A SURVEY REPORT ON :

“ANALYSIS OF FINANCIAL PERFORMANCE OF HDFC BANK”

ACADEMIC YEAR 2022-2023

NAME OF SUPERVISOR: SUBMITTED BY

MR. RITESH CHANDRA SONI SHALINI YADAV

DEPARTMENT OF COMMERCE
DR. GHANSHYAM SINGHP. G. COLLEG
SOYEPUR, LALPUR, VARANASI

ENROLLMENT NO: ROLL NO:

KA2K23/123685043 12323685043
CERTIFICATE

This is to certify that the project entitled, “ANALYSIS OF FINANCIAL PERFORMANCE

OF HDFC BANK” by SHALINI YADAV a bona-fide record of work done under my guidance
and supervision in partial fulfillment of the requirement for the award of the degree of Master
of Commerce.

NAME OF THE SUPERVISOR:

MT. RITESH CHANDRA SONI

DECLARATION

I, SHALINI YADAV hereby declare that the bona-fide record of “ ANALYSIS OF

FINANCIAL PERFORMANCE OF HDFC BANK” done in partial fulfillment of the M.com
degree program of MGKVP University under the guidance of MR. RITESH CHANDRA SONI
also declare that the project has not formed the basis of reward of any degree or any other
similar title to any other university.

Place: Varanasi
ACKNOWLEDGEMENT

First, I thank God Almighty who showers his blessings upon me, who guides, shields, and
strengthens me all the time.

I wish to express my gratitude and heart-felt thanks to our College Principal, Fr. Dr. Jolly
Andrews CMI for his encouragement and giving me permission for the study.

I am thankful to Dr. Josheena Jose, our HOD and my Project Guide without whose guidance
and encouragement, I could not have completed my Project work. In spite of her busy schedule,
she spared some of her precious time to me for this work. Her moral support besides the
scholarly guidance in research is the foundation of this Project. Thank you, for all the help and
guidance. I’m also thankful to the other faculties of the department for their valuable advices
and co-operation, rendered for the successful completion of my project.

I put forward my thankfulness to the Librarian and the Non-Teaching Staffs of Christ College
(Autonomous), Irinjalakuda for their coordination. I also make use of this opportunity to thank
my parents, friends and classmates who have been a source of inspiration. Without them it
would have been impossible for me to complete the project successfully
Place: Varanasi Shalini Yadav

Preface

This project report attempt to bring under one cover the entire
hard work and Dedication put in by me and By my supervisor in
the completion of the project report on. FINANCIAL
PERFORMANCE ANALYSIS OF HDFC BANK.

I have expressed my experience in my own simple way I hope who

goes through it will find it interesting and worth Reading all
constructive feedback is cordially invited.

SHALINI YADAV

HEAD OF DEPARTMENT
DR. SANDEEP KRAI
CONTENTS

SL PAGE
TITLE
NO. NO.

1. LIST OF TABLES

2. LIST OF FIGURES

3. CHAPTER-1 INTRODUCTION 1-9

4. CHAPTER-2 RESEARCH METHODOLOGY 10-16
5. CHAPTER-3 THEORETICAL FRAMEWORK 17-24
6. CHAPTER-4 DATA ANALYSIS AND INTERPRETATION 25-41
7. CHAPTER-5 FINDINGS, CONCLUSION AND SUGGESTIONS 42-44
8. BIBLIOGRAPHY 45-46
PAG
TABL
TITLE E
E NO.
NO.
4.1 SHOWING CURRENT RATIO
26
4.2 SHOWING DEBT EQUITY RATIO
27
4.3 SHOWING PROPRIETARY RATIO
28
4.4 SHOWING DEBT SOLVENCY RATIO
29
4.5 SHOWING FIXED ASSET TO NET WORTH RATIO
30
4.6 SHOWING CAPITAL GEARING RATIO
31-32
4.7 SHOWING OPERATING PROFIT RATIO
33
4.8 SHOWING NET PROFIT RATIO
34
4.9 SHOWING RETURN ON INVESTMENT
35
4.10 SHOWING RETURN ON SHAREHOLDER FUND
36
SHOWING COMPARATIVE BALANCE SHEET 2015-2016 TO 2016-
4.11
2017 37
SHOWING COMPARATIVE BALANCE SHEET 2016-2017 TO 2017-
4.12
2018 38
SHOWING COMPARATIVE BALANCE SHEET 2017-2018 TO 2018-
4.13
2019 39
SHOWING COMPARATIVE BALANCE SHEET 2018-2019 TO 2019-
4.14
2020 40
SHOWING COMPARATIVE BALANCE SHEET 2019-2020 TO 2020-
4.15
2021 41

LIST OF FIGURES
TABLE PAGE
NO. TITLE NO.
4.1 SHOWING CURRENT RATIO 27
4.2 SHOWING DEBT EQUITY RATIO 28
4.3 SHOWING PROPRIETARY RATIO 29
4.4 SHOWING SOLVENCY RATIO 30
4.5 SHOWING FIXED ASSET TO NET WORTH RATIO 31
4.6 SHOWING CAPITAL GEARING RATIO 32
4.7 SHOWING OPERATING PROFIT RATIO 33
4.8 SHOWING NET PROFIT RATIO 34
4.9 SHOWING RETURN ON INVESTMENT 35
4.1 SHOWING RETURN ON SHAREHOLDER FUND 36
CHAPTER - 1 INTRODUCTION

1.1 INTRODUCTION

Finance is the master key that unlocks all production and merchandising opportunities. For the
preparation and administration of financial decisions, financial success is critical. It is a method
of determining how well a firm uses its assets from its core business mode to generate money,
as well as a method of determining an organization's overall financial health over time.

Every business, large, medium, or small, requires funding to continue operations and meet its
goals. Finance is so important nowadays that it is rightfully referred to as the "living blood" of
businesses. No business can achieve its goals without enough funding. As a result, the study of
financial performance is critical, as it is the process of calculating the financial results of a
company's operations.

Financial performance analysis is the process of determining a company's financial strengths

and weaknesses by correctly defining the relationship between balance sheet and profit and loss
account components. It also aids in short- and long-term forecasting, as well as the
identification of growth through the use of various financial techniques in financial
performance analysis. In the development of the Indian economy, the bank plays a critical role.
In emerging countries, a sound and efficient banking sector provides the required financial
inputs to the economy. It also assesses an organization's overall financial health over a period
of time. The financial performance of an organisation is concerned with the bank's financial
strengths and weaknesses, as well as the relationship between the balance sheet and the income
statement.

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1.2 INDUSTRY AND COMPANY PROFILE

1.2.1 INDUSTRY PROFILE

A bank is a financial institution that offers its customers banking and other financial services.
A bank is a financial institution that performs basic banking functions such as receiving
deposits and disbursing loans. Money lenders conducted financial transactions prior to the
foundation of banks. Interest rates were extremely expensive at the time, and there was no
guarantee of public savings or loan consistency. To address these issues, the government built
an organised banking system, which is strictly regulated.
The Reserve Bank of India is the country's central bank. The Reserve Bank of India (RBI)
oversees and governs India's financial system. It is in charge of overseeing and implementing
exchange control, banking laws, and the government's monetary policy. The Indian banking
sector operates in accordance with the Reserve Bank of India's (RBI) standards.

The banking industry is the contemporary economy's lifeblood. The bank is crucial in terms o
f deposit mobilisation and credit disbursement to various sectors of the economy. It manages
savings and current accounts, extends credit to borrowers through loans and credit cards, and
acts as a trustee for its customers.

The structure of banking system in India consists of

1.RBI: The Reserve Bank supervises, control and regulates the activity of the banking sector.
The Reserve Bank of India is the currency issuing authority of the country.

The main functions of the RBI are:

• Welfare of the public.

• To maintain the financial stability of the country.

• To execute the financial transactions safely and effectively.

• To develop the financial infrastructure of the country.

• To allocate the funds effectively without any partiality.

2.Scheduled commercial bank: Among the banks, the commercial banks are one of the oldest
in the country. There are two sub types of commercial banks based on ownership and control
over management. They are:

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• Public sector banks: The public sector banks are where the government owns 50% or more
stake. Currently there are 27 commercial public sector banks operating in India.

• Private sector banks: The private sector banks are where the majority of stake is held by the
shareholders of the bank. Currently there are 15 private sector banks operating in India.

• Foreign banks: These banks are registered and have their headquarters in a foreign country
but operate their branches in our country. Foreign banks have brought latest banking practices
in India. Examples of foreign banks in India are: HSBC, Citibank, Standard chartered Bank,
etc.
• Regional Rural Bank: The government of India set up a Regional Rural Banks on October 2,
1975. The bank provide credit to weaker sections of the rural areas, particularly the small and
marginal farmers, agricultural labourers and small entrepreneurs. NABARD has the
responsibility of laying down the policies for the RRB’s to oversee their operations, provide
refinance facilities, to monitor their performance and to attend their problems.

• Co-operative Banks: These banks are government sponsored, government supported and
government subsidized financial agencies in India. It aims at providing credit to primary
agriculture credit societies at lower rate of interest. They are located in rural, urban
semiurbanareas.

1.2.2 Bank Profile

HDFC Bank, a subsidiary of the Housing Development Finance Corporation, was founded in
1994 and is headquartered in Mumbai, Maharashtra, India.Manmohan Singh, the then Union
Finance Minister, launched the company's first corporate headquarters and a full-service branch
at Sandoz House in Worli.The bank's distribution network had 5,500 branches in 2,764 cities
as of 30 June 2019. In fiscal year 2017, it installed 430,000 point - of - sale terminals and issued
23,570,000 debit cards and 12 million credit cards. As of March 21, 2020, it had 1,16,971
permanent employees.

• VISION
To be the premiere financial partner in ensuring sustainable housing and living standards.

• MISSION

Committed to provide financial solutions for sustainable living and assist entrepreneurs in value
additional.
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• VALUE

The goal of HDFC Bank is to become a world - class Indian bank. It aims to accomplish two
things: First and foremost, to be the preferred banking service provider for the target retail and
wholesale customer categories. The second goal is to generate profitable growth that is in line
with the bank's risk appetites. The bank is dedicated to upholding the highest ethical standards,
professional integrity, corporate governance, and regulatory compliance possible.
The corporate concept of HDFC Bank is founded on five basic values:

• Customer focus
• Product leadership
• People
• Sustainability
• Operational excellence

Products and Services

HDFC Bank provides a number of products and services such as wholesale banking, retail
banking, treasury, auto loans, two-wheeler loans, personal loans, loans against property,
consumer durable loan, lifestyle loan and credit cards
Whole sale banking
Wholesale banking is the provision of services by banks to larger customers or organizations
such as mortgage brokers, large corporate clients, mid-sized companies, real estate developers
and investors, international trade finance businesses, institutional customers (such as pension
funds and government entities/agencies), and services offered to other banks or other financial
institutions. Wholesale finance refers to financial services conducted between financial services
companies and institutions such as banks, insurers, fund managers, and stockbrokers.

Retail Banking
Retail banking, also known as consumer banking or personal banking, is the provision of
services by a bank to the general public, rather than to companies, corporations or other banks,
which are often described as wholesale banking. Banking services which are regarded as retail
include provision of savings and transactional accounts, mortgages, personal loans, debit cards,
and credit cards. Retail banking is also distinguished from investment banking or commercial
banking. It may also refer to a division or department of a bank which deals with individual
customers.

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Credit Cards
Credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a
merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the
card issuer to pay them for the amounts plus the other agreed charges). The card issuer (usually
a bank or credit union) creates a revolving account and grants a line of credit to the cardholder,
from which the cardholder can borrow money for payment to a merchant or as a cash advance.
There are two credit card groups: consumer credit cards and business credit cards. Most cards
are plastic, but some are metal cards (stainless steel, gold, palladium, titanium), and a few
gemstone-encrusted metal cards.

Subsidiaries
1.HDFC Securities:

HDFC Securities Limited is a financial services Limited is a financial services intermediary

and a subsidiary of HDFC Bank, a private sector bank in India. HDFC Securities was founded
in the year 2000 and is headquartered in Mumbai with its branches across major cities and
towns in India.

Products and services:

• Equities: Investment in stocks of listed companies.
• Mutual funds: Investment in mutual funds including equity, hybrid, tax saving or debt
schemes from asset management companies.
• SIPs: Systematic investment plan that allows automated investments.
• IPOs: Investment in initial public offerings (IPO).
• Derivatives: Hedge or speculate on the price movement of stocks or index through its
derivative products.
• Bonds, NCDs and Corporate FDs: Investment in fixed income instruments such as bonds,
NCDs and Corporate FDs

1.HDFC ERGO General Insurance company:

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HDFC ERGO is a 51:49 joint venture firm between HDFC International AG, one of the
insurance entities of the Munich Re Group in Germany operating in the insurance field under
the BFSI sectors. The company offers products in the retail, corporate and rural sectors. The
retail sector products are health, motor, travel, home, personal accident and cybersecurity
policy. Corporate products include liability, marine and poverty insurance. Rural sector caters
the farmers with crop insurance and cattle insurance.

2.HDFC Financial Services Limited:

HDFC Financial Services, a subsidiary company of HDFC Bank, is one of the biggest
NonBanking Financial Company (NBFC) in our country who provides a variety of loans and
finance to the people. It is known for providing various easy financial services and loans to
their customers such as:
• Personal loan
• Doctor loan
• New to Credit loan
• Gold loan
• Car loan
• Loan against property
• Loan against insurance policies
• Two-wheeler loans and many more

3.Next Gen Publishing:

Next Gen Publishing Ltd was incorporated in October 2004 and commercial operations from
January 2005 with the promise of offering the finest in the field of publishing. It is a publishing
company created by its parent companies Forbes Group, a subsidiary of Shapoorji Pallonji
Group and HDFC Bank. Its services include the following:
• Print Magazines
• Awards properties
• Digital Publishing

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1.2 Statement of Problem

The statement of problem is based on finance and aims to analyse the financial performance
of the HDFC bank for the past 5 years. Financial performance analysis enables the outsiders
and investors to evaluate the past and current performance and financial position and to predict
future performance. The study is conducted to know whether the financial performance in the
organisation is sound or not with the help of last five years financial statements

1.3 Objective of the study

• To analyse the financial performance of HDFC bank for the five years from 2016-2017 to
2020-2021
• To examine the liquidity and solvency position of the bank
• To examine the profitability position of the bank

1.4 Research Design

1.4.1 Nature of the study

Study is analytical in nature, meaning that it deals primarily with secondary data collected
from the HDFC Bank’s financial statements over the last five years.

1.4.2 Nature of Data

The data used is secondary in nature. Secondary data are those data which have already been
collected and stored.

1.4.3 Sources of data

Secondary data had been collected from annual report published by the Bank. These annual
reports had been downloaded from the official website of the company.

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1.4.4 Period of Study

The study on financial performance of HDFC BANK Ltd is confined to a period of five years
from 2016-2017to 2020-2021. It took 3 weeks to collect the data and come to a conclusion on
the study

1.5 Sample Design

Sample used in this study is HDFC BANK Ltd. Company is randomly chosen.

1.6 Tools for analysis

• Ratio analysis

• Comparative Balance sheet

1.7 Limitations of the Study

• The study takes into account only a limited period of five years.

• It considers only monetary aspects. Non-monetary aspects like human behaviour, their
relationships, etc. are not considered.

• The study possesses the limitations of secondary data i.e, Annual reports of the bank taken
from the official website.

1.8Scheme of Study
Chapter 1 Introduction: This chapter deals with the introduction of the study, statement of the
problem, the scope of the study, objectives of the study, methodology, framework of analysis,
and chapter scheme.

Chapter 2 Review of Literature: This chapter deals with the previous works related to the topic
financial performance analysis.

Chapter 3: Theoretical framework: The third chapter gives sufficient knowledge of financial
performance analysis and theoretical framework of study.

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Chapter 4: Data analysis and interpretation: Data analysis and interpretation Fourth chapter
explain data analysis and interpretation.

Chapter 5: Findings, Suggestions and Conclusion: This chapter explains findings, suggestions,
and conclusions.

CHAPTER – 2 RESEARCH METHODOLOGY

2.1 Review of Literature

Review of literature aims to summarize major studies that have been published on the topic.
It provides theoretical knowledge on the selected topic.

2.2 Empirical Literature

Empirical literature deals with past research studies which includes facts and figures identified
through various experiments.

1. (Dr K Sreenivas, L Saroja 2013)1: Entitled a comparative study of financial performance

of HDFC Bank and ICICI Bank. Study revels there is no significance difference in the
performance of HDFC Bank and ICICI Bank, but they conclude that HDFC Bank financial
performance is slightly shows an increase in compared with ICICI Bank.
2. (Dr B Sudha, P Rajendran 2019)2: Conducted astudy on financial health of Axis Bank &
HDFC Bank for the time period of 2013-2014 to 2017-2018 by using various statistical
tools and ratio analysis for analysing data. The study conclude that overall financial
performance of Axis Bank is less compared the HDFC Bank.
9
3. (A Jaiswal, C Jain 2016)3: Conducted a comparative study of financial performance of
SBI & ICICI Bank in India. This study evaluates the financial performance of Indian Banks
with help of CAMEL MODEL. The result of the study clarifies that the financial
performance of SBI is little bit more than ICICI Bank and also market position is high, but
in other terms ICICI Bank is performing well in terms of NPA.
4. (Nandini Thakur 2020)4: Conducted a study on the financial statement analysis of HDFC
Bank. The study is conducted over past Five years (2015-2019). The study conclude that
financial performance of the bank was strong during the period of the study.
5. (Dr R Malini, Dr A Meharaj Banu 2019)5: This study examined the financial performance
of Indian Tobacco Corporation Ltd. Objective of the study was to analysis the liquidity,
profitability, Solvency possession of the firm within the period from 1st April 2013 to 31st
March 2017. Study reveals that the financial performance is better.
6. (Mabwe Kumbirai, Robert Webb 2010)6: This Study Investigate performance of
commercial bank in South Africa for the period 2005 to 2009.This study reveals that the
performance of the bank is better in the first two years but later its performance fall is
noticed due to the global financial crisis in 2007.The study conclude that the performance
and profitability is falling down.
7. (Dr. Gagandeep Sharma, Dr. Divya Sharma 2017) 7: Analysed the financial performance
of top three Indian Private sector bank. Their aim was to study the ratio of profitability of
top three private sector bank (HDFC, ICICI, AXIS). The study finalizes that HDFC bank is
found to be consistent.
8. (Dr B Sudha, P Rajendran 2019)8: Analysed the financial performance of HDFC Bank
with the period of 2015 to 2019.The data was analysed by using ratio analysis. The study
implies that the performance of bank satisfactory.
9. (Dr. Seema Pandit, Jash Gandhi2021)9: Study compare the performance of SBI and
HDFC Bank by applying CAMEL Model. The results shows that the SBI Bank performed
well on the parameters of Capital Adequacy, Asset Quality and Management whereas
HDFC Bank performed well on the parameters of liquidity.
10. (Pawan, Gorav 2016)10: The study entitled to compare financial health ICICI Bank and
Axis Bank. Objective of the study was to measure and compare financial performance of
Axis an ICICI Bank. The study conclude that the performance of Axis Banak is better
compare to ICICI Bank.
11. (PriyankaJha 2018)11: A study Examined the financial performance of public sector bank
(PNB) and private sector bank (ICICI Bank) in India. Objective of study was to compare
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financial performance of both banks. Study concludes that ICICI bank Performed better
PNB in comparison.
12. (Dr Mukund Sharma 2014)12: Conducted a study to investigate financial performance of
Indian public and private sector bank based on CAMEL FRAME WORK. The study stated
that private banks are better than public sector banks.
13. (Sanjib Kumar Pakira 2016)13: Examines his research growth performance analysis a
comparative study between SBI and HDFC Bank Limited. His objective was to analysis the
growth rate in SBI and HDFC Bank limited as both the banks are giant banks in public
and private sector. In this research work the researcher found that HDFC Bank has
performed much better than the SBI Bank.
14. (Dr Ahmed Arif Almazari 2012)14: This study attempts basically to measure the financial
performance of the Jordanian Arab commercial bank for the period 2000-2009 by using the
DuPont system of financial analysis which is based on analysis of return on equity model.
Arab bank had less financial leverage in the recent years, which means the bank is relying
less on debt to finance its assets.
15. (Befekadu B. Kereta 2007)15: This study examines that the industry’s outreach rises in the
period from 2003 to 2008 but the MFIs reach the very poor. The study finds that the MFIs
are operational sustainable and also financially sustainable.
16. (Aminul Islam 2014)16:This study investigates the financial performance of National Bank
Limited with in the period 2008 to 2013.This study also determine specific areas for bank
to work to attain sustainable growth.
17. (Shewta Yadav, Jonghag Jang 2021)17: The objective of the study is to investigate the
impact on the financial performance of HDFC Bank before and after the merger by CAMEL
Analysis. The period of the study includes five-year prior merger (2003-2008) and five year
of post-merger period (2009-2014). The study states that the performance of HDFC Bank
is increased after the merger.
18. (Dr. Anurag.B. Singh, MS. Priyanka Tandon 2012)18:This study examines the financial
performance of SBI and ICICI Bank with in the period 2007-2008 to2011-2012. The study
concludes that the SBI is performing well than ICICI Bank but in terms of deposits and
expenditure ICICI Bank is better than SBI.
19. (Vijay Hemant Sonaje, Dr Shriram S. Nerlekar2017)19: This study analyses the
performance of COMMERCIAL Bank in India during the period 2013 to 2017 using
CAMEL approach. The study reveals that the KOTAK and HDFC perform better than SBI
and PNB.
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20. (Ch. Balaji, Dr. G. Praveen Kumar2016)20: The study analyses the financial performance
of selected public and private sector banks in India. The study covers a p. period of five
years (2011-2012 to 2015-2016). The study conclude that the public sector banks must
redefine their strategies by considering their strength and weakness.

❖ 2.2. OBJECTIVE OF HDFC BANK

❖ The main objective of project is to do fundamental analysis of banking sector of
companies
❖ Secondly to study the present banking system in india.
❖ Analyze the information collected on balance sheet, profit & loss statement, market
price etc
❖ To do Ratio Analysis for the selected companies and make necessary comments on it so
as to provide complete idea and core ideology of the company. So that investors can
easily get idea about the fundamental analysis of banking companies.
❖ To carry out financial and non-financial analysis of banking Sector as a whole for the
selected pperio
❖ To understand in details how to establish pay rates to different level of employee.
❖ To understand the impact of compensation management on performance level.
❖ • A comparative study of the compensation management strategies followed in different
banks.
❖ 2.3 LIMITATIONS

❖ Everything has some PROS and CONS and so certain limitations of this study that we
could observe are as follows:
❖ The area of our project work is banking sector so, the data or result may be approximate
as the conclusion is based on the survey method i.e. primary & secondary source (filling
of questionnaire from the employees) may be the imaginary data.
❖ The organizations which have been studied and surveyed are not providing us with full
information
❖ Which has hampered the result and conclusion.
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❖ Exact data was not been provided.
❖ 2.4 SCOPE
❖ The scope of this project is to study of the compensation management strategies in
HDFC bank & to evaluate the behaviour & performance of employee on their work.

CHAPTER – 3 THEORETICAL
FRAMEWORK

3.1 INTRODUCTION
This chapter shows relevant concepts and theories related with the study and frames a
relationship between them.
Meaning of Finance

Business concern needs finance to meet their requirements in the economic world. Any kind of
business activity depends on finance. Hence, it is called as lifeblood of business organization.
Whether the business concerns are small or big, they need finance to fulfil their business
activities. In the modern world, all the activities are concerned with economic activities and
very particular to earning profit through any venture or activities. The entire business activities
are directly related with making profit. A business concern needs finance to meet all the
requirements. Hence finance may be called as capital, investment, fund etc, buteach item is
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having different meanings and unique characters. Increasing the profit is the main aim of any
kind of economic activity.

Financial Analysis

Financial analysis is the process of Identifying the strength and weakness of the company with
the help of accounting information provided by the financial statements of profit and loss
account and balance sheet. It is a process of evaluation of relationship between components
part of financial statement to obtain better understanding of firm position and performance.

Tools of financial analysis

A Number of techniques or devices are used to undertake financial analysis. The fundamental
objective of analytical method is to simply the data into understandable terms. The following
are the important tools of financial analysis.

. Comparative statement

. Common Size statement

. Trend Analysis

. Ratio Analysis

. Fund Flow Analysis

. Cash Flow Analysis

Comparative Statement
Comparative statement is those statement which is used to study financial position for two or
more periods. It is also Called as horizontal financial analysis.

Types of Comparative Statement

1 Comparative Balance sheet

2 Comparative Profit and Loss Account

Comparative Balance Sheet

It shows the account of current assets and current liability on different dates and also shows the
increase and decrease in these accounts.

Comparative Profit and Loss Account

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It shows the operational results and progress of business in a given period of time

Common Size Statement

Common size statement is another technique of financial analysis. Common size financial
statement is those statement in which terms are converted into percentages taking some
common base. These statements are also called 100 percent statement or common percentage.
Common size statement includes common size balance sheet and common size profit and loss
account.

Ratio Analysis
The term accounting ratios is used to describe significant relationship between figures shown
on balance sheet, in a profit and loss account, in a budgetary control system or in any, other
part of the accounting organization. Ratio simply refers to one number expressed in terms of
another number. Ratio analysis is a technique of analysis and interpretation of financial
statement. It is the process of establishing and interpreting the various ratios for helping in
making certain decision. However, ratio analysis is not an end to itself. It is only a means of
better understanding of financial strength, weakness of a firm. Calculation of mere accounting
ratios does not serve any purpose unless several appropriate ratios are analysed and interpreted.
Objectives of Ratio Analysis

•To study the short-term solvency of a firm.

•To study the long-term solvency of a firm.

•To determine the profitability of a firm.

•To measure the performance of a firm.

•To facilitate the process of financial forecasting.

•To communicate the strength and weakness of a firm.

•To enable managerial decision making.

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Liquidity Ratio
The term liquidity refers to the firm’s ability to meet its current liabilities. Liquidity ratios are
used to measure the liquidity position or short-term financial position of a firm. These ratios
are used to assess the short-term debt paying ability of a firm, important liquidity ratios are
current ratio and quick ratio.

Current Ratio
Current ratio may be defined as the relationship between current assets and current liabilities.
This ratio is also known as working capital ratio. It is a measure of general liquidity and is the
most widely used to make the analysis of short term financial or liquidity of a firm. It is
calculated by dividing the total current assets by total current liabilities and the ideal current
ratio is 2:1. It is calculated as follows

Current Ratio = Current asset

Current liabilities
The higher the current ratio, the greater the firm’s ability to meet the short-term debts. A very
high current ratio indicates too much of money is blocked in currentassets etc. In short, a very
high current ratio indicates that the firm will find it difficult to pay off its debts.

Quick Ratio
The term liquidity ratio refers to the ability of a firm to pay off its short-term obligations as and
when they become due. Cash in hand and cash at bank are the most liquid asset. The other
assets included in the liquid assets are bills receivables, sundry debtors, marketable and short
term or temporary investments. The Ideal liquid or quick ratio is 1:1. The liquid ratio can be
calculated as follows

Quick ratio = Liquid assets

Current liabilities

Quick Assets = Current Assets - (stock + prepaid expenses)

Liquid ratio is considered to be superior to current ratio in testing the liquidity position of a
firm. If the current ratio is 2:1 and quick ratio is 1:1; the liquidity position may be considered

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satisfactory. If the current ratio is higher than 2:1, but quick ratio is less than 1:1, it indicates
excessive inventory.

Absolute Liquid Ratio or Cash Ratio

This ratio establishes the relationship between super quick assets and quick liabilities. And it is
taken as a ratio of absolute liquid assets or absolute quick assets include cash in hand, cash at
bank and marketable securities or short-term investments. It is also known as cash ratio. And
ideal absolute liquid ratio is 0.5: 19

Absolute Liquid Ratio = Absolute Liquid Assets

Current Liabilities

Solvency Ratio
Solvency ratio is one of the various ratios used to measure the ability of a company to meet its
long-term debts. Solvency ratio is also called leverage ratio. It focuses on the long-term
sustainability of a company instead of the current liability payments.

Proprietary Ratio
Proprietary ratio establishes the relationship between shareholders or proprietors fund and total
assets. This ratio shows how much funds have been contributed by shareholders in the total
assets of the firm. Proprietary ratio is also known as equity ratio or net worth ratio. It is
computed as follows:

Proprietary Ratio = Shareholder’s fund

Total assets
This ratio shows financial health of the firm. A high ratio indicates safety to the creditors and
low ratio show greater risk to the creditors. The ideal ratio is 0.5:1or above.

Profitability Ratios
The ultimate aim of any business enterprise is to earn maximum profit. To the management,
profit is the measure of efficiency and control. Profitability ratio measures the ability of the

17
firm to earn an adequate return on sales, total assets and invested capital. There are two types
of profitability ratios. First, profitability based on sales and it includes gross profit ratio,
operating ratio, operating profit ratio and net profit ratio. Second, profitability ratio based on
investment and it includes return on investment, return on shareholders fund ratio, return on
equity ratio and return on total assets. Profit is important for everyone associated with the
company including creditors and owners.

Return on shareholder’s fund

This is the ratio of net profit to shareholder’s fund or net worth. It measures the profitability
from shareholders point of view. This ratio is called the ‘mother of all the ratio’. This is perhaps
the most important ratio because it measures the return that is earned on the owner’s capital. It
is calculated as follows:

Return on shareholders’ fund = Net profit after interest and tax

Shareholder’s fund

Return in Investment (ROI)

When a firm invest money in a business, it naturally expects adequate return on its investment.
Therefore, the firm wants to know how much profit is earning on its investment. For this, ROI
is computed. It establishes the relationship between return and investment. It is also called
accounting rate of return.

ROI = Profit before interest and tax

Capital employed
Capital employed may be gross capital employed or net capital employed. Gross capital
employed means total assets minus current liabilities. Alternatively, it refers to total of share
capital, revenue reserves, debenture and other long-term loans. Profit before interest and tax is
calculated as gross profit minus operating expenses. The ideal return on investment ratio is
15%. The higher the return on investment, greater is the overall profitability and more is the
efficient use of capital employed.

18
Net Profit Ratio
Net profit ratio is the ratio of net profits to revenues for accompany or business segment. It
measures the overall profitability.Net profit and net sales are the two components of net profit
ratio. Net profit is the final profit after adjusting all expenses and all incomes. The main
objectives of the ratio is to measure the overall profitability. This ratio indicates how much of
the sales are left after meeting expenses. The ideal net profit ratio is 5% - 10%.

Net profit ratio = Net Profit×100

Net sales
Net profits can be taken as profit before tax and profits after tax. Higher the ratio, better is the
profitability.

Fund Flow Analysis

A fund flow statement means a statement which shows increase or decrease in working capital
during a period. The fund flow statement contains the source of funds, use of funds and changes
in working capital. Changes in working capital are obtained by preparing a statement called
‘Statement of changes in working capital’. It shows the changes in current asset and current
liability. Fund flow statement is also known as ‘ where got and where gone statement’ or
‘statement of changes in financial position’.

Cash Flow Analysis

Cash flow statement is a statement showing the changes in cash position from one period to
another. It explains the reasons for increase or decrease in the amount of cash between two
balance sheet dates. In other words, it explains the reasons for inflow or outflow of cash. It is
the statement of sources and use of cash.

19
CHAPTER 4 DATA ANALYSIS AND
INTERPRETATION

4.1 Ratio analysis

One of the most powerful tools in financial analysis is the ratio analysis. It is the procedure for
calculating and understanding different ratios. The ratio analysis is used to investigate a
company's liquidity, profitability, and solvency. The financial statements may be analysed more
clearly with the use of ratios, and decisions can be taken based on this analysis.
4.1.1 Liquidity Ratio

(a)Current Ratio
Current Ratio = Current Asset (Ideal Ratio = 2:1)
Current Liability

Table 4.1 Showing Current Ratio

Year Current Asset Current Liability Current Ratio
2016 - 2017 48952.1 56709.32 0.86
2017 - 2018 122915.08 45763.72 2.69

2018 - 2019 81347.64 55108.29 1.48

2019 - 2020 86618.72 67394.4 1.29
2020 - 2021 119470.4 72602.15 1.65

20
Mean 91860.79 59515.58 1.59
Standard Deviation 30437.73 10603.62 0.68
CV 33.13 17.82 42.6

CAGR -0.51 -0.74 -0.62

Source: Compiled from annual report of HDFC Bank
Table 4.1shows current assets and current liabilities over a period of 5 years from 2016-2017
to 2020- 2021. The average current ratio is 1.59 and its Standard Deviation is 0.68. Coefficient
of Variation is 42.6 and CAGR follows a negative trend. Current ratio is high during period
2017 – 2018. It indicates the firm is liquid and low during the period 2016 – 2017 and standard
in another period.

Figure 4.1 Showing Current Ratio

Current Ratio

2
2.69
1 1.48 1.29 1.65
0.86
0
2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020 2020 - 2021

Current Ratio

4.1.2 Leverage / Solvency Ratio

Solvency or Leverage ratios are used to analyse the long-term financial position of the firm.
In other words, these ratios are used to analyse the capital structure of a firm.

(a) Debt Equity Ratio

Debt to equity ratio is the most commonly used ratio to test the solvency of a firm. This ratio
indicates the relative proportion of debt and equity in financing the assets of the firm.

21
Debt Equity Ratio =Total Debt (Ideal ratio =1:1)
Equity Share holder Fund

Table 4.2 Showing Debt Equity Ratio

Year Total Debt Equity Total Debt Equity Ratio
2016-2017 717668.58 89462.35 8.02

2017-2018 911875.61 106295.00 8.58

2018-2019 1040226.05 149206.35 6.97

2019-2020 1292130.83 170986.03 7.56

2020-2021 1470547.54 203720.83 7.22

Mean 1086489.72 143934.11 7.67

Standard Deviation 299352.69 46684.93 0.64
CV 27.55 32.43 8.38
CAGR -0.59 -0.54 -0.82
Source: Compiled from annual report of HDFC Bank

The above table shows the Debt Equity Ratio. The average Debt Equity Ratio is 7.67 and its
standard deviation is 0.64, the coefficient of variation is 8.38 and CAGR follows a negative
trend.The ideal debt equity ratio is 1:1. During the five years of study the debt equity ratio is
very high. These indicates that the higher proportion of debt content in the capital structure.

Figure 4.2 Showing Debt Equity Ratio

TOTAL DEBT EQUITY RATIO

8.02 8.57
10 6.97 7.55 7.21

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

TOTAL DEBT EQUITY RATIO

22
(b) Proprietary Ratio
Proprietary ratio establishes the relationship between shareholders or proprietors fund and total
assets. This ratio shows how much funds have been contributed by shareholders in the total
assets of the firm. Proprietary ratio is also known as equity ratio or net worth ratio. Proprietary
Ratio =Shareholder Fund (Ideal ratio= .5:1) Total Asset

Table 4.3 Showing Proprietary Ratio

Year Shareholder’s fund Total Asset Proprietary Ratio

2016 - 2017 89462.35 863840.2 0.1

2017 - 2018 106295 1063934.31 0.1
2018 - 2019 149206.35 1244540.69 0.12

2019 - 2020 170986.03 1530511.27 0.11

2020 - 2021 203720.83 174670.53 1.17
Mean 143934.11 975499.4 0.32

Standard Deviation 46684.93 510401.01 0.47

CV 32.43 52.32 1.47

23
Source: Compiled from annual report of HDFC Bank
CAGR -0.54 -0.96 1.25
The above table shows the proprietary ratio. The average proprietary ratio is .32 and its standard
deviation is .47. The coefficient of variation is 1.47 an CAGR follows a positive trend. The
ratio is high during the period 2020-21. It indicates that the margin for meeting no operating
expenses, creating reserves and paying dividend is less.

Figure 4.3 Showing Proprietary Ratio

Proprietary Ratio

1.5

1
1.17
0.5

0.1 0.1 0.12 0.11

0
2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020 2020 - 2021

Proprietary Ratio

(c) Solvency Ratio

Solvency ratio is one of the various ratios used to measure the ability of a company to meet its
long-term debts. Solvency ratio is also called leverage ratio. It focuses on the long-term
sustainability of a company instead of the current liability payments.

Solvency Ratio = Total Asset

Total Debt

Table 4.4 Showing Debt Solvency Ratio

Year Total Asset Total Debt Solvency Ratio
2016-2017 863840.20 717668.53 1.20
2017-2018 1063934.31 911875.61 1.17
2018-2019 1244540.69 1040226.05 1.20
2019-2020 1530511.27 1292130.83 1.18
2020-2021 1746870.53 1470547.54 1.19

24
Mean 1289939.40 1086489.71 1.19
Standard Deviation 354034.16 299352.70 0.01
CV 20.27 20.36 1.18
CAGR -0.60 -0.59 -0.80
Source: Compiled from annual report of HDFC Bank
Generally, higher the solvency ratio the stronger is its financial position and vice versa. From
the above data it is clear that, the assets are more than the outside liabilities. In all year’s
solvency ratio is above 1:1, it indicates that there is no difficult in paying off its outside
liabilities.
Figure 4.4 Showing Solvency Ratio

Fixed Asset To Net

Year Fixed Asset Net worth
worth Ratio
2016-2017 3626.74 89462.35 0.04

2017-2018 3607.20 106295.00 0.03

25
2018-2019 4030.00 149206.35 0.03

1.2

1.18
1.2 1.2
1.19
1.16 1.18
1.17
1.14
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

SOLVENCY RATIO
SOLVENCY
RATIO
(c) Fixed Asset to Net Worth Ratio
Fixed assets to net worth ratio show the relationship between fixed assets and shareholder’s
fund. Usually, fixed assets are purchased by using owner's fund such as equity capital, reserves
and surplus, retained earnings etc. If the ratio is less than 100%, it implies that owner's fund
are more than total fixed assets and part of the working capital is financed by shareholders fund
and vice versa. Ideal ratio is considered as 60% to 65%.

Fixed Asset to net worth ratio = Fixed Asset(Ideal ratio = .67:1) Net worth

Table 4.5 Showing Fixed asset to Net worth ratio

2019-2020 4431.92 170986.03 0.03

2020-2021 4909.32 203720.83 0.02

Mean 4121.04 143934.11 0.03

Standard Deviation 555.58 46684.93 0.01

CV 13.48 32.43 22.54

CAGR -0.73 -0.54 -0.88

Source: Compiled from annual report of HDFC Bank

The above table shows the Fixed Asset to net worth ratio. The average Fixed Asset to net worth
ratio is 0.03 and its standard deviation is 0.01. the coefficient of variation is 22.54 and CAGR
follows a negative trend. The table shows fixed assets to proprietary ratio of the concern. Ratio

26
less than 1 indicates that all fixed assets are purchased out of proprietor’s fund and a
part of proprietor’s fund is invested in working capital.

Fixed Income Bearing Equity Shareholder Capital Gearing

fund Fund Ratio
Year

2016-2017 717668.53 89462.35 8.02

2017-2018 911875.61 106295.00 8.58

Figure 4.5 Showing Fixed Asset to net worth ratio

2018-2019 1040226.00 149206.35 6.97

FIXED ASSET TO NETWORTH RATIO

0.04
0.03
0.02 0.04
0.03 0.03 0.03
0.01 0.02

0.00
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

FIXED ASSET TO NETWORTH RATIO

27
(d) Capital Gearing Ratio
Capital gearing ratio is the ratio between total equity and total debt; this is a specifically
important metric when an analyst is trying to invest in a company and wants to compare
whether the company is holding a right capital structure or not.

Capital Gearing Ratio = Fixed Income Bearing fund

Equity Shareholder Fund

Table 4.6 Showing Capital Gearing Ratio

28
2019-2020 1292130.80 170986.03 7.56

2020-2021 1470547.50 203720.83 7.22

Mean 1086489.69 143934.11 7.67

Standard
Deviation
299352.69 46684.93 0.64

CV 27.55 32.43 8.38

CAGR -0.59 -0.54 -0.82

Source: Compiled from annual report of HDFC Bank

The above table shows the Capital Gearing Ratio. The average Capital Gearing Ratio is 7.67
and its standard deviation is 0.64. the coefficient of variation is 8.38 and CAGR follows a
negative trend.

Figure 4.6 Showing Capital Gearing Ratio

Capital Gearing Ratio

10

6
8.02 8.58
4 6.97 7.56 7.22

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Capital Gearing Ratio

29
Profitability ratio

Profitability ratio measures the ability of the firm to earn an adequate return on sales, total
assets and invested capital
(a) Operating profit ratio
Operating profit express the relationship between operating cost and sales. It indicates the
overall efficiency in operating in business.

Operating Profit Ratio =Operating Profit × 100

Total Income

Table 4.7 Showing Operating profit ratio

Year Operating Profit Total Income Operating Profit Ratio
2016-2017 61899.12 81602.46 75.85
2017-2018 72771.28 95461.66 76.23
2018-2019 90478.57 116597.94 77.60
2019-2020 107375.94 138073.47 77.77
2020-2021 113340.49 146063.12 77.60
Mean 89173.08 115559.73 77.01
Standard Deviation 21965.88 27365.27 0.90
CV 24.63 23.68 1.16
CAGR -0.63 -0.64 -0.80
Source: Compiled from annual report of HDFC Bank

The above table shows the Operating Profit Ratio. The average Operating Profit Ratio is
77.01 and its standard deviation is 0.90, the coefficient of variation is 1.16 and CAGR
follows a negative trend.
Figure 4.7 Showing Operating profit ratio

30
Operating Profit Ratio

78
77.5
77
76.5
77.6 77.77 77.6
76
75.5 76.23
75.85
75
74.5
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Operating Profit Ratio

(b) Net Profit Ratio

Net profit ratio is the ratio of net profit earned by a business and its net sales;it measures
overall profitability.
Net Profit Ratio =Net Profit × 100
Total Income
Table 4.8 Showing Net Profit Ratio
Year Net Profit Total Income Net Profit Ratio

2016-2017 14549.64 81602.46 17.83

2017-2018 17486.73 95461.66 18.32
2018-2019 21078.17 116597.94 18.08

2019-2020 26257.32 138073.47 19.02

2020-2021 31116.53 146063.12 21.30
Mean 22097.68 115559.73 18.91
Standard Deviation 6669.25 27365.27 1.41
CV 30.18 23.68 7.46
CAGR -0.57 -0.64 -0.76
Source: Compiled from annual report of HDFC Bank
The above table shows the Net Profit Ratio. The average Net Profit Ratio is 18.91 and its
standard deviation is 1.41. the coefficient of variation is 7.46 and CAGR follows a negative
trend. Here the bank has a very high net profit ratio and is above its idle ratio. Hence this
indicates there is high efficiency as well as profitability for the company and they have to
maintain this same satisfactory level as well.
31
Figure 4.8 Showing Net Profit Ratio

Net Profit Ratio

22

20
21.3
18 19.02
17.83 18.32 18.08
16
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Net Profit Ratio

(C) Return On Investment

It establishes the relationship between return and investment. It is also called accounting rate
of return.

ROI = Profit before interest and tax× 100

Capital employed
Table 4.9 Showing Return on Investment
Year Operating Profit Capital Employed Return On Investment

2016-2017 61899.12 807130.88 7.67

2017-2018 72771.28 1018170.60 7.15
2018-2019 90478.57 1189432.50 7.61
2019-2020 107375.94 1463116.90 7.34
2020-2021 113340.49 1674268.40 6.77
Mean 89173.08 1230423.86 7.31
Standard Deviation 21965.88 345345.01 0.37
CV 24.63 28.07 5.01
CAGR -0.63 -0.59 -0.82
Source: Compiled from annual report of HDFC Bank

The above table shows the return on investment. The average return on investment is 7.31and
its standard deviation is 37. the coefficient of variation is 5.01 and CAGR follows a negative
trend.The figure shows that bank is not having sufficient return on capital employed. Its ideal

32
ratio is 15%. Overall banks profitability is low and shows that there is inefficient use of capital
employed.

Figure 4.9 Showing Return on Investment

RETURN ON INVESTMENT

8
7 7.67 7.15 7.61 7.34 6.77
6

RETURN ON INVESTMENT

(d)Return on shareholder fund

This is the ratio of net profit to shareholder’s fund or net worth. It measures the profitability
from shareholders point of view. This ratio is called the ‘mother of all the ratio’. This is
perhaps the most important ratio because it measures the return that is earned on the
owner’s capital. It is calculated as follows:

Return on shareholders fund = Net profit after interest and tax× 100

33
Shareholder’s fund
Table 4.10 Showing Return on shareholder fund
Year Net Profit Shareholder Fund Return On Shareholder Fund
2016-2017 14549.64 89462.35 16.26
2017-2018 17486.73 106295.00 16.45

2018-2019 21078.17 149206.35 14.13

2019-2020 26257.32 170986.03 15.36
2020-2021 31116.53 203720.83 15.27

Mean 22097.68 143934.11 15.49

Standard Deviation 6669.25 46684.93 0.93

CV 30.18 32.43 5.99

CAGR -0.57 -0.54 -0.81
Source: Compiled from annual report of HDFC Bank

The above table shows the return on shareholder fund. The average return on investment is
15.49 and its standard deviation is 0.93. the coefficient of variation is 5.99 and CAGR
follows a negative trend. The ideal ratio of return on shareholders’ fund is 15%. From the
above figure it is clear that banks Return on shareholders’ fund in all the 5 year is more than
the standard ratio, which means there is better utilization of owner’s fund and higher
productivity.

34
Figure 4.10 Showing Return on shareholder fund

Return on Shareholder Fund

16.5
16
15.5
15
14.5 16.26 16.45
14 15.36 15.27
13.5 14.13
13
12.5
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Return On Shareholder Fund

35
COMPARATIVE BALANCE SHEET
Table 4.11 showing comparative balance sheet of financial year 2015 –16 to 2016 -2017
Particulars 2015-16 2016-17 Amount Of Percentage Of
Increase Increase/Decrease

/Decrease

Capital And Liabilities

Capital 505.64 512.51 6.87 1.36

Reserves and Surplus 72172.13 88949.84 16777.71 23.25

Deposits 546424.19 643639.66 97215.47 17.79
Borrowings 53018.47 74028.87 21010.40 39.63

Other Liabilities and Provisions 36725.13 56709.32 19984.19 54.42

Total 708845.57 863840.19 154994.62 21.87
Assets

Cash And Balances with RBI 30058.31 37896.88 7838.57 26.08

Balances with Other Banks 8860.53 11055.22 2194.69 24.77

Investments 163885.77 214463.34 50577.57 30.86

Advances 464593.96 554568.20 89974.24 19.37

Fixed Assets 3343.16 3626.74 283.58 8.48
Other Assets 38103.84 42229.82 4125.98 10.83

Total 708845.57 863840.19 154994.62 21.87

36
In the financial year 2016-17 the fixed assets of the bank Increased by 8.48 % from the previous
year. There was only 1.36 % increase in the capital of the bank. While the balances with other
banks increased to 24.77 % in the year. The bank deposits increased by 17.79 % and the
advances provided increased by 19.37 %.

Table 4.12 showing comparative balance sheet of financial year 2016 -17 to 2017 -2018
Particulars 2016-17 2017-18 Amount Of Percentage Of
Increase Increase/Decrease

/Decrease

Capital And Liabilities

Capital 512.51 519.02 6.51 1.27

Reserves and Surplus 88949.84 105775.98 16826.14 18.92

Deposits 643639.66 788770.64 145130.98 22.55

Borrowings 74028.87 123104.97 49076.1 66.29

Other Liabilities and Provisions 56709.32 45763.72 -10945.6 -19.3

Total 863840.19 1063934.3 200094.13 23.16

Assets

Cash And Balances with RBI 37896.88 104670.47 66773.59 176.2

Balances with Other Banks 11055.22 18244.61 7189.39 65.03

Investments 214463.34 242200.24 27736.9 12.93

Advances 554568.2 658333.09 103764.89 18.71

Fixed Assets 3626.74 3607.2 -19.54 -0.54

Other Assets 42229.82 36878.7 -5351.12 -12.67

Total 863840.19 1063934.3 200094.13 23.16

37
During the financial year 2017 -2018 the fixed asset is deceased by .54 % and also other asset
and other liability and provision decreases, the bank borrowings is increased by 66.29 % and
investment is increased by 12.93 %.

38
Particulars 2017-18 2018-19 Amount Of Percentage Of
Increase Increase/Decrease

/Decrease

Capital And Liabilities

Capital 519.02 544.66 25.64 4.94

Reserves and Surplus 105775.98 148661,69 42885.71 40.54

Deposits 788770.64 923140.93 134370.29 17.04

Borrowings 123104.97 117085.12 -6019.85 -4.89

Other Liabilities and Provisions 45763.72 55108.29 9344.57 20.42

Total 1063934.3 1244540.7 180606.37 16.98

Assets

Cash And Balances with RBI 104670.47 46763.62 -57906.85 -55.32

Balances with Other Banks 18244.61 34584.02 16339.41 89.56

Investments 242200.24 290587.88 48387.64 19.98

Advances 658333.09 819401.22 161068.13 24.47

Fixed Assets 3607.2 4030 422.8 11.72

Other Assets 36878.7 49173.95 12295.25 33.34

Total 1063934.3 1244540.7 180606.37 16.98

Table 4.13 showing comparative balance sheet of financial year 2017 -18 to 2018 -19

39
During the financial year 2018-2019 borrowings decreased by 4.89 % cash and Balance with
RBI decreased by 55.32.While banks deposit increased by 40.54% and advances increased by
24.47%.

Table 4.14 showing comparative balance sheet of financial year 2018 -19 to 2019 -2020
Particulars 2018-19 2019-20 Amount Of Percentage Of
Increase Increase/Decrease

/Decrease

Capital And Liabilities

Capital 544.66 548.33 3.67 0.67

Reserves and Surplus 148661.69 170437.7 21776.01 14.65
Deposits 923140.93 1147502.3 224361.36 24.3
Borrowings 117085.12 144628.54 27543.42 23.52
Other Liabilities and Provisions 55108.29 67394.4 12286.11 22.29
Total 1244540.69 1530511.3 285970.57 22.98
Assets

Cash And Balances with RBI 46763.62 72205.12 25441.5 54.4

Balances with Other Banks 34584.02 14413.6 -20170.42 -58.32
Investments 290587.88 391826.66 101238.78 34.84
Advances 819401.22 993702.88 174301.66 21.27
Fixed Assets 4030 4431.92 401.92 9.97
Other Assets 49173.95 53931.09 4757.14 9.67
Total 1244540.69 1530511.3 285970.57 22.98

During the financial year 2019-2020 Balance with other banks decreased by 58.32and banks
advance, investments and deposit increased.

40
Table 4.15 showing comparative balance sheet of financial year 2019 -20 to 2020 -2021
Particulars 2019-20 2020-21 Amount Of Percentage Of
Increase Increase/Decrease

/Decrease

Capital And Liabilities

Capital 548.33 551.28 2.95 0.54

Reserves and Surplus 170437.7 203169.55 32731.85 19.2
Deposits 1147502.3 1335060.2 187557.93 16.34
Borrowings 144628.54 135487.32 -9141.22 -6.32
Other Liabilities and Provisions 67394.4 72602.15 5207.75 7.73
Total 1530511.3 1746870.5 216359.26 14.14

Assets

Cash And Balances with RBI 72205.12 97340.74 25135.62 34.81

Balances with Other Banks 14413.6 22129.66 7716.06 53.53

Investments 391826.66 443728.29 51901.63 13.25

Advances 993702.88 1132836.6 139133.75 14
Fixed Assets 4431.92 4909.32 477.4 10.77

Other Assets 53931.09 45925.89 -8005.2 -14.84

Total 1530511.3 1746870.5 216359.26 14.14

During the financial year 2020-2021 borrowings is decreased by 6.32% and other assets
decreased by 14.84 and deposit, investments, advances is increased.

41
CHAPTER – 5 FINDINGS, SUGGESTIONS
AND CONCLUSION

5.1 FINDINGS
• During the study period the current ratio of bank is close to the ideal ratio 2:1,during the 3
years from 2017-18 to 2019-20.The ratio was slightly low in the year 2016-17 and beyond
the standard ratio in 2020-21.
• The ideal debt equity ratio is 1:1. During the five years of study the debt equity ratio is very
high. These indicates that the higher proportion of debt content in the capital structure.
• The ideal proprietary ratio is high during the year 2020-21.The bank having low ratio during
the last four years from 2016-17 to 2020-21.A low ratio indicates the firm is more dependent
on creditors for its working capital.
• During the period of study the solvency ratio is satisfactory.
• Fixed asset to net worth ratio is less than one it indicates that all fixed asset are purchased out
of proprietors fund and a part of proprietor fund is invested in working capital.
• The Return on investment shows that the bank is not having the sufficient return on capital
employed. It’s ideal ratio is 15%oveall bank profitability is low.
• During the period of study net profit is very high and is above ita ideal ratio its indicates the
bank have high profitability.
• In the financial year 2016-17 the fixed assets of the bank Increased by 8.48 % from the
previous year. There was only 1.36 % increase in the capital of the bank. While the balances
with other banks increased to 24.77 % in the year. The bank deposits increased by 17.79 %
and the advances provided increased by 19.37 %.

42
• During the financial year 2017 -2018 the fixed asset is deceased by .54 % and also other asset
and other liability and provision decreases, the bank borrowings is increased by 66.29 % and
investment is increased by 12.93 %.
• During the financial year 2018-2019 borrowings decreased by 4.89 % cash and Balance with
RBI decreased by 55.32. While banks deposit increased by 40.54% and advances increased
by 24.47%.
• During the financial year 2019-2020 Balance with other banks decreased by 58.32and banks
advance, investments and deposit increased.
• During the financial year 2020-2021 borrowings is decreased by 6.32% and other assets
decreased by 14.84 and deposit, investments, advances is increased

5.2 SUGGESTIONS
• Bank should focus on increasing the current assets and decreasing the current liability so as
to maintain satisfactory level of current ratio.
• The bank needs to improve the long-term financial position
• The bank should follow the recommendations of financial auditor, The bank should take
steps to improve its overall efficiency.
• The bank has to reduce its overall debt.

5.3 CONCLUSIONS
The study mainly concentrates on the analysis of financial performance and soundness of the
bank. It helps to understand the working of the bank. From the study of financial performance
of HDFC BANK it can be concluded that the bank has satisfactory position with regard to
profitability and the bank needs to improve its liquidity and solvency. If the bank continues to
work with more efficiency, it can have greater success in the near future.

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BIBLIOGRAPHY

BOOKS

1. Jain, S. (2008). Cost and management accounting. Ludhiana: Kalyani Publishers.

2. Introduction to Management Accounting – Horngreen and Sundlem

3. Principles of Management Accounting – Manmohan & Goyal

4. Management Accounting – Dr. E.B. Khedkar, Dr. D.B. Bharati and Dr. A. B. Kharpas.

5. Cost and Management Accounting – S.M.Inamdar

6. Management Accounting – Dr. Mahesh Kulkarni.

7. Management Accounting 3rd Ed. – Khan & Jain

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WEBSITE

• https://www.wikipedia.org/
• https://shodhganga.inflibnet.ac.in/
• https://www.moneycontrol.com/
Appendix

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