TGMC

A Study on Working Capital & Ratio Analysis in TGMC Bank
CHAPTER 1 WORKING CAPITAL AND RATIO ANALYSIS

Introduction This study is about the working capital management and Ratio Analysis in TGMC Bank. This study mainly concentrates on the management of working capital according to the RBI guidelines and also the actions taken by the bank to reduce them.
History of Banks Banking is one form or another was in existence even in ancient times. The writing of Manu (The maker of old Hindu Law) and Kautilya (The Minister of Chandragupta Maurya) contained reference to banking. However, banking as a kind of business, i.e., modern banking is of recent origin. It came into existence only after the industrial revolution. After the industrial revolution, with the increase in the size of industrial and business units, joint stock company form of business organization encouraged people with small means to become shareholders of big industrial and business enterprises.
Vidyavahini First Grade College, Tumkur. 2010-11.
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Still there were certain sections of the public who were not prepared to invest their money in the shares of joint companys. however, they were willing to part with their surplus money, if they were assured of the repayment of their money with little interest thereon. So, naturally those areas there is a need for the formulation of financial institutions that could collect the surplus of the people on terms acceptable to them of the people in terms (i.e., the funds) available to the needy for productive purposes.
Accordingly, a large number of financial institutions called joint stock banks were setup after the industrial revolutions. As such joint stock banks or modern banks are of recent development.
Co-operative banks are small sized units organized in the co-operative sector, which operate both in industrial and trade sectors besides professional and salary classes.
Regulated by the Reserve Bank of India they are governed by the banking regulations act 1949 and banking laws (Co-operative societies) act, 1965. The cooperative banking structure in India is divided into 4 components.
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The primary co-operative credit society: The primary co-operative society is an association borrowers and nonborrowers residing in a particular locality. The funds of the society are derived from central co-operative banks. The borrowers powers of the members as well as of the society is fixed. The loan are given to members for the purchase of cattle, fodder, fertilizers, pesticides, implements, etc. osits, loan and overdrafts from the Reserve Bank of India. The state cooperative banks lend money to central co-operative banks and primary societies and not directly to farmers.
a. Land Development Banks The land development banks are organized in 3 types namely, state, central and primary level. They meet the long-term credit requirements of the farmers for developmental purpose. The state land development bank overseas the primary land development banks situated in the districts and tehsils in the state. They are governed both by the state government and RBI. Recently, the supervision of land development banks has been assumed by National Bank for Agricultural and Rural Development (NABARD).
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CHAPTER 2 INDUSTRY PROFILE
2.1 History of co-operative banking in General Germany is the birthplace of co-operative credit movement in the world. Herr. P.W. Raiffeisen and Herr Frannz schulze of Germany are the pioneers in the field of co-operative credit Herr F.W. Raiffeisen promote co-operative societies in the rural areas of Germany. Similarly Herr Franz schelzde promote co-operative credit societies in the urban areas of Germany. These two types of co-operative credit societies worked successfully. The successful working of these types of cooperative credit societies in Germany contributed to the emergency of co-operative credit societies as co-operative banks in the other countries of the world including India.
Definition and meaning of co-operative banking In the words of Henry Wolff, Co-operative banking is an agency which is in a position to deal with small man on his own terms accreting the security he has and without drawing on the protection of the rich.
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Devine defines a co-operative bank as a mutual society formed, composed and governed by working people themselves for encouraging regular saving and granting small loans on easy terms of interest and repayment.
On the analysis of the above definitions one says that, co-operative bank is an organization engaged in the banking functions of acceptance of deposits and lending of credit. In short, a co-operative bank is an institution, which performs the banking functions of a acceptance of deposits and borrowing of funds and lending of credit.
2.2 Characteristic features of co-operative banking Like commercial banking, co-operative banking also is concerned with the performance of the banking functions of acceptance of deposits and lending of funds. Co-operative banks are established under the co-operative societies acts. A co-operative bank is an association of persons and not of capital. Co-operative banks are democratic institutions, in the sense that they follow the principle of one-man, one-vote in their management. Co-operative banking is based on the principle of mutual help.
Thrift and savings is the essence of the working of co-operative banks. Co-operative are basically rural oriented. The operations of a co-operative bank are generally, restricted to a specified area, a village and a district of a state. Co-operative banks mainly finance agriculture and allied activities.
2.3 Principles of co-operative banking The important principles of co-operative banking are: 1. Principle of co-operative and mutual help. 2. Principle of services and not profit. 3. Principle of thrift and savings. 4. Principle of one man one voice in management. 5. Principle of personalization of credit (i.e., laying emphasis on credit worthiness and honesty of the borrowing members)
2.4 Types of co-operative banks Co-operative bank in India may be divided into 2 distinct types viz., primaries and financing association the following is the detailed classification of the various types of co-operative credit institution.
2.5 Co-operative banking in India Introduction India is an agricultural country, agriculture is an important sector of Indian economy like other industry required adequate credit of all types. The chronic poverty, heavy indebtedness and stagnation of rural masses attracted the attention of the Government and made the government to take steps for the creation of an institutional credit to agriculturist in rural areas. The result was the emergence of co-operative banking.
The co-operative movement was started in India in 1904 with the object of providing to agriculturist for productive purpose at low rates of interest and thereby relieving them from the clutches of the money lenders. A large number of agricultural credit societies were set up in the village under the co-operative societies Act of 1912 contributed to the establishment of central co-operative banks and the state co-operative banks to provide refinance to primary credit societies which could not mobilize fund by their own efforts, by facilitating the formation of central co-operative banks and the state co-operative societies Act of 1912 gave stimulus to the co-operative credit movement in India.
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The co-operative credit movement made good progress during and after the First World War 1914-1918. But during the great depression of 1929-1933, it received a serious set back with the outbreak of the second World War of 19391945, the co-operative credit movement made considerable credit movement made progress once again. The number of co-operative credit institutions has increased their membership had gone up, and their deposit and advances also had increased considerably. During the post independence era, much progress has been made in co-operative banking thanks to keen interest shown by the Reserve Bank of India in co-operative credit movement.
Co-operative movement in Karnataka Karnataka has build a tradition and cultures for an effective network of cooperative in the state. The origin of co-operative credit movement in Karnataka can be traced to the passing of first co-operative societies act 1904, based on the friendly societies Act of England of 1974. The Beetgeri urban Co-operative credit societies organized on 18th October 1904 in Dharwad District was the firm urban bank formed in Mumbai Karnataka area. The Bangalore city co-operative credit society was registered on 8th December 1906.
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Co-operative banks in Tumkur In Tumkur district there are 9 co-operative urban banks. There is a district co-operative central bank at Tumkur. The district co-operative central banks have much need in the Agricultural co-operative in the rural sector.
2.6 Banking Regulation Act, 1949 (As applicable to co-operative societies) As amended by banking laws (amendments) Act 1983 and banking Regulation (amendment) act 1991.
The Banking Regulation Act, 1949 (as applicable to co-operative societies) had come into force from March 1966 has vested the Reserve Bank various statutory powers in regard to incorporation, management etc. of these banks however, continue to vest in registrations of co-operative societies of the states concerned further the provisions of the banking regulation act, 1949 shall e in addition to, land not save as expressly provided in the Act, in derogation of any other law time being in force. This means that the co-operative banks regulation act also other laws applicable to them. In respect of matters specifically provided for the banking regulation act, the provision of the said act will prevail over the provisions over the co-operative societies act.
CHAPTER 3 PROFILE OF THE BANK

3.1 History Tumkur Grain Merchants co-operative bank limited is a leading Urban Cooperative Bank in the country, functioning with its Head Quarters. The bank is sponsored by the Grain Merchants of Tumkur city and established on 13.12.1963.
In 1950s and 60s Tumkur city has been developed as a major business center of Karnataka state. In that period, the city has so many industries and merchant class., in this substantial growth time the merchants of the city were facing the lack of proper banking facilities and services, as in those days, a few nationalized banks were functioning in the city and that too having lot of imbalances in their service to customers. By observing this pathetic condition, the leading merchants of Tumkur Sri A.K.P. Parshwanath.
Sri. N.R. Jagadhesh, Sri. T.N. Kempahonnaiah, Sri Gubbi Hucchappa and other leading merchants discussed and decided to open an Urban Co-operative bank in the city, by an inspiration from grain merchants co-operative bank bank Bangalore, with the providing banking facilities and services to the business people
of the city. For this Sri. A.K. Parshwanath was elected as the Chief Promoter and the Bank was registered on 16.9.1963 with Registration No. 270, with an initial share capital of Rs. 1,20,400.
In the following years, the bank has marked its substantial growth in the cooperative banking sector along with its objective. Since its inception, the bank has been recording substantial growth each and every year. The bank is also performing its social obligations. In the year 1877 the bank has got its License from Reserve Bank of India, Mumbai.
Branch expansion In the year 1992, the bank marked its growth and stability by opening its 1 st Branch at S.S.PUram, Tumkur and succeeded its expansion program. In the same sense of expansion, the bank has opened its 2 nd branch at Raghavendra Nagar, Tumkur and 3rd Branch at Sadashiva Nagar, Tumkur city in the year 1994 and 1995 respectively. After the succession of branch expansion program in Tumkur city, bank has decided to expand its operation to beyond Tumkur city. As a result 4th branch at Tiptur and 5th branch in Sira were opened in the year 1995 and 1997 respectively. Following in 1998, APMC yard has been opened at APMC yard,
Tumkur in its own building, which was build in a beautiful structure. This branch has opened mainly for the purpose of fulfilling the banking facility requirements to the Merchants and the public visiting the APMC yard.
In the year 1998, the bank has expanded its area of operation to Bangalore urban, Bangalore rural, Mysore and Chamarajanagar Districts by modifying its Byelaws. As a result, the bank got permission from the Reserve Bank of India to open 3 branches at Bangalore city and one branch at Mysore city. With that, the bank has opened its 8th branch at Rajajinagar, Bangalroe on 15.07.199 and 9 th branch at Mysore on 25.11.1999 on 12.02.2001, bank opens its 10 th and 11th branches at Basaveshwaranagar and Jayanagar, respectively at Bangalore city.
BANK LOGO
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ORGANIZATION CHART Board of Director
President
Vice-President
General Manager
Manager
Assistant Manager
Assistant Accountant
First Division Clerk
Second Division Clerk
In practically, the bank is not following its organization chart, because it is operating according to the situation and environment.
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3.3 Branches TGMC is having 13 branches. A branch manager who in turn is assisted by Assistant Manager, Accountant, Senior Assistant heads each branch and Junior assistants, etc. Depends on the size of the branch. Head Office : B.H. Road, Tumkur Branches: 1. S.S. Puram Branch, Tumkur 2. Raghavendra Nagar, Tumkur 3. APMC Yard, Tumkur 4. J.C. Road, Tumkur 5. Sadashivanagar, Tumkur 6. Rajaji nagar, Bangalore 7. Jayanagar, Bangalore, 8. Ramvilas Road, Mysore 9. Ramavilas Road, Mysore 10. NH4 Sira 11. Railway Station Road, Tiptur 12. R.T.Nagar, Bangalore 13.Chitradurga
Business Hours Bank shall be kept opened Monday to Friday Saturday : : 10.30 to 5.30 10.30 to 2.30
Cash transaction restricted Monday to Friday Saturday : : 10.30 to 2.30 10.30 to 12.30
3.4 Raising of funds The funds for carrying out at any of the above objects may be raised by the following ways: 1. Issue of shares 2. Accepting deposits of various kinds and by issue of cash certificate. 3. Obtaining cash credit/overdraft other loans from Karnataka State cooperative Apex Bank, District central co-operative Bank and with the prior approval of the registrar from any of the National Commercial Banks. 4. Donations 5. Entrance Fee
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6. Accepting subscription from members to members way are funds at death relief fund 7. Any other means permitted under the Act.
3.5 Salient features of Bank 1. Attractive deposit scheme with higher rate of interest than commercial and nationalized bank. 2. One of the leading Co-operative banks in Tumkur/Karnataka. 3. Safe Deposit Lockers facilities are available at J.C. Road Branch, S.S. Puram Branch and APMC branch in Tumkur. 4. Deposits are covered by Deposit Insurance Scheme. 5. The total banking transactions are fully computerized with LAN system. 6. Prompt, quick and efficient service. 7. Different kinds of deposits schemes on attractive rate of interest. 8. All types of loans and advances given at competitive rate of interest. 9. Gift cheque facility is offered 10.NRE/NRO accounts accepted. 11.Gold loan facilities available at J.C. Road and APMC Yard Branch.
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3.7 Aims and Objectives of the Bank To build up quality loan asset portfolio To reduce cost of deposits To step up net interest margin To increase non interest income To reduce the cash holdings and bank balance To reduce operating cost To focus on recovery To increase net profit To absorb technology at a faster pace Innovate services To increase customers satisfaction To improve operational efficiency To focus on skill developments To maintain personal integrity 3.8 Products of the Bank The bank is offering its customers most of all the facilities of the banking industry. The products or services of the bank can be classified into two broad ways:
1. Deposit account 2. Loans and Advances account 3. Other special services
1. Deposit Account The depositors are the back bone of the bank. Any bank will sustain in the industry and can play in the market only up to that period, where the depositors having believe about the bank. If any bank losses believe in the minds of the depositors, it will not be having any more life, in future. In this bank, there are five types of deposit products, which are briefed below: a. Savings Bank deposit account Savings bank account is a simple operative account, where an account holder can frequently deposit his money and withdraw. An individual can open this account for his personal transactions. This account can be opened in joint names of individuals. Savings account is perfect for those who wish to save without having their money blocked, whether in a sole name or joint name. it is also ideal for individuals, Trusts, Associations, Clubs and HUFs others. Including professionals (advocates, physicians, chartered
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accountants,
consultants
and
others),
business
people,
business
organizations, societies, institutions, corporate bodies, government bodies and thus like can avail of this service by furnishing a No Objection Certificate form the Income Tax Authority. Savings accounts offer an interest rate of 4% per annum, compounded half yearly, for the minimum balance amount maintained in the account on a day, from 10 th to day of the month. In this account, the customer should have to maintain a minimum balance of Rs.30,000.
b. Current deposit accounts Money transactions are the heart of most business relationships. Current deposit account is particularly meant for business class. This account can open only by Business people like traders, businessmen, corporate bodies Wholesalers, Retailers, Stockbrokers, Distributors, Super market chains, clearing and forwarding agencies, etc. who operate the account frequently. Here there is no limit to deposits the money and to withdraw. This accounts does not attracts any interest on the balance maintained in the account. The account holder should have to maintain a minimum balance Rs. 1,00,000.
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c. Fixed Deposit accounts This product will give clear picture of savings. Fixed deposit account offers to open the account by any person. This account will be opened for fixed amount of deposit, for a fixed tenure at the prescribed rate of interest, by the bank. The rate of interest structure of this account and as well as for Mangala Cash Certificate Deposit Account and Cumulative Term Deposit Account is also same, which is based on the period of deposits. Period 15 days to 29 days 30 days to 90 days 91 days to 180 days 181 days to 1 year Above 1 year to 2 years Above 2 years to 3 years Above 3 years Rate of Interest 5.50% 6.00% 7.00% 8.00% 8.50% 9.00% 8.00%
The bank offers 0.50% more rate of interest to the senior citizens, who are all, completes 65 years of age.
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In this scheme, the depositor can opt any tenure for depositing his money and he can also select the mode of interest receipt. i.e., monthly/quarterly/half yearly/on maturity. Here the interest will be calculated by simple interest formula. But, if he selects the monthly interest receipt mode, then the interest will be given less 1% on the money, to match it for quarterly interest payment mode. If the depositor withdraws the money before its maturity, then he will get less 1% on the eligible interest rate.
d. Mangala Cash certificate deposit accounts Any person can open Mangala cash certificate deposit account, which is having the same features as like in case of Fixed Depoist account. But only thing difference to fixed deposit is, here the depositor can receive the interest on his deposits, only at its withdrawal. But he will get the compounded interest on quarterly. This deposit is allowed to open the tenure of one year and above.
e. Cumulative term deposit accounts This deposit is also having the same features of Mangala cash certificate. But here the depositor will deposit the money on installment basis. Every
month he is allowed to deposit a fixed amount. In any month, if depositor fails to remit the monthly installment, then he will be penalized at 2% p.m. 2. Loans and Advances The borrowers are the heart of every bank. The key persons to generate the profit of the bank. Now-a-days, selecting a prompt borrower is too difficult. Today banks are not competing for attracting the depositors, but they are competing for attracting the prompt borrowers. Non-Performing Assets (NPA) norms of Reserve Bank of India is the main cause for todays healthy competition, which is helpful in throughout the dusty loan accounts. As per Reserve Bank of Indias NPA norm, the banks should maintain the Reserve for Bad and Doubt of their loans. In this, the loan account has been classified into 4 groups, viz. I. II. III. IV. I. Standard Assets Sub-standard Assets Doubtful assets Loss assets
Standard assets Are those, which are been having due of any installment and or interest thereon, more than 6 months.
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II.
Sub-standard assets Are those, which are having due of any installment and or interest thereon, more than 6 months, but not more than 18 months from its date of becoming sub-standard asset, i.e., 24 months.
III.
Doubtful assets Are those secured loans, which are having due of any installment and or interest thereon, more than 24 months. All the un-secured doubtful assets and less margined loans to the extent of shortage of the security are to be classified under Loss Assets. After classification, the bank should make provision for the NPA accounts, at the below mentioned rates on the outstanding balances of loans account.
1. 2. 3.
Standard assets Sub-standard assets Doubtful assets
0.25% 10.00%
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a. Below 12 months b. Above 12 months to 36 months c. Above 36 months

4.
20.00% 30.00% 50.00 100.00%
Loss Assets
After this calculation, banks should maintain the Reserves for Bad and Doubtful Assets for the outcome figures, out of its profit.
Reserve Bank of India has treated the Banks, which are having more than 10% of NPA on its total loans and advances, are Week Banks.
As on 31-03-2002, Tumkur Grain Merchants co-operative Bank is having only 2.75% of NPA on its total loans and advances, which is very much keen in the process of recovery of the Loans and Advances. Its total overdue of loans and advances as on 31.03.2002 is only 2.24% to its total.
The bank is offering different types of loans on its members. The bank has classified its loans and advances in 3 broad categories, on the basis of tenure of the loan, they are:
Particulars I. II. III. Short Term loans & advances Medium term loans and advances Long term loans and advances
Tenure Below 12 months 12 months to 60 months Above 60 months
I.
Deposit loans Deposit loans can be availed by any depositor of the Bank, by its lien in the bank. A depositor can avail the loan up to 90% of this deposit, with only 1% of interest more than this deposit interest rate.
II.
Joint loan and installment joint loan Joint will be given to only the members of the bank, who are having the voting rights, with a surety of another member, who is also having the same feature. A member can get this loan only upto 5 times to his Share Certificate amount, with a maximum limit of Rs. 25,000. The tenure of this loan is 6 months.
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The installment Joint Loan is also same like joint loan, but here the borrower has to repay the loan amount in 10 equal installments.
The present rate of interest for these loans is 12% p.a. these loans are totally unsecured loans.
III.
NSC & LIC Bond Loan Any person holding NSC Bonds and LIC certificate can avail this loan, by pledging the bonds, up to 80% on the face value of the bond, for tenure of 12 months., the present rate of interest on these loans is at 14% p.a.
IV.
Shares and Debentures loan Any person holding Banks approved shares and debentures of public sector companies can avail this loan, by pledging the share certificate, up to 50% on its market value, for tenure of 12 months. The present rate of interest on these loans is at 14% p.a.
V.
Gold Loan
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To avail this loan, the borrower has to pledge his gold ornaments to the bank. the bank will gives the loan only after its valuation by its appointed gold smith and sanctions loan only up to 50% of its market value, for tenure of 12 months. The present rate of interest on these loans is at 14%.
VI.
Pledge loan This loan can be avail only by the merchants. This loan will be given by pledging the goods and stocks of the borrower, which are related to his trade/business. Gold will be stored in godowns, under the custody of the bank. The loan will be sanctioned by 70% of the value of the stock, after its inspecting the quality of the stock. This loan will be sanctioned for a period for 6 months. The present rate of interest on these loans is at 12%.
VII. Loan on mortgage of property This loan will be given for the purpose of the business, by mortgaging the immovable property of the borrower, after considering lot of legal aspects, security, repayment capacity, credit worthiness and fulfilling
documentation procedures. Normally, this loan will be given 60-70% of the value of the property. In this loan the borrower should has to repay the loan in equal installments, which is normally 60 months. The present rate of interest on these loans is at 14% p.a.
VIII. Hypothecation loan for vehicles Hypothecation loan will be sanctioned to purchase a new or an old (not old more than 3 years) vehicle, by hypothecating the same and register the hypothecation in the Road Transport Office. Normally the loan will be sanctioned 75% on the value of the vehicle. In this loan the borrower should has to repay the loan in equal installments, which is normally 60 months. The present rate of interest on these loans is at 13% p.a.
IX.
Machinery loan The bank is promoting the small industries, by sanctioning loan for purchase of new or old machinery, 75% on the value of the machinery. In this loan the borrower should have to repay the loan in equal installments, which is normally 60 months. The present rate of interest on these loan is at 13% p.a.
X.
Consumable article loan

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The bank is promoting the small industries, by sanctioning loan for purchase or new or old machinery, 75% on the value of the machinery. In this loan the borrower should have to repay the loan in equal installments, which is normally 36 months. The present rate of interest on these loans is at 14% p.a. XI. Housing loan The bank is also interested in promoting the housing sector, by granting the loans for purchase or builds a house for the purpose of residence. Normally this loan will be sanctioned 75% on the project cost. In this loan the borrower should have to repay the loan in equal installments, which is normally 60 months. The present rate of interest on these loans is at 30% p.a.
XII. Cash Credit loan The bank is also giving advances to traders and business class in the form of cash credit facility to their running account maintained with the bank. This loan will be given to meet the working capital needs of the traders, on security of stocks and the immovable property. This facility will be
sanctioned after considering the working capital requirement and the security and also the transactions made in their accounts. The tenure of this facility will be for a period of 1 year and the borrower can be renew this facility every year, if he transactions are satisfactory to the bank. The present rate of interest on these loans is at 14% p.a. calculated for the amount of debit balance 1 the account for everyday and charged on every month.
XIII. Bills Discounting Bank is discounting the cheques issued by the reputed
corporate/organizations in favor of the account holder of the bank. This facility is given only to the reputed customers of the bank. To avail this facility, the customer should have to get prior sanction from the bank for a limited amount. In this case, the bank is discounting the cheques presented in the clearing, by charging the interest at the rate of 18% p.a. up to the period of the realization of the cheque.
XIV. Staff Advance
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To encourage the work interest of the employees, the bank is granting loans to the staff for different purposes, viz., purchase/build the house, purchase of vehicle, article, education, marriage and or for other personal necessities. Normally this loan will be given for 30 equal installments, which will be deducted from the salary of the employee. For this loan, the rate of interest will be charged at the maximum deposit rate of the bank, i.e., now it is 9% p.a.
Apart from this, the employees are eligible to get festival advance, up to the limit of Rs. 2,000, to meet expenses on the occasion of festivals. But, it will be given at the time of specified festival only. This advance is free of interest repayment in 10 equal installments. 3. Other special services Apart from the above products, bank is also offering other services, which may attracts some charges. Those are: a. Pay orders and Demand Drafts Bank is issuing Pay Orders to the purchaser at the fixed commission rate, which is payable on the same branch of the bank.
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Issuing of Demand draft is also been arranged under different agreements with different banks. Under Inland Mutual Agreement Scheme with KSC Apex Bank, bank is issuing DDs on all the Member banks and its Branches of ICICI Bank, having more than 120 locations across the country. With a major demand for DDs on Gangavathi, Sindhnur, Raichur and Koppal, bank is entered an agreement with Sindhanur Co-op. bank ltd., Sindhnur to issue DDs on its branches at the said locations.
b. Cheque Collection facility Bank is also offering its customers about fast cheque collection facility, which are payable locally or out station and foreign currency instruments. For collection of out station cheques and foreign currency instruments, the bank is charging a fixed rate of commission.
c. Safe Deposit Lockers In the 5 branches of the bank Safe Deposit Lockers facility is arranged to the customers, for a fixed rate of rent, based on the size of the locker.
d. Bank Guarantee and letter of credit Bank is also issuing Bank Guarantees and Letter of Credits in favor of the customers, after satisfying and taking necessary security for the guaranteed amount. For issuing of this guarantee, the Bank charging fixed rate of commission.
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CHAPTER 4 RESEARCH DESIGN

Definition A Research Design is a arrangement for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure - Claire Sleets and Others Title of the study A STUDY OF WORKING CAPITAL AND RATIO ANALYSIS AT TGMC BANK
Statement of the problem Working capital is very significant aspect in the management of finance of any organization, checking the level of working capital and the decisions regarding can identify the liquidity and profitability of the firm. 1. The level of current assets and current liabilities can determine the level of working capital. 2. The composition of current assets and current liabilities.
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3. Financing current assets and current liabilities are of most importance in financial management. 4. The portion of working capital in current assets. 5. The proportion of working capital in current liabilities. Ratio analysis is very significant aspect in the management of finance of any organization, checking the various position of the concern. 1. Liquidity of the firm 2. Long-term solvency of firm 3. Profitability of the firm is significant in the financial management of the business bill, because it is not only shows the financial efficiency of bill, but also its credit worthiness which has gain importance in their days of credit squeeze. This fact has been justified by many industries which has failed frequently due to fault in financial management. Therefore, a study of the management of financial condition especially to fact of various suggestion and regulation laid by the board of directors is very necessary.
It is in this view that the case study has been made on working capital management and ratio analysis in the TGMC Bank.
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Objective of the study 1. To study the pattern and procedure followed regarding working capital management and ratio analysis in TGMC Bank. 2. To study liquidity position of the bank. 3. To know the financial position of the corporation through ratio analysis. 4. To analyze the performance of TGMC Bank during three years. 5. To provide manager with reports to help them control over financial activities.
Scope of the study The study includes the current assets and current liabilities to understand the working capital and the other financial details used for calculation of ratio analysis. Further study covers the accounts of only three financial years of bank.
Reference period The period cover under this study is three financial years that is form 200708 to 2008-09, 2009-10.
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Methodology Personal interview was adopted for collection of data from TGMC Bank such as profits and loss account and balance sheet.
All the information collected from the secondary data such as: 1. Annual reports of the bank 2. Financial books
Tools for the collection of the data Data required for the study is collected through publish statement of annual accounts of TGMC bank such as profit and loss a/c and balance sheet. This supplemented by the information gathered during the discussion with bank manager.
Planning of analysis The analysis has been done with the help of financial statement relevant ratio percentage comparison of past years tables and graphs of the company.
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Limitations of the study Every effort has been made to mark study complete and has exhaustive as possible. However, the study is not free from certain limitations. 1. The study is only confined to the TGMC bank and the performance of other banking company is not compared with it. 2. The study is limited to the performance of the bank for only three years. 3. The exhaustive study has not been made on TGMC bank and is limited to the partial fulfillment for the degree of BBM. 4. Some information cannot be collected as it is confidential.
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CHAPTER 5 THEORETICAL BACKGROUND
Introduction One of the most important aspects of companys financial management is the management of working capital. Working capital may be regarded as life blood of a business, its effective provision can do much to ensure the success of business while its inefficient management can lead not only to loss of profits but also to the ultimate downfall of the a promising concern. Study of working capital is of major importance to internal and external analysis because of its close relationship with the current day operations of a business in accounting working capital is the difference between the inflow and outflow of funds.
Scope The goal of working capital management is to manage the firm current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. This is so because if the firms cannot maintain the satisfactory level, it is forced to bankrupt. The current assets should be large enough to ensure margin of staff, each of the current assets must be order to
maintain the liquidity of firm, while not keeping to high level of may one of them the interaction between current assets and current liabilities is, therefore, the main theme of working capital management.
Factors determining working capital requirements Nature of Business The nature of business is an important determinant of level of working capital. Working capital requirement depends upon the general nature of type of business. They are relatively low in public utility concerns in which inventory and receivables or rapidly converted into cash manufacturing organization however face problem of slow turnover of inventories and receivables and invest large amount in working capital.
Demand of industry Creditors are interested in the security of loans; they want their obligations to be satisfactory covered. They want amount of securities in assets, which are greater than liability.
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Cash requirements Cash is one of the current assets, which is essential for successfully operation of production cycle. Cash should be adequate and properly utilized. It would be wasteful to hold excessive cash. A minimum level of cash is always required to keep the operations going. Adequate cash is also required to maintain good credit relation. Cash has universal acceptability and liquidity.
Inventory turnover If inventory turnover is high the working capital requirement will be low. With a better inventory control a firm is able to reduce its working capital requirement. While attempting this it should determine the minimum level of stock, which it will have to maintain throughout the period of its operation.
Receivable turnover It is necessary to have an effective control of receivables. A prompt collection of receivables and good facilities for setting payables result into low working capital requirements.
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Business cycle Business expands during periods of prosperity and declines during the period of depression consequently more working capital is required during the period of prosperity and less during the recovery and prosperity phase of business cycle. Prices of raw materials and wages tend to raise reduced additional funds to carry ever the same physical volume of business.
Value of current assets Decrease in the value of current asset as compared to there reduces the size of working capital. If the real value of current asset increase there is an increase in working capital.
Credit control It includes such factors as the volume of credit sales, terms of credit sales, collection policy etc. with a sound credit control policy. It is possible for a firm to improve its cash flows.
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Liquidity and profitability If a firm desires to take a greater risk for bigger gains and loss, it reduces size of its working capital in relation to its sale. If it is interested in improving its liquidity, it increases the level of its working capital. However, the policy is likely to result in a reduction of the sale volume and therefore of profitability. A firm should choose between liquidity and profitability and decide about its working capital requirement.
Inflation As a result of inflation size of working capital increased in order to make it easier for a firm to achieve better cash inflow to some extent. The rise in selling price inflations may compensate this factor.
Profit planning and control The management in accordance with its policy of profit planning and control decides the level of working capital. Adequate profit assistance in the generation of cash, it makes it possible for the management plough back a apart of its earnings in the business and substantially build up internal financial resources. A firm has to plan for taxation payments, which are an important part of working capital management.
Repayment period A firms repayment ability determines the level of its working capital. The usual practice of a firm is to prepare cost-blow projections according to its plans for repayment and to fix working capital level accordingly.
Cash reserves It would be necessary for a firm to maintain some cash reserves to enable it to meet contingent disbursements. This would provide a safer against abrupt shortages in cash flows.
Operational and financial efficiency Working capital turnover is improved with a better operational and financial efficiency of a firm with a greater working capital turnover. It may be able to reduce its working capital requirements.
Activities of the firm A firms is stocking in heavy inventory or selling on easy credit term calls for a higher level of working capital for it transfer selling services in marking for sales.
Government regulations Now-a-days regulations and restrictions affect the working capital requirements of a firm. For instance, the London committee has prescribed norms for holding inventories and debtors who a concern is not expected to exceed this with certain by affect working capital requirements of concern.
Methods of estimating working capital There are 2 methods, which are usually followed in determine working capital requirement. Conventional method According to conventional method cash inflows and outflows are mattered with each other. Greater emphases are laid on liquidity and greater importance is attached to current ratio. Liquidity ratio etc. which perform to the liquidity of a business. Operational cycle method Under this method in order to understand the timing of cash terms we should first know the length of time, which is required to convert cash in resources. Resources into final products and this receivables and receivables back into cash.
In other words length of operating cycle is the function of nature of business. Adequacy of working capital Working capital should be adequate for the following reasons. It protects a business form the adverse effects of shrinkage in the values of current assets. It is possible to pay all the current obligations promptly and to take the advantage of cash discounts. It ensures to a greater extent the maintenance of companies credit standing and provides for such emergencies of strikes and floods etc. It enables a company to extent favorable credit terms to customers. It enables a business to withstand the periods of depression smoothly. Dangers of inadequate working capital It is not possible to utilize production facilities fully for want of working capital. A company may not be able to take advantages of cash discount facilities. The credit worthiness of company is likely to be jeopardizing because of lakes of liquidity. A company may not take advantage of profitable business opportunities.
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It is very difficult to administrate the organization. A company cannot offer to increased its cash sales and have restricted its activities to credit sales only. A company will not able to pay its dividends because of non-availability of funds. A company may have to borrow funds at exorbitant rate of interest. Its low liquidity may lead to low profitability in the sense low profitability leads to low liquidity. Low liquidity would positively threaten the solvency of the business.
Danger of excessive working capital Too much working capital is as dangerous has no title of it. Excessive working capital raises the following problems: A company may tempt to over trade and loss heavily. A company may keep very big inventories and tie up its funds unnecessarily. There may be imbalance between liquidity and profitability. A company may enjoy high liquidity and suffer low profitability. High liquidity may induce company to undertake greater production which may not have matching demand.
A company may invest heavily in its fixed equipment, which may not be justified by actual sale or production. Excessive working capital leads to carelessness about cost and therefore increase inefficiency in operation.
RATIO ANALYSIS Ratio analysis is a widely used tool of financial analysis. It is defined as systematic ratio to interpret the financial statement so that the strengthens and weakness of the firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical of quantitative relationship between two items or variables. This relationship can express as: 1. Percentages 2. Fractions 3. Proportion of numbers
The ratio analysis involves compassion for a useful interpretation of the financial statement. A single ratio itself does not indicate favorable or unfavorable conditions. It should be compared with some standards, standards may consist of past ratio, i.e., ratios calculated form the past financial of the
same firm projected ratios, i.e., ratios developed using projected performed, financial statement on the firm.
Competitors ratio, i.e., ratios of some firm especially the most progressive and successful competitors at the same point in the time and industry ratio, i.e., ratios to the industry to which the firm belongs.
Type of ratios The financial ratio analysis is study of ratios between various items on groups of items of financial statement the ratio for calculation purpose form the accounting data is grouped into various classes according to the financial activity or its function for the purpose of calculation the ratio on dividend into 4 main types.
1. Liquidity ratio These are used to judge the firms ability to meet short term obligation from the much insight can be obtained into the present cash solvency of the firm and its ability to remain solvent in the event of advertises i.e., the firm should ensure that it does not sure from back of liquidity and also that it
doesnt have excess liquidity. The failure of company due to the above may need to closure of the company. Therefore, it is necessary of strict to proper balance between high liquidity and lack of liquidity.
2. Leverage ratios The short-term creditors like bankers and suppliers of raw materials are more concerned with firms current debt paying ability. On the other hand long-term creditors like debentures holders financial institutions etc. are more financial strength infact, firms should have a strong shorter as well as long-term financial position. To judge the long time financial of the firms financial leverage in capital structure ratios are calculated.
3. Activity ratio Funds of conditional and owners reinvested in various assets to generate sales and profit. The better the management of assets longer the amount of sales activity ratios are calculated to evaluate the efficiency with which the firm manage and utilize its assets. These ratios are also called the turnover ratio because they indicate its speed with which the assets are being converted on turned over into sales.
4. Profitability ratio Profitability reflects the financial of the business operations. There are 2 types of profitability ratios
a. Profit margin ratio b. Rate of return ratio
Profit maintains ratio shows the relationship between sales and profit, the important profit margin ratio gross profit margin and net profit margin.
The rate of return ratios reflects the relationship between profit and investment. The important rates of return ratios are return on equity, earning per share.
Limitations of Ratio Analysis Though ratio analysis is one of the most power tools of financial management and is simple to calculate and easy to understand.
They suffer from some serious limitations such as: 1. Limited use of single ratio 2. Lack of adequate standards 3. Change of according procedures 4. Ratios rate no substitute
CHAPTER 6 DATA ANALYSIS AND INTERPRETATION

1. Table showing ratios of working capital Particulars Currents assets/ current liabilities Deposits/Working capital Borrowings/working capital Deposits/current liab. Borrowings/current liabilities Advances/Current assets 181.395 62.652 59.597 0 0 0 0.000 458.66 90.674 0 0 0 0.001 0.328 103.130 2007-08 43.79 2008-09 1476.92 2009-10 120.77
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2. Table showing working capital for the period of 2009-10 Years 2007-08 2008-09 2009-10 Current assets 1177732250.43 4000832269.84 4690143536.78 Current liabilities 2689380727.00 270888690 3883274338 Working capital 1511648476.57 3729943579 3414259982
Interpretation From the above table we can observe that the working capital of respective three years of the bank is increasing up to 1511648476.57 to Rs. 3414259982.
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Table No. 1: Table showing trend analysis to networking capital Years W.C. = CA-CL Decrease or increase in working capital 2007-08 2008-09 2009-10 1511648476.57 270888690.00 3883274338 1240759786 3612385648 82.07 1333.53 Increase of % of range
Interpretation From the above table we can observe that the working capital of the bank the working capital of the bank is nil in the year 2007-08, it is increased in the year 2008-09 is 82.07%, it is also increased in 2009-10 is 1333.53%.
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Table No.2: Table showing percentage of current assets for the period 2009-10 Current assets Cash & bank balance with RBI Balance with banks money @ call and short notice Advances Other current assets Total 100 100 21363.58 24822824.97 2506638074.57 106918998.79 2795185702.65 222685534.07 204563650.6 203565426.36 713627340.11 2007-08 32632321.00 2008-09 32028354.00 2009-10 164397411.95
Interpretation From the above table we can observe that percentage of current assets for the period of 2009-10. In the year 2006-07 cash and balance with RBI is 32632321 and it is decrease in next years. In the year 2007-08 advances are increasing in three years from 21363.58 to 2506638074.57 Other current assets are increased in the three years by 24822824.97 to 106918998.79
Table 3: Table showing percentage of current liabilities for the period 2009-10
Current liabilities Deposits Borrowings Other liabilities & provision Contingent liabilities Total
2007-08 25696.91 00 154302000.00
2008-09 124246814.98 00 139523603.38
2009-10 3521158627.85 00 354372110.45
7118271.83
7743601.16
100
100
100
Interpretation From the above table we can observe that percentage of current liabilities for the period of 2007-08 In the year 2007-08 deposits is 25696.91 and it is increased in next 2 years. In the year 2007-08 borrowing are decreasing in 2 years from 0.00 to 0.00 Contingent liabilities are raised year by year
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Deposits to working capital ratios
Formula =
Deposits .
Working capital
Table 4: Table showing deposits to working capital ratios Particulars Deposits Working capital CR Ratio 2007-08 2569690702.00 1511648476.57 1.699 2008-09 3124246814.98 3729943579.00 0.0333 2009-10 3521158627.85 3414259982.00 1.0313
Interpretation From the above table we can observe that the deposits to working capital ratio it was 1.699 the year 2007-08 it has been decreased to 0.03 in the year 200809 it was also increased to 1.031.
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Graph-1
1.8 1.6 1.4 1.2 1.0313 1 0.8 0.6 0.4 0.2 0 2006-07 2007-08 2008-09 0.0333 1.699
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Deposits of current liability
Deposits of current liability =
Deposits
Current liability Table 5: Table showing deposits to current liability Particulars Deposits Current liability C.R. Ratio (%) 2007-08 2569690702.00 2689380727.00 0.000 2008-09 3124246814.98 270888690 0.458 2009-10 3521158627.85 3883274338 0.906
Interpretation From the above table we can observe the deposits to current liabilities ratio in the year 2007-08 it was 0.000 was increased to 0.458 in the year 2008-09 in the year 2009-10 it was still increased to 0.906.
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Graph-2
1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 0 0.458
0.906
2008-09
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Borrowings to working capital Borrowing to working capital = Borrowings . Working capital Table 6: Table showing borrowings to working capital Particulars Borrowings Working capital CR Ratio (%) 2007-08 0.00 1511648476.57 0 2008-09 0.00 3729943579 0 2009-10 0.00 3414259982 0
Interpretation From the above table we can observe the borrowings to working capital. In the year 2007-08 it was 0. It decreased to 0 in the year 2008-09. The year 2009-10 was again decreased to 0.
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Borrowings to current liability ratio
Borrowings to current liability ratio =
Borrowings
. x 100
Current liability
Table 7: Table showing borrowings to current liability ratio Particulars Borrowings Current liability CR Ratio (%) 2007-08 0 2689380727.00 0 2008-09 0.00 270888690 0 2009-10 0.00 3883274338 0
Interpretation From the above table we can observe that the borrowings to total current liabilities ratio. In the year 2007-08 it was 0. It was decreased to 0 in the year 2008-09. In the year 2009-10 it was again decreased to 0.
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Advances to current assets
Advances to current assets =
Advances . x 100
Total assets Table 8: Table showing advances to current assets Particulars Advances 2007-08 2136357546.43 2008-09 2506638074.57 4000832269.84 0.626 2009-10 2795185702.65 4690143536.78 0.595
Total current assets 1177732250.43 CR Ratio (%) 1.813
Interpretation From the above table we can observe that the advances to total current assets ratio total advances decreased year by year and shows negative trend decreasing profits indicates the customers service. The advances in the year 2007-08, were 1.813 and decreased to 0.626 in the year 2008-09 the bank deposits decreased to 0.595 in the year 2009-10.
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2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0
1.813
0.626
0.595
2007-08
2008-09
2009-10
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Ratio Analysis 1. Liquidity Ratio
Current Ratio = Current assets Current liability
Table 9 : Table showing the current ratio Particulars Current assets Current liabilities Current ratio 2007-08 117732250.43 2689380727.00 0.437 2008-09 4000832269.84 270888690 14.769 2009-10 4690143536.78 3883274338 1.207
Interpretation From the above table we can observe the standard set for current ratio is 0.437 from the above computation it can be observed that the current bank is significantly high the standard. This indicates there is high level of liquidity practiced by the company.
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0.437 1.207
2007-08 2008-09 2009-10
14.769
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2. Leverage Ratio Equity Ratio = owned capital Total capital Table 10: Table showing total equity ratio Particulars Owned capital Total capital CR Ratio 2007-08 11821585.99 134439321 0.087 2008-09 68031650.00 9068031650.00 0.007 2009-10 88924900.00 238924900.00 0.372
Interpretation From the above calculation we can observe that the owned capital to total capital ratio. It was fluctuating year by year, it was 0.087 in the year 2007-08. In the year 2008-09 it was decreased to 0.007. it was increased to 0.372 in the year 2009-10.
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0.087 0.007 2007-08 2008-09 2009-10 0.372
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3. Debt Equity Ratio Debt equity ratio = Debt . Net worth Table 11: Table showing debt equity ratio Particulars Debt Net worth Ratio 2007-08 0.00 116807000.00 0 2008-09 0.00 659697753.4 0 2009-10 0.00 749867665.4 0
Interpretation From the above table we can observe the standard debt equity ratio is 0. The above calculation states that debt equity ratio is substantially below the standard ratio in all three years. The debts decreased continuously meeting its debts and raising capital by increasing shares.
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Total Debt Ratio Total Debt Ratio = Long-term debt Capital employed Table 12: Table showing Total Debt Ratio Particulars Debt Capital employed (NW) Current ratio 0 0 0 2007-08 0.00 116807000.00 2008-09 0.00 659697753.4 2009-10 0.00 749867665.4
Interpretation From the above calculation it shows that the capital employed in the company decreasing year by year. In the year 2007-08 it was 0 in the year 2008-09 it was 0.
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Equity to fixed asset ratio Equity to fixed asset ratio = Equity .
Fixed assets Table 13: Table showing equity to fixed asset ratio Particulars Equity Fixed assets Current ratio 2007-08 119690025 20434968.00 0.585 2008-09 158031650 19018092.00 8.30 2009-10 238924900 21171928.00 11.28
Interpretation From the above table, we can observe the equity to fixed asset. It was 0.585 in the year 2007-08, the equity ratio is substantially below the standard ratio in all the 3 years it shows continuous increase it was 11.28.
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0.585
2007-08 8.3 11.28 2008-09 2009-10
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Proprietary ratio Proprietary ratio = owners fund x 100 Total assets Table 14: Table showing proprietary ratio Particulars Onwers fund Total assets Current ratio 2007-08 119690025 3396349838.77 3.52 2008-09 158031650 4004809141.67 3.94 2009-10 238924900 4690143536.78 5.09
Interpretation From the above calculation we can observe owners fund to total assets in the year 2007-08 it was 3.52 it was increased to 3.94 in the year 2008-09 in the year 2009-10 it came up to 5.09.
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3.52 5.09 2007-08 2008-09 2009-10 3.94
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Net fixed asset ratio = Net fixed asset ratio Capital employed Table 15: Table showing net fixed asset ratio Particulars Net fixed assets Capital employed Current ratio 2007-08 11626787.00 116807000.00 0.099 2008-09 10915129.00 689697753.4 0.016 2009-10 201513606 749867665.4 0.268
Interpretation From the above table we can observe that net fixed assets to capital employed ratio. It was fluctuating year by year, it was 0.099 in the year 2007-08. It was decreased to 0.016 in the year 2008-09. It was again increased to 0.268 in the year 2009-10.
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0.3 0.268 0.25
0.2
0.15 0.099
0.1
0.05 0.016 0 2007-08 2008-09 2009-10
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Net profit to total assets ratio = Net profit Total assets Table 16: Table showing net profit to total asset ratio Particulars Net profit Total assets Current ratio 2007-08 63078857.78 3396349838.77 0.018 2008-09 77364098.00 4000823269.84 0.019 2009-10 64745133.00 4690143536.78 0.013
Interpretation From the above table we can observe that the actual total assets maintained by the company are 0.018. in the year 2008-09 it was increased to 0.019. in the year 2009-10 it was decreased to 0.013.
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0.02 0.018 0.016 0.014 0.012 0.01 0.008 0.006 0.004 0.002 0 2007-08 2008-09 2009-10
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Net profit net worth
= Net profit x 100 Net worth
Table 17: Table showing net profit to net worth Particulars Net profit Net wroth Current ratio 2007-08 63078857.78 116807000.00 0.540 2008-09 77364098.00 659697753.4 0.011 2009-10 64745133.00 749867665.4 0.086
Interpretation From the above calculation we can observe the net profit to net worth. It was fluctuating year by year in the 2007-08 it was 0.540 it was decreased to 0.011 in the year 2008-09. It has been increased to 0.086 in the year 2009-10.
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0.6 0.5 0.4 0.3 0.2 0.1
0.54
0.086 0.011
0 2007-08 2008-09 2009-10
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Solvency Ratio
= Outsider liabilities x 100 Total asset
Table 18: Table showing solvency ratio Particulars Outsider liabilities Total asset Current ratio 2007-08 901336652.00 3396349838.77 0.265 2008-09 2506638074.57 4004809141.67 0.625 2009-10 2795185702.65 4690143536.78 0.595
Interpretation From the above calculation we can observe the company is in a good position in paying its long term and short-term obligation in the 3 years the solvency of the company is in between 0.265 in the year 2007-08. In the year 2009-10 it was 0.595.
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0.265 0.595 2007-08 2008-09 0.625 2009-10
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CHAPTER 7 FINDINGS
1. Working capital Working capital of the bank shows Ea. 1511648476.57 in the year 2007-08 against Rs. 3729943579 in the year 2008-09 which indicates that working capital of the bank is increased year by year to meet day to day requirements and it is Rs. 34425998200 in the year 2009-10. So the bank is in a good position in meeting its working capital requirements.
2. Current assets A current assets of the bank is constantly increasing from 1177732250.43 in the year 2007-08 to Rs. 4000832269.84 in the year 2008-09 to Rs. 46901436.78 in the year 2009-10 which is a good indication to the bank and the current assets of the bank are effectively managed bank increasing its advances continuously year by year.
3. Current liabilities A current liability of the bank is constantly increasing from Rs. 270888690 in the year 2008-09 to Rs. 388327438.00 in the year 2009-10 as it is a bank it has to accept more deposits so the liability increase. The total deposit of
the bank in the year 2008-09 Rs. 124246814.98 of the current liabilities and the borrowing of the bank is nil in all the year. 4. Liquidity The short term solvency of the firm is satisfactory as the entire ratios that is liquidity ratio or quick ratio absolute liquid ratio shows positive trend. So the firm is in a good position in maintaining its liquidity. 5. Total debt ratio The debt of the bank in the year 2007-08 it was 0.00 and was nil in the year 2008-09 because they dont meet the requirements. In the year 2009-10 it again nil, It show s that inefficiency in meeting its borrowing and getting more profits. 6. Proprietary ratio The proprietary ratio is unsatisfactory, the ideal proprietary ratio is but the bank has .. of proprietary ratio in three years.
7. Net fixed asset ratio The standard ratio of the fixed asset is in the year 2007-08. In all 3 years fixed asset ratio is ased so bank has making improvement to increase its fixed asset to meet its requirements.
8. Solvency ratio The solvency of the company is fluctuating slightly in between 0.265 in the year 2007-08, in the 2008-09 it was 0.625. in the year 2009-10 it was 0.595. the company is in a bad position in meeting its short term and long term obligation. Lower the ratio greater the amount of firm auditors money that is being used to generate profits of the firms owners.
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SUGGESTIONS
Working capital is positive as the currents are more than current liability. Working capital of the company increased in 3 years. It shows that the company is utilizing much of its funds for working capital. As it is a banking company it needs more working capital to carry out regular transactions so the company has to improve its working capital. Current assets of the bank managing effectively and the short term advances of the bank in 3 years. The bank has to improving its advances to get more customers. Remaining all other current assets are properly utilizing. Current liabilities of the bank managing effectively the bank has improved its deposits from year to year and minimized its borrowings from outsiders. All other liabilities managing effectively. Solvency position of the bank is good and can be further improved has its total assets are more than the external liabilities. Company maintaining its good reputation and gaining more profits. Improving working capital position and reducing operating cost and increasing operating revenue can determine profitability of the company. The company is getting more profit by efficiently managing all the areas of operation.
Earning per share of the company is very low in 2 years and it increased its EPS in the year 2007-08 by increase in profit. The company has to increase further its EPS to give more dividends.
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CONCLUSION
Thus form the above project, we can understand that the study on working capital and its management. Thus form the above project and ratio analysis help to know the solvency, liquidity as well as performance of the each organization.
This study is very important for every organization in order to get rid of heavy competition in the world. Now-a-days the Indian banks is facing lot of competition from the foreign banks.
In order to tolerate for the heavy competition from the foreign bank, it is very much essential to know the financial performance in time. Therefore, every organization is in need of conducting working capital study and its management and ratio analysis.
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BIBLIOGRAPHY
1. Banking Theory and Practice
B.S. Raman
2. Banking manuals, banks annual reports, broachers, etc. 3. Theory and practice of Banking S.N. Maheshwari R. R. paul
Internet www.tgmcbank.com www.google.com
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ANNEXURE
FINANCIAL STATISTICS Particulars Current assets Working capital Current liabilities Deposits Advances Borrowing 2007-08 1177732250.43 1511648476.57 2689380727.00 25696.91 2136357546.43 0.00 2008-09 4000832269.84 3729943579.00 270888690.00 124246814.98 2506638074.57 0.00 2008-10 4690143536.78 3414259982.00 3883274338.00 35211586278.5 2795185702.65 0.00
Page 90

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A Study on Working Capital & Ratio Analysis in TGMC Bank

CHAPTER 1 WORKING CAPITAL AND RATIO ANALYSIS

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

CHAPTER 2 INDUSTRY PROFILE

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

CHAPTER 3 PROFILE OF THE BANK

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

ORGANIZATION CHART Board of Director

First Division Clerk

Second Division Clerk

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

1. Deposit account 2. Loans and Advances account 3. Other special services

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

Standard assets Sub-standard assets Doubtful assets

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

a. Below 12 months b. Above 12 months to 36 months c. Above 36 months

20.00% 30.00% 50.00 100.00%

A Study on Working Capital & Ratio Analysis in TGMC Bank

Tenure Below 12 months 12 months to 60 months Above 60 months

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

Consumable article loan

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

A Study on Working Capital & Ratio Analysis in TGMC Bank

XIV. Staff Advance

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank

Vidyavahini First Grade College, Tumkur. 2010-11.

A Study on Working Capital & Ratio Analysis in TGMC Bank