INTRODUCTION

"Cash is the lifeblood of business" is an often repeated maximum amongst financial

managers. Working capital management refers to the management of current or short-
term assets and short-term liabilities. Components of short-term assets include
inventories, loans and advances, debtors, investments and cash and bank balances.
Short-term liabilities include creditors, trade advances, borrowings and provisions.
The major emphasis is, however, on short-term assets, since short-term liabilities arise
in the context of short-term assets. It is important that companies minimize risk by
prudent working capital management.

Banking sector is the major part of Indian economy. Who has provided best services
to customer and good return to share holders for last few years. So, I had chosen to
complete my summer training with Vijaya Bank.

A ratio is an expectation relating to a one number to another, a ratio is one

figure. It is mathematical yardstick that measure in relationship between to figure and
accounting ratios is an expectation relating to two figures or to accounts or two sets of
accounts or group contained in the financial statement.

Financial statements are prepared for decision making. They play dominant
role in setting the framework of managerial decision. But the information provided in
financial statement is not an end in itself has no meaningful conclusion can be drawn
from this statement alone. However, the information provided in financial statement
can be used in decision making through analysis and interpretation of financial
statement.

Researcher has properly studied all financial documents, records, profit and
loss account to calculate important ratios. Each ratio focused on financial strength and
weaknesses of the firm. Researcher also gives all theoretical background necessary to
understand all ratios and their importance. Ratio analysis has been providing efficient
technique to analyze financial statement.

1
 This technique has been used by many companies for analyzing the financial
statement to know their firms status. In every business organization its financial
transactions are recorded in the systematic terms.

Financial statements are prepared for decision making. Management become

able to this purpose such financial statements are necessary to be analyzed.

The ratio analysis is one of the most powerful tools of financial analysis. It is
used as a device to analysis and interprets the financial health of enterprise. The
project is useful to understand the ratio analysis of financial statement undertaken for Vijaya
Bank.

This is useful in understanding all theoretical concepts and how they are
practically implemented. Researcher has found positive and negative aspects of
Vijaya Bank. Negative finding results in pitfall in the financial statement of the bank.

The scope of the study is identified after and during the study is conducted. The
main scope of the study was to put into practical the theoretical aspects of the study
into real life work experience.

After completion of the project we conclude that the bank has performed is good.
Also we found that the bank has special focus on CASA, Return on assets, Earning
per share of bank is in well position.

We also suggest the bank that they should advertise their banking services through
media, newspaper, radio and other advertising tools. The bank has not provided to the
customaries services like; investment banking, merchant banking, and mutual fund
this service has very needed for improvement of bank.

2
COMPANY/BANK PROFILE

Vijaya Bank was incorporated in October 1931 in Mangalore, Karnataka. It was

founded by late Shri A.B.Shetty and other enterprising farmers with an intention to
promote banking habits among farming community in the Dakshina Kannada district
in Karnataka State.

Vijaya Bank became a scheduled bank in 1958. During the year 196368 is grew into
all India bank by merger of nine smaller banks into Vijaya Bank. It got nationalised in
year 1980.

Currently, it has a network of 1277 branches, 49 extension counters and 551 ATMs
pread across all 28 states and 4 union territories in the country.

Products and Services

Rural Banking As main objective of Vijaya Bank was induce banking habits in
Farmers, it offers wide range of products and services such as saving account, loans
and advance facility to farmers, deposits , etc.

Personal Banking It offers wide range of products in personal banking such as

saving account, fixed deposit, debit card, credit card, RTGS, NEFT facility etc.

NRI Banking It also offers products and services catering NRI Clients such
remittances facility, loans, deposits etc.

Vijaya Bank offers various products and services specific to various segments such as
it has saving accounts for children, scheme for women clientele, credit facilities to
minority communities like Zoroastrians, Buddhists are among others.It also offers
merchant banking facility and insurance policy.

3
 Organizational set up of bank as per 1931

Board of directors

Chairman

Secretary

Accountants and Staff

4
 Organisational set up of the bank as per 2009

Board of directors

Chairman & managing director

Executive director
Chief
General General General vigilanc General General General General General General
manage manage manager manager manager manager manager manager manager
e
r r
officer

planning general
and administra central
personnell developm tion,centr inspectio
risk ent credit al
official manage treasury n
departme credit(revi (priority) accounts,s
language ment manage custome
credit(op division nt of ew and credit(re ecurity,bo
monitori ment r
erations) marketing vigilance informatio recovery) tail) aerd/md/
ng and n ed internati relations
house credit credit
technolog secretariat onal system
magazine supervisi (legal) card
and library ng y ,public banking and
division
merchant relations procedur
b anking and e
division publicity

17 regions, 3regions headed by general managers, 14 regions headed

by deputy general manager

1011 branches

5
STATEMENT OF THE PROBLEM:

This project deals with the study about Working Capital Management in Vijaya
Bank.

OBJECTIVES OF STUDY

To study working capital management at Vijaya bank.

To analyse the liquidity position of the company through ratios.
To study the working capital components such asCash management, Inventory
management.
To make suggestions based on the finding of the study.

6
RESEARCH METHODOLOGY

Research Methodology is the provision of information on methods & techniques used

in conducting research. It includes information on research design, methodsof data
collection, use of sampling, field work, organization, analysis & interpretation of data
collection etc.
The research methodology which I have used is descriptive.

Primary Sources Secondary Sources

- Excel presentations & other documents
Observation Books & Annual reports
Discussion Website

Primary Data Sources

The Primary Data is a data specifically generated to meet the data needs of the
problem on hand. It is also called as qualitative data because it relates to human
behavior& motivation. Primary data are created data & obtained by asking questions
to respondents or by observing or through experimental research. Respondents can be
interviewed personally, or on telephone or through mail questionnaire. Collected the
information and data through formal and informal discussions with our professional
guide in the organization, and through personal interviews, questionnaire, observation
etc. which are methods available for primary data collection.

7
Secondary Data Sources
The secondary data is the published data collected by someone else for purposes other
than the researchers problem under investigation. Information which is already
available in published form & collected for research purpose is termed as secondary
data. It is like a library or readymade source of information which can be used by any
one for any purpose. It is also called as quantitative data. I have also collected some
secondary data from companys website, annual report, company presentation, &
other company documents.

LIMITATIONS OF THE STUDY

The study duration was short.
The analysis is limited just four years of data study (from year 2013 to year 2016)
for the financial analysis.
Limited interaction with the concerned heads due to their busy schedule.

8
Conceptual Background

Review of literature

Interest Earned To Working Capital-

Actually working capital means excess of current assets over liabilities, it is not in the
liquid form but that can be converted into cash as well in very less time. And interest
earned is already in the liquid form. So this ratio says that, the current liquidity of the
firm as compare to the semi liquid assets.

And it also shows that the quickness in the business operations is how much and at
what extent the bank can be at the place of pure liquidity stage.

Other Income To Working Capital-

This ratio shows the non-operating income is how much to support the liquidity of the
bank as compared to the working capital. This income is other than operating income
so this help to bank to pay off some liabilities which are not being paid. And the
reason behind the calculation of this ratio is as the operating profit ratio.

Net Profit to Working Capital-

When the net profit is not sufficient to make or pay out the liabilities in the routine
business environment then the working capitals can be used to do so. This ratio shows
how much the business has the capacity to manage its debts payment by not much use
of working capital.

9
 Per Employee Business-

This ratio shows that how much profit contribution by the per employee to be the
bank at profitable/loss stage.

Return On Assets-

Return on asset measure the profitability of the investment in a firm. As such higher
return on asset will always be preferred. However, return on asset does not indicate
the profitability of various sources of funds, which finances total asset.

Return on asset is an indicator of how profitable a company is before leverage, and is

compared with companies in the same industry. Since the figure for total assets of the
company depends on the carrying value of the assets, some caution is required for
companies whose carrying value may not correspond to the actual market value.
Return on assets is a common figure used for comparing performances of financial
institutions (such as bank), because the majority of their assets will have a carrying
value that is close to their actual market value. Return on assets is not useful for
comparisons between industries because of factors of scale and peculiar capital
requirement (such as reserve requirement in the insurance and banking industries).

Credit Deposit Ratio-

This ratio shows the bank has efficiently used their deposits to raise the loans to there.
This ratio has to be increasing as the bank is getting more deposits from his
customers/clients.

10
 Cost of Deposit Ratio-

This ratio shows that the cost i.e. the interest paid on deposits is how much as
compared to the deposit amount. This ratio has to be maintained at lower level in the
point of view of bank but increase this ratio is good sign for the bank account
holders/depositors.

Current Ratio-

The ratio is mainly used to give an idea of the company's ability to pay back its short-
term liabilities (debt and payables) with its short-term assets (cash, inventory,
receivables). The higher the current ratio, the more capable the company is of paying
its obligations. A ratio under suggests that the bank would be unable to pay off its
obligations if they came due at that point. While this shows the company is not in
good financial health, it does not necessarily mean that it will go bankrupt - as there
are many ways to access financing - but it is definitely not a good sign.

The current ratio can give a sense of the efficiency of a company's operating cycle or
its ability to turn its product into cash. Companies that have trouble getting paid on
their receivables or have long inventory turnover can run into liquidity problems
because they are unable to alleviate their obligations. Because business operations
differ in each industry, it is always more useful to compare companies within the
same industry.

Earnings Per Share-

Earnings per share are widely used ratio to measure the profit available to the equity
shareholders on a per share basis. As such increasing EPS may indicate the increasing
trend of current profits per equity share.

11
 Dividend Payout Ratio-

It measures the relationship between the earnings belonging to the equity shareholders
and the amount finally paid to them by way of dividend. It indicates the policy of
management to a cash dividend. D/P ratio when subtracted from 100, give the
indication about the policy of the management to retain the profit in the business with
the intension to reinvest the same which are likely to have effect on future market
price of the share.

Return On Equity-

This ratio provides information about the earnings, which the funds put in by
promoters/ shareholders or the ones retained in the business generate.

Cash Deposit Ratio-

A cash ratio determines how much credit can be created from deposits. It also
determines the profitability of a bank. If cash ratios are higher than banks will be less
profitable. However, higher cash ratios do enable greater security.

Interest Expended to Interest earned Ratio-

This ratio shows the relationship between interest expended and interest earned. This
ratio is useful to calculate the banks profitability stage at any time in a year, because
it reflects the fair picture of the business operations and the income generation.

12
 CASA TO Total Deposits-

CASA means Current Account and Saving Account. In this ratio only the current and
saving accounts deposits are considered because of, the current and saving account
deposits have less cost to incur but if the bank have to use the other type of accounts
for their lending purpose then this will not be profitable for the business. The reason
behind this is the cost of current and saving deposits is less than the other type of
deposits.

For doing the financial analysis of the banks following ratio are need to be studied

13
Products & Services

Deposit Schemes

1. Savings Bank
2. V Platinum Savings Bank Account
3. Vijaya Saral Savings
4. Current Account
5. VStar Savings Scheme
6. Term Deposit

Loans & Advances

1. Retail Lending Schemes

2. Loans Against Securities
3. Non Fund Based Facilities
4. Advances to Agriculture, SSIs and Others
5. Government Sponsored Schemes
6. Special Schemes for Women

NRI Services

1. Deposits
2. Loans Remittances
3. FOREX Branches
4. FCNR(B) Branches
5. Helpline for NRIs

14
Remittance Collection and Facilities

1. FOREX Remittances
2. Inland Remittances
3. Electronic Remittance Services
4. Inward / Outward Collection Instruments

Credit Cards

1. Domestic Cards
2. Global cards
3. Debit cards

Forex

1. FOREX market Information

2. Card Rates
3. Treasury

Other Services

1. Merchant Banking
2. Vijaya Rakshak
3. V-Arogya Bima Policy
4. Credit Cards
5. Mutual Funds
6. Leasing
7. Hiring
8. Purchases

15
Competitors of Vijaya bank

Canara Bank.

Corporation Bank.

HDFC Bank Ltd.

ICICI Bank Ltd.

Indian Bank.

IndusInd Bank Ltd.

Karnataka Bank

16
Concept of Working Capital
Generally, there are two concepts of working capital i.e. gross concept and net
concept.
1. Gross Concept of Working Capital
According to gross concept, working capital refers to all the current assets and
represents the amount of funds invested in current assets. Thus, gross working capital
is the capital invested in current assets. Current assets are those assets which can be
converted into cash within the short-time period.

Gross Working Capital = Total current assets

In this way, gross working capital refers to the firm's investment in current assets.
Gross working capital represents total of current assets which includes cash in hand,
cash at bank, inventory, prepaid expenses, bills receivable etc.

2. Net Concept of Working Capital

According to the net concept, working capital is the excess of current assets over
current liabilities. In other words, the difference between current assets and current
liabilities is called net working capital.

Net Working Capital = Current Assets - Current liabilities

In this way, net working capital is the difference of current assets and current
liabilities.

Definition
Working capital management refers to a company's managerial accounting strategy
designed to monitor and utilize the two components of working capital, current
assets and current liabilities, to ensure the most financially efficient operation of the
company

17
DATA ANANLYSIS AND INTERPRETATION
Liquidity Ratio:
Liquidity refers to the ability of a firm to meet its current obligations as and
when these become due. The short-term obligations are met by realizing
amounts from current, floating or circulating assets.

Following are the ratios which can help to assess the ability of a firm to meet its
current liabilities
1. Loan / Deposit(x):
In finance, a loan is the lending of money from one individual, organization or entity
to another individual, organization or entity. ... Acting as a provider of loans is one of
the principal tasks for financial institutions such as banks and credit card companies.

=Loan/Deposit
YEAR RATIO INCREASE/DECREASE
2013 0.07 0
2014 0.04 -0.03
2015 0.06 0.02
2016 0.08 0.02
TABLE.NO 1

0.1

0.08

0.06

0.04 RATIO

0.02 INCRRASE/DECREASE

0
2013 2014 2015 2016
-0.02

-0.04

18
INTERPRETATION
The loan /deposit ratio is changing over the years. It was -0.03 times in 2014. It
increased to 0.02 in 2015 and there was subsequent increase in 2016 by 0.02 times
respectively. This shows that bankis making prompt payment to the creditors.

Total Dept/Equity(x):

Dept to Equity ratio=Total dept/Total equity

YEAR RATIO INCREASE/DECREASE

2013 0.04 0
2014 0.04 0
2015 0.05 0.01
2016 0.05 0

TABLE NO 2

0.06

0.05

0.04

0.03 RATIO
INCREASE/DECREASE
0.02

0.01

0
2013 2014 2015 2016

GRAPH NO: 2

19
INTERPRETATION
The Total Dept/Equity ratio is changing only in one year 2015 respectively. This
shows that bank is making prompt payment to the creditors.
2. Current Ratio(X):

Current Ratio = Current Assets / Current Liabilities

YEAR RATIO INCREASE/DECREASE

2013 0.32 0
2014 0.34 0.02
2015 0.32 -0.02
2016 0.33 0.01
TABLE NO 3

0.4

0.35

0.3

0.25

0.2 RATIO

0.15 INCREASE/DECREASE

0.1

0.05

0
2013 2014 2015 2016
-0.05

GRAPH NO:3

20
INTERPRETATION

The current ratio is changing over the years. It was 0.02times in 2014. It decreased
to -0.02 in 2015 and there was subsequent increase in 2016 by 0.01 times
respectively.

3.Quick Ratio(x):

QUICK RATIO = Current Assets - Inventory

Current Liabilities

YEAR RATIO INCREASE/DECREASE

2013 6.59 0
2014 3.82 -2.77
2015 5.76 1.94
2016 8.21 2.45

TABLE NO 4

10

4
RATIO
INCREASE/DECREASE
2

0
2013 2014 2015 2016
-2

-4

GRAPH NO:4

21
INTERPRETATION

The Quick ratio is changing over the years. It was -2.77 times in 2014. It increased
to1.97 in 2015 and there was subsequent increase in 2016 by 2.45 times respectively.

PERFORMANCE RATIOS:
1. ROA(%)

ROA=Net Profit/Average Total Assets

YEAR RATIO INCREASE/DECREASE

2013 0.57 0
2014 0.33 -0.24
2015 0.31 -0.2
2016 0.26 -0.5
TABLE NO 5

0.8

0.6

0.4

0.2
RATIO
INCREASE/DEACREASE
0
2013 2014 2015 2016

-0.2

-0.4

-0.6

GRAPH NO:5

22
INTERPRETATION
The ROA ratio is changing over the years. It was -0.24times in 2014. It decreased to -
0.2 in 2015 and there was subsequent decrease in 2016 by -0.5 times respectively.

2.ROE(%)ROE=Net Income/Share holder equity

YEAR RATIO INCREASE/DECREASE
2013 14.88 0
2014 8.54 6.33
2015 7.60 0.94
2016 6.13 1.47

TABLE NO 6

20

15

10

RATIO
5
INCREASE/DECREASE

0
2013 2014 2015 2016

-5

-10

GRAPH NO:6

23
INTERPRETATION
The ROE ratio is changing over the years. It was -6.33times in 2014. It decreased to -
0.94 in 2015 and there was subsequent decrease in 2016 by -1.47 times respectively.

3.ROCE(%):

ROCE=EBIT/Capital emp

YEAR RATIO INCREASE/DECREASE

2013 7.97 0
2014 6.34 -1.63
2015 5.66 -0.68
2016 5.09 -0.57
TABLE NO 7

24
 10

4
RATIO
INCREASE/DECREASE
2

0
2013 2014 2015 2016

-2

-4

GRAPH NO:7

INTERPRETATION
The ROCE ratio is changing over the years. It was -1.63times in 2014. It decreased to
-0.68 in 2015 and there was subsequent decrease in 2016 by -0.57 times respectively.

25
Operation & Financial Ratios:

1.Earning Per Share(Rs):

EPS=Net income-preferred dividend/weight avg common share

outstanding

YEAR RATIO INCREASE/DECREASE

2013 9.41 0
2014 4.84 -4.47
2015 5.11 0.27
2016 4.09 -1.02

TABLE NO 8

12

10

4 RATIO

2 INCREASE/DECREASE

0
2013 2014 2015 2016
-2

-4

-6

GRAPH NO:8

26
INTERPRETATION
The Earning per share ratio is changing over the years. It was -4.47times in 2014. It
decreased to -0.27in 2015 and there was subsequent decrease in 2016 by -1.02 times
respectively.

2.DPS(Rs):

DPS=Divident/No.of share

YEAR RATIO INCREASE/DECREASE

2013 2.50 0
2014 2.00 -0.50
2015 1.50 -0.50
2016 0.00 -1.50

2.5

1.5

1
RATIO
0.5
INCREASE/DECREASE
0
2013 2014 2015 2016
-0.5

-1

-1.5

-2

GRAPH NO:9
INTERPRETATION
The DPS ratio is changing over the years. It was -0.50times in 2014. It decreased to -
0.50 in 2015 and there was subsequent decrease in 2016 by -1.50 times respectively.

27
FINDINGS
Working capital of the Vijaya bank is increasing and showing positive working
capital per year.
The loan /deposit ratio is changing over the years. It was -0.03 times in 2014. It
increased to 0.02 in 2015 and there was subsequent increase in 2016 by 0.02
times respectively. This shows that bank is making prompt payment to the
creditors.
The Total Dept/Equity ratio is changing only in one year 2015 respectively. This
shows that bank is making prompt payment to the creditors.
The current ratio is changing over the years. It was 0.02times in 2014. It
decreased to -0.02 in 2015 and there was subsequent increase in 2016 by 0.01
times respectively.
The Quick ratio is changing over the years. It was -2.77 times in 2014. It
increased to1.97 in 2015 and there was subsequent increase in 2016 by 2.45 times
respectively.

CONCLUSION
The study on working capital management conducted in Vijaya Bank. To analyse
the financial position of the company. The companys financial position is analyse
by using the tool of annual reports.
The financial status of vijaya bank is good.
The bank should take precautionary measures for investing and collecting funds
from receivables to reduce the bad debt.

28
SUGGESTIONS
Working capital of the bank has increasing every year. Profit also increasing every
year this is the good sign for the company. It has to maintain it further, to run the
business long term.
The Current and quick ratios are almost up to the standard requirement. So the
Working capital management. Vijaya Bank is satisfactory and it has to maintain
further
The bank has sufficient working capital and has better liquidity position.

29
Bibliography

Text books
M. Y. KHAN and P. K. JAIN (2007), Financial management text, problems cases,
TATA McGraw Hill Publishing Company Limited, New Delhi, 5th edition.
Annual Report of Vijaya bank.
Vechlekar N.M.- Financial management: Nirali Publication
Pande I.M.-. Financial management: Vikas Publication P.Ltd

Website
WWW.VIJAYABANK.COM
WWW.INDIAMART.COM

30
31