icici complete project

7/29/2019 ICICI complete project

1/39

1

INTRODUCTION:

In Accounting working capital is the difference between the inflow and outflow of funds.

In other words, it is the net cash inflow. It is define as the excess of current assets over currentliabilities and provisions. In other words, it is net current assets or net working capital.

A study of working capital is of major importance to internal and external analysis

because of its close relationship with the day to day operations of a business working capital is

the portion of the assets of a business which are used on or related to current operations and

represented at any one time by the operating cycle of such items as against receivable,

inventories of raw materials, stores, work in process and finished goods, merchandise notes or

bills receivables and cash.

Working capital comprises current assets which are district from other assets. In the first

instance, current assets consist of these assets which are of short duration working capital may be

regarded as the life blood of a business. Its effective provisions can do much to ensure the

success of a business while its inefficient management can lead not only to loss of profits but

also to the ultimate downfall of what otherwise might be considered as a promising concern.

The funds required and acquired by a business may be invested to two types of assets.

1. Fixed asset2. Current asset

Fixed assets are those which yield the returns n the due course of time. The

Various decisions like in which fixed assets funds should be invested and how much should be

invested n the fixed assets etc are in the form of capital budgeting decision. This can be said to

be fixed capital management.

Other types of assets are equally important.

i.e. Current Assets


2/39

2

These types of assets are required to ensure smooth and fluent business operation and can

be said to be life blood of the business. These are two concepts of working capital. Gross and

net grows working capital refers to gross current assets. Net working capital refers to the

difference between current assets and current liabilities. The term current assets refers to those

assets held by the business which can be converted into cash within a short period of time of say

one year, without reduction in valve. The main types of current assets are stock, receivables and

cash. The term current liabilities refer to those liabilities, which are to be paid off during the

course of business, within a short period of time. Say one year. They are expected to be paid out

of current assets or earnings of the business. The current liabilities mainly consist of sundry

creditors, bills payable, bank overdraft, or cash credit, outstanding expenses etc.

NEED FOR WORKING CAPITAL:

The need of gross working capital or current assets cannot be overemphasized. The

object of any business is to earn profits. The main factor affecting the profits is the magnitude of

sales of the business. But the sales cannot be converted into cash immediately. There is a time

log between the sale of goods and realization of cash. There is a need of working capital in the

form of current assets to fill up this time lag. Technically, this is called as operating cycle or

working capital cycle, which is the heart of need for working capital. This working capital cycle

can be described in the following words. If the company has a certain amount of cash, it will be

required for purchasing the raw material though some raw material may be available on credit

basis. Then the company has to spend some amount for labour and factory overheads to convert

the raw material in work in progress, and ultimately finished goods. These finished goods when

sold on credit basis get converted in the form of sundry debtors. Sundry debtors are converted in

cash only after the expiry of credit period. Thus, there is a cycle in which the originally available

cash is converted in the form of cash again but only after following the stages of raw material,

work in progress, finished goods and sundry debtors. Thus, there is a time gap for the original

cash to get converted in form of cash again. Working capital needs of company arise to cover

the requirement of funds during this time gap, and the quantum of working capital needs varies

as per the length of this time gap.


3/39

3

Thus, some amount of funds is blocked in raw materials, work in progress, finished goods,

study debtors and day to day requirements. However some part of these current assets may be

financed by the current liabilities also. E.g. some raw material may be available on credit basis,

all the expenses need not be paid immediately, workers are also to be paid periodically etc. But

still the amounts required to be invested in these current assets is always higher than the funds

available from current liabilities. This is precise reason why the needs for working capital arise.

From the financial management point of view, the nature of fixed assets and current assets differ

from each other.

1) The fixed assets are required to be retained in the business over a period of time andthey yield the return over their life, whereas the current assets loose their identify

over a short period of time say one year.

2) In the event of current asses, it is always necessary to strike a proper balance betweenthe liquidity and profitability principles, which is not the case with fixed assets. Eg.

If the size of current assets is large, it is always beneficial from the liquidity point of

view as it ensures smooth and fluent business operations. Sufficient raw material is

always available to cater to the production needs, sufficient finished goods are

available to cater to any kind of demand of customers, liberal credit period can be

offered to the customers to improve the sales and sufficient cash is available to pay

off the creditors and so on.

However if the investment in current assets is more than what is ideally required, it

affects the profitability, as it may not be able to yield sufficient rate of return on

investments. On the other hand if the size of current assets to too small, it always

involves the risk of frequent stock out inability of the company to pay its dues in time

etc. As such, the investment in current assets should be optimum. Hence it is

necessary to manage the individual components of current assets in a proper way.


4/39

4

CLASSIFICATIONS OF WORKING CAPITAL:

Working capital may be classified into two ways. On the basis of concept, on the basis

on time. On the basis of concept working capital can be classified as gross working capital and

not working capital. On the basis of time, working capital may be classified as permanent or

fixed working capital on temporary or variable working capital.

CHARACTERISTICS OF WORKING CAPITAL:

Working capitals distinguishing it from the fixed capital are as follows:-

1) SHORT TERM NEEDS:Working capital is used to acquire current assets which get converted into cash in

a short period. In this respect it differs from fixed capital which represents funds

locked in long term assets. The duration of the working capital depends on the length

of products process, the time that elapses in the and the wanting period of cash

receipt.

2) CIRCULAR MOVEMENT:Working capital is constantly convents into cash which against turn into working

capital. The process of conversion goes on continuously. The cash is used to

purchase current assets and when the goods are produced and sold out. These current

assets are transferred into cash. Thus it move in a circular always that is why

working capital is also described as circulating capital.

3)

A DEMAND OF FORMARENCY:Though working capital is a short term capita, it is required always and forever as

stated before, working capital is necessary to continue the production activity of the

enterprise. Hence so long as production continues, the enterprises will constantly

remain in need of working capital. The working capital that is required permanently

is called permanent or regular working capital.


5/39

5

4) AN ELEMENT OF FLUCTUATION:Though the requirements of working capital are field permanently its requirement

fluctuates more widely than that of fixed capital. The requirement of working capital

various directly with the level of production. It varies with the variation of the

purchase and sale policy. The portion of working capital that changes with

production, sale, price, etc. is called variable working capital.

5) LIQUIDITY:Working capital is more liquid than fixed capital. If need arises, working capital

can be converted into cash within a short period and without mush loss. A company

in need of cash can get it through the conversion of its working capital by insisting on

quick recovery of its bills receivable and by expediting sales of its product. It is due

to this trait of working capital that the companies with a buyer amount of working

capital feel more secure.

6) LESS RISK:Funds invested in fixed assets get locked up for a long period of time and cannot

be recovered easily. There is also a danger of fixed assets like Machinery getting

absolute due to technological innovation. Hence investment is fixed capital is

comparatively more risky. As against this, investment in current assets is less risky as

it is a short term investment. Working capital involves more of physical risk only,

and that too is limited. Working capital involves financial or economic risk to a much

loss extent because the variations of product prices are less severe generally.

Moreover, working capital get converted only cash again and again. Therefore, it is

free from the risk arising out of technological changes.


6/39

6

7) SPECIAL ACCOUNTING SYSTEM NOT NEEDED:Since fixed capital is invested in long term assets, it becomes necessary its adopt

various systems of estimating depreciation. On the other hand working capital is

invested in short term assets which last for one year only. Hence it is not necessary to

adopt special accounting system for them.

CLASSIFICATIONS OF WORKING CAPITAL :

Working capital may be classified into two ways. On the basis of concept, on the

basis on time. On the basis of concept working capital can be classified as gross

working capital and not working capital. On the basis of time, working capital may

be classified as permanent or fixed working capital on temporary or variable working

capital.

ADVANTAGES OF ADEQUATE WORKING CAPITAL :

1) SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintainingthe solvency of the business by providing uninterrupted of production.

2) GOODWILL: Sufficient amount of working capital enables a firm to make promptpayment and makes and maintain the goodwill.

3) EAST LOANS: Adequate working capital leads to high solvency and credit standingcan arrange loans from the banks and other on easy and favorable terms.

4) CASH DISCOUNT: Adequate working capital also enables a concern to avail cashdiscounts on the purchases and hence reduces costs.

5) REGULAR SUPPLY OF RAW MATERIALS: Sufficient working capital ensuresregular supply of raw materials and continues products.

6) REGULAR PAYMENTS OF SALARIES, WAGES AND OTHER DAY TODAY COMMITMENTS: It looks to the satisfaction of the employees and raises the

moral of the employees, increase their efficiency, reduces wastage and costs and

enhance production and profits.


7/39

7

7) EXPLOITATION OF FAVORABLE MARKET CONDITIONS : If a firm ishaving adequate, working capital than it can exploit the favorable market conditions

such as purchasing its requirements in bulk when the prices are lower and holdings its

inventories for higher price

8) ABILITY TO FACES CRISES: A concern can face the situation during thedepression.

9) QUICK AND REGULAR RETURN ON INVESTMENTS: Sufficient workingcapital enables a concern to pay quick and regular of dividends to its investors in

gain confidence of the investors and can raise more funds in future.

10) HIGH MORALE: Adequate working capital briefs and environment of securities,confidence, high morale which results in overall efficiency in a business.

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING

CAPITAL:

Excessive working capital means ideal funds which earn no profit for the firm and

business cannot earn the required rate of return on its investments.

Redundant working capital leads to unnecessary purchasing and accumulation of inventors

Excessive working capital impels excessive, debtors and defective credit policy which cause

higher incidence of bad debts.

It may reduce the overall efficiency of the business.

If a firm is having excessive working capital then the relation with banks and other financial

institution may not be maintained.

Due to lower rate of return in investments, the values of shares may also fall.The redundant working capital gives arise to speculative transactions.


8/39

8

DISADVANTAGES OF INADEQUATE WORKING CAPITAL:

Every business needs some amounts of working capital. The need for working capital

arises due to the time gap between production and realization of cash from sales there is an

operational cycle involved in sales and realization of cash.

WORKING CAPITAL vs CASH:

The term working capital has many connections and is often used very loosely in

practice. Small business owners after refer to the need to obtain more working capital to keep

their business operating in the black, and many people equate working capital with cash.

DEFINITION OF WORKING CAPITAL:

Working capital is the total of all those items shown on a companys balance sheet as

short term or current assets. That is cash, market securities, account receivable, and inventories.

A current asset is one that is expected to be turned into cash in one year or the current operating

cycle. Whichever is longer, nevertheless, when we speak of working capital, we usually mean

net working capital, which are current assets minus current liabilities (accounts payable, taxes

and wages currently payable, short term bank borrowing and the current part of long term debt).

Net working capital is a useful indication of the funds available to the company to finance its

current operations, but we shall see that net working capital is not synonymous with cash on

even liquidity. An understanding of working capital does, however, provide managers with an

sight on both cash flow and liquidity.


9/39

9

ADEQUACY OF CASH AND WORKING CAPITAL:

These definition point out a crucial distinction, although cash is a part of working capital

and although working capital is closely connected with cash needs, working capital is not the

same thing at cash.

WORKING CAPITAL POLICIES:

Different companies adopt different policies concerning the management of working

capital. As in most areas of financial management, some companies adopt very aggressive

policies, some companies adopt, very conservation policies and some try to follow a middle of

the road approach.

ADEQUACY OF CASH AND WORKING CAPITAL:

These definition point out a crucial distinction, although cash is a part of working capital

and although working capital is closely connected with cash needs, working capital is not the

same thing at cash.

WORKING CAPITAL FINANCING BY BANKS:

A commercial bank is a business organization which deals in money ie., lending and

borrowing of money. They perform all types of functions like accepting deposits, advancing

loans, credit creation and agency functions besides these usual functions, one of the most

important functions of banks is to finance working capital requirement of firms working capital

advances from major part of portfolio of banks. In determining working capital requirements of a

firm, the bank takes into account its sales and production plans and desirable levels of current

assets. The amount approved by the bank for its firms working capital requirement is called

credit limit. Thus it is maximum fund which a firm can obtain from the bank. In the case of

firms with seasonal businesses, the bank may approve separate l imits, for peak season and


10/39

10

non-peakseason. These advances were usually given against the security of the current assets

of the borrowing firm, usually; the bank credit is available in the following forms.

Cash Credit: Under this facility, the bank specifies a pre-determined limit and the borrower is

allowed to withdraw funds from the bank up to that sanctions credit limit against a bond or other

security. However, the borrower cannot borrow the entire sanctioned credit in lump sum; he can

draw it periodically to the extent of his requirements. Similarly, repayment can be made

whenever desired during the period. Though he is no commitment charge involves interest is

payable on the amount actually utilized by the borrower and not on the sanction limit.

Over Draft: Under this arrangement, the borrower is allowed to withdraw funds is excess of

the actual credit balance in current account up to a certain specific limit during a stipulated

period against a security within the stipulated limits any number of withdrawals is permitted for

the bank overdraft facility is generally available against the securities of life insurance policies,

fixed deposits receipts, government securities, states and debentures, etc. of the corporate sector.

Interest is charged on the amount actually withdrawn by the borrower, subject to some minimum

charges.

Loans: Under this system, the total amount of borrowing is credited to the current

account of the borrower or released to him in cast. The borrower has to pay interest on the total

amount of loan, irrespective of how much he draw loans are payable either on demand or on

periodical in statements. They can also be renewed from time to time. As a form of financing,

loan imply a financial disciplines on the part of the borrowers.

Bill Financing: This facility enables a borrower to obtain credit from a bank against its

bills. The bank purchases or discounts the bills of exchange and promissory notes of the

borrower and credits, the amount in his account after deducting discount under this facility, the

amount provided is covered by cash credit and overdraft limit. Before purchasing or discounting

the bills, the bank satisfies itself about the credit with drawer and genuineness of the bill.


11/39

11

Letter Of Credit: While the other forms of credit are direct forms of financing in which the

banks provide funds as well as bears the risk, letter of credit is an indirect form of working

capital financing in which banks assumes only the risk and the three supplier himself provide the

funds. A letter of credit is the guarantor provided by the buyers banker to the seller. The bank

opens letter of credit in favor of customers to facilitate his purchase of goods. This arrangement

passes the risk of the supplies to the bank. The customer pays bank charges for the facility to the

bank.

Working Capital Loan : Sometimes a borrower may require additional credit in excess of

sanctioned credit limit to meet unforeseen contingencies book provide such credit though a

working capital demand loan account or separate non open able cash credit account. This

arrangement is presently applicable to borrowers having working capital requirement of Rs.10

corers or above. The minimum period of working capital demand loan keeps on changing

working capital demand loan is granted for a fixed term on maturity of which it has to b e

liquidated, renewed or rolled over. On such additional credit, the borrower has to pay a higher

rate of interest more than the normal rate of interest.

METHODOLOGY:

The Methodology, have adopted for the study is the various tools, which is basically

analyze critically financial position of the organization. The study is based on secondary data.

LIMITATION:

Limitation is collected from the secondary data.

OBJECTIVE:

To analysis the industry of ICICI bank especially for a period of 5 years. To ascertain the financial appraisal of working capital by using selected ratio.


12/39


13/39

13

S.No:2

The Title of The Article : Working Capital finance Analysis of HDFC bank

Author Name : Neetu Hans

Objectives:

To analysis the industry especially private bank industry for the selected period of 5years.

To carryout financial and Non-financial analysis of HDFC bank as a whole for theselected period.

Methodology :

These are the most popular tools of fundamental analysis. They focus on earning, growth

and value in the market.

EPF = Earning price per share

P/E =Price Earnings ratio

Statistical :

1) Based on the past 5 years EPS data, estimated growth % can be determine . And theestimated growth rate is 10.1%

2) Now by using the current EPS we can compound it with the estimated growth i.e.10.1%

3) Current EPS is 40.95 compounding of the EPS is 40.95 = 40.085.4) Now based on the past 5 years P/E lakhs the average of P/E value which is 20.432.5) Now multiplying the step 3 & 4 and we will get the estimated share price.6) Estimated share price is 921.176 and current share is 1033 which is higher than the

estimated it means that share price is overvalued and investor should sell the share for

short term.


14/39

14

Conclusion :

According to financial analysis of ICICI bank it performance in the private industry in

good and expected to grow further in the near future which is good sign for investment. EPS anddividend both are increasing and its on the top in term of profit and not interest income. If we

compared it with the other banks in the some industry but we cannot ignore the intrinsic value of

the company which is lower the current value which shows then investor should sell the share of

the company.


15/39

15

S.No:3

The Title of The Article : Report On Working Capital Finance Assistance

Provided by Punjab National Bank.

Author Name : Hemanth CR

Objectives:

To understand and analysis how far the theoretical issues of financial management havebeen practically used in the bank when the present study is made.

To ascertain the financial appraisal of working capital by using selected ratio. To study the assessment of working capital involving computation of maximum

permissible bank finance.

Methodology :

The report will be prepared mainly using secondary data. The contains tools use in data

collection.

Statistical :

The above table shows the proportion of working capital financed by Punjab National

Bank. The table shows that PNB, finance 30% of working capital range of less than 15% to 20%

of working capital range between 15% 25% 40$ of working capital range is between 25% to

50% and there remaining 10% of working capital range is between 50% to 100% . Thus we can

conclude that mostly 25% to 50% of working capital is financed by PNB.


16/39

16

Conclusion:

This study indicate that in order to improve the overall performance of Punjab National

Bank Management must take all possible steps, review and modify various policies, financial,trading and inventory status by using sound information management system to enable

management to have a close control over the various operation.

Source :

Web site : www.google.com

www.prob.com
http://www.google.com/http://www.google.com/http://www.prob.com/http://www.prob.com/http://www.google.com/


17/39

17

S.No:4

The Title of The Article : Project On Working Capital FinanceAuthor Name : Chandra Mohanty

Objectives:

To study the various components working capital. To analysis the liquidity trend To appraise the utilization of current asset and current liabilities and find out short

coming if any.

Methodology :-

Research methology is a systematic approach in management research to achieve pre-

defined objectives. It contains periodic tools. It is basic on secondary data.

Statistical:

Ratio analysis helps to approve the firm in the term of their profitability and efficiency of

performance, either individually or in relation to other firm in same industry. As future is closely

related to the immediate past, ratios calculated on the basis historical financial data may be of

good assistance to predict the future. e.g. Current ratio which shows a constant decline trend may

be indicate the need for further introduction of long term finance in order to increase the liquidityposition as the ratio analysis is concerned with all the aspect of the firm. Financial analysis is

liquidity, solvency, activity, profitability and overall performance, it enables the interested

person to know the financial and operational characteristic of an organization and take suitable

decision.


18/39

18

Conclusion:

On the basis of data analysis on working capital finance though the net working capital is

decreased, still the it is in better manageable position to maintain their current asset / current

liabilities.

Source :

The data is collected from the web site.www.google.com
http://www.google.com/http://www.google.com/


19/39

19

S.No: 5

The Title of The Article : Project On Working Capital Finance

Author Name : Reena Srivastava

Objectives:

To provide reliable financial influence of a business firm. To provide financial information those assets is estimating the learning potential of the

business.

Methodology :

The methodology, have adopted for the study is the various tools, which is basically

analyze critically financial position of the organization. The study is based on Secondary date.

Statistical :

As we know that ideal current ratio for any firm is 2:1 . If we the current ratio of the

company for last three years it has increased from 2006 to 2008. The current ratio is more than

the ideal ratio. The current assets are more than its current liabilities.

These ratio shows that company carries a small amount of cash but there is nothing to be

worried about the lack of cash because company has reserve, borrowing power and long term

investment. In India, firms have credit limits sanctioned from banks and can easily draw cash.


20/39

20

Conclusion:

However the financial manager handles the finance matter in profitable manner in the

critical challenging atmosphere the recommendation are made which word suggest theorganization in formulation of healthy and strong position financially with proper management

system. Through the evaluation of various percentage, rations are comparative analysis, the

organization would be able to conquer its efficiencies and makes the desired changes.

Source :

www.filedocs.com
http://www.filedocs.com/http://www.filedocs.com/http://www.filedocs.com/


21/39

21

Bibliography

Serial No1.

The title of the Article : Project on working capital finance @ SBI

Author Name : Babasab PatelSource : www.google.com

Serial No2.

The title of the Article : Working capital finance analysis of HDFC bank

Author Name : Neetu Mans (2007)

Source : www.google.com.www.hdfcbank.com

Serial No3

The title of the Article : Report on working capital finance assistance provided by

Punjab National Bank

Author Name : Memanth CR (2006)

Source : www.google.com,www.pnb.com

Serial No4.

The title of the Article : Project on working capital finance

Author Name : Babasab Patel

Source : www.google.com

Serial No5.

The title of the Article : Project on working capital finance

Author Name : Reena Srivastava (2009)

Source : www.filedocs.com
http://www.google.com/http://www.google.com/http://www.google.com/http://www.google.com/http://www.hdfcbank.com/http://www.hdfcbank.com/http://www.google.com/http://www.google.com/http://www.pnb.com/http://www.pnb.com/http://www.google.com/http://www.filedocs.com/http://www.filedocs.com/http://www.google.com/http://www.pnb.com/http://www.google.com/http://www.hdfcbank.com/http://www.google.com/http://www.google.com/


22/39

22

FINANCIAL STATEMENT ANALYSIS:

A financial statement analysis consists of the application of analytical tools and

techniques to the data in financial statement in order to derive from them measurements andrelationship that are significant and useful for decision making.

USES OF FINANCIAL STATEMENT ANALYSIS:

Financial statement analysis can be used as preliminary screening tools in the selection of

stock in the secondary market. It can be uses as forecasting tools of future financial condition

and results. It may be used as process of evaluation and diagnosis of managerial operating orother problem areas.

SOURCE OF FINANCIAL INFORMATION:

The financial data needed in the financial analysis come from many sources.

TOOLS OF FINANCIAL ANALYSIS:

In the analysis of financial statement, the analyst has a variety of tools available to choose

the best that suits his specific purpose. In this report we will confine ourselves to ratio analysis

based on information provided from financial statement such as balance sheet and profit & loss

account.


23/39

23

PROFIT AND LOSS ACCOUNTS OF ICIC BANK

MARCH

2011

MARCH

2010

MARCH

2009

MARCH

2008

MARCH

2007

Income

Operating income 32369.69 327470.36 38250.39 39467.92 28457.13

Expenses

Material Consume - - - - -

Manufacturing Expense - - - - -

Persona expense 2816.93 1925.79 1971.70 2078.90 1616.75

Selling expenses 305.79 236.28 669.21 1750.60 1741.63

Admin expenses 4909.00 7440.42 7475.63 6447.32 4946.89

Expenses capitalized - - - - -

Cost of sale 8031.72 9602.49 10116.54 10276.82 8305.07

Operating profit 7380.82 5552.30 5407.891 5706.85 3793.56

Other recurring income 7.26 305.36 330.64 65.58 309.17

Adjusted profit 7388.68 5857.66 5738.55 5772.43 4102.73

Financial expense 16957.15 17592.57 22725.93 23484.24 16358.50

Depreciation 562.44 519.50 678.60 578.35 544.78

Other written off - - - - -

Adjusted PBT -

10131.51

-12354.42 -

17665.98

5194.08 3557.05

Tax charges 1609.33 14600.78 1830.51 1611.73 984.25

Adjusted PAT 5110.21 3890.47 3740.62 4092.12 2995.00

NM recurring items 41.17 134.52 17.51 65.61 115.22

Other non-cash

Adjustment -2.17 - -0.58 - -

Reported net profit 5179.21 4024.98 3757.55 4157.73 3110.22

Earnings Before

Appropriation 8613.59 6834.63 6193.87 5156.00 3403.66


24/39

24

Equity dividend 1612.58 1337.95 1224.58 1227.70 901.17

Preference dividend - - - - -

Dividend tax 202.28 164.04 151.21 149.67 153.10

Retained earning 6798.73 5332.63 4848.07 3778.63 2349.39


25/39

25

RATIO ANALYSIS

CAPITAL ADEQUACY RATIO:

A measure of a banks capital it is expressed as a percentage of a banks risk weighted

credit exposures. It calculated capital risk.

Mar 07 Mar 08 Mar 09 Mar 10 Mar 11

11.18 11.56 10.09 11.93 13.21

Capital adequacy ratio (CAR) is a ratio of banks capital to its risk. National regulators

track a banks CAR to ensure that it can absorb a reasonable amount of loss and are complying

with their statutory capital requirement. The formula for capital adequate ratio is (Tier 1 capital

+ Tier 2 capital) / risk weighted assets capital adequacy ratio is the ratio which determines the

capacity of the bank in terms of meeting the time liabilities and other risks such as credit risk,operational risk, etc. In the simplest formulation, abankscapital is the Cushion for potential

losses, which the banks depositor or other lenders. Her incase of ICICI bank we can see that its

CAR showed a sudden dip in the year 2008 but after that it has shown a study rise for the next 2

years which is a good sign

For its depositors and investors.

Mar 7th

Mar 8th

Mar 9th

Mar 10th

Mar 11th


26/39

26

DEBTEQUITY RATIO:

A measure of a companys financial leverage calculated by dividing its total liabilities by

stock holders equally. It indicates what proportion of equity and debt the company is using to

finance its assets.

DEBT EQUITY FUND


69.93 84.28 102.11 186.19 234.24

The debt to equity ratio (D/E) is a financial ratio indicating the relative proportion of

shareholders equity and debt used to finance a companys assets. More, in case of ICICI bank

we can see that the add-equity ratio has incurred during the years. This is because its equity

capital showed no growth from the year 2007 to 2009 and it decreased by around Rs. 250 crores

in 2010 and renewed the same for the year 2010. But its debt capital has shown and study

increase over the past 5 years from this we can infer that since ICICI bank is a public sector

undertaking it depends much more on debt capital rather than equity capital.

0

50

100

150

200

250

7-Mar Mar 8th Mar 9th Mar 10th Mar 11th


27/39

27

CURRENT RATIO:

Current ratio may be defined as the relationship between current assets and current

liabilities.

CURRENT RATIOCURRENT ASSETCURRENT LIABILITIES.


65.17 79.27 98.16 182.22 238.24

A relatively high current rates is an indication that the firm is liquid and has the ability to

pay its current obligations in time as and when they become due. An increase in the current rates

represent improvement in the liquid position of the firm while a decrease in the current ratio

indicates that there has been deterioration in the liquidity position of the firm.

0

50

100

150

200

250

Mar 7th Mar 8th Mar 9th Mar 10th Mar 11th


28/39

28

QUICK RATIO:

Quick ratio also known as acid test or liquidity rates is more rigorous test of liquidity.

QUICK RATIO = QUICK ASSETS / CURRENT LIABILITIES


62.16 72.37 96.74 164.46 213.26

INTERPRETATION:

Usually a high test ratio is an indication that the firm is liquid and has the ability to meet

it current or liquid liabilities in time and on the other hand a low quick repressed that the firm

liquidity position is not good.

0

50

100

150

200

250

Mar 7th Mar 7th Mar 8th Mar 9th Mar 10th Mar 11th


29/39

29

DEBT TURNOVER RATIO:

Debt turnover ratio indicates the velocity of debt collection of firm. In simple working

indicates the number of times average debtors are turnover during the year.


15.46 16.45 11.87 17.46 19.85

Debt turnover indicates the number of times the debts are turned over during a year

generally, the higher the value ofdebtors turnover the more efficient in the management ofdebtor and more liquid are the debtors.

0

5

10

15

20

25

Mar 7th Mar 8th Mar 9th Mar 10th Mar 11th


30/39

30

ADVANCES TO ASSETS:

A high ratio of advances to assets would mean that the chances of non-performing assets

formation are also high, which is not a good sceneries for a bank.


0.60 0.63 0.61 0.62 0.60

Advances to assets is also a good indicator of a firms capital adequacy. A high ratio of

advances to assets would mean that the chances of non-performing assets formation are also

high, which is not good scenarios for a bank. This could mean the credibility of its assets would

go down. In case of ICICI bank, we can see that it is able to maintain a pretty study ratio of its

advances to assets which means the credibility of its assets is good.

0.595

0.6

0.605

0.61

0.615

0.62

0.625

0.63

0.635

0 1 2 3 4 5 6


31/39

31

GOVERNMENT SECURITIES TO TOTAL INVESTMENTS :

The ratio of government securities to total investments showed how safe are the company

investments.


0.81 0.83 0.83 0.86 0.80

The rates of government securities to total investments have how safe are the companys

investments. Here in case of ICICI bank we can see that its ratio of investments in government

securities to total investment is very high and it has remained quite steady over the years with

minimum fluctuations. The high rates tell that ICICI banks investment policy is consecutives

and their investment are safe.

Mar 7th

Mar 8th

Mar 9th

Mar 10th

Mar 11th


32/39

32

EARNING QUALITY:

PERCENTAGE GROWTH IN NET PROFITS.

Total 13:1 (Per cent)

2008 0.61

2009 0.30

2010 0.35

2011 081

As per the analyses it can be seen that the net profit of the bank is going continuously

from the year 2009 onwards. In the year 2009-2010 the net profit was decreased because of the

substitute crises in U.S.A. and again it was measure 2009-2010 as RBI did not stopped money

flow to the marks.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

2008 2009 2010 2011


33/39

33

NET PROFIT TOTAL ASSETS:

Total 3-2 (Per cent)

2007 0.0031

2008 0.0042

2009 0.0049

2010 0.0053

2011 0.0078

Net profit to total assets is continue increasing from 2007 onwards. It means the bank is

able to utilize its assets.

2007

2008

2009

2010

2011


34/39

34

INTEREST INCOME TO TOTAL INCOME

Table: 3.3 (Per Cent)

2007 7.61

2008 7.86

2009 8.39

2010 8.79

2011 8.06

7

7.2

7.4

7.6

7.8

8

8.2

8.4

8.6

8.8

2007 2008 2009 2010 2011


35/39

35

NON-INTEREST INCOME TO TOTAL INCOME:

Table: 3.4 (Per Cent)

2007 0.30

2008 0.32

2009 0.36

2010 0.35

2011 0.32

0.27

0.28

0.29

0.3

0.31

0.32

0.33

0.34

0.35

0.36

2007 2008 2009 2010 2011

0.3

0.32

0.36

0.35

0.32


36/39

36

(SUMMARY OF RATIOS)

RATIO

Per Share Ratio Mar11 Mar10 Mar09 Mar08 Mar07

Adjusted EPS (Rs) 44.37 34.90 33.60 36.78 33.30

Adjusted cash EPS (Rs) 49.25 10.45 39.70 41.97 39.36

Repoted EPS (Rs) 44.73 36.10. 33.76 37.37 34.59

Repoted Cash EPS (Rs) 49.61 41.66 39.85 42.56 40.64

Dividend Per Share 14.00 12.00 11.00 11.00 10.00

Operating profit per share (Rs) 64.08 49.80 48.58 51.29 42.19

Book value (excel revres ) Per

Share (Rs) 478.31 463.01 444.94 419.64 270.37

Book value (ind revres) Per

Share (Rs) 478.31 463.01 444.94 417.64 270.37

Net Operating Income Per share (Rs) 281.04 293.74 343.59 354.71 316.45

Free Reseues per share ( Rs) 358.12 356.94 351.04 346.21 199.52

Profitability Ratios

Operating Margin (%) 22.80 16.95 14.13 14.45 13.33

Gross Profit Margin (%) 21.06 15.06 12.36 12.99 11.41

Net profit Margin (%) 15.91 12.17 9.74 10.51 10.81

Adjusted cash margin (%) 17.52 13.64 11.45 11.81 12.30

Adjusted retune on net worth (%) 9.27 7.53 7.55 8.80 12.31

Repated Retunen on net worth (%) 9.35 7.79 7.55 8.94 12.79

Retune on long term fund 42.97 44.72 56.72 62.34 82.46


37/39

37

HEVERAGE RATIO:

Long term debt /Equity - - 0.01 0.01 0.01Total debt / Equity 4.10 3.91 4.42 5.27 4.50

Owners fund as % of

Total source 19.62 20.35 18.46 15.95 9.52

Fixed asset tuners ratio 3.55 4.60 5.15 5.61 4.52

LIQUIDITY RATIO:

Current Ratio 1.73 1.94 0.78 0.72 0.61

Current Ratio (inc st loan) 0.11 0.13 0.13 0.10 0.08

Quick ratio 15.86 14.70 5.94 6.42 6.04

PAYOUT RATIO:

Dividend payout ratio (net profit) 35.23 37.31 36.60 33.12 33.89

Dividend payout ratio (cash profit) 31.76 32.33 31.00 29.08 28.84

Earning retention ratio 64.49 61.40 63.23 66.35 64.80

Cash earnings retention ratio 68.01 66.70 68.87 70.51 70.22

COVERAGE RATIO:

Adjusted cash flow time total debt 39.77 44.79 49.41 52.34 65.12

Financial charges coverage ratio 0.43 0.33 0.25 1.25 1.25

Financial charges coverage ratio (pst tax) 1.34 1.26 1.20 1.20 1.22


38/39

38

COMPONENT RATIO:

Material cost component (%earning) - - - - -Selling cost component 0.94 0.72 1.74 4.43 6.12

Export as percent of total sales - - - - -

Import comp in law material consumed - - - - -

Long term assets/total assets 0.83 0.80 0.75 0.78 0.80


39/39

CONCLUSION:

The balance sheet along with the income statement is an important tool for investors and

many other parties who are interested in it to gain insight into a company and its operation. The

balance sheet is a snapshot at a single point of time of the companys accounts. Covering its

assets, liabilities and shareholders equity. The purpose of the balance sheet is to give users or

idea of the companys financial position along with displaying what the company owns and

owes. It is important that all investors know how to use, analyze and read balance sheet. Profit

and loss account tells the net profit and net loss of a company and also appropriation. In the case

of ICICI Bank, during fixed 2008 the bank continued to grow and diversify its assets base and

revenue streams. Trend analysis of profit and loss account and balance sheet shows the %

change in items of Profit and loss account and balance sheet i.e. % change in 2009 from 2007

and % change in 2008 from 2007. It shows that all items are increased mostly but increase in this

year is loss than as compared to increase in previous year. In profit and loss accounts, all items

like interest income. Non-interest income, interest expenses operating expenses, operating

profit, profit before tax and after tax is incurred that in mostly cases it is loss than from previous

year but in some items like interest income, interest expenses, provision % increase is more.

Some items like tax, depreciation, lease income is decreased. Similarly in balance sheet all items

like advances, cash, liabilities, and deposits are increased except borrowing switch is decreased

% increase in some item is more than previous year and in some items it is less.

Ratio analysis of financial statement shows that banks current ratio is better than the

quick ratio and fixed/worth ratio. It means bank has invested more in current assets than the

fixed assets and liquid assets. Thus, the ratio analysis and trend analysis show that ICICI banks

financial position is good. Banks profitability is increasing but not at high rate. Banks liquidity

position is fair but not good because bank invests more in current assets than the liquid assets.

As well all know that ICICI bank is on the first position among the entire private sector bank ofIndia in all areas but it should pay attention or its profitability and liquidity .Banks position is

stable.

icici complete project

Documents