CASH FLOW STATEMENT ANALYSIS OF

SUNRISE BANK LIMITED

A Project Work Report

Submitted by :
Gyanina Bakhati

T.U. Regd. No.: 7-2-0927-0098-2015

Exam Symbol No.: 9270157

Group: Finance

Shwoyambhu International College

Submitted to:

The Faculty Of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the Requirements for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)

New Baneshwor , Kathmandu

May, 2019
 DECLARATION

I hereby declare that the project work entitled “CASH FLOW STATEMENT
ANALYSIS OF SUNRISE BANK LIMITED”, submitted to the faculty of
management, Tribhuvan University, Kathmandu is an original piece of work under
the supervision of Mr. Raju Raut, faculty member, Shwoyambhu International
College, New Baneshwor, and is submitted in partial fulfillment of the requirement
for the reward of the degree of Bachelor of Business Studies (BBS). This project work
report has not been submitted to any other university or institution for the award of
any degree of diploma.

Signature:

Gyanina Bakhati

Date:

ii
 SUPERVISIOR’S RECOMMENDATION

The project work report entitled “CASH FLOW STATEMENT ANALYSIS OF

SUNRISE BANK LIMITED”, submitted by Gyanina Bakhati of Shwoyambhu
International College, New Baneshwor, Kathmandu , is prepared under my
supervision as per the procedure and format requirements laid by the Faculty of
Management, Tribhuvan University, as partial fulfillment of the requirements for the
award of the degree of Bachelor of Business Studies (BBS). I therefore, recommend
the project work report foe evaluation.

Signature:

Raju Raut

Shwoyambhu International college

Date:

iii
iv
 ENDORSEMENT

We hereby endorse the project work entitled “CASH FLOW STATEMENT

ANALYSIS OF SUNRISE BANK LIMITED” submitted by Gyanina Bakhati of
Shwoyambhu International College, in partial fulfillment of the requirements of the
degree of business studies (BBS) for external evaluation.

Signature: Signature:

Dr. Hari Sharan Chakhun Mr. Suman Prasad Chaudhary

Chairman Campus chief

Research Management Committee

Date: Date:

v
 ABSTRACT

This study was conducted under the title “Cash Flow Statement Analysis Of Sunrise
Bank Limited.” Its main objective was to compare and examine the empirical cash
flow statement analysis of Sunrise Bank with in comparison with different years cash
flow for the period of 2070-2075. This study found that all the result of cash flow
statement generally showing operational stability and funding, outflow and inflow of
the cash.

Overall analysis of cash payment, cash receipt, interest coverage ratio, debt coverage
ratio of the cash flow analysis reveals that Sunrise Bank Limited was improving
overtime considerably in this liquidity, profitability position, optimum cash balance
and cash management.

vi
 ACKNOWLEGEMENT

This study attempts to examine the cash flow statement of Sunrise Bank Limited with
special reference to several recommendations with available data and information. For
easier study, the data has been presented by tables, graph and have been interpreted
using various statistical methods.

I express my heartily gratitude to Mr. Raju Raut (our research teacher) for guiding
and inspiring me to do this fieldwork. Similarly, I am equally indebted to all lectures
of Shwoyambhu International College, who helped me prepare this work. I would also
like to extend my sincere thanks to the staff of Sunrise Bank Limited for providing me
related data and information.

Gyanina Bakhati

Shwoyambhu International College

New Baneshwor, Kathmandu

BBS 4th Year

vii
 TABLE OF CONTENTS

Contents Page no.

Title Page.......................................................................................................................i

Declaration....................................................................................................................ii

Supervisior’s Recommendation....................................................................................iii

Endorsement..................................................................................................................iv

Acknowlegement............................................................................................................vi

Table of Contents……………………………………………………………………….........vii

List of Figures................................................................................................................x

List of Tables.................................................................................................................ix

Abbreviation…………………………………………………………………………………….x

CHAPTER ONE: INTRODUCTION........................................................................1

1.1 Background of study........................................................................................1

1.2 Profile of Sunrise Bank Limited......................................................................1

1.2.1 Capital Structure.......................................................................................2

1.2.2 Board of Directors....................................................................................2

1.2.3 Organization Structure.............................................................................2

1.3 Statement of problems.....................................................................................3

1.4 Objectives of study..........................................................................................3

1.5 Significances of the study................................................................................4

1.6 Statement of hypothesis...................................................................................4

1.7 Theoretical framework....................................................................................7

1.8 Definition of terminology................................................................................7

1.9 Literature Review............................................................................................5

1.9.1 Conceptual Review..................................................................................5

viii
 1.9.2 Empirical Review.....................................................................................6

1.9.3 Research Gap...........................................................................................7

1.10 Research Methodology....................................................................................8

1.10.1 Research design........................................................................................9

1.10.2 Population and sample.............................................................................9

1.10.3 Sources of data.......................................................................................10

1.10.4 Data analysis procedures........................................................................10

1.11 Limitations of study.......................................................................................13

1.12 Report Structure.............................................................................................12

CHAPTER TWO: RESULT AND ANALYSIS…………………………….....14

2.1 Diagrammatic Presentation...........................................................................14

2.1.1 Explanations...........................................................................................15

2.2 Data Analysis.................................................................................................15

2.2.1 Cash debt coverage ratio........................................................................16

2.2.2 Cash Interest Coverage Ratio.................................................................17

2.2.3 Assets Efficiency Ratio..........................................................................19

2.2.4 Price/Cash Flow Ratio...........................................................................20

2.2.5 Current Ratio..........................................................................................21

2.3 Primary data collection and it’s analysis.......................................................22

2.4 Major Findings..............................................................................................27

CHAPTER THREE: SUMMARY AND CONCLUSIONS....................................29

3.1 Summary........................................................................................................29

3.2 Conclusions...................................................................................................30

BIBLIOGRAPHY......................................................................................................32

APPENDICES............................................................................................................34

ix
 LIST OF TABLES

Contents Pg no.

Table 1. 1: Board of Directors........................................................................................2

Table 2.1: Cash flow for five years (2070 to 2075) ....................................................14
Table 2. 2: Cash Debt Coverage Ratio ........................................................................16
Table 2.3: Cash Interest Coverage Ratio .....................................................................18
Table 2.4: Assets Efficiency Ratio ..............................................................................19
Table 2. 5: Price/Cash Flow Ratio ..............................................................................20
Table 2.6: Current Ratio ..............................................................................................21

x
 LIST OF FIGURES

Contents Page No.

Figure 1.1: Organizational Structure………………………………………….........4

Figure 1.2 Theoretical Framework…………………………………………………5

Figure 2.1: Interest Coverage Ratio……………………………………………….15

Figure 2.2: Current Liability Coverage Ratio………………………………..........17

Figure 2.3: Cash Flow to Total Debt Ratio……………………………………......18

Figure 2.4: Asset Efficiency Ratio…………………………………………….......19

Figure 2.5: Current Ratio…………………………………………………………..20

Figure 2.6: Question No. 1……………………………...........................................20

Figure 2.7: Question No. 2…………………………………...................................21

Figure 2.8: Question No. 3………………………………………….......................21

Figure 2.9: Question No. 4……………………………...........................................22

Figure 2.10: Question No. 5……………………….................................................22

Figure 2.11: Question No. 6………………………………….................................23

Figure 2.12: Question No. 7……………………………………………………….23

Figure 2.13: Question No. 8……………………………………….........................24

xi
 ABBREVIATION

CA : Current Assets
CL : Current Liabilities
CFFA : Cash Flow From Financing Activities
CFIA : Cash Flow From Investing Activities
CFOA : Cash Flow From Operating Activities
Fig : Figure
FY : Fiscal Year
Int. : Interest
Ltd. : Limited
NPAT : Net Profit After Tax
NPM : Net Profit Margin
NRB : Nepal Rastra Bank
OCFPS : Opearting Cash Flow Per Share
SBL : Sunrise Bank Limited

xii
 1

CHAPTER ONE

INTRODUCTION

1.1 Background of study

The cash flow is also known as Statement of Accounting for Variation in Cash and
Secondary Data. The cash flow statement studies about to the movement of the
working capital funds (includes cash and non cash things like assets, liability, etc) like
cash inflow (Income of the cash) and cash outflow (usage of the money). An
examination of a company’s cash inflows and outflows during a specific period. The
analysis begins with a starting balance and generates an ending balance after
accounting for all cash receipts and paid expenses during the period. The cash flow
analysis is often used for financial reporting purposes. ( Business Dictionary)

One of the most important components of financial statement is the Cash Flow
Statements(CFS). The CFS allows investors to understand how a company’s
operations are running, where its money is coming from, and how it is being spent.
Here you will learn how the CFS is structured and how to use it as part of your
analysis of a company. A company can use a cash flow statement to predict future
cash flow, which helps in matter in budgeting future activities. For investors, the cash
flow reflects a company’s financial health: basically is better to have more cash
available for business operations. However, this is not a hard and fast rule.
Sometimes, a negative cash flow results from company’s growth strategy in the form
of expanding its operations (Megan,2009).

1.2 Profile of Sunrise Bank Limited

Sunrise bank limited is one among 28 commercial banks which officially started its
operations in October 12, 2007 as the 22 nd commercial bank of Nepal . The bank
having paid up capital of 2.015 Billion issued the initial public offering (IPO) of Rs.
375 million. Headquarter in Gairidhara Kathmandu, at present ;the bank has the
networks of 49 branches and 57 ATM outlets. The bank has 215,000 deposits
 2

customers. Its 56 promoters own 70 % of share capital and the remaining 30% is with
the general public.

Objectives of Sunrise Bank Limited are as follows:

 To continuously expand bank’s operation in systematic manner.

 To become a major innovative bank and provide top of the line service.
 To build an HR team that continuously supplements the growth of the
organization.
 To be vigilant to the evolving economy and align operations accordingly.

1.2.1 Capital Structure

Authorized Capital of the Bank Rs. 10,000 Million

Paid-up Capital Rs. 8,152,555,851

Promoter Shares  51.10% of the Paid up Capital

Public Shares  48.90% of the Paid up Capital

1.2.2 Board of Directors

Table 1. 1: Board of Directors
Board of Directors

Chairman Mr. MotilalDugar

Director Er. Bachh Raj Tater
Director Mr. MalchandDugar
Public Director Er. ShailendraGuragain
Public Director Mrs. Sharada Sharma
Public Director Mr. Deepak Nepal
Independent Director Mr. Om Krishna Joshi

1.2.3 Organization Structure

 3

BOARD OF DIRECTORS

EMPLOYEE MONEY LAUNDERING

RISK MANAGEMENT CHIEF EXECUTIVE
COMPENSATION AND AUDIT COMMITTEE PREVENTION
COMMITTEE OFFICER
BENEFIT COMMITTEE COMMITTEE

EXECUTIVE
CHIEF RISK OFFICER
MANAGEMENT

RISK MANAGMENT
DEPARTMENT

COMPLIANCE
DEPARTMENT

BUSINESS UNITS/
DEPARTMENT HEADS

OPERATION & SUPPORT

UNIT HEADS

Figure 1.1: Organizational Structure

1.3 Statement of problems

Commercial banks have achieved a greater pace of development in recent years owing
to rapid advancement in the technology over the years. Still the development is not
satisfactory for the rural areas of Nepal as they are still deprived of the banking
facilities.
In this regard, the challenge that remains is to make the access of commercial banks in
rural areas too. So this research is aimed at finding out the shortcomings of the most
successful bank “Sunrise Bank “for which the rural areas are still nit accessed.
Further, attempts will also be made to answer these questions:
 What is the relationship between cash flow and profitability?

1.4 Objectives of study

The main objective of this study is to access cash flow of Sunrise Bank Limited.
Other objectives are listed as follows:

 To analyze the relationship between cash flow and profitability.

 4

1.5 Significances of the study

The present study on Cash Flow Statement Analysis of Sunrise Bank Limited is
important in several ways. The study will be valuable to major parties interested in
the performance of Sunrise Bank Limited i.e. the shareholders, management of bank
itself, bankers, creditors, financial institutions, general public , depositors, prospective
customers etc. Executives at the top level as well as other policy making bodies
concerned with banking will also find it useful. Similarly, it will also be useful to
teachers, students, and faculties in management, accountancy, chartered accountancy,
chartered accountants and finance.

Significances of this study can be enlisted as follow:

 It can be a good asset of library and guidance for other report writer.
 It can be used as guidance while preparing a small project report.
 It will help the prospective investors to decide whether or not to invest.

1.6 Statement of hypothesis

Hypothesis of the study will be:

Null hypothesis:

There is no significant impact of cash flow from operating activities on the net cash
flow of Sunrise Bank Limited.

There is no significant impact of cash flow from investing activities on the net cash
flow of Sunrise Bank Limited.

There is no significant impact of cash flow from financing activities on the net cash
flow of Sunrise Bank Limited.

Alternative hypothesis:

There is significant impact of cash flow from operating activities on the net cash flow
of Sunrise Bank Limited.

There is significant impact of cash flow from investing activities on the net cash flow
of Sunrise Bank Limited.
 5

There is significant impact of cash flow from financing activities on the net cash flow
of Sunrise Bank Limited.

1.7 Literature Review

1.7.1 Conceptual Review

The cash flow statement is the final component of company’s annual report. It throws
light on the cash generating ability of a company. The statement records actual
movement in cash in an accounting period. All cash received by the company and
spent by them will be shown in this statement. Cash flow received by the company
and spent by them will be shown in this statement. Cash flow statement may be a
little bit difficult to understand than balance sheet and income statement, (Victor,
2011).

A cash flow statement is an essential index of financial health as it is possible for a

company to shoe profits while not having enough cash to carry on operations. It is a
financial statement which shows the usage of cash i.e. where and how it was spent
over a specific period of time. A statement of cash flow counters the ambiguity
regarding a company’s solvency that various accrual accounting measures create. It
shows the sources of cash generated by the business. If more cash is coming in the
business than outflow the company is facing positive cash flow but if more cash is
going out than into the company, then is called negative cash flow. The cash flow
statement consists of three parts for classification of the cash flow from operating
activities, investing activities and financing activities (Kam ,1990).

The purchase and sale of long term assets is cash flows from investing activities
(Tiiman, Keran & Martin, 2001). Tallard (2012) describes financing as the process of
acquiring capital to fund a start-up, an expansion, basic operation or whatever else the
bank needs the extra funds for. (Jabbari, Sadeghi & Aksari,2013) suggested that the
operating cash flows are inversely related to stock price cash risk in their analysis on
Tehran stock exchange from 2006 to 2010. Considering the above literature, the
proposed thesis plan is to take the cash flow from financing activities, cash flow from
investing activities and cash flow from operating activities as independent activities
and net cash flows as dependent variables.
 6

1.7.2 Empirical Review

Aghdas Jafari Motlagh, (2013) "According to him in his study he studies about how
statement of cash flow is prepared and how it is differentiated from funds flow
statement. The study used the secondary data collected from various
websites,journals, etc. The found that funds flow statement is not useful in short term
financial planning like cash flow statement because the cash is more important for
execute the plan in short run as compared to working capital.

Thomas Zeeker and Brian Stanko, (1990's) "This research paper studies about wether
the cash flow ratio is useful for the financial ratio analysis of retail sellers. The study
used the primary data to conduct this research. The study found that the cash flow
statement for retail sellers is useful to find out the financial ratios and it is also found
that not only based the accrual basis of accounting, the new and traditional accounting
methods should be implemented to assess the economic status or financial position of
retail firm.

Ajay Paliwal, MukeshAhirrao and Rana, (2015)"According to him, the term cash flow
statement is an important tool to analyze the financial performance of a firm and the
cash flow changes can be identified only by comparing the financial position of a firm
for two years. The study found the net changes in net cash in cash and it's distribution
in three business activities and also found the strength and weakness in cash flow
statement.

Jeffrey Hales and Steven Orpurt, (2013) "According to them they analyzed that
though many financial statement users have given more importance to direct method,
some of the financial statement users have given importance to indirect method of
cash flow statement. They found that the direct method information is economically
significant and that the recurring benefits that manyfirms derive from providing direct
method information likely exceed recurring cost.

Prior to the study, several researchers have done various studies regarding the cash
flow statement of banks. Different studies were conducted on the analysis of cash
flow statements. A thesis was conducted by Ravi Acharaya (2004) on the cash flow
statement analysis of NABIL BANK but it did not take into account Liquidity and
 7

Solvency ratio, also it did not clearly defined the Net Cash Flows and it’s relation
with the cash flow from operating activities, cash flow from investing activities and
cash flow from financing activities. Different studies were also conducted on cash
flow statement analysis of the banks.

1.7.3 Research Gap

As already discussed above number of studies have been done on the cash flow
statement analysis of the banks. Moreover, the research conducted previously lack on
some important aspects. Thus, this research is done taking into account the above
research gaps.

Therefore, considering above theoretical and empirical review, this research have
been conducted taking Casf flow from operating activities, Cash flow from investing
activities and Cash flow from financing activities as independent variable and netcash
flows as dependent variable. Also liquidity and solvency ratio has been taken into
account for better interpretation.

1.8 Theoretical framework

The dependent variable is net cash flow and independent variables are cash flow from
operating activities, cash flow investing activities and cash flow from financing
activities.

Cash flow from operating

activities

Cash flow from investing Net cash flow

activities

Cash flow from financing

activities

Independent Dependent
Variable Variable

Figure 1. 2: Theoretical Framework

1.9 Definition of terminology

 8

 Cash flow from operating activities:Cash from operating activities usually refers

to the first section of the statement of cash flows. Cashfrom operating
activities focuses on the cashinflows and outflows from a company's main
business activities of buying and selling merchandise, providing services, etc.
 Cash flow from investing activities: Cash flow from investing activities is an
item on the cash flow statement that reports the aggregate change in a
company's cash position resulting from investment gains or losses and changes
resulting from amounts spent on investments in capital assets, such as plant and
equipment.
 Cash flow from financing activities: The section of the cash flow statement
titled Cash Flow from Financing Activities accounts for inflows and outflows
of cash resulting from debt issuance and financing, the issuance of any new stock,
dividend payments, and any repurchase of existing stock.
 Net cash flow: Net cash flow refers to the difference between a company's
cash inflows and outflows in a given period. In the strictest sense, net
cashflow refers to the change in a company's cash balance as detailed on its cash
flow statement.

1.10 Research Methodology

The rationale behind the study is to analyze the cash flow statement of Sunrise Bank
Limited. Thus this includes those methods and techniques used for finding out
aforesaid purpose. Research methodology refers to the various sequential steps (along
with the rationale of each step) to be adopted by a researcher in studying a problem
with certain objective in view. It is a way to systematic solving of research problem. It
may be understood as a science of studying how research is done systematically. It
includes the various steps that are generally adopted by a researcher studying his/her
research problem along with logic behind them. So, it would be appropriate to
mention here that research project is not meaningful to anyone unless they are in
sequential order which will be determined by the particular problem at hand therefore,
this study aims at analyzing and interpreting the cash flow statement of Sunrise Bank
Limited. This deals with the following aspects or methodology:
 9

 Research design
 Population and sample
 Sources of data
 Methods of data analysis

1.10.1 Research design

A research design is one that minimizes bias and maximizes the reliability of data. It
also yields maximum experimental information, gives minimum experimental error
and provides different aspects of a single problem. The research design refers to the
overall strategy that you choose to integrate the different components of the study in a
coherent and logical way, thereby, ensuring you will effectively address the research
problem; it constitutes the blueprint for the collection, measurement and analysis of
data.

Accordingly to David J Luck and Ronald S Rubin, “A research design is the

determination and statement of the general research approach or strategy adopted for
the particular project. It is the heart of planning. If the design adheres to the research
objective, it will ensure that the client’s needs will be served.

The research of cash flow of a bank can be done on various manners. It includes both
quantitative and qualitative approaches. The qualitative approach includes various
observations, individual interviews, focus groups etc. The quantitative approach
includes sampling and questionnaires. The cash flow analysis of Sunrise Bank
Limited has been made from a huge evaluation from both quantitative and qualitative
approaches.

It is an analytical research based on secondary data. It investigates the financial

figures of the concern using theoretical framework of cash flow statement analysis.
Figures of cash flow statement of 5 years i.e. 2070-2071, 2071-2072, 2072-2073,
2073-2074 and 2074-2075 is comparatively analyzed to identify strength and
weakness in cash flow of the business.

1.10.2 Population and sample

 10

There are 28 commercial banks in Nepal. Among them, this study has selected
Sunrise Bank Limited for the purpose of research. Here, total 28 commercial banks
represents the population and Sunrise Bank Limited represents the sample.

1.10.3 Sources of data

Although present study is basically on secondary data, necessary suggestions are also
taken from various experts both inside and outside the bank. Sources of secondary
data include published balance sheet, profit and loss account and other related
statement of accounts as well as annual reports of Sunrise Bank Limited.

Primary data are collected through:

 Questionnaire: A set of printed or written questions with a choice of answers,

devised for the purpose of a survey or statistical study. Examples are: Exam, Test,
Opinion Poll, Quiz etc.

 Sample survey: A sample survey is a survey which is carried out using a sampling
method, i.e. in which a portion only, and not the population is surveyed.

A brief description of these primary data has been presented in Chapter II of this
research.

The data mentioned above has been prepared through various ways and channel. They
are:

 Sample surveys

 Observations

 Questionnaires

 Interviews

 Web facilities

1.10.4 Data analysis procedures

They imply various tools and techniques to measure and analyze the collected data for
interpretation. The purpose of analysis is to identify the potential risks and/ or returns
 11

that may be experienced through any investment/involvement in the entity. A

researcher examines how well the entity performed this year in comparison to
previous years. Financial tools help to find out the strength and weakness of the
business. Within the financial tools, there are different methods or tools such as trend
analysis, cash flow statement, ratio analysis, etc. but this research will focus on the
only one financial tool that is ratio analysis.
The ratios used in this study are described below:

1.10.4.1 Cash Debt Coverage Ratio

Cash debt coverage ratio or current liability coverage ratio is a liquidity ratio that
measures the relationship between net cash provided by operating activities and the
average current liabilities of the company. It indicates the ability of the business to
pay its current liabilities from its operations. The two components of the formula are
net cash provided by operating activities and average current liabilities. The net cash
provided by operating activities is the net cash generated from its operations during a
particular period. The average current liabilities are equal to opening liabilities plus
closing liabilities divided by two. It is computed as:

Cash debt coverage ratio=CFOA/Current Liabilities

1.10.4.2 Cash Interest Coverage Ratio

The interest coverage ratio is a debt ratio and profitability ratio used to determine how
easily interest on its outstanding debt can be paid. The interest coverage ratio may be
calculated by dividing EBIT during a given period by the company's interest
payments due within the same period.The Interest coverage ratio is also called “times
interest earned.” Lenders, investors, and creditors often use this formula to determine
a company's riskiness relative to its current debt or for future borrowing. It is
computed as:

ICR= (CFO +Cash payments for interest and income taxes)/Cash payment for interest

1.10.4.3 Assets Efficiency Ratio

 12

Assets efficiency ratio measures a company's ability to use its assets and manage its
liabilities effectively in the current period or in the short-term. Although there are
several efficiency ratios, they are similar in that they measure the time it takes to
generate cash or income from a client or by liquidating inventory.Efficiency ratios
include the inventory turnover ratio, asset turnover ratio, and receivables turnover
ratio. These ratios measure how efficiently a company uses its assets to generate
revenues and its ability to manage those assets. With any financial ratio, it's best to
compare a company's ratio to its competitors in the same industry. It is computed as:

Asset Efficiency Ratio=CFOA/Total Assets

1.10.4.4 Price/Cash Flow Ratio

The price to cash flow ratio is often considered a better indication of a company's
value than the price to earnings ratio. It is a really useful ratio for a company to know,
particularly if the company is publicly traded. It compares the company's share price
to the cash flow the company generates on a per share basis.

Calculate the price/cash flow ratio as follows:

Price/cash flow ratio = Share price/Operating cash flow per share 

1.10.4.5 Current Ratio

The current ratio is the most simple of the cash flow ratios. It tells the business owner
if current assets are sufficient to meet the company's current debt. The ratio is
calculated as follows:

Current Ratio = Current Assets/Current Liabilities

1.11 Report Structure

This includes background of the study, introduction of cash flow, introduction of the
bank under study, statement of the problems, objectives of study, significances of the
study, statement of hypothesis, theoretical framework and definition of terminologies.
This express the way and techniques of the study applied in the research process. It
includes research design, population and sample, sources of data and data analysis
procedures. In this, the collected data are processed, presented, analyzed and
 13

interpreted by using financial tools as well as statistical tools. In this, summary of

whole study, conclusions and recommendations are made. At the end of the study,
bibliography and appendix have also been incorporated.

1.12 Limitations of study

The finding of the study is subject to various limitations and may not be applicable in
area other than one studied. Despite of effort to collect all information data for over
all analysis of bank and intended system there are still some limitations of the study
because of various reasons and they are as follows:

 This study is based majorly on secondary data.

 The study covers only five fiscal years historical data of Sunrise Bank
Limited.
 Use of simple tools and techniques in analysis of data.
 The study covers limited data and facts.
 Data are derived from annual reports of Sunrise Bank Limited. Hence there
might be any error on the published reports that may affect the findings of this
study.
 14

CHAPTER TWO

RESULTS AND ANALYSIS

The result section is where you report the findings of your study based upon the
methodology (or methodologies) you applied to gather information. The result section
should state the findings of the research arranged in a logical sequence without bias or
interpretation.

The result and findings of cash flow analysis of Sunrise Bank Limited is highly based
on trends and assumptions on the trends thereof.

The result of the Cash Flows has been accurately and precisely undertaken in this
research. Plenty of data and information has been collected from various sources such
as from intermediaries, web services, and interviews with bankers, newspapers and
magazines etc.

The findings are so accurate that we can rely on the financial position of Sunrise Bank
Limited. The detailed Cash Flow Statement of Sunrise Bank Limited for 5 years
(2070 – 2075) is given below:

2.1 Diagrammatic Presentations

Table 2.1:
Cash flow for five years (2070 to 2075)
Particular 2074/75 2073/74 2072/73 2071/72 2070/71
s
1.CFOA 1,286,961,974 2,070,481,389 1,657,415,89 (2,945,866,699) 1,309,132,515
7
2.CFIA (3,769,936,931) (1,184,740,482) (103,060,834) (136,291,522) (78,928,751)
3. CFFA 384,166,545 1,564,950,034 513,510,677 203,052,888 (20,075,252)

Net Cash (2,098,808,411) 2,450,690,939 2,067,865,74 (2,879,105,333) 1,250,279,016

Flows 0
(1+2+3)
Source: Annual Report of Sunrise Bank Limited
 15

The brief explanation of Cash Flows Inclusions are as follows:

2.1.1 Explanations

A. CFOA (Cash flow from operating activities):

These are those activities which are to be done on a regular basis. The flow of cash
from operating activity seems to be profitable to Sunrise Bank Limited at all years
except on 2071-2072 ,the cash flow seems to be negative. The bank seems to be
having heavy flow of interest income and interest expenses.

B. CFIA (Cash flow from investing activities):

These are those activities which appear to be in Bank’s cash flow statement as a result
of investing in some investment. There has not been a profitable trend of cash from
investing activities. The bank has not earned much through its investment. However,
dividend income seems to be in a positive pattern but the income from dividend also
does not seem to be precise and accurate every year.

C. CFFA (Cash flow from financing activities):

These includes financing terms like shares, debentures, bonds, etc. The cash flow
from these activities of Sunrise Bank Limited does not seem to have sound financial
position. The amount from such activities is not at all profitable to the bank. However,
recently, the figure seems to have been improved in a good times during recent years.
The bank has involved itself in qualify financing activity.

2.2 Data Analysis

Data analysis is the process of evaluating data using analytical and logical reasoning
to examine each component of the data provided. This chapter is the main part of
research which deals with the analysis and interpretation of data following the
research methodology dealt in the first chapter. The data have been analyzed by using
various ratios which are as follows:

 Cash Debt Coverage Ratio

 Cash Interest Coverage Ratio
 16

 Assets Efficiency Ratio

 Price/Cash Flow Ratio
 Curent Ratio

2.2.1 Cash debt coverage ratio

Bank’s ability to cover liabilities from cash flow arising from operating activities is
shown by cash debt coverage ratio. This ratio is obtained as the ratio of net cash flow
from operating activities and bank’s total liabilities.The cash debt coverage ratio of
Sunrise Bank Limited for the period 2070/71 to 2074/75 are presented below in Table
2.2 and Figure 2.1:

Table 2. 2:
Cash Debt Coverage Ratio( in %)
Particular 2074-75 2073-74 2072-73 2071-72 2070-71
(2,945,866,699
(A)CFOA 1,286,961,974 2,070,481,389 2,054,357,977 ) 1,309,132,515
(B)Total 62,123,476,43 61,988,387,78 52,414,539,98 34,040,842,02 26,963,404,24
Liabilities 6 9 6 9 5
Cash debt
coverage
ratio%
(A/B) 2.07 3.34 3.92 -8.65 4.86
Source: Annual Report of Sunrise Bank Limited

Table 2.2 shows the change in cash debt coverage ratio of Sunrise Bank Limited from
the period 2070/71 to 2074/75. The highest cash debt coverage ratio was 4.86% in the
fiscal year 2070/71 and the lowest was (8.65%) in the fiscal year 2071/72.
 17

Cash Debt Coverage Ratio

6.00%

4.00%
Cash Debt Coverage Ratio (in %)

2.00%

0.00%
2070/71 2071/72 2072/73 2073/74 2074/75
-2.00% Cash Debt Coverage Ratio

-4.00%

-6.00%

-8.00%

-10.00%

Year

Figure 2.1: Cash Debt Coverage Ratio

Figure 2.1 shows the cash debt coverage ratio of Sunrise Bank Limited. The ratio has
been increasing slowly from the FY 2070-71 but during the FY 2073-74 the ratio has
decreased in such a way that it’s negative. Although the company in its recent year
2074-75 has increased it’s cash debt coverage and become positive.

2.2.2 Cash Interest Coverage Ratio

Cash interest coverage ratio is used for determining a bank’s ability to make interest
payments and shows how many times the cash outflows for interest payments were
covered by cash flows from operating activities. This ratio is obtained when the net
cash from operating activities plus the interest paid and taxes paid id divided by the
interest paid for long-term and current liabilities.The cash interest coverage ratio of
Sunrise Bank Limited for the period 2070/71 to 2074/75 are presented below in Table
2.3 and Figure 2.2:
 18

Table 2.3:
Cash Interest Coverage ratio(in times)
Particulars Year Year Year Year Year
2074-75 2073-74 2072-73 2071-72 2070-71
(A)CFOA 1,286,961,974 2,070,481,38 2,054,357,97 (2,945,866,699 1,309,132,51
9 7 ) 5
(B)Taxes 491,882,126 567,004,452 356,153,180 197,108,601 193,366,113
paid
(C)Interest 4,762,032,994 3,064,199,71 1,618,635,69 1,241,236,036 1,364,516,50
paid 6 9 3
Cash interest 1.37 1.86 2.49 (1.21) 2.10
coverage
(A+B+C)/C
Source: Annual Report of Sunrise Bank Limited

Table 2.3 shows the change in cash interest coverage ratio of Sunrise Bank Limited
from the period 2070/71 to 2074/75. The highest cash interest coverage ratio was 2.10
times in the FY 2070/71 and the lowest was (1.21 times) in the FY 2071/72.

Cash Interest Coverage Ratio

3
Cash Interest Coverage Ratio (in times)

2.5
2
1.5
1
Cash Interest Coverage Ratio
0.5
0
2070-71 2071-72 2072-73 2073-74 2074-75
-0.5
-1
-1.5
Year

Figure 2.2: Cash Interest Coverage Ratio

 19

The above figure 2.2 shows the Cash interest coverage ratio of Sunrise Bank Limited.
The ratio in the FY 2070/71 has decreased and in the FY 2071/72 has increased but
then after that fiscal year the ratio has been decreasing since last three years.

2.2.3 Assets Efficiency Ratio

 Assets efficiency ratio measures a company's ability to use its assets and manage its
liabilities effectively in the current period or in the short-term. The assets efficiency
ratio of Sunrise Bank Limited for the period 2070/71 to 2074/75 are presented below
in Table 2.4 and Figure 2.3:

Table 2.4:
Assets Efficiency Ratio( in Times)
Particulars 2074-75 2073-74 2072-73 2071-72 2070-71
CFOA 1,286,961,974 2,070,481,389 1,657,415,897 (2,945,866,699) 1,309,132,515
Total assets 718,588,594 71,455,686,094 58,738,886,373 37,388,814,893 29,661,322,163
CFOA/Total 1.79 0.029 0.028 (0.079) 0.044
assets
Source: Annual Report of Sunrise Bank Limited

Table 2.4 shows the assets efficiency ratio of Sunrise Bank Limited from the period
2070/71 to 2074/75. The highest assets efficiency ratio was 1.79 times in the FY
2074/75 and the lowest was (0.079 times) in the FY 2071/72.
 20

Assets Efficiency Ratio

5
Assets Efficiency Ratio (in times)

2 Assets Efficiency Ratio

0
2070-71 2071-72 2072-73 2073-74 2074-75
-1
Year

Figure 2.3: Assets Efficiency Ratio

Figure 2.3 shows the asets efficiency ratio of Sunrise Bank Limited. The ratio in the
FY 2070/71 has decreased and it has been increasing slowly. Although in the FY
2073/74the ratio has increased rapidly.

2.2.4 Price/Cash Flow Ratio

The price to cash flow ratio is often considered a better indication of a company's
value than the price to earnings ratio.The price/cash flow ratio of Sunrise Bank
Limited for the period 2070/71 to 2074/75 are presented below in Table 2.5 and
Figure 2.4:

Table 2. 5:
Price/Cash Flow Ratio
Particulars 2074-75 2073-74 2072-73 2071-72 2070-71
Share Price 230 396 748 395 510
OCFPS 15.78 29.20 41.68 (120.55) 58.53
Share 14.57 13.56 17.95 (3.28) 8.71
Price/OCFPS
Source: Annual Report of Sunrise Bank Limited
 21

Table 2.5 shows the change in Price/cash flow ratio of Sunrise Bank Limited from the
period 2070/71 to 2074/75. The highest price/cash flow ratio was 17.95 in the FY
2072/73 and the lowest was (3.28) in the FY 2071/72.

Price/Cash Flow Ratio

20
Price/Cash Flow Ratio (in times)

15

10
Price/Cash Flow Ratio

0
2070-71 2071-72 2072-73 2073-74 2074-75

-5
Year

Figure 2.4: Price/Cash Flow Ratio

Figure 2.4 shows the Price/cash flow ratio of Sunrise Bank Limited. The ratio in the
FY 2070/71 has decreased and in the FY 2071/72 has increased but then after that
fiscal year the ratio has been decreasing since last two years.

2.2.5 Current Ratio

It tells the business owner if current assets are sufficient to meet the company's
current debt.The current ratios of Sunrise Bank Limited for the period 2070/71 to
2074/75 are presented below in Table 2.6 and Figure 2.5 :

Table 2.6:
Current Ratio (in Times)
Particulars 2074-75 2073-74 2072-73 2071-72 2070-71
CA 64,357,094,562 61,367,721,920 49,951,248,545 29,819,365,025 25,978,601,822
CL 62,123,476,436 61,998,387,789 52,414,539,986 34,040,842,029 26,963,404,822
CA/CL 1.04 0.99 0.95 0.88 0.96

Source: Annual Report of Sunrise Bank Limited

 22

Table 2.6 shows the change in current ratio of Sunrise Bank Limited from the period
2070/71 to 2074/75. The highest current ratio was 1.04 times in the FY 2074/75 and
the lowest was 0.88 times in the FY 2071/72.

Current Ratio
5
4.5
4
Current Ratio (in times)

3.5
3
2.5 Current Ratio
2
1.5
1
0.5
0
2070-71 2071-72 2072-73 2073-74 2074-75
Year

Figure 2.5: Current Ratio

Figure 2.5 shows the current ratio of Sunrise Bank Limited. The ratio in the FY
2070/71 has decreased and in the FY 2071/72 has increased also then after that fiscal
year the ratio has been increasing since last three years gradually.

2.3 Primary data collection and it’s analysis

Primary data were collected by means of questionnaire and were focused on the
certain questions so as to check the cash position of the bank, liquidity position by
analyzing the various areas of operations and services provided. The following data
are collected through questionnaires:
 23

1) Did the bank use internal cash flow for financial growth?

Question No. 1

16%

20%

64%

Yes No I don't know

Figure 2.6: Question No. 1

In this diagram, 64% says “Yes”, 20% says “No” and 16% says “I don’ know”. It
represents that there is sufficient cash from internal cash flow for financial growth.

2) Did you find internal cash flow generation is strong?

Question No. 2

10%

17%

73%

Yes No I don't Know

Figure 2.7: Question No. 2

In this diagram,73% says “Yes”, 17% says “No” and 10% is “I don’t know”. It
reflects that there is saving cash flow generation from internal activities.
 24

3) Does the bank have the ability to meet its short term financial obligation such as
interest payment from its operating activities?

Question No. 3

10%

10%

80%

Yes No I don't know

Figure 2.8: Question No. 3

In this diagram, 80% says “Yes”, 10% says “No” and 10% says “I don’ know”. It
represents that there is sufficient cash to pay short term financial obligation as result
in out flow of cash flow of cash for the bank.

4) Is the financing consistent with your overall business risk?

Question No. 4

10%

13%

77%

Yes No I don't know

Figure 2.9: Question No. 4

 25

In this diagram, 77% says “Yes”,13% says “No” and 10% says “I don’t know”. It
indicates that bank’s overall business risk is consistent with financing.

5) Will you be able to pay your customary cash benefits?

Question No. 5

20%

13%

67%

Yes No I don't know

Figure 2.10: Question No. 5

In this diagram, 67% says “Yes”,20% says “No”and13% says “I don’t know”. It
represents the bank is able to pay its customary cash dividend.

6) Is the cash flow from operational adequate to pay medium and long term debt?

Question No. 6

10%

10%

80%

Yes No I don't know

 26

Figure 2.11: Question No. 6

In this diagram, 80% staff says “Yes”,10% says “No” and 10% says “I don’t know”.
It indicates that there is sufficient cash to pay medium and long term debt and short
term debt financing.

7) Do you raise capital?

Question No. 7

4%
13%

83%

Yes No I don't know

Figure 2.12: Question No. 7

In this diagram, 83% says “Yes”, 13% says “No” and 4% says “I don’ know”. It
reflects that bank has ability of raising capital.

8) Is your investment consistent with your business strategy?

 27

Question No. 8

20%

7%

73%

Yes No I don't know

Figure 2.13: Question No. 8

In this diagram, 73% says “Yes”, 7% says “No” and 20% says “I don’t know”. It
shows that the investment made by bank is as per the business strategy.

2.4 Major Findings

 The cash debt coverage ratio is in fluctuating trend. It reached itd highest of
4.86% in the FY 2070/71 and the lowest of (8.65%) in the FY 2071/72. The ratios
over the five years denote that SBL has weaker ability to pay its total debt as the
ratios are lower resulting in less financial flexibility.
 The cash interest coverage ratio is in fluctuating trend. It reached its highest of
2.10 times in FY 2070/71 and the lowest of (1.21times) in the FY 2071/72. The
ratios over five years denote that SBL has lower level of cash to pay its interest
obligation.
 The assets efficiency ratio is in fluctuating trend. It reached its highest of 1.79
times in FY 2074/75 and the lowest of (0.079 times) in the FY 2071/72. The
higher the ratio the better the utilization of assets to generate cash flow return.
 The price/cash flow ratio is in fluctuating trend. It reached its highest of 17.95 in
the FY 2072/73 and the lowest was (3.28) in the FY 2071/72. The higher the ratio
the better the position of the institution in the market.
 28

 The current ratio is in fluctuating trend. It reached its highest of 1.04 times in the
FY 2074/75 and the lowest was 0.88 times in the FY 2071/72.
 As per primary data collected through questionnaire method, SunriseBank Limited
has satisfactory liquidity position. Cash flow has greater impact on the
profitability and risk of the bank. It reflects that there is saving cash flow
generation from internal activities and has sufficient cash to pay short term
financial obligation. It also indicates that bank’s overall business risk is consistent
with financing and is able to pay its customary cash dividend. It indicates that
there is sufficient cash to pay medium and long term debt and short term debt
financing. It reflects that bank has ability of raising capital and the investment
made by bank is as per the business strategy.
 29

CHAPTER THREE

SUMMARY AND CONCLUSIONS

This chapter consists of the summary of the whole research as well as the conclusion
that the researcher has reached through this research.

3
3.1 Summary

Cash Flow Statement is an important financial statement which helps in observing

liquidity and solvency of an entity. It is an important indicator of financial health
because it is possible for a company to show profits while not having enough cash to
sustain operation. The importance of being familiar with cash flow statement has
been explained in this report. The study investigates different components included in
cash flow statements and uses various modern cash flow ratios. Various ratios of cash
flows such as interest coverage ratio, price to cash flow ratio, current liability
coverage ratio, cash flow to total debt ratio, asset efficiency ratio, etc. used in finding
out the liquidity and solvency of the bank.

The research report has been done by collecting the data and information from
2070/71 to 2074/75 which was given in the annual report of Sunrise Bank Limited.
This research was conducted to analyse the financial statement of Sunrise Bank Ltd.
Cash flow analysis is a form of financial statement analysis that is used to obtain
quick indication of a firm’s financial position and performance in several areas.

This report has been prepared for the partial fulfilment of the requirement for the
degree of Bachelor of Business studies(BBS). This report is also prepared for the
analysis of cash flow statement of Sunrise Bank Ltd. In this report, the cash flow
statement is analysed using certain financialn and statistical tools in order to know
 30

cash flow from operating activities, cash flow from investing activities and cash flow
from financing activities of Sunrise Bank Ltd.

To conduct the research in effective way and for easy understanding to the reader of
the study, the study has been divided into three chapters such as introduction, result
and analysis and summary and conclusions. Chapter one deals with background of the
study, statement of problem, objectives of the study, significance of the study, review
of literature, research methodology, limitation of the study and organization of the
study. Chapter three deals with summary and conclusions. Chapter two deals with
data presentation and analysis of relevant data using statistical tools. In this chapter,
various ratios are calculated for the study of financial performance of Sunrise Bank
Limited, which are as follows:

Table No.3.1

Comparative chart of findings

Year Cash Cash Debt Assets Price/Cash Current

Interest Coverage Efficiency Flow Ratio Ratio
Coverage Ratio Ratio
Ratio
2074/75 1.37 2.07 1.79 14.57 1.04
2073/74 1.86 3.34 0.029 13.56 0.99
2072/73 2.49 3.92 0.028 17.95 0.95
2071/72 (1.21) (8.65) (0.079) (3.28) 0.88
2070/71 2.10 4.86 0.044 8.71 0.96
Average 1.322 1.108 0.3624 10.302 0.964
Sources: Annual report of Sunrise Bank (2070/71 to 2074/75)

In the above chart, it represents the comparative findings of different ratios which are
used to analyse cash flow statement of Sunrisei Bank Limited.

3.2 Conclusions

It is clearly visible Sunise Bank is beneficial bank in the country. Under this Research
study, different financial tools are used for cash flow statement analysis of selected
sample banking institutions. It is found that bank has adopted normal cash
management and investment management policy. Commercial bank should run their
business according to the directions given by Nepal Rastra Bank and should follow
 31

required act as per necessity. Banks should not invest haphazardly. They should
invest their funds in different portfolios and study of the project to get higher return
on their investment. If banks don’t diverse their investments in different
organizations, then there is high chance of default risk. Financial institution should
not exceed the limit set by central bank to make investment policy. The Sunrise Bank
has been able to satisfy its customer demand and the bank is profitable. In fact, we
can say that Sunrise Bank is an important financial institution in the economy sector
of the country and it is believed that Sunrise Bank is able to fulfil its objectives for
which it is established.
 32

BIBLIOGRAPHY

Banskota, S. (200). Research Methodology.Kritipur: New Books Enterprises.

Dahal, B &Dahal, S. (2002). A Hand Book to Banking, Kathmandu :Ashmita Books

and Stationery, Putalishadak, Nepal.

Dahal, P &Khatiwada, S. (2058 B.S.). Research Methodology. Kathmandu: M.K.

Publisher and Distributor

Economic Survey (2008). Ministry of Finance, Government Of Nepal.

Gopinathan, T(2009). Financial ratio analysis for performance check.

Gupta, D.P. (1894). The Banking System: Its Role in Export Development.

Gupta, S. (1993).Research Methodology and Statistical Techniques. New Delhi: Deep

and Deep Publication.

Hampton (1998). Financial Decision Making, India: Prentice Hall Pvt. Ltd.

Joshi, P.R. (2010). Research Methodology, (4thed.). Kathmandu: Buddha Publication.

Kothari, C.R. (1995). Research Methodology, Methods and Techniques, New Delhi:
VishwaPrakasahan Second Edition.

Manandhar, K.D.(6th ed. 2073). Managerial Finance. Kathmandu, Nepal: Khanal

Publication Pvt. Ltd.

Mckinnon R.I. (1973). Money and capital in economic development. Washington,

DC: The Brookings Institution.

Pandey, K.M. (2001). Research, Concept, Methods and Tools For Social Science
Research. Kathmandu: CEDA, T.U.

Prakash, A. & Sharma T. (2017).Fundamentals of Investment.Bhotahity, Kathmandu,

Nepal: published by Ashmita Books Publisher &Distributions(P) Ltd.
 33

Regmi M. (2007). Financial Performance analysis and thesis writing. Kathmandu:

T.U.

Shakya, P. &Pokharel,, R.(2073).Fundamentals of Investment .Minbhawan

Kathmandu: Januka Book House Pvt. Ltd.

Vanhorne, J.C. (1999). Financial Management and Policy, India: Prentice Hall of
India, Pvt. Ltd.

WEBSITES:

- www.sbl.com.np

- www.nepalstock.com

- http://suite101.com/article/financial-ratio-analysis-for-performancecheck.
 34

APPENDICES

Format of Questionnaire on Cash Flow Analysis of Sunrise Bank Limited

Dear Sir/Madam,

I am a BBS student of Shwoyambhu International College affiliated to Tribhuvan

University. As a part of academic requirement of the University, I am conducting
research entitled “CASH FLOW STATEMENT OF SUNRISE BANK LIMITED”.
As a part of research data collection exercise, I solicit your cooperation and honest
responses on a few identified aspects through this questionnaire. I would also like to
assure you that your response will be kept strictly confidential and will be used for
the thesis purpose only. Your contribution will be valuable to accomplish objective of
the study. I would be grateful if you read these questions and give answers.

General information:

Name of Respondent: ………………………………

Job position: ……………………………………….

Age: ………………………………………………...

Address: …………………………………………….

Contact number: ………………………………….…

Questions:

1. Did the bank use internal cash flow for financial growth?

a) Yes

b) No

c) I don’t know

2. Did you find internal cash flow generation is strong?

a) Yes

b) No

c) I don’t know
 35

3. Does the Bank have ability to meet its short term financial obligation such as
interest payment from its operating cash flow?

a) Yes

b) No

c) I don’t know

4. Is the financing consistent with yours overall business risk?

a) Yes

b) No

c) I don’t know

5. Will you be able to pay your customary cash benefit?

a) Yes

b) No

c) I don’t know

6. Is the cash flow from operational adequate to pay medium and long term debt?

a) Yes

b) No

c) I don’t know

7. Can you raise the capital?

a) Yes

b) No

c) I don’t know

8. Are your investment consistent with your business strategy?

a) Yes

b) No

c) I don’t know