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INTRODUCTION TO RATIO ANALYSIS

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INTRODUCTION TO RATIO ANALYSIS:-

Ratio analysis is the powerful and most commonly used tool of analysis and interpretation of
financial statements. Ratio analysis helps to analyze the past performance of the company and
to make future projections .It concentrates on the inter-relationship among the figures
appearing in the financial statements.

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 the view of the needs of various uses of ratios , which can be calculated from the
accounting data are classified into the following broad categories:

a) Liquidity Ratios:

 Current Ratio

 Quick Ratio

b) Solvency Ratios:

 Debt Equity ratio

 Total debts to Total Assets Ratio

 Proprietary Ratio

c) Profitability Ratios:

 Gross Profit Ratio

 Net Profit Ratio

d) Turnover Ratios:

 Debtors Turnover Ratio

 Creditors Turnover Ratio

 Fixed Assets Turnover Ratio

 Total Assets Turnover Ratio\

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SIGNIFICANCE OF RATIO ANALYSIS:-

HELPFUL IN ANALYSING THE FINANCIAL STATEMENT: Accounting

ratios are extremely useful device for analysing the financial statements. Bankers,
investors,creditorsetcanalyse the balance sheet and profit and loss account of the
company by means of ratio.

(1) HELPFUL IN SIMPLIFYING ACCOUNTING FIGURES: Accounting ratios

simplifies,summaries and systematises a long array of accounting figures to make
them understandable. Absolute figures do not carry much meaning. They become
more important when considered along with other figures.

(2) HELPFUL IN LOCATING WEAKSPOTS OF BUSINESS: Ratios help in

measuring the efficiency and performance of each unit and development of a firm.
During this process, weak spots may come to light. Owners can pay more attention to
these weak spots and make the businessmore profitable.

(3) HELPFUL IN COMPARISON: Accounting ratios help in making inter-firm and

intra-firm comparison. A firm can compare its performance with the general trend in
the industry and take corrective measures wherever needed.

(4) EFFECTIVE CONTROL: Ratio analysis provides various types of information

which enables the management to access the changes that have taken place over a
period of time in the working of business firm. It helps the management to discharge
their managerial functions and make controlling more effective.

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COMPANY PROFILE

ICICI Bank, stands for Industrial Credit and Investment Corporation of India, is
an Indian multinational banking and financial services company headquartered in Mumbai,
Maharashtra, India, with its registered office in Vadodara. In 2017, it is the third largest bank
in India in terms of assets and third in term of market capitalisation. It offers a wide range of
banking products and financial services for corporate and retail customers through a variety
of delivery channels and specialised subsidiaries in the areas of investment banking, life, non-
life insurance, venture capital and asset management. The bank has a vast network of 4,850
branches and 14,404 ATMs in India, and has a presence in 19 countries including India.

The bank has subsidiaries in the United Kingdom and Canada; branches in United
States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar, Oman, Dubai International Finance
Centre, China and South Africa; and representative offices in United Arab Emirates,
Bangladesh, Malaysia and Indonesia. The company's UK subsidiary has also established
branches in Belgium and Germany.

ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public offering of
shares in India in 1998, followed by an equity offering in the form of American Depositary
Receipts on the NYSE in 2000. ICICI Bank acquired the Bank of Madura Limited in an all-
stock deal in 2001 and sold additional stakes to institutional investors during 2001-02.

In the 1990s, ICICI transformed its business from a development financial institution offering
only project finance to a diversified financial services group, offering a wide variety of
products and services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank. In 1999, ICICI became the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE.

In 2000, ICICI Bank became the first Indian bank to list on the New York Stock
Exchange with its five million American depository shares issue generating a demand book
13 times the offer size.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of
ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was

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approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of
Gujarat at Ahmedabad in March 2002 and by the High Court of Judicature at Mumbai and the
Reserve Bank of India in April 2002.

In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and branches
in some locations due to rumours of adverse financial position of ICICI Bank. The Reserve
Bank of India issued a clarification on the financial strength of ICICI Bank to dispel the
rumours.

Acquisition

 1996: SCICI Ltd. A diversified financial institution with headquarters in Mumbai

 1997: ITC Classic Finance. incorporated in 1986, ITC Classic was a non-bank financial
firm that engaged in hire, purchase, and leasing operations. At the time of being acquired,
ITC Classic had eight offices, 26 outlets, and 700 brokers.
 1998: Anagram(ENAGRAM) Finance. Anagram had built up a network of some 50
branches in Gujarat, Rajasthan, and Maharashtra that were primarily engaged in retail
financing of cars and trucks. It also had some 250,000 depositors.[16]
 2001: Bank of Madura
 2002: The Darjeeling and Shimla branches of Grindlays Bank
 2005: Investitsionno-Kreditny Bank (IKB), a Russian bank
 2007: Sangli Bank. Sangli Bank was a private sector unlisted bank, founded in 1916, and
30% owned by the Bahte family. Its headquarters were in Sangli in Maharashtra, and it
had 198 branches. It had 158 in Maharashtra and 31 in Karnataka, and others in Gujarat,
Andhra Pradesh, Tamil Nadu, Goa, and Delhi. Its branches were relatively evenly split
between metropolitan areas and rural or semi-urban areas.
 2010: The Bank of Rajasthan (BOR) was acquired by the ICICI Bank in 2010 for ₹30
billion (US$470 million). RBI was critical of BOR's promoters not reducing their
holdings in the company. BOR has since been merged with ICICI Bank.

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Role in Indian financial infrastructures

The bank has contributed to the set-up of a number of Indian institutions to establish financial
infrastructure in the country over the years:

 National Stock Exchange - The National Stock Exchange was promoted by India's
leading financial institutions (including ICICI Ltd.) in 1992 on behalf of the Government
of India with the objective of establishing a nationwide trading facility for equities, debt
instruments and hybrids, by ensuring equal access to investors all over the country
through an appropriate communication network.
 Credit Rating Information Services of India Limited (CRISIL) - In 1987, ICICI Ltd along
with UTI set up CRISIL as India's first professional credit rating agency. CRISIL offers a
comprehensive range of integrated products and service offerings which include credit
ratings, capital market information, industry analysis and detailed reports.
 National Commodities and Derivatives Exchange Limited - NCDEX is an online multi-
commodity exchange, set up in 2003, by ICICI Bank Ltd, LIC, NABARD, NSE, Canara
Bank, CRISIL, Goldman Sachs, Indian Farmers Fertiliser Cooperative Limited (IFFCO)
and Punjab National Bank.
 Financial Innovation Network and Operations Pvt Ltd. - ICICI Bank has facilitated
setting up of "FINO Cross Link to Case Link Study" in 2006, as a company that would
provide technology solutions and services to reach the underserved
and underbanked population of the country. Using technologies like smart
cards, biometrics and a basket of support services, FINO enables financial institutions to
conceptualise, develop and operationalise projects to support sector initiatives
in microfinance and livelihoods.
 Entrepreneurship Development Institute of India - Entrepreneurship Development
Institute of India (EDII), an autonomous body and not-for-profit society, was set up in
1983, by the erstwhile apex financial institutions like IDBI, ICICI, IFCI and SBI with the
support of the Government of Gujarat as a national resource organisation committed to
entrepreneurship development, education, training and research.
 North Eastern Development Finance Corporation - North Eastern Development Finance
Corporation (NEDFI) was promoted by national level financial institutions like ICICI Ltd
in 1995 at Guwahati, Assam for the development of industries, infrastructure, animal
husbandry, agri-horticulture plantation, medicinal plants, sericulture, aquaculture, poultry

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and dairy in the North Eastern states of India. NEDFI is the premier financial and
development institution for the North East region.
 Asset Reconstruction Company India Limited - Following the enactment of the
Securitisation Act in 2002, ICICI Bank, together with other institutions, set up Asset
Reconstruction Company India Limited (ARCIL) in 2003, to create a facilitative
environment for the resolution of distressed debt in India. ARCIL was established to
acquire non-performing assets (NPAs) from financial institutions and banks with a view
to enhance the management of these assets and help in the maximisation of recovery.
This would relieve institutions and banks from the burden of pursuing NPAs, and allow
them to focus on core banking activities.
 Credit Information Bureau of India Limited - ICICI Bank has also helped in setting
up Credit Information Bureau of India Limited (CIBIL), India's first national credit
bureau in 2000. CIBIL provides a repository of information (which contains the credit
history of commercial and consumer borrowers) to its members in the form of credit
information reports. The members of CIBIL include banks, financial institutions, state
financial corporations, non-banking financial companies, housing finance companies and
credit card companies.
 Institutional Investor Advisory Services India Limited (IiAS) – ICICI Bank has indirectly
invested in Institutional Investor Advisory Services, through ICICI Prudential Life
Insurance Company, in IiAS. IiAS is a voting advisory firm aka proxy firm, dedicated to
providing participants in the Indian market with data, research and commentary. It
provides recommendations on resolutions placed before shareholders of over 300
companies.

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RESEARCH STUDY

PROBLEM DEFINITION OF RATIO ANALYSIS:-

The main purpose of study is to find out the “A ANALYTICAL STUDY ON
RATIO ANALYSIS OF ICICI BANK IN NAGPUR”
Ratio analysis is a process of computing determining and presenting the relationship
of items or group of items of financial statements to provide a meaningful understanding of
the performance and financial position of a business concern.

Ratio analysis is therefore a tool or a technique to present figures of the financial

statements in simple, concise, intelligible and understandable manner.

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OBJECTIVES OF THE STUDY

● To study the liquidity position.

● To know about whether the company has efficiently employed its fixed assets.
● To study the financial position on the basis of ratio analysis.
● To find out the true position of the business.
● To study Debt – Equity position of company.
● To study the theoretical perspective of the ratio analysis.

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SCOPE OF THE STUDY

● The study is entirely based on the balance sheet and other financial statements provided by
the company.
● The study is limited to the stated tools of financial analysis only.
● The time period of the study is five years only.
● The basic aim of the study is to acquire the insights in to the tools of the theoretical data
analysis and its application to practical data.
● The study also intends to use modern tools and techniques of ratio analysis.

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HYPOTHESIS

● Liquidity of long term and short term is high.

● Company has efficiently employed its fixed assets.

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THEORETICAL PERSPECTIVE

RATIO ANALYSIS
Ratio analysis is a process of computing determining and presenting the relationship of items
or group of items of financial statements to provide a meaningful understanding of the
performance and financial position of a business concern.

Ratio analysis is therefore a tool or a technique to present figures of the financial statements
in simple, concise, intelligible and understandable manner.

Hence ratio analysis is a technique of analyzing the financial statements by computing

accounting ratios and interpreting it to draw meaningful conclusions.

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ADVANTAGES OF RATIO ANALYSIS:

Ratio analysis is full of uses and advantages.

1. HELPFUL IN ANALYSING THE FINANCIAL STATEMENT: Accounting

ratios are extremely useful device for analysing the financial statements. Bankers,
investors, creditors etcanalyse the balance sheet and profit and loss account of the
company by means of ratio.

2. HELPFUL IN SIMPLIFYING ACCOUNTING FIGURES: Accounting ratios

simplifies, summaries and systematises a long array of accounting figures to make
them understandable. Absolute figures do not carry much meaning. They become
more important when considered along with other figures.

3. HELPFULIN LOCATING WEAK SPOTS OF BUSINESS: Ratios help in

measuring the efficiency and performance of each unit and development of a firm.
During this process, weak spots may come to light. Owners can pay more attention to
these weak spots and make the businessmore profitable.

4. HELPFUL IN COMPARISON: Accounting ratios help in making inter-firm and

intra-firm comparison. A firm can compare its performance with the generaltrend in
the industry and take corrective measures wherever needed.

5. EFFECTIVE CONTROL: Ratio analysis provides various types of information

which enables the management to access the changes that have taken place over a
period of time in the working of business firm. It helps the management to discharge
their managerial functions and make controlling more effective.

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USES OF RATIO ANALYSIS:

The uses of ratio analysis for different parties are

1. UTILITY FOR THE INVESTORS: Investors first priority will be the security of
their investment and a certain return in the form of dividend or interest. Long term
solvency ratios will help them in assessing the financial position of the firm
Profitability ratios will help them in determining the profitability position. Thus ratios
will help the investors in deciding where they should invest.

2. UTILITY FOR CREDITORS: Creditors are interested to know whether the firm is
able to pay its debts at a specified time of not. Current ratio and quick ratio give an
idea about the current financial position of the firm.

3. UTILITY FOR THE EMPLOYEES: Employees are mainly concerned with the
profitability position of the firm because their increase in wages,bonus and other
incentives depend upon the volume of the profit earned. Gross profit ratio,net profit
ratio and operating ratios are helpful for the employees to put forward their claim for
hike in the wages,bonusetc

4. UTILITY FOR THE GOVERNMENT: Ratio analysis is very helpful for the
government. Profitability index can be prepared with the help of ratios. Financial
ratios may be used as indicators of overall financial strength of public and private
sector, which helps in making financial plans and policies.

5. UTILITY FOR THE MANAGEMENT: Ratios are helpful for the managers: (i)It
helps in decision making,(ii) It helps in financial forecasting and planning (iii) It helps
in communication and increases the financial statements, (iv) It helps in effective
control over business activities,(v) It helps in comparative study (inter firrm It helps in
deterring the financial position and measuring the and intra firm),(vi) working
efficiency.

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Classification of Ratios:

Classification of ratios depends on the objectives and availability of data. Ratios may debased
on figures given in the balance sheet,or in the Profit and loss account or in both the
statements. On the basis of data given in the financial statements, ratios may be classified as
follows:

 Income statement ratio: The ratios those are calculated on the basis of the
items of the PnL account, e.g Gross Profit Ratio, Net profit Ratio etc.

 Position statement ratio: These ratios are calculated on the basis of the items
of balance sheet, e.g Current Ratio,Debt Equity Ratio,etc

 Inter-statement ratio: These ratios are based on both items of PnL and
balance sheet, e g Fixed Asset Turnover Ratio,Debtors Turnover
Ratio,Creditors Turnover Ratio, Stock Turnover Ratios.

But the above is not of much use because analysis of financial statement
classification cannot be carried out in isolation. Ratios are used for the
achievement of special objectives. From the viewpoint of various uses of
ratios, these are calculated to serve the different objectives or purpose.
Therefore, classification on the basis of purpose is more meaningful and
significant. On the basis of purpose, ratios may be classified as under:

A. Liquidity ratios
B. Solvency ratios
C. Turnover or Activity or Performance ratios
D. Profitability ratios

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(A)Liquidity Ratios
It includes the following:

1. Measures ability of the company to meet its current obligations

2. Indicates short term financial stability of the firm.
3. Indicates present cash solvency and ability to remain solvent in times of adversities.
To measure the liquidity of a firm the following ratios can be calculated
● Current Ratio
● Quick (or) Acid-test (or) Liquid ratio

a. Current Ratio
Current ratio is useful to find out the solvency of the company, High current ratio
indicates that company will be able to pay the debt maturity within a year, Low
current ratio indicates that company will not be able to meet its short debts.

Minimum standard current ratio is 2:1

Current Ratio Current Asset/Current Liabilities.

b. Quick Ratio
Quick ratio is also as acid test ratio. It indicates immediate ability of a known
company to pay off its current obligations. And also shows the solvencyand financial
soundness of the business. Greater the ratio stronger the financial position of the
company.

The standard quick ratio should be 1:1

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(B) Solvency Ratios:

These ratios are calculated to ascertain the abilities of the firm to pay its long term liabilities
in time. Solvency ratios measure the relationship between external equities and internal
equities. Sound solvency ratios ensure long term financial stability of the business. Some
important solvency ratios are:

 Debt-Equity Ratio: This ratio indicates the proportion of funds which are
acquired by long term borrowings in comparison to share holders fund.
Higher the ratio less secured the creditors, lower the ratio creditors enjoy
higher degree of safety.

Debt Equity Ratio Debt/share holders fund

 Total asset to debt ratio: ratio determines the extent to which debt is being
covered by assets.
It indicates the percentage of the total asset created by the company through
short term and long term debt. Higher the ratio less safe is the creditors and
vice versa.

Total asset to debt ratio = Total Asset / Debt

 Proprietary Ratio: The ratio determines long term solvency of the firm It
measures the relationship between funds invested in the business by the
owners with the total fund invested in business. It indicates long run
solvency of the business. High ratio means company is less dependent on
outside funds and company is quite solvent. Low ratio indicates company is
more dependent on outside funds solvency and solvency may be danger.

Proprietary Ratio = Proprietary fund/Total Asset

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(C) Turnover Ratio:

It measures how efficiently the assets are employed. These ratios are expressed in number of
times is used during the period.

1. Receivable Turnover Ratio

The ratio indicates average credit period employed by debtors.

Receivable Turnover Ratio = Net credit sales / Average Debtors

2. Fixed Asset Turnover Ratio

It indicates efficiency in the utilisation of fixed assetslike plant and machinery by
management.

Fixed Asset Turnover Ratio = Net Sales/Fixed Assets

3. Total Asset Turnover Ratio

It indicates how efficiently the assets are employed overall. It indicates relationships
between the amount invested in the assets and the result accrues in terms of sales.

Total Asset Turnover Ratio = Net Sales/total Assets

4. Creditors Turnover Ratio

lt indicates how the credit period is enjoyed by the creditors.

Creditors turnover Ratio = Net credit purchase/Average Creditors

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D) Profitability Ratio:

The primary objectives of business are to earn profits. Because profit is undertaking the
engine that drives the business enterprise. It measures the overall efficiency of the business. It
indicates whether utilisation of business assets and funds are done efficiently and best way or
not, so as to generate adequate profits or returns.

1. Gross Profit Ratio:

It shows the operating efficiency of the business. It measures theefficiency of
production as well as pricing. Decrease in the ratio indicates reduction in selling price
or increase in the cost of production or decline in the business activity.

Increase in the ratio indicates increase in the selling price or reduction in the cost of
production.

Gross Profit Ratios = Gross Profit/Sales × 100.

2. Net Profit Ratio:

It shows the overall effciency of the business. Higher the ratio indicates higher
efficiency of business and better utilisation of total resources. In addition it indicates
efficiency of financing operations as well as tax management.

Net Profit Ratio= Net Profit/Sales x 100.

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RESEARCH METHODOLOGY

1} RESEARCH METHODOLOGY:-

Research methodology is an important tool in any research work. It acts as guideline and
road in completion of research. It is scientific search for data and information on as particular
topic research is search for knowledge.

Research methodology is a way to systematically solve the research problem. It may

be understood as a science of studying now research is done systematically. In that various
steps, those are generally adopted by a researcher in studying his problem along with the
logic behind them. It is important for research to know not only the research method but also
know methodology.

DEFINITION :-

“The procedures by which researcher goes about their work of describing, explaining and
predicting phenomenon are called methodology. Methods comprise the procedures used for
generating, collecting and evaluating data. All this means that it is necessary for the
researcher to design his methodology for his problem as the same may differ from problem to
problem”.

TYPES OF RESEARCH

 Primary Research Vs Secondary Research

Conducting primary research occurs when a company is gathering
information directly for themselves. This type of research is often conducted through the
medium of questionnaires, observations and interviews. This method can often be very useful
to companies because the results are specific to that particular business. The findings can also
be regarded as being reliable and accurate because the company have conducted the research
independently.
Secondary research differs from primary research because it involves a company using
research that has been conducted by someone else. For example, an organisation may use
findings through a relevant journal, website or newspaper article.

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 Basic / Fundamental Research Vs Applied Research

Basic research whether in business or any other field has as its basic goal, to expand
one's knowledge. Basic questions such as, How can we increase production and save money
at the same time, might be a question for business. If, we increase production, we also
increase the cost of payroll by hiring additional production employees. How can this save
money? Curiosity lies at the heart of all business and it is this curiosity,

Applied research is solutions designed from basic research information , aimed at the
solution of business problems within the company. The goal of applied research is change for
the better, improvements in business management and practice aimed at improving the
human condition.

 Qualitative Research Vs Quantitative Research

Qualitative research, is merely explained in words and descriptions of what the
studies found. For example, if the researcher found that they found the people in debt to be
very funny, care-free, friendly individuals, Quantitative research is of course, the complete
opposite, and again, the clue is in the name. It is called quantitative research because it works
with numbers, quantities and statistics.

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DATACOLLECTION

Data taken for the study purpose fall in two category.

● Primary Data
● Secondary Data

PRIMARY DATA

For this study primary data are collected by the first time through

• Observation

• Interview

SECONDARY DATA

For this study Secondary data are collected by the different books, journals,
documents and reports.In this research I have collected primary data from the company
finance manager.

THROUGH INTERVIEW

It is done to know internal view of a person. It is a process of data collection which

includes face to face interaction and secondary data has been used a lot in this research as all
the interpretations have been done with the help of yearly reports.

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DATA ANALYSIS AND INTERPRETATION

CURRENT RATIO:

Current Ratio :- Current Assets / Current liability

Particulars 2014 2015 2016 2017

Current Assets 8,73,84,788 12,42,68,554 10,04,36,601 11,43,94,131

Current Liability 7,25,17,298 8,86,62,728 7,09,71,637 6,25,30,737

Current Ratio 1.20 1.40 1.41 1.82

High current ratio indicates that company will be able to pay the debt on maturity within a
year. Low current ratio indicates that company will not be able to meet its short debts.

From the above graph we can see that the current ratio of the company is continuously rising
from 2014 to 2017 this means that company will be able to pay the debt on maturity.

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DEBT EQUITY RATIO:

Debt/Equity Ratio = Total Liabilities / Shareholders' Equity

PARTICULARS 2014 2015 2016 2017

DEBT 7,87,15,411 10,92,24,337 8,08,12,418 8,57,56,813

SHARE 1,56,49,589 2,21,65,213 2,80,58,400 3,43,80,010

HOLDER’S
FUND

DEBT EQUITY 5.02 4.9 2.88 2.49

RATIO

Interpretation: Higher the ratio less secured the creditors, lower the ratio creditors enjoy
higher degree of safety.

From the above graph we can see that debt equity ratio of the company is continuously
decreasing meaning company is doing good.

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TOTAL ASSET TO DEBT RATIO:

Particulars 2014 2015 2016 2017

Total Assets 9,43,65,000 13,13,89,552 10,88,70,818 12,01,36,825

Debt 7,87,15,411 10,92,24,337 8,08,12,418 8,57,56,813

Total Assets to 1.19 1.20 1.34 1.40

debt ratio

Interpretation: It indicates the percentage of the total asset created by the company through
short term and long term debt. Higher ratio less safe is the creditors and vice versa.
From the above graph we can see that total asset to debt ratio is rising every year this
means that the creditors are less secured.

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PROPRIETARY RATIO:

Proprietary ratio = Proprietor's funds / Total assets

Particulars 2014 2015 2016 2017

Share holders 9,43,65,000 13,13,89,552 10,88,70,818 12,01,36,825

fund

Total Asset 1,56,49,589 2,21,65,213 2,80,58,400 3,43,80,010

Proprietary ratio 6.02 5.92 3.88 3.49

Interpretation: High Ratio means company is less dependent on outside funds and company is
quite solvent. Low ratio means company is more dependent on outside funds and solvency
my be in danger.

Form the above chart we can see that in 2014 company maintained a good ratio and it is
decreasing continuously.

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TOTAL ASSET TURNOVER RATIO:

Total Asset Turnover Ratio =Net Sales / Average Total Assets

Particulars 2014 2015 2016 2017

Net sales 30,20,25,820 43,02,12,932 38,17,83,004 43,42,60,332

Total assets 9,43,65,000 13,13,89,552 10,88,70,818 12,01,36,825

Total asset 3.20 times 3.27 times 3.50 times 3.61 times
turnover ratio

Interpretation: it indicates how efficiently the assets are employed overall. It indicates
relationships between the amount invested in the assets and the results accrues in terms of
sale.

Higher turnover ratio means company is using its assets more efficiently, lower ratio means
that the company isn’t using its assets efficiently and most likely have management problems.

In this company’s ratio is continuously rising means company is using its assets well.

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NET PROFIT RATIO:

Net Profit Ratio = Net Profit / Net Sales × 100

Particulars 2014 2015 2016 2017

Net profit 40,07,511 65,15,624 58,93,187 63,21,610

Net sales 30,20,25,820 43,02,12,932 38,17,83,004 43,42,60,332

Net profit ratio 1.32% 1.51% 1.54% 1.45%

Interpretation: Higher the ratio indicates higher efficiency of the business and better
utilization of total resources.

From the above graph it seems that the company’s ratio is increasing from 2014 but in 2017 it
started decreasing.

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FIXED ASSET TURNOVER RATIO:

Fixed Assets Turnover Ratio = Net Sales / Average Fixed Assets

Particulars 2014 2015 2016 2017

Net sales 25,68,102 28,41,549 24,16,644 19,94,464

Fixed assets 30,20,25,820 43,02,12,932 38,17,83,004 43,42,60,332

Fixed asset 117.60 times 151.40 times 157.98 times 217.73 times
turnover ratio

Interpretation: it indicates efficiency in the utilization of fixed asset like plant and machinery
by management.

The higher the ratio, the better, a high ratio indicates that the business has less money tied up
in fixed assets. A declining ratio may indicate that the business is over invested in plant,
equipment, or other fixed assets.

From the above we can see that fixed asset turnover ratio is continuously rising means
company is doing good.

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GROSS PROFIT RATIO:

Gross Profit Ratio = Gross Profit / Net Sales × 100

Particulars 2014 2015 2016 2017

Gross profit 59,63,811 95,12,946 95,89,699 88,24,187

Sales 30,20,25,820 43,02,12,932 38,17,83,004 43,42,60,332

Gross profit 1.97 2.21 2.51 2.03

ratio

Interpretation: Decrease in ratio indicates reduction in selling price or increase in the cost of
distribution or decline in the business activity. Increase in the ratio indicates increase in the
selling price or reduction in the cost of distribution.

From the above table we can see that gross profit ratio is continuously increasing from 2014
to 2016 but in 2017 there is a slight decrease.

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STOCK TO WORKING CAPITAL RATIO:

Inventory Working Capital Ratio =Stock / Working Capital × 100

Particulars 2014 2015 2016 2017

Stock 6694651 29771898 15348288 34370032

Working capital 1,48,67,489 3,56,05,826 2,94,64,963 5,18,63,394

ratio 45.02% 83.61% 52.08% 66.27%

Interpretation: stock to working capital ratio defined as a method to show what portion of a
company’s stock is financed from its available cash, is essential to business which hold stock
and survive on cash supplies.

The lower the ratio the higher the liquidity of the company.

From the above we can see that in 2015 the ratio increased then in 2016 it decreased and
increased in 2017.

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WORKING CAPITAL TURNOVER RATIO

Working Capital Turnover Ratio = Revenue / Average Working Capital

Particulars 2014 2015 2016 2017

Sales 30,20,25,820 43,02,12,932 38,17,83,004 43,42,60,332
Working capital 1,48,67,489 3,56,05,826 2,94,64,963 5,18,63,394
ratio 20.31 times 12.08 times 12.95 times 8.37 times

Interpretation: This ratio indicates company’s effectiveness in using its working capital.

High working capital turnover ratio states that the company is effective in using the firms
short term assets and liabilities to support sales and vice versa.

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CONCLUSION

From the project, we come to a conclusion that the company has earned profits but its
fluctuating.

Current ratio is continuously rising debt equity ratio is continuously decreasing and total asset
to debt ratio is continuously rising.

The company is doing good and growing every year. It showed rapid growth from 2014 to
2015 and maintains it till 2017.

Hence, the hypothesis that Liquidity of long term and short term is high and
Company has efficiently employed its fixed assets is accepted.

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CITY PREMIER COLLEGE

FINDINGS AND SUGGESTIONS

After analysing and interpretation of the financial statement it would be suggested that the
company should focus on its future development and should keep in mind that there is scope
of development.

The debt ratio in 2014 was 5.02 is rising every year, in 2017 it reached to 2.49 this means that
the creditors are less secured and company should try to maintain its ratio.

The company’s net profit ratio 1.32% is increasing from 2014 but in 2017 it started
decreasing.

Gross profit ratio is continuously increasing from 2014 to 2016 but in 2017 there is a slight
decrease. Hence company should try to improve its profitability position…

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CITY PREMIER COLLEGE

REFERENCES:-

BOOKS:- Paul,S.K. 4th edition ; Stephen H. Penman 2000 ; TATA McGraw Hill.

I. M. Pandey vikas publication house,PVT.LTD. ; .M.Y Khan ;

WEBSITES:-

 http://en.m.wikipedia.org>financialstatement

 http://money.rediff.com>ratio

 http://craytheon.com>financials

 www.ril.com

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CITY PREMIER COLLEGE

BALANCE SHEET

Balance Sheet of ICICI Bank ------------------- in Rs. Cr. -------------------

Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 1,165.11 1,163.17 1,159.66 1,155.04 1,153.64

Equity Share Capital 1,165.11 1,163.17 1,159.66 1,155.04 1,153.64

Share Application Money 6.26 6.70 7.44 6.57 4.48

Reserves 95,737.57 85,748.24 79,262.26 72,051.71 65,547.84

Net Worth 96,908.94 86,918.11 80,429.36 73,213.32 66,705.96

490,039.0
Deposits 421,425.71 361,562.73 331,913.66 292,613.63
6

147,556.1
Borrowings 174,807.38 172,417.35 154,759.05 145,341.49
5

637,595.2
Total Debt 596,233.09 533,980.08 486,672.71 437,955.12
1

Other Liabilities & Provisions 34,245.16 34,726.44 31,719.86 34,755.55 32,133.60

768,749.3
Total Liabilities 717,877.64 646,129.30 594,641.58 536,794.68
1

Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

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Assets

Cash & Balances with RBI 31,702.41 27,106.09 25,652.91 21,821.83 19,052.73

Balance with Banks, Money at

44,010.66 32,762.65 16,651.71 19,707.77 22,364.79
Call

464,232.0
Advances 435,263.94 387,522.07 338,702.65 290,249.44
8

161,506.5
Investments 160,411.80 186,580.03 177,021.82 171,393.60
5

Gross Block 7,805.21 7,576.92 4,725.52 4,678.14 4,647.06

Revaluation Reserves 3,042.14 2,817.47 0.00 0.00 0.00

Net Block 4,763.07 4,759.45 4,725.52 4,678.14 4,647.06

Other Assets 62,534.55 57,573.70 24,997.05 32,709.39 29,087.07

768,749.3
Total Assets 717,877.63 646,129.29 594,641.60 536,794.69
2

1,053,616.
Contingent Liabilities 922,453.51 868,190.58 794,965.35 802,383.84
90

Book Value (Rs) 166.37 149.47 138.72 634.60 578.65

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Profit & Loss account of ICICI Bank ------------------- in Rs. Cr. -------------------

Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

Interest / Discount on Advances / Bills 39,603.39 38,943.15 35,631.08 31,427.93 27,341.11

Income from Investments 11,377.07 10,625.35 11,944.57 11,557.06 11,009.27

Interest on Balance with RBI and Other

495.46 158.24 195.10 199.98 542.98
Inter-Bank funds

Others 2,680.35 3,012.69 1,320.39 993.19 1,182.24

Total Interest Earned 54,156.28 52,739.43 49,091.14 44,178.15 40,075.60

Other Income 19,504.48 15,323.05 12,176.13 10,427.87 8,345.70

Total Income 73,660.76 68,062.49 61,267.27 54,606.02 48,421.30

EXPENDITURE

Interest Expended 32,418.96 31,515.39 30,051.53 27,702.59 26,209.18

Payments to and Provisions for Employees 5,733.71 3,012.69 4,749.88 4,220.11 3,893.29

Depreciation 757.65 679.29 623.89 544.27 457.34

Depreciation on Leased Assets 0.00 19.22 35.06 31.70 32.82

Operating Expenses (excludes Employee

8,263.70 8,972.36 6,087.01 5,512.79 4,629.44
Cost & Depreciation)

Total Operating Expenses 14,755.06 12,683.56 11,495.83 10,308.86 9,012.88

Provision Towards Income Tax 2,180.12 5,788.61 4,859.14 3,839.50 2,998.20

Provision Towards Deferred Tax 702.60 -3,319.18 -219.57 313.19 66.02

Provision Towards Other Taxes 0.00 0.00 5.00 5.00 7.00

Other Provisions and Contingencies 13,802.94 11,667.82 3,899.99 2,626.41 1,802.54

Total Provisions and Contingencies 16,685.66 14,137.25 8,544.56 6,784.10 4,873.76

Total Expenditure 63,859.67 58,336.20 50,091.92 44,795.55 40,095.83

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Net Profit / Loss for The Year 9,801.09 9,726.29 11,175.35 9,810.48 8,325.47

Net Profit / Loss After EI & Prior Year

9,801.09 9,726.29 11,175.35 9,810.48 8,325.47
Items

Profit / Loss Brought Forward 17,132.19 17,261.42 13,318.59 9,902.29 7,054.23

Total Profit / Loss available for

26,933.28 26,987.70 24,493.94 19,712.76 15,379.71
Appropriations

APPROPRIATIONS

Transfer To / From Statutory Reserve 2,450.30 2,431.60 2,793.90 2,453.00 2,082.00

Transfer To / From Reserve Fund 0.98 0.93 0.77 4.61 2.78

Transfer To / From Special Reserve 450.00 1,350.00 1,100.00 900.00 760.00

Transfer To / From Capital Reserve 5,293.30 2,382.24 291.93 76.00 33.00

Transfer To / From Investment Reserve 0.00 0.00 -127.00 127.00 0.00

Transfer To / From Revenue And Other

0.00 500.00 0.00 0.00 0.00
Reserves

Dividend and Dividend Tax for The

-6.24 3.85 2.98 -53.97 0.25
Previous Year

Equity Share Dividend 0.00 2,907.52 2,898.81 2,656.28 2,307.23

Tax On Dividend 0.00 279.37 271.15 231.25 292.16

Balance Carried Over To Balance Sheet 18,744.94 17,132.19 17,261.42 13,318.59 9,902.29

Total Appropriations 26,933.28 26,987.70 24,493.94 19,712.76 15,379.71

OTHER INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 16.84 16.75 19.32 84.99 72.20

Diluted EPS (Rs.) 16.77 16.65 19.13 84.65 71.93

DIVIDEND PERCENTAGE

Equity Dividend Rate (%) 125.00 250.00 250.00 230.00 200.00

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