LOVELY PROFESSIONAL UNIVERSITY

Term Paper

School of Business Department of

Management

Name of the Student: Azhar Shokin Regd. No.: - 11000968

Course Code: MGT515 Course Title: Accounting

For Managers

Course Instructor: Nitika Sehgal Course Tutor: Nitika Sehgal

Class: MBA Semester: 1st

Section: S1001 Batch 2010-12

Student’s
Signature

Azhar Shokin

Topic: - Complete Financial Analysis of a

Company

Company Taken: - J&K Bank.

 INDEX

1.Introduction
2.Solution Of Comparative Balance Sheet
3.Solution Of Common Size Balance Sheet
4.Solution Of Comparative Income Statement
5.Solution Of Common Size Income Statement
6.Trend Analysis
7.Ratio Analysis
8.Interpretation of Fund Flow
9.Interpretation Of Cash Flow
10. Cost Sheet
11. References
INTRODUCTION
The origin of Jammu and Kashmir Bank Limited, more commonly referred to as
J&K Bank, can be traced back to the year 1938, when it was established as the
first state-owned bank in India. The bank was incorporated on 1st October 1938
and it was in the following year (more precisely on 4th July 1939) that it
commenced its business, in Kashmir (India). It was initially set up as a semi-State
Bank, with its capital being contributed by State as well as the public under the
control of State Government.

Jammu and Kashmir Bank had to face serious problems in 1947 i.e. at the time of
independence. With the partition of Pakistan, two out of the total ten branches of
the bank, namely the ones in Muzaffarabad and Mirpur, fell to the other side of
the line of control (now Pak Occupied Kashmir), along with cash and other
assets. At that point of time, in keeping with the extended Central laws of the
state, J&K Bank was categorized as a Government Company, as per the
provisions of Indian Companies Act 1956.

It was in the year 1971 that Jammu and Kashmir Bank was granted the status of
a 'Scheduled Bank'. Five years later, it was declared as "A" Class Bank, by the
Reserve Bank of India (RBI). As the years passed on, the bank started achieving
more and more success. Today, it boasts of more than 500 branches across the
country. It was only recently that Jammu and Kashmir Bank became a billion
dollar company. Governed by the Companies Act and Banking Regulation Act of
India, it is regulated by RBI and SEBI. It finds a listing on the National Stock
Exchange (NSE) and Bombay Stock Exchange (BSE) as well.

Unique Characteristics & Services

• J&K Bank carries out banking business of the Central Government
• In spite of a government equity holding of 53 per cent, Jammu & Kashmir
Bank (J&K Bank) is regarded as a private sector bank
• J&K Bank is the one and only banker and lender of last resort to the
Government of J&K
• Plan and non-plan funds, taxes and non-tax revenues are routed through
the J&K Bank
• J&K Bank claims the distinction of being the only private sector bank that
has been designated as agent of RBI for banking
• The services of J&K Bank are utilized for the purposes of disbursing the
salaries of Government officials
• J&K Bank collects taxes pertaining to Central Board of Direct Taxes, in
Jammu & Kashmir
 Products & Services
Support Services
• Anywhere Banking
• Internet Banking
• SMS Banking
• ATM Services
• Debit Cards
• Credit Cards
• Merchant Acquiring

Depository Services
• Demat Account
• Other Services

Third Party Services

• Mutual Funds
• Insurance Services - Life & Non Life
• Remittance Services

Cash Management Services

• Real Time Gross Settlement (RTGS)
• National Electronic Fund Transfer (NEFT)
Additional
Incorporation Year
Information 1938
Chairman -
Managing Director
Company Secretary Parvez Ahmed
Auditor K B Sharma & Co /Verma Associates /O P Garg & Co
Registered Office Moulana Azad Road,
Srinagar, 190001, Jammu & Kashmir
Telephone 91-194-2481928/2481930-35/2483775
Fax 91-194-2481928
E-mail sharedeptt_gc@jkbmail.com
Website http://www.jkbank.net
Face Value (Rs) 10
BSE Code 532209
BSE Group B
NSE Code J&KBANK
Bloomberg J&KBK IN
Reuters JKBK.BO
ISIN Demat INE168A01017
Market Lot 1
Listing Mumbai,NSE
Financial Year End 3
Book Closure Month Jul
AGM Month Jul
Registrar's Name & Address Karvy Computershare Pvt Ltd, Plot No 17-24, Vittal Rao Nagar, Madhapur,
Hyderabad-500081.
91-040-44655000
91-040-23420814
 Balance Sheet

Year Mar 10 Mar 09 Mar 08 Mar 07 Mar 06 Mar 05 Mar 04 Mar 03 Mar 02 Mar 01
SOURCES OF FUNDS :
Capital + 48.49 48.49 48.49 48.49 48.49 48.49 48.25 48.20 48.16 48.11

Reserves Total + 2,961.97 2,574.37 2,232.34 1,960.24 1,750.98 1,616.91 1,545.49 1,193.80 888.92 651.41
Equity Share Warrants 0.00 0.00 28.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Equity Application Money 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Deposits + 37,237.16 33,004.10 28,593.26 25,194.29 23,484.64 21,644.97 18,661.38 14,674.90 12,911.11 11,168.08

Borrowings + 1,100.21 996.62 751.79 620.19 263.93 319.48 297.01 215.89 184.53 176.99

Other Liabilities & Provisions + 1,198.96 1,069.67 1,102.02 823.31 900.94 792.98 653.63 660.96 665.95 674.85

TOTAL LIABILITIES 42,546.79 37,693.25 32,755.99 28,646.52 26,448.98 24,422.83 21,205.76 16,793.75 14,698.67 12,719.44
APPLICATION OF FUNDS :

Cash & Balances with RBI+ 2,744.73 2,302.95 3,219.97 1,854.77 937.88 1,675.88 1,534.60 720.56 1,015.92 1,087.50

Balances with Banks & money at Call+ 1,869.51 2,971.81 1,217.27 1,758.99 1,349.53 1,502.38 1,382.16 800.45 952.23 969.69

Investments + 13,956.25 10,736.33 8,757.67 7,392.19 8,993.84 9,031.91 8,451.10 6,737.82 5,752.54 5,424.95

Advances + 23,057.22 20,930.41 18,882.61 17,079.94 14,483.10 11,517.14 9,284.94 8,010.95 6,423.89 4,762.90

Fixed Assets + 204.13 199.41 192.00 183.45 194.72 202.40 196.07 172.41 167.02 130.89

Other Assets + 714.95 552.34 486.47 377.18 489.91 493.12 356.89 351.56 387.07 343.51

Miscellaneous Expenditure not written off 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS 42,546.79 37,693.25 32,755.99 28,646.52 26,448.98 24,422.83 21,205.76 16,793.75 14,698.67 12,719.44

Contingent Liability+ 11,499.25 9,140.92 11,264.43 3,299.52 4,970.13 4,397.09 4,016.89 2,747.42 1,949.27 2,266.14
Bills for collection 592.26 949.04 628.54 541.35 380.18 520.13 366.98 384.15 252.87 193.97
 Profit And Loss

Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
Year
10(12) 09(12) 08(12) 07(12) 06(12) 05(12) 04(12) 03(12) 02(12) 01(12)
INCOME :
Interest Earned + 3,056.88 2,971.70 2,434.23 1,899.33 1,706.25 1,549.23 1,521.25 1,427.36 1,353.74 1,076.50

Other Income + 455.04 261.47 263.34 182.72 129.01 96.14 301.70 287.20 257.12 80.78
Total 3,511.92 3,233.17 2,697.57 2,082.05 1,835.26 1,645.37 1,822.95 1,714.56 1,610.86 1,157.28
II. Expenditure
Interest expended + 1,937.54 1,987.86 1,623.79 1,131.48 1,042.53 952.99 901.36 900.95 915.38 719.61
Payments to/Provisions for Employees 366.36 278.77 225.77 220.07 192.40 178.82 168.38 158.47 144.21 95.83
Operating Expenses & Administrative Expenses + 90.83 83.21 76.47 65.59 57.66 53.86 45.28 33.86 30.93 27.85

Depreciation + 36.93 32.51 32.16 33.14 38.92 43.42 36.80 29.73 24.10 16.98

Other Expenses, Provisions & Contingencies+ 288.73 218.72 163.40 216.57 242.62 280.35 94.80 119.76 117.92 64.45

Provision for Tax + 280.37 220.31 216.46 140.53 77.50 21.00 170.00 134.04 118.52 65.00

Fringe Benefit tax+ 0.00 1.95 1.70 1.45 8.00 0.00 0.00 0.00 0.00 0.00

Deferred Tax + -1.22 0.00 -2.18 -1.27 -1.21 -0.14 0.00 0.00 -1.92 0.00
Total 2,999.54 2,823.33 2,337.57 1,807.56 1,658.42 1,530.30 1,416.62 1,376.81 1,349.14 989.72
III. Profit & Loss
Reported Net Profit 512.38 409.84 360.00 274.49 176.84 115.07 406.33 337.75 261.72 167.56
Extraordinary Items + 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Adjusted Net Profit 512.38 409.84 360.00 274.49 176.84 115.07 406.33 337.75 261.72 167.56
Prior Year Adjustments + 0.00 0.00 0.00 0.00 1.45 0.00 0.00 0.00 0.00 0.00
Profit brought forward 0.00 0.00 0.00 0.00 107.94 0.00 0.00 0.00 0.00 0.00
IV. Appropriations
Transfer to Statutory Reserve 128.89 102.34 90.00 68.62 44.62 28.80 101.58 84.44 65.43 48.14
Transfer to Other Reserves + 258.71 211.60 182.09 140.64 197.39 -65.52 250.04 220.39 172.04 98.04

Trans. to Government /Proposed Dividend + 124.78 95.90 87.91 65.23 44.22 43.85 54.71 32.92 24.25 21.38
Balance carried forward to Balance Sheet 0.00 0.00 0.00 0.00 0.00 107.94 0.00 0.00 0.00 0.00
Equity Dividend % 220.00 170.00 155.00 115.00 80.00 80.00 100.00 60.00 50.00 40.00
Earnings Per Share-Unit Curr 101.93 81.65 71.61 54.65 35.35 22.69 82.93 69.28 54.34 34.42
Earnings Per Share(Adj)-Unit Curr
Book Value-Unit Curr 620.84 540.91 470.37 414.26 371.10 343.45 330.31 257.68 194.58 145.40
 Funds Flow Statement

Year Mar 10 Mar 09 Mar 08 Mar 07 Mar 06 Mar 05 Mar 04 Mar 03 Mar 02 Mar 01
Sources of funds

Cash Profit 549.31 442.35 392.17 307.62 215.77 158.48 443.14 367.47 285.82 184.54
Increase in Equity 0 0 0 0 0 0.24 0.05 0.04 0.05 0.1

Other Increases in other Net worth 0 0 15.33 0 0 0 0 0 0.04 23.1

Increase in Deposits 4233.06 4410.84 3398.97 1709.65 1839.67 2983.59 3986.48 1763.79 1743.03 1745.99
Increase in Borrowing 103.59 244.83 131.6 356.26 0 22.47 81.12 31.36 7.54 156.46
Increase in other Liabilities and
129.29 0 278.71 0 107.96 139.35 0 0 0 84.39
Provisions

Decrease in cash and bank balances 0 917.02 0 0 738 0 0 295.36 71.58 314.64

Decrease in money at call 1102.3 0 541.72 0 152.85 0 0 151.78 17.46 0

Decrease In advances 0 0 0 0 0 0 0 0 0 0
Decrease in investments 0 0 0 1601.65 38.07 0 0 0 0 0
Decrease in Fixed assets 0 0 0 0 0 0 0 0 0 0
Other assets 0 0 0 112.73 3.21 0 0 35.51 0 42.21
Total Inflow 6117.55 6015.04 4758.5 4087.91 3095.53 3304.13 4510.79 2645.31 2125.52 2551.43

Application of funds

Cash Loss 0 0 0 0 0 0 0 0 0 0
Decrease in networth 18.13 13.93 0 9.48 3.99 4.87 6.14 3.77 0 0
Decrease in deposits 0 0 0 0 0 0 0 0 0 0
Decrease in borrowings 0 0 0 0 55.55 0 0 0 0 0
Decrease in other liabilities and
0 32.35 0 77.63 0 0 7.33 4.99 8.9 0
provisions

Increase in cash and bank balances 441.78 0 1365.2 916.89 0 141.28 814.04 0 0 0

Increase in money at call 0 1754.54 0 409.46 0 120.22 581.71 0 0 76.01

Increase in advances 2126.81 2047.8 1802.67 2596.84 2965.96 2232.2 1273.99 1587.06 1660.99 1244.83
Increase in investments 3219.92 1978.66 1365.48 0 0 580.81 1713.28 985.28 327.59 1170.63
Increase in fixed assets 41.65 39.92 40.72 21.86 31.25 49.74 60.47 35.11 60.23 40.56
Increase in other assets 162.61 65.87 109.29 0 0 136.23 5.33 0 43.56 0
Dividend 106.65 81.97 75.14 55.75 38.78 38.78 48.5 29.1 24.25 19.4
Total Outflow 6117.55 6015.04 4758.5 4087.91 3095.53 3304.13 4510.79 2645.31 2125.52 2551.43

Cash Flow Statement

 Mar 10 Mar 09 Mar 08 Mar 07 Mar 06 Mar 05 Mar 04 Mar 03 Mar 02 Mar 01

Cash Flow Summary

Cash and Cash Equivalents at Beginning of the year 5274.76 4437.24 3613.76 2287.41 3178.27 2916.75 1521.01 1968.14 2057.2 2295.82

Net Cash from Operating Activities -1109.18 965.35 901.33 1480.11 -805.54 348.46 1489 -387.85 -7.54 -177.52

Net Cash Used in Investing Activities -41.65 -39.92 -40.72 -21.87 -31.25 -49.74 -60.47 -35.12 -60.24 -40.55

Net Cash Used in Financing Activities 490.31 -87.91 -37.13 -131.89 -54.07 -37.2 -32.79 -24.16 -21.28 -20.55

Net Inc/(Dec) in Cash and Cash Equivalent -660.52 837.52 823.48 1326.35 -890.86 261.52 1395.74 -447.13 -89.06 -238.62

Cash and Cash Equivalents at End of the year 4614.24 5274.76 4437.24 3613.76 2287.41 3178.27 2916.75 1521.01 1968.14 2057.2
Comparative Balance Sheet
 INTERPERTATION:-

PARICULAR 2010 2009 Change Percentage

O.0 0.0
Capital + 48.49 48.49

Reserves Total + 2,961.97 2,574.37 387.60 15.1

0.0 0.0
Equity Share Warrants 0.00 0.00
0.0 0.0
Equity Application Money 0.00 0.00
4233.06 12.8
Deposits + 37,237.16 33,004.10
30.54 3.1
Creditor 1,100.21 996.62
129.29 12.1
other Current Liabilities & Provisions + 1,198.96 1,069.67
4853.54 12.9
TOTAL LIABILITIES 42,546.79 37,693.25

APPLICATION OF FUNDS :
441.78 19.2
Cash & Balances with RBI+ 2,744.73 2,302.95
(1102.3) 37.1
Balances with Banks & money at Call+ 1,869.51 2,971.81

Investments + 13,956.25 10,736.33 3219.92 30.0

2126.81 10.2
Advances + 23,057.22 20,930.41
4.72 2.4
Fixed Assets + 204.13 199.41
162.61 29.4
Other Assets + 714.95 552.34
0.0 0.0
Miscellaneous Expenditure not written off 0.00 0.00
4853.54 12.9
TOTAL ASSETS 42,546.79 37,693.25
2358.33 25.8
Contingent Liability+ 11,499.25 9,140.92
(356.78) 37.6
Bills for collection 592.26 949.04
WORKING CAPITAL=TOTAL CURRENT ASSETS - TOTAL CURRENT LIABLITIES

=54884.93-4365.46

=50519.47
In this case current asset is increase by 50519.47 compared to current liabilities. Its mean the
financial position of the company is good.

LIOUIDITY POSITION:-

2010 2009

Cash = 2744.73 2302.95

Bank = 1869.51 2971.81

Loan and advance =23057.22 20930.41

--------------- ----------

27671.46 26205.17

------------ ------------

In this case liquidity position of the company is increase by 1466.29 compared to previous
year. Its mean the liquidity position of the company is good.

SOLOVENCY POSTION:-

Long term liabilities = 5536.34

Share capital = 96.98

-----------------

5633.32

---------------------

Fixed assets of 2009& 2010 = 403.54

In this case fixed assets is decrease by 5229.79 compared to long term liabilities and. Its
mean the solvency position of company is not good.

PROFITABLITY POSITION:-

YEAR 2009 2010

Reserve & surplus =2574.37 2961.97

In this case the reserve and surplus is increase by 387.6 compared to previous year. Its mean
the profitability position of the company is good.
 For the study of above facts .I found that the position of the company is good. Its mean the
company is growing.

COMMON SIZE BALANCE SHEET:-

Common size balances express the assets and liabilities as percentage of total assets and
expense and profit as percentage of sales.

Common Size Balance Sheet

2010 %age 2009 %age

Capital + 48.49 0.11 48.49 0.16

Reserves Total + 2,961.97 6.96 2,574.37 6.83

Equity Share Warrants 0.00 0 0.00 0

Equity Application Money 0.00 0 0.00 0

Deposits + 37,237.16 87.52 33,004.10 87.56

Borrowings + 1,100.21 2.58 996.62 2.64

Other Liabilities & Provisions + 1,198.96 2.81 1,069.67 2.84

TOTAL LIABILITIES 42,546.79 100 37,693.25 100

APPLICATION OF FUNDS :

Cash & Balances with RBI+ 2,744.73 6.45 2,302.95 6.11

Balances with Banks & money at Call+ 1,869.51 4.39 2,971.81 7.88

Investments + 13,956.25 32.80 10,736.33 28.48

Advances + 23,057.22 54.19 20,930.41 55.53

Fixed Assets + 204.13 0.48 199.41 0.53

Other Assets + 714.95 1.68 552.34 1.47

Miscellaneous Expenditure not written 0 0
0.00 0.00
off
TOTAL ASSETS 42,546.79 100 37,693.25 100
Contingent Liability+ 11,499.25 27.02 9,140.92 24.25

Bills for collection 592.26 1.39 949.04 2.52

INTERPERTATION:-

WORKING CAPITAL=TOTAL CURRENT ASSETS- TOTAL CURRENT LIABLITIES

=54884.93-4365.46

=50519.47

In this case current asset is increase by 50519.47 compared to current liabilities .In
percentage current assets is increase by 127.59%compared to current liabilities of both years.
Its mean the financial position of the company is good.

LIOUIDITY POSITION:-
2009 2010
Cash = 2744.73 2302.95

bank = 1869.51 2971.81

Loan and advance =23057.22 20930.41

--------------- ----------

27671.46 26205.17

------------ ------------

In this case liquidity position of the company is increase by 1466.29 compared to previous
year . In 2010 it is increase by 4.29% compared to 2009. Its mean the liquidity position of the
company is good.
SOLOVENCY POSTION:-
Long term liabilities = 5536.34

Share capital = 96.98

-----------------

5633.32

---------------------
 Fixed assets of 2009& 2010 = 403.54

In this case fixed assets is decrease by 5229.79 compared to long term liabilities and. Fixed
assets is decrease by 13.05% compared to long term liabilities and share capital. Its mean the
solvency position of company is not good.

PROFITABLITY POSITION:-

YEAR 2009 2010

Reserve & surplus =2574.37 2961.97

In this case the reserve and surplus is increase by 387.6 compared to previous year and in
2010 reserve and surplus increase by 0.13% compared to 2009. Its mean the profitability
position of the company is good.

For the study of above facts .I found that the position of the company is good. Its mean the
company is growing.

COMPARTIVE INCOME STATEMENT:-The comparative income statement we compare

the profit and loss with previous year and we know the position of sale, GP, and NP. This
statement shows the financial position of the company.

COMPARTIVE PROFIT &LOSS ACCOUNT

PARTICULAR 2010 2009 CHANGES PERCENTAGE

INCOME :

Interest Earned + 3,056.88 2,971.70 85.18 2.90

Other Income + 455.04 261.47 193.57 74.00

Total 3,511.92 3,233.17 278.75 8.62

II. Expenditure

Interest expended + 1,937.54 1,987.86 (50.32) (2.53)

Payments to/Provisions for 87.59 31.42

366.36 278.77
Employees
Operating Expenses & 90.83 83.21 7.62 9.15
Administrative Expenses +
Depreciation + 36.93 32.51 4.42 13.6

Other Expenses, Provisions & 70.01 32.00

288.73 218.72
Contingencies+
Provision for Tax + 280.37 220.31 60.06 27.26

Fringe Benefit tax+ 0.00 1.95 (1.95) 100

Deferred Tax + -1.22 0.00 (1.22) (100)

Total 2,999.54 2,823.33 (823.79) (29.18)

III. Profit & Loss

Reported Net Profit 512.38 409.84 102.54 25.02

Extraordinary Items + 0.00 0.00 0.00 0.00

Adjusted Net Profit 512.38 409.84 1O2.54 25.02

Prior Year Adjustments + 0.00 0.00 0.00 0.00

Profit brought forward 0.00 0.00 0.00 0.00

IV. Appropriations

Transfer to Statutory Reserve 128.89 102.34 26.55 25.94

Transfer to Other Reserves + 258.71 211.60 47.11 22.26

Trans. to Government /Proposed 28.88 30.11

124.78 95.90
Dividend +
Balance carried forward to Balance 0.00 0.00
0.00 0.00
Sheet
Equity Dividend % 220.00 170.00 50 29.41

Earnings Per Share-Unit Curr 101.93 81.65 20.28 24.83

Earnings Per Share(Adj)-Unit Curr

Book Value-Unit Curr 620.84 540.91 (220.07) (40.68

INTERPRETATION:-

INCOME: - The income statement of bank is increase by 278.75 compared to previous year.
So it is benefit for the bank its mean the position of the bank is good.

EXPENDITURE: - The expenditure of the bank in 2010 is 2999.54 and the expenditure of
2009 is 2823.33. It is increase by 176.21 compared to previous year. So it is not beneficial for
bank.
 102.54 compared to previous year. It is good sign for bank.

COMMOM SIZE INCOME STATEMENT:-

The quickest and easiest solution to this comparability problem is to divide all financial
statement number for a given year by sale for the year. The resulting financial statement is
called common size financial statement with all amounts for a given year being shown as a
percentage of sales for that year.

COMMON SIZE INCOME STATEMENT

PARTICULAR 2010 %age 2009 %age

INCOME :

Interest Earned + 3,056.88 2,971.70

 Other Income + 455.04 261.47

Total 3,511.92 100 3,233.17 100

II. Expenditure

Interest expended + 1,937.54 55.17 1,987.86 61.48

Payments to/Provisions for 8.62
366.36 10.43 278.77
Employees
Operating Expenses & 2.57
90.83 2.59 83.21
Administrative Expenses +
Depreciation + 36.93 1.05 32.51 1.00

Other Expenses, Provisions & 6.76

288.73 8.22 218.72
Contingencies+
Provision for Tax + 280.37 7.98 220.31 6.81

Fringe Benefit tax+ 0.00 O.O 1.95 0.06

Deferred Tax + -1.22 (O.03) 0.00 0.0

Total 2,999.54 85.41 2,823.33 87.32

III. Profit & Loss

Reported Net Profit 512.38 14.58 409.84 12.67

Extraordinary Items + 0.00 0.00 0.0

Adjusted Net Profit 512.38 409.84 12.68

Prior Year Adjustments + 0.00 0.00 0.0

Profit brought forward 0.00 0.00 0.0

IV. Appropriations

Transfer to Statutory Reserve 128.89 3.67 102.34 3.16

Transfer to Other Reserves + 258.71 7.3 211.60 6.54

Trans. to Government /Proposed 3.55 2.97

124.78 95.90
Dividend +
Balance carried forward to Balance 0.0
0.00 0.0 0.00
Sheet
Equity Dividend % 220.00 6.22 170.00 5.25

Earnings Per Share-Unit Curr 101.93 2.90 81.65 2.52

Earnings Per Share(Adj)-Unit Curr

INTERPRETION:-

In the current year the pat of j&k bank has increase to 14.58 from 12.67 compared to
previous year. But it is good sign for bank. And the expenditure statement is decrease by 1.91
compared to previous year .so it is good sign for bank.

TREND ANALYSIS: -

The financial position of a firm improving or deteriorating over the year. This is made
possible by use of trend analysis. The significance of a trend analysis of the ratio lies in the
fact that the analysis can know the direction of movement that is whether the movement is
favorable or unfavourable.

TREND ANALYSIS OF PROFIT AND LOSS ACCOUNT

Year INCOME %age EXPENDITURE %age profit %age

2007 2082.05 100 1807.56 100 274.49 100

2008 2697.57 129.56 2337.57 129.32 360 131.15

2009 3233.17 155.28 2823.33 156.19 409.84 149.30

2010 3511.92 168.67 2999.54 165.94 512.38 186.66

INTERPRETION:-

INCOME: - In 2008 the income of J&K bank is increase to 129.56% from 100% compared to
2007 and 2009 it is increase to 155.28% from 129.56% compared to 2008. In the current year
the income of the bank has 168.67% from 155.28% in the previous year. It means the income
position of the position of the bank is good.
EXPENDITURE: - In 2008 the expenditure of bank is increase 129.32% from 100%
compared to 2007 and the 2009 it is increase to 156.19% from 129.32% compared to 2008.in
the current year it is increase to 165.94% from 156.19 compared to the previous year. It
means the expenditure of the company is increase year by year so it is not good for company.

PAT: - In 2008 the profit of the bank is increase to 131.15% from 100% compared to 2007.
And the profit of the bank is increase to 149.30% from 131.15% in the year 2008. In the
current year the profit of the bank is 186.66% from 149.30% in the previous year. It means
the profit of the bank is increase by year by year.so it is good sign for the bank.

Overall the income is increase, expenditure is increase and the profit is increase compared to
previous year. It means the bank is growing.

RATIOS ANALYSIS

Ratio analysis is one of the techniques of financial analysis where ratio is used as a yardstick
for evaluating the financial condition and performance of the firm.

MEANING OF RATIOS

Ratios are relationships expressed in mathematical terms between figures which are
connected with each other in some manner. Obviously, no purpose will be served by
comparing two sets of figures which are not at all connected with each other.

Ratio can express in two ways:

1) Time when one value is divided by another the unit used to express the quotient is termed
as times.

2) Percentages-if the quotient obtained is multiplied by 100 the unit of expression is termed
as percentage.

CLASSISFICATION OF RATIOS
LIQUIDITY RATIOS SOLVENCY RATIOS PROFITABLITY
RATIOS

1) CURRENT RATIO DEBT EQUITY RATIO GROSS

RATIO

2) QUICK RATIO PROPRIETAR YRATIO NET

PROFIT RATIO

3) DEBTOR TURN OVER RATIO FIXED ASSETS RATIO

OPERATING EXP.RATIO

4) AVG.COLLECTION PERIOD INTREST COV.RATIO

OPERATING PRO. RATIO

5) CREDITOR TURN OVER RATIO

C0GS.RATIO

6) AVG.PAYMENT.PERIOD

7) STOCK TURN OVER RATIO

8) CONVERSION RATIO

GROSS PROFIT RATIO:-The ratio expresses relationship between gross profit and net sale.
Its formula is:

=GP*100/SALE

GP-DATA NOT AVILIABLE

SALE;-. DATA NOT AVILIABLE

OPERATING EXP. RATIO:-This ratio is a complementary of net profit ratio .increase the
NP ratio is 20%, it means that the operating ratio is 80% .it is calculated is as follows.

Operating ratio*100/net sale

Operating exp 2010 = COGS + manful expenses + administration expenses

=90.83

SALE;-. DATA NOT AVILIABLE

Operating exp 2009 = COGS + manful exp + administration exp

=83.21
 SALE;-. DATA NOT AVILIABLE

Operating profit: - The ratio expresses relation between operating profit and net sales. Its
formula is:

Operating profit*100/net sales

2009

Operating profit: DATA NOT AVILIABLE

Net sale= DATA NOT AVILIABLE

2010

Operating profit: = DATA NOT AVILIABLE

Net sale= DATA NOT AVILIABLE

NET PROFIT RATIO:- The ratio indicate net margin earned on a sale of 100 .it is calculated
as follows.

=Net profit *100/Net sale

2009 2010

Net profit =409.84 Net profit= 512.32 Net sale=

DATA NOT AVILIABLE Net sale= DATA NOT AVILIABLE

COGS RATIOS: - This ratio expresses the relationship between cost of goods sold and net
sale. Its formula is: -

=COGS*100/NET SALES

2009 2010

COGS=DATA NOT AVILIABLE COGS=DATA NOT

AVILIABLE

Net sale= DATA NOT AVILIABLE

 LIQUIDITY RATIOS:-This ratio is also termed as working capital ratio or short term
solvency ratio an enterprise must have adequate working capital to run its day to day
operations. Inadequacy of working capital may bring the entire business operation to a
grinding halt because of inability of the enterprise to pay for the wages material and other
regular expense.

Current ratio:-the ratio is an indicator of the firm’s commitment to meet its short term
liabilities. It is expressed as follows.

=CURRENT ASSETS/CURRENT LIABILITIES

2010 2009

= 28263.72/2299.17 = 27154.21/2066.29

= 12.3:1 =13.1:1

INTERPRETION: - The ideal ratio of current ratio is 2.

In the year 2009 the current ratio is 12.3:1. Its mean the current ratio position of the company
is good so it is good sign of the company.

In the year 2010 the current ratio is 13.1:1. Its mean the current ratio position of the company
is good so it is good sign of the company.

Quick ratio: - This ratio is ascertained by comparing the liquid assets to current liabilities.
Prepaid expenses and stock are not taken as liquid assets.

=Liquid assets/current liabilities

2009 2010

L.A=CA- Prepaid expense-stock L.A=CA- Prepaid expense-stock

= 28263.72-23057.22-18 69.51 =27154.21-20930.41-2971.81

=3336.99 =3251.99

3336.99/2066.29 =3251.99/ 2299.17

=1.6:1 = 1.4:1

INTERPRETION: - The ideal ratio of quick ratio is 1.

In the year 2009 the quick ratio is 1.6:1. Its mean the quick ratio position of the company is
good so it is good sign of the company.

In the year 2010 the quick ratio is 1.4:1. Its mean the quick ratio position of the company is
satisfied so it is good sign of the company.
Inventory turnover ratio: - In this ratio evaluation of the liquidity of inventory and adequacy
of inventory controls.

=COGS/AVERAGE INVENTORY

2009 2010

COGS=data not available COGS=data not available

Avg. stock=2008 yrs+2009yrs Avg. stock =2009yrs +2010yrs

1217.27+2971.81/2=2094.54 2971.81+1869.51/2=2420.6

CONVERSION PERIOD RATIO:-The ratio expresses the relationship of no. of day and
stock turnover ratio.

= No. of days/stock turnover ratio

2009 2010

No. of days=365 No. of days=365

Stock turnover ratio= data is not available of 2009 and 2010

Debtor turnover ratio:-Debtor constitutes an important constituent of current assets therefore

the quantity of debtor to great extent determines a firm’s liquidity.

Net credit sale/avg. debtor

Sale;- data is not available of 2009 and 2010

Avg. debtor (2008+2009) Avg. debtor(2009+2010)

=628.54+949.04 /2=788.79 949.04+592.26/2=770.65

AVERAGE COLLECTION PERIOD:-The ratio indicates the extent to which the debts have
been collect in time, it gives the average collection period. The ratio very helpful to the
lenders.

= No. of days/debtor turnover ratio

No. of days=365 No. of days=365

Debtor turnover ratio;-data not available

.
CREDITOR TURNOVER RATIO: - It is expresses the relationship of credit purchase and
average creditor payable.

= Net credit purchase /avg. credit

Average creditor (2009) = 2008yrs+2009yrs

=751.79+996.62/2=874.2

Average creditor (2010) = 2009yrs+2010yrs

=996.62+1100.21/2=1048.41

AVERAGE PAYMENT PERIOD:-This ratio indicate about the promptness or the otherwise
in making payment of creditor purchase.

= No. of days/creditor turnover ratio

No. of days=365 No. of days=365

Creditor Turnover ratio;-data is not available of both two year

SOLVENCY RATIOS:-This ratio help in ascertaining the long term solvency of the firm
which depend the firm has adequate resources to meet its long term fund requirement.

DEBT EQUITY RATIO:-The debt equity ratio is determined to ascertain the soundness of
the long term financial policies of the company.

=long term debt/shareholder funds

2009 2010

Total long term debt=33004 .1 Total long term debt=37237.16

Shareholder fund=2622.86 Shareholder fund=3010.40

33004.1/2622.86=12.58 37237.16/3010.4= 12.36

. INTERPRETION: In 2009 the debt equity ratio is 12.58 and in 2010 the debt equity ratio is
12.36 in current year it is decrease by.22.so it is not good sign for the company
PROPRIETARY RATIO;-It is variant of debt equity ratio. It establishes relationship between
the proprietors fund and the total tangible assets.

=Shareholder fund/ total assets

2009 2010

Total assets =37693.25 total assets=42546.79

Shareholder fund=2622.86 Shareholder fund=3010.40

37693.25/2622.86=14.37 42546.79/3010.40=14.13

INTERPRETION: In 2009 the proprietary ratio is 14.37and in 2010 the proprietary ratio
14.13 in current year it is decrease by.24.so its mean the ratio is decrease compared to
previous year it is relatively not danger to the creditor.

FIXED RATIO:-The ratio explains whether the firm has raised adequate long term fund to
meet its fixed assets requirement. It is expressed as follows.

=fixed assets/long term fund

2009 2010

Fixed assets= 751.75 Fixed assets= 919.08

Shareholder fund=2622.86 Shareholder fund=3010.40

751.75/2622.86=.29 919.08/3010.40=.30

INTERPRETION: idea ratio of fixed assets ratio is less than 1. In case it is more than 1 it is
not good for company. In 2009 the ratio is .29 and 2010 it is .30. As both the condition it is
better for the company.

ACTIVITY RATIO:-DATA IS NOT AVIBILABLE.

FUND FLOW STATEMENT: -

The fund flow means transfer of economic values from one assets of equity to another.

RULE;-The flow of fund occurs when a transaction changes on the one hand a non current
account and on the other a current account and vice versa.

INTERPRATION OF FUND FLOW STATEMENT

SOURCES OF FUNDS:-

1) Cash profit;-in 2010 the cash profit is increase 106.97. so it is good for bank and it is
sources of fund for the bank.
2) Increase in deposit;-in 2010 the deposit of cash is 4233.04and 2009 is 4410.84 so it is a
sources of fund.

3) Increase in borrowing;-in2010 the borrowing is 103.59and 2009 it is 244.85 its mean the
customer are increase so it is good for bank

4) Increase in other liabilities;-In 2010 the other liabilities increase so it is source of fund.

5) Decrease in cash and bank balance;-In 2009the cash and bank balance is decrease so it is
good sign bank so it is sources of fund.

APPLICATION OF FUND;-

1) Decrease of net worth;-for the compare of 2009 and 2010 the net worth is decrease so it is
flow of fund.

2) Decrease in other liabilities; - in 2009 the other liabilities is decrease so it is flow of fund.

3) Increase in cash and bank balance;-in 2010the cash and bank balance is increase so it is
flow of fund.

4) Increase in advance;-in compared to 2010 and 2009 advance is increase by 79.01. So it is

flow of fund.

5) Increase in investment;-in compared of 2010 and 2009 investment is increase by 1241.06

so it is flow of fund.

6) Increase in fixed and other liabilities;- it means bank purchase fixed and other assets so it
is flow of fund.

CASH FLOW STATEMENT: -

It is shows the movement of cash during a particular financial year.

INTERPRATION OF CASH FLOW STATEMENT;-

1) CASH FROM OPERATING ACTIVITIES;-IN 2010 cash from operating activities

is increase by 143.83 compared to previous year. So the liquidity and solvency
position of the bank is good.
2) CASH FROM INVESTING ACTIVITIES;-IN 2010 AND 2009 both the year the
investing activities of the bank is negative so it is bad sign for bank. Hence the
investing activities of bank are not good.

3)CASH FROM FINANCING ACTIVITIES;-In 2010 cash from financing activities

is increase by 402.4 compared to previous year so the financial position of the bank is
good.

COST SHEET-Cost sheet is a statement. It is not an account. It does not form the part
of double entry system. The item of the expense is present in it on the basis of the
element, function and even behavior fixed and variable.

COST SHEET

(For the year ending mar 2010)

PARTICULAR AMOUNT

Opening stock 2971.01

Add;-purchase -

Less;-closing stock 1869.51

PRIME COST 1101.5

Work overhead;-

Operating exp 90.83

WORK COST 1192.33

Office overhead;-

Depreciation 36.93
 COST OF GOOD SOLD 1155.4

References
www.jkbank.net

www.capitaline.com

Management Accounting (S.N Maheshwari)

Cost Accounting (B Bhagwati)

Accounting for Decision Making (Needles)