales by average debtors.

Debtor Turnover Ratio = Net Credit Sales

Average Trade Debtors

Net credit sales consist of gross credit sales minus sales return. Trade debtor includes sundry debtors

and bill’s receivables. Average trade debtors (Opening + Closing balances / 2). When the

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information about credit sales, opening and closing balances of trade debtors is not available

then the ratio can be calculated by dividing total sales by closing balances of trade debtor.

Debtor Turnover Ratio = Total Sales

Trade Debtors

EXPENSES RATIO

While some of the expenses may be increasing and other may be declining to know the

behavior of specific items of expenses the ratio of each individual operating expenses to net

sales should be calculated. The various variants of expenses are

Cost of goods sold = Cost of goods sold X 100

Net Sales

Administrative Expenses Ratio = Administrative Expenses X 100

Net sales

Selling and distribution expenses ratio = Selling and distribution expenses X 100

Net sales

DEBT EQUITY RATIO

Debt equity ratio shows the relative claims of creditors (Outsiders) and owners (Interest)

against the assets of the firm. Thus this ratio indicates the relative proportions of debt and

equity in financing the firm’s assets. It can be calculated by dividing outsider funds (Debt)

by shareholder funds (Equity)

Debt equity ratio = Outsider Funds (Total Debts)

Shareholder Funds or Equity

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The outsider fund includes long-term debts as well as current liabilities. The shareholder

funds include equity share capital, preference share capital, reserves and surplus including

accumulated profits. However fictitious assets like accumulated deferred expenses etc

should be deducted from the total of these items to shareholder funds. The shareholder funds

so calculated are known as net worth of the business.

PROPRIETARY (EQUITY) RATIO

This ratio indicates the proportion of total assets financed by owners. It is calculated by

dividing proprietor (Shareholder) funds by total assets.

Proprietary (equity) ratio = Shareholder funds

Total assets

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CHAPTER 5

BALANCE SHEET

PARTICULARS MARCH 2015 MARCH 2014

SOURCES OF FUNDS

Owners' Fund

Equity Share Capital 101.00 101.00

Share Application Money 0.00 0.00

Preference Share Capital 0.00 0.00

Reserves & Surplus 6,380.29 5,581.21

Loan Funds

Secured Loans 54,975.35 44,614.54

Unsecured Loans 3,729.83 3,255.37

Total 65,186.47 53,552.12

USES OF FUNDS

Fixed Assets

Gross Block 115.25 108.15

Less: Revaluation Reserve 0.00 0.00

Less: Accumulated Depreciation 52.88 45.92

Net Block 62.37 62.24

Capital Work-in-progress 0.00 14.53

Investments 184.63 164.03

Net Current Assets

Current Assets, Loans & Advances

80,313.23 64,191.79

Less : Current Liabilities & Provisions

15,373.76 10,880.45

Total Net Current Assets 64,939.47 53,311.34

Miscellaneous Expenses not written

0.00 0.00

Total 65,186.47 53,552.12

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PROFIT AND LOSS STATEMENT

PARTICULARS MARCH 2015 MARCH 2014

Income :

Operating Income 7,575.92 6,114.86

Expenses

Material Consumed 0.00 0.00

Manufacturing Expenses 0.00 0.00

Personnel Expenses 90.41 72.44

Selling Expenses 0.00 110.85

Administrative Expenses 262.78 202.46

Expenses Capitalized 0.00 0.00

Cost Of Sales 353.18 385.75

Operating Profit 7,222.74 5,729.11

Other Recurring Income 82.96 23.09

Adjusted PBDIT 7,305.70 5,752.21

Financial Expenses 5,924.60 4,591.07

Depreciation 7.53 7.42

Other Write offs 0.00 0.00

Adjusted PBT 1,373.57 1,153.72

Tax Charges 350.36 316.72

Adjusted PAT 1,023.21 837.00

Non Recurring Items 0.00 77.09

Other Non Cash adjustments 0.00 0.11

Reported Net Profit 1,023.21 914.20

Earnings Before Appropriation 1,712.14 1,445.03

Equity Dividend 191.77 181.68

Preference Dividend 0.00 0.00

Dividend Tax 32.35 29.42

Retained Earnings 1,488.02 1,233.93

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CHAPTER 6

CALCULATION OF RATIOS

Current Ratio = Current Assets

Current Liabilities

Current Year = 80313.23

15373.36

= 5.22:1

Previous Year = 64191.79

10880.45

= 5.89: 1

COMMENTS – Current ratio is also known as Bankers Ratio/Working Capital Ratio.

This ratio shows the relationship between current assets and current liabilities. It also shows

the short term solvency position of the organization. Ideal current ratio should be 2:1.

Proprietary ratio = Proprietors funds × 100

Total Assets

Current Year = 55209.68 × 100

101876.93

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= 54.09 %

Previous Year = 52216.46 × 100

95802.99

= 54.50 %

COMMENTS :- This ratio shows the relationship between proprietors fund and total

assets. It also shows long tern stability and solvency position of the organization. Ideally it

should be between 65 % to 70 %.

Debt Equity Ratio = Borrowed funds

Proprietor’s funds

Current Year = 23636.51

55209.68

= 42.82: 100

Previous Year = 21418.82

55216.46

= 38.79 : 100

COMMENTS: - This ratio shows the relationship between borrowed funds and

proprietors funds. It also shows the composition and structure of the capital invested in the

business. Standard ratio should be 2:1

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Debtors Turn Over Ratio = Net Credit Sales

Average Receivables

= Net Credit Sales

Average (Debtors + Bills receivables)

Current Year = 38199.43

796.92

= 47.93 times

Previous Year = 33933.46

904.08

= 37.53 times

Comments :- This ratio is an activity ratio which shows the number of times good sold

to debtors and payment received from them. HIGHER the ratio is FAVAROUBLE and vice

versa.

Creditors Turn Over Ratio = Net Credit Purchases

Average Payables

= Net Credit Purchases

Average (Creditors + Bills payables)

Current Year = 9877.40

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6369.91

= 1.55 times

Previous Year = 8014.37

5883.92

= 1.36 times

Comments:- This ratio is an activity ratio which shows the number of times goods purchased on credit basis and payments made to creditors. HIGHER the ratio is FAVOURABLE and vice versa.

Expense Ratio : Employee Benefit Expense Ratio × 100

Net Sales

Current Year = 90.41 × 100

7575.92

= 1.19 %

Previous Year = 72.44 × 100

6114.86

= 1.18 %

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Gross Profit Ratios :- Gross Profit ×100

Net sales

= Sales – COGS × 100

Net sales

Current year = 7575.92 – 353.18 ×100

7575.92

= 95.33%

Previous year = 6114.86-385.75 ×100

6114.86

= 93.69%

Comments : This ratio indicates the relationship between gross profit and net sales. It is

a profitability ratio which shows the efficiency of the company to earn trading surplus.

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CHAPTER 7

CONCLUSION

The study was conducted to study the performance of Axis Bank Ltd. It was found

that the schemes where the investors have chosen equity based fund the returns are directly

proportional to the stock market. However the debt based fund has shown increasing returns

over the time. They are neutral to the volatility shown by the stock market.

The survey showed that around 40% of the investors had invested in ULIP of ICICI

Prudential Life Insurance Co Ltd. The company’s brand image has captured the attention of

investors in Pune. The primary objective for investing in such plans was found to be capital

appreciation and children education. The investors found the allocation charges to be average

and the consequent returns also to be average. It was observed that the switch option was not

exercised by nearly half the investors. Thus, it can be said that the investors are not

monitoring their investment properly. The investors have to understand the working of ULIP

in a better way to maximize their returns.

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BIBLIOGRAPHY

http://economictimes.indiatimes.com/lic-housing-finance-ltd/stocks/companyid-

10823.cms

http://www.investopedia.com/terms/r/ratioanalysis.asp

http://en.wikipedia.org/wiki/Financial_ratio

http://www.demonstratingvalue.org/resources/financial-ratio-analysis

http://www.moneycontrol.com/financials/lichousingfinance/ratios/LIC

www.iciciprulife.com

www.bseindia.com

www.irda.org

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