PROJECT REPORT

A STUDY ON FINANCIAL RATIO ANALYSIS OF

AXIS BANK

SUBMITTED TO

B.Com (Honours) Programme

THE MAHARAJA SAYAJIGUNJ UNIVERSITY OF BARODA

In partial fulfilment of the requirement of the Degree of

BACHELOR OF COMMERCE (HONOURS)

SUBMITTED BY:

ABHIJIT DAS

dasabhijeet13598@gmail.com

T.Y.BCOM (HONOURS) SEM-VI

Exam Seat No: 617002

SUBMITTED TO
Ms. AKIRA

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 ACKNOWLEDGEMENT

I would like to thank some eminent personalities who have been involved with me right from
the beginning of Project Report till end of the Report. I express my deep sense of gratitude to
the Programme Coordinator: Dr. J. K. PANDYA and Assistant Programme Coordinator: Dr.
Arti Khabia, Dr. Archana Fulwari and Shri. R Hariharan who constantly guided us in this
Project and also providing me such nice opportunity to undergo this project. I express my
sincere gratitude to Ms. Akira Dhiraj Ramchandani for Support while preparing the report. I
also extend my thanks to other teachers & non-teaching staff of the Programme and also my
friends who helped me directly or indirectly to furnish the Project Report. Last but not the
least I am thankful to Almighty, for making my difficulties easier and Begin with me.

ABHIJIT DAS

[Student – T. Y. B.Com (Honours)]

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 DECLARATION

I declare that the project report entitled ' STUDY ON FINANCIAL RATIO ANALYS OF
AXIS BANK' submitted by me for the degree of Bachelor of Commerce (Honours) is the
record of research work carried out by me during the academic year 2018-19 under the
guidance of Ms. Akira Dhiraj Ramchandani and has not formed the basis for the award of any
degree, diploma, associateship, fellowship, titles in this or any other University or other
institution of higher learning.

I further declare that the material obtained from other sources has been duly acknowledged in
the project report. I shall be solely responsible for any plagiarism or other irregularities, if
noticed in the project report.

Signature of the student

Date:

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TABLE OF CONTENT PAGE NO.

CHAPTER 1- INTRODUCTION..............................................................................7

 BACKGROUND..............................................................................................8
 PROBLEM STATEMENT...............................................................................9
 OPERATIONAL KEY TERM DEFINATIONS............................................10
 PERIOD OF THE STUDY..............................................................................10
 SCOPE OF THE STUDY................................................................................10
 SIGNIFICANCE OF THE STUDY................................................................11
 LIMITATIONS OF THE STUDY...................................................................12

CHAPTER 2- COMPANY OVERVIEW................................................................13

 HISTORY.........................................................................................................15
 SERVICES.......................................................................................................15

CHAPTER 3- REVIEW OF LITERATURE.........................................................18

 LIQUIDITY....................................................................................................19
 PROFITABILITY...........................................................................................21
 EFFICIENCY USE OF CAPITAL EMPLOYED..........................................22

CHAPTER 4- RESEARCH METHODOLOGY....................................................24

 DATA COLLECTION....................................................................................25
 DATA ANALYSIS.........................................................................................25
 SECONDARY DATA....................................................................................26
 RESEARCH INSTRUMENTS.......................................................................26
 RATION ANALYSIS FORMULAS..............................................................26
 CLASSIFICATION OF RATIOS...................................................................27
CHAPTER 5 - DATA ANALYSIS AND INTERPRETATION...........................29
CHAPTER 6- FINDINGS, SUGGESTIONS AND CONCLUSION...................41
 BIBLIOGRAPHY..............................................................................45
 APPENDIX........................................................................................46

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 LIST OF TABLES

Table 5.1 Showing The Bank's Current Ratio..........................................................31

Table 5.2 Showing The Bank's Quick Ratio............................................................32

Table 5.3 Showing The Bank's cash position Ratio.................................................33

Table 5.4 Showing The Bank's Net Profit Margin Ratio.........................................34

Table 5.5 Showing The Bank's Return on common stock equity............................35

Table 5.6 Showing The Bank's Return on Asset Ratio............................................36

Table 5.7 Showing The Bank's Current Asset Turnover Ratio...............................37

Table 5.8 Showing The Bank's Fixed Asset Turnover Ratio..................................38

Table 5.9 Showing The Bank's Total Asset Turnover Ratio...................................39

Table 5.10 Showing The Bank's Debt Ratio...........................................................40

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 CHAPTER I

INTRODUCTION

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BACKGROUND

 The banking sector is one of the most important instrument of the national
development, occupies a unique place in a nation’s economy. It acts as one of the
important element of the whole backbone of the country. Economic development of
the country is evident through the soundness of the banking system. Deregulation in
the financial market, market liberalization, economic reforms have witnessed
important changes in banking industry leading to incredible competitiveness and
technological sophistication leading to a new era of in banking.
 Indian banks are the dominant financial intermediaries in India and have made good
progress during the global financial crisis; it is evident from its annual credit growth
and profitability. The growth is possible in two ways, organic or inorganic.
1. Organic growth is also referred as internal growth, occurs when the
company grows from its own business activity using funds from one
year to expand the company the following year. Such growth is a
gradual process spread over a few years but firms want to grow faster.
2. Inorganic growth is referred as external growth and considered as a
faster way to grow which is most preferred Inorganic growth occurs
when the company grows by merger or acquisition of another
business.
 The main motive behind the Merger is to create synergy, that is one plus one is more
than two and this rationale beguile the companies for merger at tough times. Merger
and Acquisitions help the companies in getting the benefits of greater market share
and cost efficiency. For expanding the operations and cutting costs, Banks are using
Merger and Acquisitions as a strategy for achieving larger size, increased market
share, faster growth, and synergy for becoming more competitive through economies
of scale.
 Today a large section of people, who have minimal financial literacy, are need to
know the financial performance status of the banks where their deposits are vested.
They may be as an investor, manager, employee, owner, lender, customer,
government and public at large. Financial performance is not available from the
records and files in any organization. It has to be derived by the usage of financial
statement analysis techniques. The selection and usage of technique is subject to the
option of the user.

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  Some of the important and commonly used techniques are: Ratio Analysis, Cross
section analysis Comparative statement analysis, Time series analysis, Common size
analysis. The usefulness of ratios depends on skilful interpretation and intelligence of
the user.
 The present study is devoted to analysis the financial ratios of Axis Bank by using
ratio analysis with a view to give meaningful interpretations for the users Financial
Ratios are used in the evaluation of the financial condition and profitability of a
company. The ratios are calculated from the financial information provided in the
balance sheet and income statements.
 Ratio Analysis is one of the techniques of financial analysis where ratios are used to
evaluating the financial condition and performance of a firm. Analysis and
interpretation of various accounting ratios gives a skilled and experienced analyst a
better understanding of the financial condition and performance of the firm.

PROBLEM STATEMENT
 Generally banking System is the backbone of every country’s economy. It is generally
agreed that a strong and healthy banking system is a prerequisite for sustainable
economic growth. The banking system of India is featured by a large network of
banks, serving many kinds of financial needs of the people
 The Axis Bank popularly is one of the leading banks in India with number of
branches and variety of products. The investigation in this study is the financial
performance of the bank. The study will mainly explore the financial tools to measure
and interpret a performance.
 The main objective of any company is the creation of wealth for its stakeholders
although this mostly applies market facts. This means that progress needs to be
measured to show the bank return in total by highlighting the major strengths and
opportunities of the bank and on the other hand, weaknesses and threats facing the
bank. Also an analysis indicates the level of efficiency, liquidity, debt management
and adequate cash flow. No research is completed until it has formulated a specific
problem. The problem of the study is to analyze the financial status of Axis Bank

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OPERATIONAL KEY TERMS DEFINITION

 Ratios: are the simplest mathematical (statistical) tools that reveal significant
relationships hidden in mass of data, and allow meaningful comparisons. Some ratios
are expressed as fractions or decimals, and some as percentages. Major types of
business ratios include Efficiency, Liquidity, Profitability, and Solvency ratios.
 Analysis: Ratio Analysis is a form of Financial Statement Analysis that is used to
obtain a quick indication of a firm's financial performance in several key areas. The
ratios are categorized as Short-term Solvency Ratios, Debt Management Ratios, Asset
Management Ratios, Profitability Ratios, and Market Value Ratios
 Profit: The surplus remaining after total costs are deducted from total revenue, and
the basis on which tax is computed and dividend is paid. It is the best known measure
of success in an enterprise.

PERIOD OF THE STUDY

 This study of financial ratio analysis is limited to five years from 2013 to 2018. The
accounting year starts from 1 April to 31 march.

OBJECTIVE OF THE STUDY

 To know the liquidity position and solvency
 To study the profitability of axis bank
 To find financial performance and efficiency use of capital employed

SCOPE OF THE STUDY

The current study choose one private sector bank to evaluate the financial performance The
main scope of the study was to put into practical the aspect of the study into real life work
experience. The study applies Ratio analysis based on last 5 years Annual financial reports of
Axis bank in India

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SIGNIFICANCE OF THE STUDY

 Government regulation, in most of the countries shielded the banks from the forces of
competition. India is no exception for this. With the nationalization of the most of the
major commercial banks in 1969, restrictions on entry and expansion of private and
foreign banks were gradually increased. The Reserve Bank of India also began
enforcing uniform interest rates, spreads and service changes among nationalized
banks. This cause of lack free market competition either among public and private
banks. Gradually the force of competition from the banking sector is still remain.

 In addition some areas of concern in the form of increasing non-performing assets,

declining profitability and efficiency, which were threatening the viability of
commercial banks. Commercial banks have played a vital role in giving direction to
economic development by catering the financial requirement of trade and industry in
the country. By encouraging saving among the people, commercial banks have
fastened the process of capital formation. Banks draw the community savings into the
organized sector which can then be allotted among the different economic activities
according to the priorities laid down by planning authorities in the country.

 The banks are not only the safe deposit vaults for these savings, but taking the
banking system as a whole, they also create deposits in the process of their lending
operations. However, the important function of a banker is the provision of
convenient machinery by which people can make payments to each other without
having to walk round each other’s house with bags of coins.

 Banks also exercise influence on the level of economic activities through the creation
of manufacturing of money. Through their lending policies, they divert the economic
activity to the needs of the country. In view of this, the role of commercial banks in
underdeveloped countries and planned economies like India becomes particularly
important. the present study seeks to examine the trends in the financial performances
of one of the leading banking sector of the country (Axis Bank).

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LIMITATION OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer from certain limitations.
Some of these are mentioned here under so that the findings of the study may be understood
in a proper perspective. The limitations of the study are:
 The study is based on the secondary data and the limitation of using secondary data
may affect the results.
 The secondary data was taken from the five years annual reports of the Axis Bank. It
may be possible that the data shown in the annual reports may be limited period of
time which does not effectively show the actual fluctuation of the bank profitability.

Financial analysis is mainly done to compare the growth, profitability and financial
soundness of bank by diagnosing the information contained in the financial statements.
Financial ratio analysis is done to identify the financial strengths and weaknesses of the bank
by properly establishing relationship between the items of Balance Sheet and Profit & Loss
Account for period of five years. It helps in better understanding of bank financial position,
growth and performance by analyzing the financial statements with various tools and
evaluating the relationship between various elements of financial statements

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 CHAPTER II
COMPANY PROFILE

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 Axis Bank is the third largest private sector bank in India. The Bank offers the entire
spectrum of financial services to customer segments covering Large and Mid-
Corporate, MSME, Agriculture and Retail Businesses.
 The Bank has a large footprint of 3,964 domestic branches (including extension
counters) with 12,705 ATMs & 3,548 cash recyclers spread across the country as on
31st December, 2018. The overseas operations of the Bank are spread over ten
international offices with branches at Singapore, Hong Kong, Dubai (at the DIFC),
Colombo and Shanghai; representative offices at Dhaka, Dubai, Abu Dhabi; a step
down subsidiary in the US- Axis Capital USA, LLC and an overseas subsidiary in
London, UK. The international offices focus on corporate lending, trade finance,
syndication, investment banking and liability businesses.
 Axis Bank is one of the first new generation private sector banks to have begun
operations in 1994. The Bank was promoted in 1993, jointly by Specified
Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of India), Life
Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC),
National Insurance Company Ltd., The New India Assurance Company Ltd., The
Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The
share holding of Unit Trust of India was subsequently transferred to SUUTI, an entity
established in 2003.
 With a balance sheet size of Rs. 6,91,330 crores as on 31st March 2018, Axis Bank
has achieved consistent growth and with a 5 year CAGR (2012-13 to 2017-18) of
15% in Total Assets, 12% in Total Deposits, 17% in Total Advances.

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History

 UTI Bank opened its registered office in Ahmadabad and corporate office in Mumbai
in December 1993. The first branch was inaugurated on 2 April 1994 in Ahmadabad
by Dr. Manmohan Singh, the then Finance Minister of India. UTI Bank began its
operations in 1993, after the Government of India allowed new private banks to be
established. The Bank was promoted in 1993 jointly by the Administrator of the Unit
Trust of India (UTI-I), Life Insurance Corporation of India (LIC), General Insurance
Corporation, National Insurance Company, The New India Assurance Company, The
Oriental Insurance Corporation and United India Insurance Company.
 In 2001 UTI Bank agreed to merge with and amalgamate Global Trust Bank, but the
Reserve Bank of India (RBI) withheld approval and nothing came of this. In 2004 the
RBI put Global Trust into moratorium and supervised its merger into Oriental Bank of
Commerce. In 2003 UTI Bank became the first Indian bank to launch the travel
currency card. In 2005, UTI bank got listed on London Stock Exchange.
 UTI Bank opened its first overseas branch in 2006 Singapore. That same year it
opened a representative office in Shanghai, China. UTI Bank opened a branch in the
Dubai International Financial Centre in 2007. That same year it began branch
operations in Hong Kong. In 2008 it opened a representative office in Dubai.
 With effect from July 30, 2007, UTI Bank changed its name to Axis Bank.
 Axis Bank opened a branch in Colombo in October 2011, as a Licensed Commercial
Bank supervised by the Central Bank of Sri Lanka. Also in 2011, Axis Bank opened a
representative offices in Abu Dhabi. In 2011, Axis bank inaugurated Axis House, its
new corporate office in Worli, Mumbai.
 In 2013, Axis Bank's subsidiary, Axis Bank UK commenced banking operations. Axis
Bank UK has a branch in London.

SERVICES

 RETAIL BANKING

In the retail category, the bank offers services such as lending to individuals and small
businesses subject to the orientation, product and granularity criterion, along with
liability products, card services, Internet banking, automated teller machines (ATM)

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 services, depository, financial advisory services, and Non-resident Indian (NRI)
services. Axis bank is a participant in RBI's NEFT enabled participating banks list.

 CORPORATE BANKING

Credit: The Bank offers various loan and fee-based products and services to large and
mid-corporate customers and small and medium Enterprise (SME) businesses. These
products and services include cash credit facilities, demand and short-term loans,
project finance, export credit, factoring, channel financing, structured products,
discounting of bills, documentary credits, guarantees, foreign exchange and derivative
products. Liability products including current accounts, certificates and deposits and
time deposits are also offered to large and mid-corporate segments.

Transaction banking: Formed in April 2015, TxB provides integrated products and
services to customers in areas of current accounts, cash management services, capital
market services, trade, foreign exchange and derivatives, cross-border trade and
correspondent banking services and tax collections on behalf of the Government and
various State Governments in India.

Treasury: The treasury manages the funding position of the Bank and also manages
and maintains its regulatory reserve requirements. It invests in sovereign and
corporate debt instruments and engages in proprietary trading in equity and fixed
income securities, foreign exchange, currency futures and options. It also invests in
commercial papers, mutual funds and floating rate instruments as part of the
management of short-term surplus liquidity. In addition, it also offers a wide range of
treasury products and services to corporate customers.

Syndication: The bank also provides services of placement and syndication in the
form of local currency bonds, rupee and foreign term loans and external commercial
borrowings.

Investment banking and trustee services: The bank provides investment banking
and trusteeship services through its owned subsidiaries. Axis Capital Limited provides
investment banking services relating to equity capital markets, institutional stock
broking besides M&A advisory. Axis Trustee Services Limited is engaged in

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 trusteeship activities, acting as debenture trustee and as trustee to various
securitization trusts.

 INTERNATIONAL BANKING

The bank continues to offer corporate banking, trade finance, treasury and risk
management through the branches at Singapore, Hong Kong, DIFC, Shanghai and
Colombo, and also retail liability products from its branches at Hong Kong and
Colombo. The representative office at Dhaka was inaugurated during the current
financial year.

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 CHAPTER III

REVIEW
OF
LITERATURE

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LIQUIDITY

 Corporate liquidity can be examined along two basic dimensions: static and dynamic
(Uyar, 2009). Static analysis is focused on traditional ratios (current and quick ratios)
based on the data from the balance sheet. These ratios assess to what extent current
liabilities are covered by current assets. Dynamic analysis is based on cash outflows
and inflows and uses cash conversion cycle (CCC) to measure effectiveness of a
company’s ability to generate cash. It comprises both balance sheet and income
statement data to create a measure with a time dimension (cash flow within the
operating cycle of the firm). To conduct a comprehensive liquidity analysis both types
of ratios are used. the essential part in management of working capital lies in
maintaining liquidity in day-to-day operations is to ensure smooth running of the
business and that it meets its obligations (Deloof, 2003). Liquidity management,
which refers to management of current assets and liabilities, plays an important role in
the successful management of a business and secures future growth. The liquidity
position of a business is about the degree in which it can dispose money. Liquidity
management is necessary for all businesses, small, medium or large. Nevertheless,
this is not an effortless task because managers must ensure that the firm is running in
an efficient and profitable manner and in most cases there are high possibilities of
mismatch of current assets and current liabilities during this process. If this happens
and firm’s manager failed to manage it properly then it will affect firm’s growth and
profitability which will further lead to financial distress and finally firms can go
bankrupt.
 Qasim & Ramiz (2011) indicate the fact that liquidity refers to the available cash for
the near future, after taking into account the financial obligations corresponding to
that period. Liquidity risk consist in the probability that the organization should not be
able to make its payments to creditors, as a result of the changes in the proportion of
long term credits and short term credits and the un correlation with the structure of
organization's liabilities. Further, Qazim and Ramiz (2011) posit that liquidity
management is very important for every organization that means to pay current
obligations on business that include operating and financial expenses that are short
term. Liquidity is particularly important to shareholders, long-term lenders and
creditors, as it provides information about a particular business's safety margins

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 afforded to creditors and its ability to repay loans. The levels of inventory, credit,
accounts payable and cash that form part of the overall cash flow of a business affect
the liquidity of the firm (Maness, 1994 ). By maintaining an appropriate level of
liquidity a business should be in a position to survive down turns and moreover, it
may be able to exploit profitable opportunities as they arise (Gitman, 1997). On the
other hand, as asserted by Cooper, et al (1998), illiquidity, unless remedied, will give
rise to insolvency and eventually bankruptcy as the Business’s liabilities exceed its
assets. Excessive debt exposes the business to potentially large interest costs and the
risk of potential bankruptcy. Shareholders, long term lenders and creditors evaluate
the level of risk they bear, and require compensation for the risks, which arise from a
business's capital structure. The proportion of assets financed by creditors are of
particular importance to shareholders, since creditors have a prior claim on the
Liquidity ratios measure a business' ability to meet the payment obligations by
comparing the cash and near-cash with the payment obligations. If the coverage of the
latter by the former is insufficient, it indicates that the business might face difficulties
in meeting its immediate financial obligations. This can, in turn, affect the company's
business operations and profitability. The Liquidity versus Profitability Principle:
There is a trade-off between liquidity and profitability; gaining more of one ordinarily
means giving up some of the other. Ration analysis is one of the conventional way
that use financial statements to evaluate the company and create standards that have
simply interpreted financial sense.
 Benjamin and Kamalavali (2006) in their study in which the independent variables
used were current ratio, quick ratio, inventory turnover ratio, working capital turnover
ratio, debtor’s turnover ratio, ratio of current asset to total asset, ratio of current asset
to operating income, comprehensive liquidity index, net liquid balance size and
leverage and growth while dependent variable (profitability) was measured in terms
of return on investment ROI established a negative association between ROI and the
current ratio, cash turnover ratio, current asset to operating income and leverage. On
the other hand they established a positive association between ROI and the quick
ratio, debtor’s turnover ratio, current asset to total asset and growth rate. Dong (2010)
in his study that focused on the variables that include profitability, conversion cycle
and its related elements and the relationship that exists between them reported that the
firms’ profitability and liquidity are affected by working capital management. The
relationship among these variables was found to be strongly negative. This denote that

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 decrease in the profitability occur due to increase in cash conversion cycle. It is also
found that if the number of days of account receivable and inventories are diminished
then the profitability will increase numbers of days of accounts receivable and
inventories.
 Saswata Chatterjee (2010) focused on the importance of the fixed and current assets
in the successful running of any organization. It poses direct impacts on the
profitability and liquidity. There have been a phenomenon observed in the business
that most of the companies increase the margin for the profits and losses because this
act shrinks the size of working capital relative to sales. But if the companies want to
increase or improve its liquidity, then it has to increase its working capital.
 Islam et al. (2009) conducted a research on financial diagnosis of the financial
institutions of Bangladesh: A comparative study on IPDC, IDLC and ICB and through
ratio analysis they measured the financial health of the financial institutions and
concluded that financial institutions play a key role in the economic development of
capital market of the country.
 Hassan and Habib (2010) used financial ratios for conducting a research on
performance evaluation of the pharmaceutical companies in Bangladesh. They
revealed that the financial performance of Beximco Pharmaceuticals Ltd. is better
than Square Pharmaceuticals Ltd.
 Raheman and Mohamed (2007) studied the effect of average collection period,
inventory turnover in days, average payment period, cash conversion cycle, and
current ratio on the net operating profitability of Pakistani firms. They found that as
the cash conversion cycle increases, it leads to decreasing profitability of the firm and
managers can create a positive value for the shareholders by reducing the cash
conversion cycle to a possible minimum level.

PROFITABILITY

 Reilly and Brown (2005) stated that financial statement analysis seeks to evaluate
managerial performance in several important areas including profitability, efficiency
and risk. The ultimate goal of that analysis is to provide insights that will help us
project future managerial performance. They also suggest that financial ratios should
be examined relating to the economy, the firm’s industry, firm’s main competitors and

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 the firm’s past relative ratios. the issue of trade-off between liquidity and profitability
has been discussed intensively since this it is crucially important for companies.
 Ross (2000) and Myers (2003) mention that excess liquidity is an expense for the
company. Money tied up in current assets can be alternatively deposited or invested
and generate interest income. Thus, the price of working capital over financing is the
interest rate. In the case of liquidity deficit the company must either attract short term
loan or sell some liquid assets, which is also an expense. Only the optimal level of
liquidity benefits profitability.
 Taping and Stephan (2008) in their research on profit determinants found that
liquidity of Ukrainian firms, measured by current ratio, has a significant positive
influence on profitability. One can name the size of the company, intangible assets
and liquidity among other important determinants of profitability for companies
operating in the emerging markets. Therefore, liquidity has a considerable impact on
firm’s profitability and that is why it requires proper management. Banking Sector
plays an important role in economic development of a country. The banking system of
India is featured by a large network of bank branches, serving many kinds of financial
services of the people.

EFFICIENCY USE OF CAPITAL EMPLOYED

 One of the most important areas in the day to day management of the firm is the
management of efficiency use of capital employed. Working capital refers to the
funds invested in the current assets i.e. investment in stock, sundry debtors, cash and
others current are essential to use fixed assets profitability for e.g.: A machinery
cannot be used without raw materials. The investments on the purchase of raw
material are identified as working capital. It is obvious that a certain amount of the
fund is always tied up in raw material inventories. Working capital may be regarded
as lifeblood of a business (Srinivas K T, 2012). Working capital is nerve system of
any business. Without proper working capital management company cannot achieve
its objectives and not possible to maintain financial soundness. So in this perspective
present study is undertaken to study working capital management through ratio
analysis at Karnataka Power Corporation limited. From the present study it is found
that company financial position was seeing to be sound because the company tries to
increase its production and also net profit (Srinivas K T, 2012).

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 Eljelly, (2004): elucidated that efficient liquidity management involves planning and
controlling current assets and current liabilities in such a manner that eliminates the
risk of inability to meet due short-term obligations and avoids excessive investment in
these assets. The relation between profitability and liquidity was examined, as
measured by current ratio and cash gap (cash conversion cycle) on a sample of joint
stock companies in Saudi Arabia using correlation and regression analysis. The study
found that the cash conversion cycle was of more importance as a measure of liquidity
than the current ratio that affects profitability. The size variable was found to have
significant effect on profitability at the industry level. The results were stable and had
important implications for liquidity management in various Saudi companies. First, it
was clear that there was a negative relationship between profitability and liquidity
indicators such as current ratio and cash gap in the Saudi sample examined. Second,
the study also revealed that there was great variation among industries with respect to
the significant measure of liquidity.
 Deloof (2003): discussed that most firms had a large amount of cash invested in
working capital. It can therefore be expected that the way in which working capital is
managed will have a significant impact on profitability of those firms. Using
correlation and regression tests he found a significant negative relationship between
gross operating income and the number of days accounts receivable, inventories and
accounts payable of Belgian firms. On basis of these results he suggested that
managers could create value for their shareholders by reducing the number of days’
accounts receivable and inventories to a reasonable minimum. the negative
relationship between accounts payable and profitability is consistent with the view
that less profitable firms wait longer to pay their bills.
 Ghosh and Maji, (2003): in this paper made an attempt to examine the efficiency of
working capital management of the Indian cement companies during 1992 – 1993 to
2001 – 2002. For measuring the efficiency of working capital management,
performance, utilization, and overall efficiency indices were calculated instead of
using some common working capital management ratios. Setting industry norms as
target-efficiency levels of the individual firms, this paper also tested the speed of
achieving that target level of efficiency by an individual firm during the period of
study. Findings of the study indicated that the Indian Cement Industry as a whole did
not perform remarkably well during this period

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 CHAPTER IV

RESEARCH METHODOLOGY

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The researcher adopted the analysis of data in a manner that to combine relevance to purpose
with economy in procedure. Research design is the based define of a research problem. The
preparation of the design of the project is standard analytical of researcher favourite. It was
used in secondary data that was published already as annual reports of the bank in bank
website, journals, magazines and newspapers and other secondary data sources. this
Secondary data may be already collected and analyzed by someone else but gap is period of
the study and variables which we want to know. The study mainly connected annual financial
reports that are last five years 2013-2018 company final accounts ( balance sheet and profit
and loss )

DATA COLLECTION
 Main data of this study is based to the annual financial reports axis bank from in
2013 to 2018. Also researches used four main financial statements for ratio analysis of
bank such as; balance sheets, an income statement, cash flow statement; statement of
shareholder's equity although study strongly emphasis the first main reports

DATA ANALYSIS
 The study used all important tools of ratio analysis for profitability evaluation of
bank. It indicates the different steps such Selection of financial report, Identification
of balance sheet, income statement and cash flow statement, ratio analysis,
mathematical calculation, statistical analysis of bank financial report year by year
comparison and among industry First step of model, I did a selection of financial
report that means a choose of annual financial report. The annual financial report
present financial data of a company's position, operating performance, and funds flow
for an accounting period .I used the annual reporting of bank in 2013 to 2018. Second
step of model, researcher identify the balance sheet, income statement, cash flow
statement from the annual financial report. Study used some data from balance sheets
for different kind of ratio such as liquidity ratios, asset management ratios, debt
management ratios. In contrast, I used some sources from income statement. When
analysis the ratio of profitability and debt management ratio employment of bank
income statement and balance sheet is must. however the use of some data from the
cash flow statement for ratio analysis such as market value ratio is also possible . The
third step of model, study identify the suitable ratio for profitability analysis and
evaluation the ratio such as current ratio, liquidity ratio, asset management ratio,

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 profitability ratio, debt coverage ratio, market value etc. All types of ratio are most
important for how well a bank to generate its assets, liquidity, revenue, expense, share
holder equity profit or loss are also here . The Forth step of model, study used the
Mathematical calculation of bank. some figure from the income statement and balance
sheet. Financial calculators was used to determine the results a financial ratio
calculations a graphical analysis for evaluation of bank using Microsoft excel is
employed and finally study compares the results to manipulate objectives

SECONDARY DATA
 The major source of data for this project was collected through Balance sheet and
Profit and loss of Axis bank account of 5 year period from 2013-2018 Descriptive
research is used in this study because it will ensure the minimization of bias and
maximization of reliability of data collected. The researcher had to use fact and
information already available through financial statements of earlier years and analyze
these to make critical evaluation of the available material. Hence by making the type
of the research conducted to be both Descriptive and Analytical in nature

RESEARCH INSTRUMENTS
 Study used secondary data collected from publishers of the bank final accounts it is
limited to last five years 2013-2018 annual financial reports

RATIO ANALYSIS FORMULAS

 For most of us, accounting is not the easiest thing in the world to understand, and
often the terminology used by accountants is part of the problem. “Financial ratio
analysis” sounds pretty complicated. the analysis of the financial statements and
interpretations of financial results of a particular period of operations with the help of
'ratio' is termed as "ratio analysis."
 Ratio analysis used to determine the financial soundness of a business concern. the
term 'ratio' refers to the mathematical relationship between any two inter-related
variables. In other words, it establishes relationship between two items expressed in
quantitative form.
 According J. Batty, Ratio can be defined as "the term accounting ratio is used to
describe significant relationships which exist between figures shown in a balance
sheet and profit and loss account in a budgetary control system or any other part of the
accounting management.

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CLASSIFICATION OF RATIOS
 Accounting Ratios are classified on the basis of the different parties interested in
making use of the ratios. A very large number of accounting ratios are used for the
purpose of determining the financial position of a concern for different purposes.
Ratios may be broadly classified in to:
1. Classification of Ratios on the basis of Balance Sheet.
2. Classification of Ratios on the basis of Profit and Loss Account.
3. Classification of Ratios on the basis of Mixed Statement (or) Balance Sheet
and Profit and Loss account
to meet the objective the study groups ratios and divides three main parts which are
Liquidity ratios, profitability ratios, and asset management ratios

Liquidity Ratio
Liquidity ratio refers to the ability of a company to interact its assets that is most readily
converted into cash. Assets are converted into cash in a short period of time that are
concerns to liquidity position. However, the ratio made the relationship between cash and
current liability
 CURRENT RATIO:
Current Ratio = Current assets /Current liabilities
 QUICK RATIO:
Quick Ratio= (Quick Assets-Inventories)/ Quick Liabilities
Quick Asset= current asset-(stock + prepaid expense)
Quick Liabilities = Current liabilities -Bank Overdraft
 CASH RATIO:
Cash Ratio = Cash / Current Liabilities

Profitability Ratio
Profitability ratios designate a bank's overall efficiency and performance. It measures
how to use assets and how to control its expenses to generate an acceptable rate of return.
It also used to examine how well the bank is operating or how well current performance
compares to past records of bank
 NET PROFIT MARGIN
Net Profit margin = Net profit /sales

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  RETURN ON COMMON STOCK EQUITY RATIO
Return on common stock equity ratio = Net income / Common stockholders' equity
 RETURN ON TOTAL ASSETS
Return on Total Assets = Net profits / total assets

Asset Management Ratios

Asset management ratios are most notable ratios of financial ratios analysis. It measure
how effectively any organization uses and controls its assets. It is analysis how a
company quickly converted to cash or sale on their resources. It is also called Turnover
ratios because it indicates the asset converted or turnover in to sales.

 CURRENT ASSET TURNOVER RATIO

Current asset turnover ratio = Sales / Current asset
 FIXED ASSET TURNOVER RATIO
Fixed asset turnover = Sales / Net fixed asset
 TOTAL ASSET TURNOVER
Total asset turnover = Sales / Total asset
 DEBT RATIO
Debt Ratio = Total liabilities / Total assets

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 CHAPTER V

DATA ANALYSIS

&

INTERPRETATION

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Data Analysis

 The previous chapter discussed a detailed description of the research methodology. In

this chapter, the data comes from the Axis Bank in India with relation to the research
objectives, all data is Secondary data which is already published to Secondary data
sources mainly bank website.

 The data will be analyzed by using Microsoft excel 2007. Also in this section study
present the result from data analysis, the study briefly examined the performance of
liquidity position of the bank. Second part present the overall profitability of the bank
and third part is asset management condition after analysis the study also discussion
the debt management position and finally comments represent the market value of the
bank.

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 CURRENT RATIO

Table 5.1 Showing The Bank's Current Ratio

Year Current Asset Current Liabilities Ratio

(A) (B) (A/B)

2013-2014 2,672,862,432 2,947,334,592 0.907

2014-2015 3,270,752,520 3,374,976,103 0.969

2015-2016 3,999,382,443 3,730,763,319 1.072

2016-2017 4,689,274,074 4,406,742,591 1.064

2017-2018 5,334,818,180 4,798,681,757 1.111

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE:

Table 5.1 presents current ratio of five years from 2013 to 2018. In the above ratios the bank
current ratio of 2013 is 0.907, 2014 is 0.969, 2015 is 1.072, 2016 is 1.064, and 2017 is 1.111
it shows us that bank current ratio is going to one with increasing positive growth year by
year.

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 Quick Ratio

Table 5.2 Showing The Bank's Quick Ratio

Year Quick Assets Current Liabilities Ratio

(A) (B) (A/B)

2013-2014 282,386,946 2,947,334,592 0.096

2014-2015 360,990,318 3,374,976,103 0.106

2015-2016 333,254,404 3,730,763,319 0.089

2016-2017 502,561,831 4,406,742,591 0.114

2017-2018 434,548,906 4,798,681,757 0.090

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE: In the above ratios the bank quick / asset test ratio of it shows us that bank
liquidity is normally good with marginal up and down of growth side.

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 Table 5.3 Showing The Bank's cash position Ratio

Year Cash Current Liabilities Ratio

(A) (B) (A/B)

2013-2014 170,413,196 2,947,334,592 0.058

2014-2015 198,188,397 3,374,976,103 0.059

2015-2016 223,611,495 3,730,763,319 0.062

2016-2017 308,579,390 4,406,742,591 0.070

2017-2018 354,810,577 4,798,681,757 0.073

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE: In the above ratios the bank cash position ratio of it shows us that bank
liquidity is normally good but there is marginal increase in current liabilities in recent years.

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 Table 5.4 Showing The Bank's Net Profit Margin Ratio

Year Net Profit Total Sales Ratio

(A) (B) (A/B)

2013-2014 62,176,666 308,463,801 0.201

2014-2015 73,578,223 438,436,435 0.167

2015-2016 82,236,628 503,595,008 0.163

2016-2017 36,792,792 562,334,686 0.065

2017-2018 2,756,813 567,473,988 0.004

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE:

Table 5.4 presents net profit margin ratio of five years from 2013 to 2018. in the above ratios
the bank net profit margin ratio of 2013 is 0.201, 2014 is 0.167, 2015 is 0.163 , 2016 is 0.065,
and 2017 is 0.004 it shows us that bank profitability is not satisfactory.

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 Table 5.5 Showing The Bank's Return On Common Stock Equity

Year Net Profit Common stock equity Ratio

(A) (B) (A/B)

2013-2014 62,176,666 4,698,446 13.23

2014-2015 73,578,223 4,741,044 15.51

2015-2016 82,236,628 4,765,664 17.25

2016-2017 36,792,792 4,790,072 7.68

2017-2018 2,756,813 5,133,078 0.53

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE: . In the above ratios the bank net profit margin ratio of 2013-14 is 13.23,
2014-15 is 15.51, 2015-16 is 17.25 , 2016-17 is 7.68, and 2017-18 is 0.53 it shows us that
bank profitability is not satisfactory in recent years.

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 Table 5.6 Showing The Bank's Return on Asset Ratio

Year Net Profit Total Assets Ratio

(A) (B) (A/B)

2013-2014 62,176,666 3,832,448,882 0.016

2014-2015 73,578,223 4,619,323,942 0.016

2015-2016 82,236,628 5,254,676,181 0.015

2016-2017 36,792,792 6,014,676,703 0.061

2017-2018 2,756,813 6,913,295,799 0.0003

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE: In the above ratios the bank Return on Asset Ratio it shows us that bank
profitability is not satisfactory. As there is a constant decrease in the ratio.

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 Table 5.7 Showing The Bank's Current Asset Turnover Ratio

Year SALES Current Asset Ratio

(A) (B) (A/B)

2013-2014 308,463,801 2,672,862,432 0.115

2014-2015 438,436,435 3,270,752,520 0.134

2015-2016 503,595,008 3,999,382,443 0.125

2016-2017 562,334,686 4,689,274,074 0.119

2017-2018 567,473,988 5,334,818,180 0.106

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE: Current Asset Turnover Ratio it shows us that bank Current Asset Turnover
Ratio is not good as liquidity .

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 Table 5.8 Showing The Bank's Fixed Asset Turnover Ratio

Year SALES Fixed Asset Ratio

(A) (B) (A/B)

2013-2014 308,463,801 1,159,586,450 0.266

2014-2015 438,436,435 1,348,571,422 0.325

2015-2016 503,595,008 1,255,293,738 0.401

2016-2017 562,334,686 1,325,402,629 0.424

2017-2018 567,473,988 1,578,477,619 0.359

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE:. In the above ratios the bank Fixed Asset Turnover Ratio. It shows us that
bank Fixed Asset Turnover Ratio is not good as liquidity as it is to be required.

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 ]Table 5.9 Showing The Bank's Total Asset Turnover Ratio

Year SALES Total Asset Ratio

(A) (B) (A/B)

2013-2014 308,463,801 3,832,448,882 0.080

2014-2015 438,436,435 4,619,323,942 0.095

2015-2016 503,595,008 5,254,676,181 0.095

2016-2017 562,334,686 6,014,676,703 0.093

2017-2018 567,473,988 6,913,295,799 0.082

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE: Table 5.9 presents Bank's Total Asset Turnover Ratio of five years from
2013 to 2018. In the above ratios the bank Total Asset Turnover Ratio of 2013-14 is 0.080,
2014-15 is 0.095, 2015-16 is 0.095, 2016-17 is 0.093, and 2017-18 is 0.082 it shows us that
bank Total Asset Turnover Ratio is not good as liquidity

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 Table 5.10 Showing The Bank's Debt Ratio

Year Total Liabilities Total Asset Ratio

(A) (B) (A/B)

2013-2014 3,450,244,017 3,832,448,882 0.90

2014-2015 4,172,558,792 4,619,323,942 0.90

2015-2016 4,723,027,108 5,254,676,181 0.89

2016-2017 5,457,051,285 6,014,676,703 0.90

2017-2018 6,278,843,203 6,913,295,799 0.90

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE:

Table 5.10 presents Bank's Debt Ratio of five years from 2013 to 2018. In the above
ratios the bank Debt Ratio of 2013 is 0.90, 2014 is 0.90, 2015 is 0.89, 2016 is 0.90, and
2017 is 0.90 it shows us that bank Debt Ratio is Favourable. Comparison of years the
bank debt ratio is getting better according to recent years debt ratio.

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 CHAPTER VI

FINDINGS, SUGGESTIONS, AND

CONCLUSION

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Findings

After the study of the components of current assets & current liabilities and the trends of
working capital, it was found that:

 Year after year from 2013 to 2018 is the indication of continuous improvement in the
earning power of the bank. This increasing EPS is the sign of favorable earnings,
health financial position and, therefore, a reliable firm to invest money.

 Asset turnover ratio should be improved together with the bank's financing mix and
its profit margin for a better analysis. A lower turnover ratio means that the bank is
not using its assets optimally. Total asset turnover ratio is a key driver of return on
equity which is quite constant according to axis bank ratios.

 During 2013-15 period the liquidity position of the bank was not good. The current
ratio is below 1(current liabilities exceed current assets) for the study period, then the
bank may have problems paying its bills on time. However, low values do not indicate
a critical problem but should concern the management. After 2015 the liquidity
position of the bank improves as it can be seen that the ratio is above 1.

 The debt of the bank is quite high as it indicates debt ratio. there is leverage risk. to
address this concern, bank can also analyze the firm's interest coverage ratio, which is
the company's operating income divided by debt service payments. A high operating
income will allow even a debt-burdened firm to meets its obligations

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SUGGESTIONS

It is recommended that bank to use more ratios, especially those in the study which are so
significant as improvement of their financial performance measures. axis bank should
probably consider the use of the fund to invest other opportunities to get a profit, since they
seem to be paying or expending more interest not only for the majority of participants, but for
businesses in general.

It is also recommended that axis bank owners/ managers request more research study and
financial analysis to their financial staff and also external examiner on bankruptcy prediction
models at relevant institutions such as universities. The few models presented in this study
may be used by axis bank as well, since they are simple and important to know financial
health of the bank,

The axis bank should have increased its current assets than its current liabilities to make
positive working capital. The bank should have decreased its current liabilities by paying
through the profit which is being made. The debt should been minimized to keep debt ratio
and debt-equity ratio to a minimum value

Efficient use of asset good as liquidity measures of Asset accounts such us total asset
turnover of the bank are significant increase in positive account side but decreases some
accounts the point is that there is no proper efficiency use of asset so axis bank executive
have to consider best asset position use .

In addition it should work on improving its credibility and trustworthiness among its
customers and potential customers which has been hampered due to its involvement in
various illegal events like the scam during the demonetization period etc.

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CONCLUSION

 The conclusion chapter is directly connected to the purpose. The analysis will be
summarized in order fulfill the purpose of the study Since the start of the financial
institutions in the financial sector were introduced in India, banking sector has
undergone major transformation. The underlying objectives of the study were to know
financial health make the banking system more competitive, productive and
profitable.
 Since 2008 world Financial Crisis and meltdown which may institutions in Banking
Industry there Liquidated and drop out of market. the greater presence of international
financial players in the Indian Financial system and some of the Indian banks would
become international players in the recent years. The key to success in the competitive
environment is increased productivity
 This research has analyzed the productivity of selected private sector bank (Axis
bank) in India during 2013-18 This Study concludes that though the per ratio of the
bank financial productivity of axis bank is far better than other improving. This study
is based on three main research objectives. First, we analysis of liquidity measures
indicates that current ratio is bed condition for the bank. Quick and asset measures is
found that the same position of previous ratio and cash ratio measures the bank is
little bit better than the previous years. So we notice that the bank is better condition
of liquidity position compare that 2014 and 2015.
 Second the study analysis's profitability measures indicates the different kind of ratio.
Due to demonetization in year 2016-17 the profitability of the bank has been affected.
Since demonization brought many organizational level as well as ground level
changes, it lead to many positive changes which led to the improvement of the
functioning and operation of the bank.
 Third, study analysis is all efficiency measures of Asset accounts. Current assets
turnover fixed assets turnover, total asset turnover . the bank are significant increase
in asset account side also increases some measure and decreases some measures but
increasing point is so significant and betters then decreasing parts so study ensure
that the axis bank is standards position for asset management measure.

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 BIBLIOGRAPHY

https: //www.wikipedia.com

https://www.axisbank.com

https://www.slideshare.net

https://www.researchgate.net

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 APPENDIX A
Axis Bank Profit And Loss Account For The Year End 31 March

1 INCOME 2018 2017 2016 2015 2014

Interest earned 457,803,123 445,421,579 409,880,364 354,785,977 306,411,554
other income 109,670,865 116,913,107 93,714,644 83,650,458 74,052,247
Total income 567,473,988 562,334,686 503,595,008 438,436,435 380,463,801
2 Expenditure
Interest expended 271,625,818 264,490,420 241,550,675 212,544,595 186,895,220
Operating expenses 139,903,398 121,999,053 101,008,186 92,037,456 79,007,739
Provisions and
contingencies 153,187,959 139,052,421 78,799,519 60,276,161 52,384,176
Total exp 564,717,175 525,541,894 421,358,380 364,858,212 318,287,135
3 NET PROFIT FOR
THE YEAR (1-2) 2,756,813 36,792,792 82,236,628 73,578,223 62,176,666
Balance in Profit &
Loss Account brought
forward from previous
year 244,483,275 237,664,559 176,234,914 135,014,461 100,292,624
4 AMOUNT
AVAILABLE FOR
APPROPRIATION 247,240,088 274,457,351 258,471,552 208,592,684 162,469,290
5 APPROPRIATIONS
Transfer to Statutory
Reserve 689,203 9,198,198 20,559,157 18,394,555 15,544,167
Transfer to/(from)
Investment Reserve 1,034,894 (871,671) (418,074) 254,885 500,289
Transfer to Capital
Reserve 1,016,559 75,557,40 620,406 631,421 388,664
Transfer to General
Reserve 16,158 17,522 17,409 -12,664 10,465
Proposed dividend
(includes tax on 14,052,756 14,074,287 28,085 13,089,573 11,011,244

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 dividend)
Balance in Profit &
Loss Account carried
forward 230,430,518 244,483,275 237,664,559 176,234,914 135,014,461
TOTAL 247,240,088 274,457,351 258,471,542 208,592,684 162,469,290

APPENDIX B

Axis Bank Balance Sheet As At 31 March

(in Thousands)
Particulars 2018 2017 2016 2015 2014
CAPITAL
AND
LIABILITIES
Capital 5,133,078 4,790,072 4,765,664 4,741,044 4,698,446
Reserves &
Surplus 629,319,518 552,835,346 526,883,409 442,024,106 377,506,419
Total Capital 634,452,596 557,625,418 531,649,073 446,765,150 382,204,865
Employees’
Stock Options
Outstanding
(Net) 0 0 0 0 0
Deposits 4,536,227,223 4,143,787,878 3,579,675,603 3,224,419,369 2,809,445,649
Other
Liabilities and
Provisions 262,454,534 262,954,713 151,087,716 150,556,734 137,888,943
total Current
Liabilities 4,798,681,757 4,406,742,591 3,730,763,319 3,374,976,103 2,947,334,592
Borrowings 1,480,161,446 1,050,308,694 992,263,789 797,582,689 502,909,425
total Debt 6,278,843,203 5,457,051,285 4,723,027,108 4,172,558,792 3,450,244,017
TOTAL debt
and capital 6,913,295,799 6,014,676,703 5,254,676,181 4,619,323,942 3,832,448,882
ASSETS

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Cash and
Balances with
Reserve Bank
of India 354,810,577 308,579,390 223,611,495 198,188,397 170,413,196
Balances with
Banks and
Money at Call
and Short
Notice 79,738,329 193,982,441 109,642,909 162,801,921 111,973,750

Total cash on
hand 434,548,906 502,561,831 333,254,404 360,990,318 282,386,946
Advances 4,396,503,045 3,730,693,495 3,387,737,229 2,810,830,297 2,300,667,584
Other Assets 503,66,229 456,018,748 278,390,810 98,931,905 89,807,902
TOTAL
Current Asset 4,446,869,274 4,186,712,243 3,666,128,039 3,270,752,520 2,672,862,432
Fixed Assets 39,716,792 37,468,925 35,231,719 25,143,105 24,102,106
Investments 1,538,760,827 1,287,933,704 1,220,062,019 1,323,428,317 1,135,484,344
total Fixed
Assets 1,578,477,619 1,325,402,629 1,255,293,738 1,348,571,422 1,159,586,450
TOTAL
ASSETS 6,913,295,799 6,014,676,703 5,254,676,181 4,619,323,942 3,832,448,882

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