finacial mangment ...project....report

DENA BANK & ORIANTAL BANK OF COMMERCE

PROJECT GUIDE: PROF. RUPAL DESAI

SUBMITTED BY:

NAME : Pooja J. Soni ID NO : O8BBA062 CLASS : S.Y. B.B.A

SUBMITTED TO:

SANSKAR INSTITUT OF MANGMENT & TECHNOLOGUY

PREFACE

As a student of management, practical knowledge is a must with full theoretical concepts. Therefore in` order to acquire the knowledge we were given a this project as one of its subjects to include in our BBA syllabus by shree KSKV Kachchh University. So for this said purpose we have made this project of financial management in which we have compared the two banks .DENA BANK and ORIANTAL BANK OF COMMERCE.

I hope that my sincere efforts in this field of study would be considered and the honorable authorities accept this Report

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“ EXPERIENCE IS THE BEST TEACHEREXPERIENCE IS THE BEST TEACHER ”

This Proverbs plays a guiding role in the curriculum of the

B.B.A. Programme of Kutchh University . Only theoretical

knowledge does not impart complete education, it is necessary

that practical exposure being accompanied to add meaning to

education.

I have prepared this project on DENA BANK OF INDIA and

ORINTAL BANK OF COMMERCE . as a part of the practical

studies. I have tried to discuss the firm’s financial information

details in detail

Through this acknowledgement, I express my sincere

gratitude towards all those people who helped me in the

preparation of my project, which has been a learning experience.

I would like to thank the Director, the Faculty, the

Librarians, & the Professors who helped me a lot in completing

this project.

“A Student is always incomplete without the

guidance of his teacher ”

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By:- Pooja J.Soni

INDEX

PREFES ACKNOWLEDGMENT INTRODUCTIONHISTORY OF DENA BANK OF INDIA HISTORY OF ORIANTAL BANK OF COMMERCE BALANCE SHEET OF DENA BANKBALANCE SHEET OF ORIANTAL BANK OF COMMERCE RATION ANALYASIS MEANING OF RATIO ANALYASISOBJECTIVE OF RATIO ANALYSISCLASSIFICATION OF RATIOCURRENT RATIO DEBT EQUTY RATIO PRICE EARNING RATIO COMPARISION BETWEEN DENA BANK & ORIANTAL BANK OF COMMERCEIMPORTANCE OF RATIO ANALYSISPURPOSE OF RATIO ANALYSISSERVICE PROVIDED BY DENA BANKSERVICES PROVIDED BY ORIANTAL BANK OF COMMERCECONCLUSION

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INTRODUCTION

To understand the information contained in financial statements with a view to know the strength or weaknesses of the firm and to make forecast about the future prospects of the firm and thereby enabling the financial analyst to take different decisions regarding the operations of the firm.

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HISTORY OF DENA BANK

Dena Bank was founded on 26th May, 1938 by the family of Devkaran Nanjee under the name Devkaran Nanjee Banking Company Ltd.

It became a Public Ltd. Company in December 1939 and later the name was changed to Dena Bank Ltd.

In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized and is now a Public Sector Bank constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of the Banking Regulations Act 1949, in addition to the business of banking, the Bank can undertake other business as specified in Section 6 of the Banking Regulations Act, 1949.

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HISTORY OF ORIENTAL BANK OF COMMERCE

Established on 19th Feb' 1943 in Lahore, Oriental Bank of Commerce (OBC) is one of the public sector banks in India. Its modest beginning is creditable to its founder Late Rai Bahadur Lala Sohan Lal, the first Chairman of the OBC. Within four years of coming into existence, the country partitioned, the Bank shifted its Registered Office from Lahore to Amritsar. The Oriental Bank of Commerce was nationalized on 15th April 1980, and paved its way to count amongst the strongest banks in India.

OBC has a network of 530 branches and 505 ATM's spread throughout India, out of which 490 branches offer, centralized banking solutions. With High Capital Adequacy Ratio, Oriental Bank of Commerce is known be a consistent profit-making bank. It offers various services and products, like current/ savings account, general loans, educational loans, agricultural loans, etc, for the benefit of customers. For its effective services, the National Institute of Bank Management (NIBM) rated OBC Bank as "Customer Friendly" Bank.

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BALANCE SHEET OF DENA BANK

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BALANCE SHEET OF ORIANTAL BANK OF COMMERCE

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RATIO ANALYSIS:

Fundamental Analysis has a very broad scope. One aspect looks at the general (qualitative) factors of a company. The other side considers tangible and measurable factors (quantitative). This

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means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results.

Ratio analysis isn't just comparing different numbers from the balance sheet, income statement, and cash flow statement. It's comparing the number against previous years, other companies, the industry, or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future.

MEANING OF RATIO:

A ratio is one figure express in terms of another figure. It is a

mathematical yardstick that measures the relationship two figures,

which are related to each other and mutually interdependent. Ratio

is express by dividing one figure by the other related figure. Thus a

ratio is an expression relating one number to another. It is simply

the quotient of two numbers. It can be expressed as a fraction or as

a decimal or as a pure ratio or in absolute figures as “so many

times”. As accounting ratio is an expression relating two figures or

accounts or two sets of account heads or group contain in the

financial statements.

MEANING OF RATIO ANALYSIS:

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Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed, determined and presented.

Ratio analysis is an attempt to derive quantitative measure or

guides concerning the financial health and profitability of business

enterprises. Ratio analysis can be used both in trend and static

analysis. There are several ratios at the disposal of an analyst but

their group of ratio he would prefer depends on the purpose and the

objective of analysis.

While a detailed explanation of ratio analysis is beyond the

scope of this section, we will focus on a technique, which is easy to

use. It can provide you with a valuable investment analysis tool.

This technique is called cross-sectional analysis. Cross-

sectional analysis compares financial ratios of several companies

from the same industry. Ratio analysis can provide valuable

information about a company's financial health. A financial ratio

measures a company's performance in a specific area. For example,

you could use a ratio of a company's debt to its equity to measure a

company's leverage. By comparing the leverage ratios of two

companies, you can determine which company uses greater debt in

the conduct of its business.

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A company whose leverage ratio is higher than a competitor's

has more debt per equity. You can use this information to make a

judgment as to which company is a better investment risk.

However, you must be careful not to place too much

importance on one ratio. You obtain a better indication of the

direction in which a company is moving when several ratios are

taken as a group.

OBJECTIVE OF RATIOS

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Ratio is work out to analyze the following aspects of business

organization-

A) Solvency-

1) Long term

2) Short term

3) Immediate

B) Stability

C) Profitability

D)Operational efficiency

E) Credit standing

F) Structural analysis

G)Effective utilization of resources

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Classification of Ratio

Profitability

Gross Profit Rattio

Net Profit RatioReturn on Capit

al Employed Ratio

Return on

Shareholders Fun

d

Return on Equity Ratio

Operating Ratio

Expenses Ratio

Earning Per Share Ratio

Dividend Per Ratio

Prise Earning Ratio

Liqudity Ratio

Current ratio

Liquid Ratio

Leverage Ratio

Debt Equity Ratio

Profitability Ratio

Capital

Gearing

Ratio

Long

Term

Funds to

Fixed

Assets

Activity Ratio

Stock Turn Over RatioTotal

Assets Turn Over Ratio

Debtors

Ratio

Creditor

s Rati

oBook Value Per Share

Working

Capital Turn Over Ratio

Coverage Ratio

Debentures

Service Coverage RatioInterest Covera

ge Ratio

CURRENT RATIO: -

Liquidity refers to the ability of a firm to meet its short-term

(usually up to 1 year) obligations. The ratios, which indicate the

liquidity of a company, are Current ratio, Quick/Acid-Test ratio,

and Cash ratio. These ratios are discus

This ratio compares the current assests with the current liabilities. It

is also known as ‘working capital ratio’ or ‘solvency ratio’. It is

expressed in the form of pure ratio.

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Formula:

CURRENT RATIO = CURRENT ASSET CURRENT LIABILITY

The current assests of a firm represents those assets which can be,

in the ordinary course of business, converted into cash within a

short period time, normally not exceeding one year. The current

liabilities defined as liabilities which are short term maturing

obligations to be met, as originally contemplated, within a year.

Current ratio (CR) is the ratio of total current assets (CA) to total

current liabilities (CL). Current assets include cash and bank

balances; inventory of raw materials, semi-finished and finished

goods; marketable securities; debtors (net of provision for bad and

doubtful debts); bills receivable; and prepaid expenses. Current

liabilities consist of trade creditors, bills payable, bank credit,

provision for taxation, dividends payable and outstanding expenses.

This ratio measures the liquidity of the current assets and the ability

of a company to meet its short-term debt obligation.CR measures the

ability of the company to meet its CL, i.e., CA gets converted into

cash in the operating cycle of the firm and provides the funds

needed to pay for CL. The higher the current ratio, the greater the

short-term solvency. This compares assets, which will become liquid

within approximately twelve months with liabilities, which will be

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due for payment in the same period and is intended to indicate

whether there are sufficient short-term assets to meet the short-

term liabilities. Recommended current ratio is 2: 1. Any ratio below

indicates that the entity may face liquidity problem but also Ratio

over 2: 1 as above indicates over trading, that is the entity is under

utilizing its current assets

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RATIO OF DENA BANK

MARCH 2008 CURRENT RATIO

CURRUNT ASSET = 126648027

CURRUNT LAIBLITY= 25032668


= 126648027

25032668

= 5.06

MARCH 2009 CURRUNT RATIO


CURRUNT LAIBLITY = 31872695


= 88845858

31872695

= 2.79

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COMENT ON CURRUNT RATIO OF DENA BANK

The current ratio of DENA BANK is 5.06 in 2008 and 2.79 in 2009.

It shows that the current ratio of DENA BANK have declined up to 2.27% during 2009.

It is also unsatisfactory during current year which shows that the working condition of DENA BANK is weak. The ratio is far away from the decided standard of current ratio that is 2:1 .according to this stander the current ratio of DENA BANK is sufficient in 2009.

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RATIO OF ORIENTAL BANK OF COMMERCE

CURRUNT RATIO MARCH 2008


CURRUNT LAIBLITY=52328867

CURRUNT RATIO = CURRUNT ASSET

CURRUNT LAIBILITIES

= 130152156

52328867

= 2.49

CURRUNT RATIO MARCH 2009


CURRUNT LAIBLITY=60883366

CURRUNT RATIO = CURRUNT ASSET

CURRUNT LAIBILITIES

= 60883366

150640939

= 2.47

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COMMENT ON CURRUNT RATIO OF ORIENTAIL BANK OF COMMERCE

The ORIANTAL BANK OF COMMERCE is 2.49 in 2008 & 2.47 in 2009. It shows that the current ratio of ORIANTAL BANK OF COMMERCE have increase up to 0.02% in 2009. So the banks working condition is better than previous year but the standard of current ratio is 2:1. So as per standard of current ratio, the ratio of ORIANTAL BANK OF COMMERCE is satisfactory. This shows that the working condition of ORINATAL BANK OF COMMERC is good in comparison of the standard.

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DEBT EQUTY RATIO

Formula:

DEBT EQUTY RATIO = TOTAL LONG TERM DEBT

OWNER’S FUND

Debt equity ratio is also called as leverage ratio. Leverage means the process of the increasing the equity shareholders return through the use of debt. Leverage is also known as ‘gearing’ or ‘trading on equity’. Debt equity ratio shows the margin of safety for long-term creditors & the balance between debt & equity.

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DEBT EQUTY RATIO OF DENA BANK

DEBT EQUTY RATIO MARCH 2008

TOTAL DEBT = UNSECURED LOANS = 33943.18

OWNER’S FUND =

1. EQUITY CAPITAL = 286.82 2. PREFRANCE CAPITAL = 1279.69

TOTAL OF OWNER’S FUND = 1566.51

DEBT EQUTY RATIO = TOTAL LONGTRME DEBT

OWNER’S FUND

= 33943.18

1566.51

= 21.67



OWNER’S FUND =

1. EQUITY CAPITAL = 286.822. PREFRANCE CAPITAL = 1662.09


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DEBT EQUTY RATIO = TOTAL LONGTRME DEBT

OWNER’S FUND

= 43050.61 1948.91

= 22.09

COMENT ON DEBT EQUITY RATIO OF DENA BANK

The debt equity ratio of DENA BANK is 21.67 in 2008 and 22.09 in 2009. IT shows that the debt equity ratio of the bank has increased upto 0.42 % in 2009. So we can see that the working condition of DENA BANK is good in 2009. It is satisfactory. It mean DENA BANK have more owner’s fund in comparison of their total debt which will help the bank to run the business very smoothly and satisfy the consumer of it .

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DEBT EQUTY RATIO OF ORIANTAL BANK

OF COMMERCE



OWNER’S FUND =

1. EQUITY CAPITAL = 250.542. RESERVE SURPLUSE = 5525.36


DEBT EQUTY RATIO =TOTAL DEBTS

OWNER’S FUND

= 5775.9

77856.70

= 13.48



OWNER’S FUND =

1. EQUITY CAPITAL =2505397 2. RESERVE SURPLUSE = 7152,90,73

3. TOTAL OF OWNER’S FUND =74034470

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DEBT EQUTY RATIO =TOTAL DEBTS

OWNER’S FUND

= 9836885

74034470

= 0.13

COMMENT ON DEBT EQUITY RATIO OF ORIANTAL BANK OF COMMERCE

The debt equity ratio of ORIANTAL BANK OF COMMERCE is 13.48 in 2008 and o.13in 2009. Its shows that the debt equity ratio of the bank have decreased up to 13.35% in 2009. So we can see that the working condition of ORIANTAL BANK OF COMMERCE is poor in current year. It is not satisfactory. its mean ORINATAL BANK OF COMMERCE have more debt than owner’s fund in 2009 which will not help the bank to run the business very smoothly and not satisfy the consumer of it.

.

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PRICE EARNING RATIO

It saws the relationship between the market price of share and earnings per share .it significance the price that is currently ruling in the market for each rupee of earnings being made by compny per share. As geral rule, the higher this ratio , the beter it is for owners . This ratio is widly used by the analyist to the value of firm’s performance as exepted by investor . The higher the P/E ratio, the better is for owners.

Formula:

PRICE EARNING RATIO = MARKET VALUE OF SHARE

EARNING PER SHARE

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PRICE EARNING RATIO OF DENA BANK

PRICE EARNING RATIO MARCH 2008


EARNING PER SHARE

EARNING PER SHARE = NET PROFIT AFTER TAX

NUMBER OF EQUITY SHARES

= 329.87

28.6823

= 11.50


EARNING PER SHARE

= 286.82

11.50

= 24.94

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EARNING PER SHARE



= 423.37

28.6823

= 14.76


EARNING PER SHARE

= 286.82

14.76

= 19.43

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COMENT ON PRICE EARNING RATIO OF DENA BANK

The price earnings ratio of Dena bank 24.94 in 2008 and 19.43 in 2009. it shows that the price earnings ratio of the bank have declined in 2009 up to 5.51% it shows that the working condition of Dena bank according to P.E ratio is weak.

PRICE EARNING RATIO OF ORIANTAL BANK OF

COMMERCE



EARNING PER SHARE

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= 353.22

2505.40

= 14.09


EARNING PER SHARE

= 250.14

14.09

= 17.75



EARNING PER SHARE



= 905.42

2505.40

= 36.14

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EARNING PER SHARE

= 250.14

36.14

= 6.93

COMENT ON PRICE EARNING RATIO OF ORIANTAL BANK OF COMMERCE

The price earnings ratio of ORIANTAL BANK OF COMMERCE 17.75 in 2008 and 6.93 in 2009. it shows that the price earnings ratio of the bank have declined in 2009 up to 10.82% it shows that the working condition of ORIANTAL BANK OF COMMERCE according to P.E ratio is weak.

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COMPARISON BETWEEN DENA BANK & ORIANTAL BANK OF COMMERCE OF YEAR 2009

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BANK CURRENT RATIO

DEBT EQUTY RATIO

PRICE EARNING RATIO

DENA BANK 2.79 22.09 19.43 ORIANTAL BANK OF COMMERCE

2.47 0.13 6.93

CURRUNT RATIO

As per the year 2009, the current ratio of DENA BANK is 2.79 and current ratio of ORIANTAL BANK OF COMMERCE is 2.47

Now by observing the current ratio of both the banks we can fine that the current ratio of DENA BANK is more than the ORIANTAL BANK OF COMMERCE it is high up to o.32%.

It shows that the current asset’s condition of DENA BANK is good than ORIANTAL BANK OF COMMERCE. It has more liquidity power.

As per the general standard of current ratio that is 2:1. So the desired standard can be maintained

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DEBT EQUTY RATIO

As per the year 2009 the debt equity ratio of DENA BANK is 22.09 & debt equity ratio of ORIANTAL BANK OF COMMERCE bank is o.13

Now by observing the debt equity ratio of both the banks we can fine that the debt equity ratio of DENA BANK is more than the ORIANTAL BANK OF COMMERCE it is high up to 21.96%.

It shows that the owner’s fund or capital of DENA BANK is more than the ORIANTAL BANK OF COMMERCE. Which helps Dena bank to compete with its total debts? While in ORIANTAL BANK OF COMMERCE they have also more owners’ fund to compete with its total debts but it is less in comparison of DENA BANK. So the debt equity ratio of DENA BANK is satisfactory.

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PRICE EARNING RATIO

As per the year 2009 the price earnings ratio of DENA BANK is 19.43 & P.E. ratio of ORIANTAL BANK OF COMMERCE is 6.93.

Now by observing the P.E. ratio of both the banks we can find that the P.E. ratio of DENA BANK is more than the ORIANTAL BANK OF COMMERCE it is high up to 12.5%.

It shows that the working condition of DENA BANK is better than the ORIANTAL BANK OF COMMERCE. It indicates that DENA BANK is more successful to handle the earning per share & market value of its shares in comparison of ORIANTAL BANK OF COMMERCE.

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IMPORTANCE OF RATIO ANALYSIS:

As a tool of financial management, ratios are of crucial

significance. The importance of ratio analysis lies in the fact that it

presents facts on a comparative basis & enables the drawing of

interference regarding the performance of a firm. Ratio analysis is

relevant in assessing the performance of a firm in respect of the

following aspects:

1] Liquidity position,

2] Long-term solvency,

3] Operating efficiency,

4] Overall profitability,

5] Inter firm comparison

6] Trend analysis.

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PURPOSE OF RATIO ANLYSIS:

1] To identify aspects of a businesses performance to aid decision

making

2] Quantitative process – may need to be supplemented by

qualitative

Factors to get a complete picture.

3] 5 main areas:-

Liquidity – the ability of the firm to pay its way

Investment/shareholders – information to enable decisions to

be made on the extent of the risk and the earning potential of a

business investment

Gearing – information on the relationship between the

exposure of the business to loans as opposed to share capital

Profitability – how effective the firm is at generating profits

given sales and or its capital assets

Financial – the rate at which the company sells its stock and

the efficiency with which it uses its assets

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SERVICES PROVIDED BY DENA BANK

1. Core banking solution

2. Delivery channel

3. Dena ATM services

4. Dena India Remit

5. Value added services

6. Dena Bill pay

7. Inbound remittance

8. Direct tax collection

9. Banc assurance

10. Indirect Tax

11. Distribution of mutual fund

12. RTGS / NEFT

13. Dena e-tax pay Demat service

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SERVICES PROVIDED BY ORIANTAL BANK OF COMMERCE

1.N.R.I. services

2.Premium Services

Internet Banking

R.T.G.S.

N.E.F.T.

Online Tax payment

3. Other Service Dmat Account Foreign Remittance Cash Management Service

\

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ROLE OF RATIO ANALYSIS:

It is true that the technique of ratio analysis is not a creative

technique in the sense that it uses the same figure & information,

which is already appearing in the financial statement. At the same

time, it is true that what can be achieved by the technique of ratio

analysis cannot be achieved by the mere preparation of financial

statement.

Ratio analysis helps to appraise the firm in terms of their

profitability & efficiency of performance, either individually or in

relation to those of other firms in the same industry. The process of

this appraisal is not complete until the ratio so computed can be

compared with something, as the ratio all by them do not mean

anything. This comparison may be in the form of intra firm

comparison, inter firm comparison or comparison with standard

ratios. Thus proper comparison of ratios may reveal where a firm is

placed as compared with earlier period or in comparison with the

other firms in the same industry.

Ratio analysis is one of the best possible techniques available

to the management to impart the basic functions like planning &

control. As the future is closely related to the immediate past, ratio

calculated on the basis of historical financial statements may be of

good assistance to predict the future. Ratio analysis also helps to

locate & point out the various areas, which need the management

attention in order to improve the situation.

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CONCLUSION

As we have given the project work to compare the two well known banks i.e. DENA BANK and ORIANTAL BANK OF COMMERCE .I came to know about the financial condition of both company are good. They are able to generate customer and these banks are providing new services to customers. At the end I can say that DENA BANK is good in financial position in compare to

ORINTAL BANK OF COMMERCE.

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