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Submitted To: MR - Atin Garg Submitted On: 4 Nov 2010 Subject: Accounting For Managers
Submitted To: MR - Atin Garg Submitted On: 4 Nov 2010 Subject: Accounting For Managers
Submitted To: MR - Atin Garg Submitted On: 4 Nov 2010 Subject: Accounting For Managers
ATIN GARG
SUBMITTED BY:
> MBA(HHM)
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SNO. INDEX PAGE NO.
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INTRODUCTION
As a premier commercial bank in India, Canara Bank has a distinct track record
in the service of the nation for over 100 years. Today, Canara Bank has a strong
pan India presence with 3057 branches and over 2000 ATMs, catering to all
segments of an ever growing clientele base of over 37.5 million. We are
recognized as a leading financial conglomerate in India, with as many as nine
subsidiaries/sponsored institutions/joint ventures in India and abroad. As we
step into the second century, we aspire to emerge as a Global Bank with Best
Practices.
Widely known for customer centricity, Canara Bank was founded by Shri
Ammembal Subba Rao Pai, a great visionary and philanthropist, in July
1906, at Mangalore, then a small port in Karnataka. The Bank has gone
through the various phases of its growth trajectory over hundred years of
its existence. Growth of Canara Bank was phenomenal, especially after
nationalization in the year 1969, attaining the status of a national level
player in terms of geographical reach and clientele segments. Eighties was
characterized by business diversification for the Bank. In June 2006, the
Bank completed a century of operation in the Indian banking industry. The
eventful journey of the Bank has been characterized by several memorable
milestones. Today, Canara Bank occupies a premier position in the comity
of Indian banks. With an unbroken record of profits since its inception,
Canara Bank has several firsts to its credit. These include:
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Issuing credit card for farmers
Over the years, the Bank has been scaling up its market position to emerge
as a major 'Financial Conglomerate' with as many as nine
subsidiaries/sponsored institutions/joint ventures in India and abroad. As
at June 2010, the Bank has further expanded its domestic presence, with
3057 branches spread across all geographical segments. Keeping customer
convenience at the forefront, the Bank provides a wide array of alternative
delivery channels that include over 2000 ATMs- one of the highest among
nationalized banks- covering 732 centres, 2681 branches providing
Internet and Mobile Banking (IMB) services and 2091 branches offering
'Anywhere Banking' services. Under advanced payment and settlement
system, all branches of the Bank have been enabled to offer Real Time
Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT)
facilities.
Not just in commercial banking, the Bank has also carved a distinctive
mark, in various corporate social responsibilities, namely, serving national
priorities, promoting rural development, enhancing rural self-employment
through several training institutes and spearheading financial inclusion
objective. Promoting an inclusive growth strategy, which has been formed
as the basic plank of national policy agenda today, is in fact deeply rooted
in the Bank's founding principles. "A good bank is not only the financial
heart of the community, but also one with an obligation of helping in
every possible manner to improve the economic conditions of the
common people". These insightful words of our founder continue to
resonate even today in serving the society with a purpose. The growth
story of Canara Bank in its first century was due, among others, to the
continued patronage of its valued customers, stakeholders, committed staff
and uncanny leadership ability demonstrated by its leaders at the helm of
affairs. We strongly believe that the next century is going to be equally
rewarding and eventful not only in service of the nation but also in helping
the Bank emerge as a "Global Bank with Best Practices". This
justifiable belief is founded on strong fundamentals, customer centricity,
enlightened leadership and a family like work culture.
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Our Beloved Founder
Founded as 'Canara Bank Hindu Permanent
Fund' in 1906, by late Sri. Ammembal
Subba Rao Pai, a philanthropist, this small
seed blossomed into a limited company as
'Canara Bank Ltd.' in 1910 and became
Canara Bank in 1969 after nationalization.
"A good bank is not only the financial heart of the community,
but also one with an obligation of helping in every possible
manner to improve the economic conditions of the common
people" - A. Subba Rao Pai.
Founding Principles
Vision:
Mission:
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orientation, higher value creation for stakeholders and to
continue as a responsive corporate social citizen by effectively
blending commercial pursuits with social banking.
Comparative statement:
Trend analysis:
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What Does Ratio Analysis Mean?
A tool used by individuals to conduct a quantitative analysis of
information in a company's financial statements. Ratios are calculated from
current year numbers and are then compared to previous years, other
companies, the industry, or even the economy to judge the performance of
the company. Ratio analysis is predominately used by proponents of
fundamental analysis
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In this way profitability ratios show the actual
performance of the business.
2. To workout the solvency: With the help of solvency ratios,
solvency of the company can be measured. These ratios
show the relationship between the liabilities and assets. In
case external liabilities are more than that of the assets of
the company, it shows the unsound position of the
business. In this case the business has to make it possible
to repay its loans.
3. Helpful in analysis of financial statement: Ratio analysis
help the outsiders just like creditors, shareholders,
debenture-holders, bankers to know about the
profitability and ability of the company to pay them
interest and dividend etc.
4. Helpful in comparative analysis of the performance: With
the help of ratio analysis a company may have
comparative study of its performance to the previous
years. In this way company comes to know about its weak
point and be able to improve them.
5. To simplify the accounting information: Accounting ratios
are very useful as they briefly summarise the result of
detailed and complicated computations.
6. To workout the operating efficiency: Ratio analysis helps
to workout the operating efficiency of the company with
the help of various turnover ratios. All turnover ratios are
worked out to evaluate the performance of the business
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in utilising the resources.
7. To workout short-term financial position: Ratio analysis
helps to workout the short-term financial position of the
company with the help of liquidity ratios. In case short-
term financial position is not healthy efforts are made to
improve it.
8. Helpful for forecasting purposes: Accounting ratios
indicate the trend of the business. The trend is useful for
estimating future. With the help of previous years’ ratios,
estimates for future can be made. In this way these ratios
provide the basis for preparing budgets and also
determine future line of action.
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only the ratios will be correct. For example, valuation of
stock is based on very high price, the profits of the
concern will be inflated and it will indicate a wrong
financial position. The data therefore must be absolutely
correct.
3. Effect of Price Level Changes: Price level changes often
make the comparison of figures difficult over a period of
time. Changes in price affects the cost of production, sales
and also the value of assets. Therefore, it is necessary to
make proper adjustment for price-level changes before
any comparison.
4. Qualitative factors are ignored: Ratio analysis is a
technique of quantitative analysis and thus, ignores
qualitative factors, which may be important in decision
making. For example, average collection period may be
equal to standard credit period, but some debtors may be
in the list of doubtful debts, which is not disclosed by ratio
analysis.
5. Effect of window-dressing: In order to cover up their bad
financial position some companies resort to window
dressing. They may record the accounting data according
to the convenience to show the financial position of the
company in a better way.
6. Costly Technique: Ratio analysis is a costly technique and
can be used by big business houses. Small business units
are not able to afford it.
7. Misleading Results: In the absence of absolute data, the
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result may be misleading. For example, the gross profit of
two firms is 25%. Whereas the profit earned by one is just
Rs. 5,000 and sales are Rs. 20,000 and profit earned by the
other one is Rs. 10,00,000 and sales are Rs. 40,00,000.
Even the profitability of the two firms is same but the
magnitude of their business is quite different.
Type of Ratios:
1 liquidity ratio
2 solvency ratio
3 activity ratio
4 profitability ratio
Liquidity ratio
it is used to determine a company's ability to pay off
its short-terms
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Current ratio, quick ratio, cash ratio, interval measure ratio, net
working capital ratio
current ratio
It is a measure of general liquidity and is most widely used to
make the
dividing the total of the current assets by total of the current liabilities.
Formula:
The two basic components of this ratio are current assets and
current liabilities.
Current assets include cash and those assets which can be easily
converted into
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dividend payable, etc
of a firm to pay its short term obligations as and when they become
due.
from the list of liquid assets because they are not expected to be
converted into
Formula
importance
The perfect ratio should be 1 :1 .The quick ratio/acid test ratio is very
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useful in
ratio.
Cash ratio
the most liquid asset. It is also useful to find out the company’s ability
to pay its debt.
Formula
Formula
asset
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Formula
Leverage ratio
firms current debt paying capacity. On the other hand long term
creditors are more
concerned with the firms long term financial strength. They are of
following type.
importance
against the firms assets. The purpose is to get an idea of the cushion
available to
Formula
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Total debt ratio
Formula
Coverage ratio
It is use to test the firms debt servicing capacity.
Formula
Activity ratio
time the stock has been turned over during the period and evaluates
the efficiency
with which a firm is able to manage its inventory. This ratio indicates
whether
Formula
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Importance
inventory because more frequently the stocks are sold, the lesser
amount of money
during a year.
Formula :
Importance
debtors turnover ratio indicates the number of times the debtors are
turned over a
year. The higher the value of debtors turnover the more efficient is
the management
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Fixed Assets Turnover Ratio:
Formula :
Profitability ratio
Gross profit ratio (GP ratio) is the ratio of gross profit to net
sales expressed as a percentage. It expresses the relationship
between gross profit and sales.
Formula:
Importance
gross profit ratio may be indicated to what extent the selling prices of
goods per unit
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may be reduced without incurring losses on operations. It reflects
efficiency with
goods sold from net sales, higher the gross profit better it is. There is
no standard
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is
expressed as
percentage.
Formula:
Importance:
proprietors. The ratio is very useful as if the net profit is not sufficient,
the firm shall
competition, low demand, etc. Obviously, higher the ratio the better is
the profitability
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Operating expenses ratio
This is another type of ratio which indicate the expense in relation to
net sales
Formula
Importance
net profit (after interest and tax) and share holder's/proprietor's fund.
Formula
This ratio is one of the most important ratios used for measuring the
overall
achieved.
This ratio find out the return the company getting on their total asset.
Formula
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Return on total asset = profit after tax/ total asset
This ratio is also helpful for owners and outsiders to know the return
of company for
their interest.
Formula :
Formula
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dates.”
The funds-flow-statement is a report on financial
operations
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Disbursed', 'Funds Generated and Expended', Changes in
Working Capital”,
In fund from operation i will find out the actual change in fund.
In fund from
from net profit. We also minus the item which are not operating
and had add
in net profit.
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activities, investing activities, and financing activities. The statement
is a basic
or annually. The format for reporting cash flow activity may be either
direct or
BALANCE SHEET:
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increasing.
Interpretation: Total share capital may constant, bank do not give its share
to any other.
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Equity Share Capital
500
400
Equity Share
300 Capital
200
100
0
1 2 3 4 5
Interpretation: Equity share capital also constant through out the five years
Reserves
14,000.00
12,000.00
10,000.00
Reserves
8,000.00
6,000.00
4,000.00
2,000.00
0.00
1 2 3 4 5
Interpretation: Reserve are increase every year , customer deposites more cash in
the canara bank.
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Net Worth
16,000.00
14,000.00
12,000.00
10,000.00 Net Worth
8,000.00
6,000.00
4,000.00
2,000.00
0.00
1 2 3 4 5
Deposits
250,000.00
200,000.00
150,000.00 Deposits
100,000.00
50,000.00
0.00
1 2 3 4 5
Interpretation: Deposites are increase year by year , there are more customer to
deposite cash in the bank.
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Total Liabilities
300,000.00
250,000.00
200,000.00
Total Liabilities
150,000.00
100,000.00
50,000.00
0.00
1 2 3 4 5
Interpretation: Total liabilities are Increased, may be bank take loans from the RBI.
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Advances
180,000.00
160,000.00
140,000.00
120,000.00
Advances
100,000.00
80,000.00
60,000.00
40,000.00
20,000.00
0.00
1 2 3 4 5
Total Assets
300,000.00
250,000.00
200,000.00
Total Assets
150,000.00
100,000.00
50,000.00
0.00
1 2 3 4 5
Interpretation: Total assets are increasing every year , bank purchase furniture or
machinery for the bank.
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Total Income
25,000.00
20,000.00
10,000.00
5,000.00
0.00
1 2 3 4 5
Interpretation: Total income are increased ,customer deposite more cash in the
canara bank.
Interpretation: Net profit are increasing every year , the total income is more than
the total expences every year.
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CURRENT ASSETS: 39337458+696769522+32169178 = 768276158
NOTE:
1. LIQUIDITY RATIO
= 768276158/69772989
=11.0
= 768276158 – 0/ 69772989
= 11.0
= 157194642 / 69772989
= 2.2
NWC = CA – CL
= 768276158 – 69772989
= 761303169
= 761303169/28593722+768276158
= 761303169/796869880
= 0.9
2. LEVERAGE RATIO
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TOTAL DEBT RATIO:
= 2647410828/796869880
= 33.2 %
= 2647410828/ 146717834
= 1.80 %
3. ACTIVITY RATIO
= SALES/ASSETS
= 157194642/2647410828
= 0.05
4. PROFITABILITY RATIO
= 13071426/ 157194642
= 0.083
= 30214304/157194642
= 0.19%
= OPERATING EXPENSE/SALES
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= 34776235/157194642
= 0.22 %
30214304
NET PROFIT
(+) DEPRECIATION 1551324
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(+) TRANSFER TO 7600000
STATUTORY RESERVE
(-)OTHER INCOME 28579024
FUND FROM OPERATION 14886604
Rs APPLICATIONS Rs
SOURCES
Deposites 2346514432 Other provision 69772989
& liabilities
COST SHEET:
PRIME COST
EMPLOYEE COST 21936999
OPERATING EXPENSES 34776235
TOTAL 56713234
BANK OVERHEAD
INTEREST EXPENDED 130714284
DEPRICIATION 1551324
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TOTAL 132265608
SALES EXPENSES
OTHER EXPENSES 3588554
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