UNIVERSITY OF MUMBAI

RAYAT SHIKSHAN SANSTHAS

KARMAVEER BHAURAO PATIL COLLEGE

VASHI, NAVI MUMBAI

COLLEGE CODE 33

PROJECT REPORT
ON

COMPARATIVE STUDY OF FINANCIAL RATIO OF STATE BANK OF

INDIA AND BANK OF BARODA
SUBMITTED BY

AARTI LAXMAN BANGAR

ROLL NO : 8371
PROJECT GUIDE

Dr. Megha Lohiya

IN PARTIAL FULFILLMENT FOR THE COURSE OF

MASTER OF COMMERCE

M.COM.PART II (SEMESTER IV)

ACADEMIC YEAR

2015-16

RAYAT SHIKSHAN SANSTHAS

1

KARMAVEER BHAURAO PATIL COLLEGE

VASHI, NAVI MUMBAI 400 703.

CERTIFICATE

This is to certify that Aarti Laxman Bangar , student of

M.Com.Part-II Semester III has completed her project on
COMPARATIVE STUDY OF FINANCIAL RATIO OF STATE BANK OF INDIA &
BANK OF BARODA & has submitted a satisfactory report under the

guidance of Dr. Megha Lohiya in the partial fulfillment of M.Com.

Course of University of Mumbai in the academic year 2015-2016

Project guide

Coordinator

Principal

University Examiner

DECLARATION

I , Aarti Laxman Bangar student of KARMAVEER BHAURAO

PATIL COLLEGE, studying in M.Com.Part-II. (Semester IV)
hereby declare that I have completed this project report on
COMPARATIVE STUDY OF FINANCIAL RATIO OF STATE BANK OF INDIA &
BANK OF BARODA And has not been submitted to any other

University or Institute for the award of any degree, diploma etc.

The information is submitted to me is true and original to the best
of my knowledge.

Date ..

Aarti Laxman Bangar

(Name & Sign of Student)

Place Vashi, Navi Mumbai.

INDEX
Sr. No.

1.

Content

Pg. No.

2.

Research Methodology:
a) Objective of Study
b) Introduction of Ratio
c)Classification of Ratio
Introduction of Bank

3.

Introduction of Ratio

4.

Ratio Analysis of:

a) State Bank of India
b) Bank of Baroda
Financial Comparative Analysis:
a) B/S of SBI & BOB
b) P/L Statement of SBI & BOB
Conclusion

5.

6.

9 to 19
20 to 26

26 to 39
40

7.

Reference/ Bibliography

41

Remark/
Sign

RESEARCH METHODOLOGY

THE COMPARATIVE STUDY OF FINANCIAL RATIO OF STATE BANK OF INDIA

AND BANK OF BARODA.

OBJECTIVE OF THE STUDY:1. To know the strength and weakness of State Bank Of India and Bank Of Baroda
through Ratio analysis.
2. To evaluate the performance of the companies.
3. To understand the liquidity, profitability and efficiency positions of the companies.
4. To make comparison between the ratios during different periods.

INTRODUCTION:

Financial Management is the specific area of finance dealing with the financial
decision corporations make, and the tools and analysis used to make the decisions. The
5

discipline as a whole may be divided between long-term and short-term decisions and
techniques. Both share the same goal of enhancing firm value by ensuring that return
on capital exceeds cost of capital, without taking excessive financial risks.
Capital investment decisions comprise the long-term choices about which projects
receive investment, whether to finance that investment with equity or debt, and when or
whether to pay dividends to shareholders.
Short-term corporate finance decisions are called working capital management and deal
with balance of current assets and current liabilities by managing cash, inventories, and
short-term borrowings and lending (e.g., the credit terms extended to customers).
Corporate finance is closely related to managerial finance, which is slightly broader in
scope, describing the financial techniques available to all forms of business enterprise,
corporate or not.
RESEARCH METHODOLOGY
The conclusive research is being used to study the comparison of the
companies.
Data collection:
Secondary data is being taken
Websites

Outcomes of the study:

1. With this analysis we come to know about the strength and weakness of
State Bank Of India and Bank Of Baroda through Ratio analysis.
2. To evaluate the performance of the companies.
3. To understand the liquidity, profitability and efficiency positions of the companies.
4. To make comparison between the ratios during different periods.
5.

INTRODUCTION
DEFINITION OF BANK

Banking Means "Accepting Deposits for the purpose of lending or Investment of

deposits

of money from the public, repayable on demand or otherwise and withdraw

by cheque, draft or otherwise."

- Banking Companies (Regulation) Act,1949

ORIGIN OF THE WORD BANK:The origin of the word bank is shrouded in mystery. According to one view point the
Italian business house carrying on crude from of banking were called banchi bancheri"
According to another viewpoint banking is derived from German word "Branck" which
mean heap or mound. In England, the issue of paper money by the government was
referred to as a raising a bank.

ORIGIN OF BANKING :
Its origin in the simplest form can be traced to the origin of authentic history. After
recognizing the benefit of money as a medium of exchange, the importance of banking
was developed as it provides the safer place to store the money. This safe place
ultimately evolved in to financial institutions that accepts deposits and make loans i.e.,
modern commercial banks.
Banking system in India
Without a sound and effective banking system in India it cannot have a healthy
economy.The banking system of India should not only be hassle free but it should be
able to meet new challenges posed by the technology and any other external and
internal factors.
For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system
has reached even to the remote corners of the country. This is one of the main reasons
of India's growth process.
7

STATE BANK OF INDIA

State Bank of India
Industry :Banks - Public Sector
Incorporation Year
E-mail
Website
Face Value (Rs)

1955
gm.snb@sbi.co.in
http://www.sbi.co.in
10

It is the largest Indian banking and financial services company (by turnover and total
assets) with its headquarters in Mumbai, India. It is state-owned. The bank traces its
ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of
the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent.
Bank of Madras merged into the other two presidency banks, Bank of Calcutta and
Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of
India. The government of India nationalized the Imperial Bank of India in 1955, with the
Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In
2008, the government took over the stake held by the Reserve Bank of India.
SBI provides a range of banking products through its vast network of branches in India
and overseas, including products aimed at non-resident Indians (NRIs). The State Bank
Group, with over 16,000 branches, has the largest banking branch network in India. SBI
has 14 Local Head Offices and 57 Zonal Offices that are located at important cities
throughout the country. It also has around 130 branches overseas.

Net block= gross block depreciation

Introduction RATIO

Net block = fixed assets

CURRENT RATIO:
An indication of a company's ability to meet short-term debt obligations; the
higher the ratio, the more liquid the company is. Current ratio is equal to current assets
divided by current liabilities. If the current assets of a company are more than twice the
current liabilities, then that company is generally considered to have good short-term
financial strength. If current liabilities exceed current assets, then the company may
have problems meeting its short-term obligations.

CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITY

current ratio
9

year 2007-2011
year
2007
2008
2009
2010
2011

Ratio
0.05
0.07
0.04
0.04
0.04

LIQUID RATIO:

Liquid ratio is also known as Quick or Acid Test Ratio. Liquid assets refer to
assets which are quickly convertible into cash. Current Assets other stock and prepaid
expenses
are considered as quick assets.

Quick Ratio = Total Quick Assets

Total Current Liabilities
10

Quick Assets = Total Current Assets Inventory

Year
2007
2008
2009
2010
2011

Ratio
6.52
6.15
5.74
9.07
8.50

quick ratio
10
9
8
7
6
5
4
3
2
1
0

9.07
6.52

6.15

8.5

quick ratio

5.74

EARNING PER SHARE:

In order to avoid confusion on account of the varied meanings of the term capital
employed, the overall profitability can also be judged by calculating earning per share
with the help of the following formula:
Earning Per Equity Share = Net Profit after Tax Preference Dividend
No. of Equity shares
The earning per share of the company helps in determining the market price of the
equity shares of the company. A comparison of earning per share of the company with
another will also help in deciding whether the equity share capital is being effectively
11

used or not. It also helps in estimating the companys capacity to pay dividend to its
equity shareholders.
Year

Ratio

2007

86.29

2008

106.56

2009

143.67

2010

144.37

2011

116.07

Earning Per Share Ratio

160

143.67

144.37

140
120
100

116.07

106.56

Ratio

86.29

80
60
40
20
0
1

DIVIDEND PER SHARE :

It is expressed by dividing dividend paid to equity shareholders by no. of equity shares.

this shows the per share dividend given to equity shareholders. It is very helpful for
potential investors to know the dividend paying capacity of the company. It affects the
market value of the company.

12

Dividend Per Share = Dividend Paid To Equity Shareholders

No. Of Equity Shares

dividen
d per
share
2007
2008
2009
2010
2011

year

14
21.5
29
30
30

35
29

30
25

30

21.5

dividend per
share

20
15

30

14

10
5
0

NET PROFIT RATIO:

This ratio indicates the Net margin on a sale of Rs.100. It is calculated as follows:
Net Profit Ratio = Net Profit X 100
Net Sales
13

This ratio helps in determining the efficiency with which affairs of the business are being
managed. An increase in the ratio over the previous period indicates improvement in the
operational efficiency of the business. The ratio is thus on effective measure to check
the profitability of business.

net
profit
ratio
2007
2008
2009
2010
2011

year

10.12
11.65
12.03
10.54
8.55

14
11.65

12
10

12.03

10.12

10.54
8.55
net profit ratio

6
4
2
0

RETURN ON NET WORTH:

It measures the profitability of the business in view of the shareholders. It judges the
earning capacity of the company and the adequacy of return on proprietors funds.
Shareholders and potential investors are interested in this ratio. It is calculated as
below:
14

Return On Net Worth = Net Profit After Interest And Tax x 100
Shareholders Funds
return on
shareholder'
s
2007
2008
2009
2010
2011

year

14.5
13.72
15.74
13.89
12.71

18
16
14

15.74
14.5

13.72

13.89
12.71

12
10

return on
shareholder's

8
6
4
2
0

DEBT- EQUITY RATIO:

The Debt-Equity ratio is calculated to find out the long-term financial position of the firm.
This ratio indicates the relationship between long-term debts and shareholders funds.
The soundness of long-term financial policies of a firm can be determined with the help
of this ratio. It helps to assess the soundness of long-term financial policies of a
business. It also helps to determine the relative stakes of outsiders and shareholders.
15

Long-term creditors can assess the security of their funds in a business. It indicates to
what extent a firm depends upon lenders to meet its long-term financial requirements. A
low Debt-Equity ratio is considered better from the point of view of creditors.
Total
Debt to
Owners
Fund

2007
2008
2009
2010
2011

year

13.92
10.96
12.81
12.19
14.37

Total Debt to Owners Fund

16
14
12

14.37

13.92

12.81

12.19

10.96

10

Total Debt to Owners

Fund

8
6
4
2
0

FIXED ASSETS TURNOVER RATIO:

It is also called as Sales to Fixed Assets Ratio. It measures the efficient use of fixed
assets. This ratio is a measure of efficient use of fixed assets. it is calculated as:
Fixed Assets Turnover Ratio = Cost of goods sold or Sales
Net Fixed Assets
16

It measures the efficiency and profit earning capacity of the business. Higher the ratio,
greater is the intensive utilization of fixed assets and a

lower ratio shows under

utilization of the fixed assets. This ratio has a special importance for manufacturing
concerns where investment in fixed assets, is very high and the profitability is
significantly dependent on the utilization of these assets.
assets
turnove
r ratio
2007
2008
2009
2010
2011

year

5.44
6.32
7.2
7.26
7.24

7.2

7
6

7.26

7.24

6.32
5.44

5
assets turnover ratio

4
3
2
1
0

CAPITAL TURNOVER RATIO :

Income / capital employed
CAPITAL
TURNOVE
R RATIO
2007
17

8.46

YEAR

2008
2009
2010
2011

8.96
8.99
8.62
8.48

9.1
8.96

8.99

8.9
8.8
8.7

CAPITAL TURNOVER
RATIO

8.62

8.6
8.5

8.48

8.46

8.4
8.3
8.2
8.1

Total assets turnover ratio:

total
assets
turnover
ratio

year

18

2007
2008
2009
2010
2011

0.08
0.09
0.09
0.09
0.08

0.09
0.09

0.09

0.09

0.09

0.09
0.09
total assets turnover
ratio

0.08
0.08
0.08

0.08

0.08

0.08
0.08
0.07

PRICE- EARNING RATIO:

Price earning ratio = market price per share/ earning per share
Price
Earnin
g (P/E)

Year

19

2007
2008
2009
2010
2011

11.83
15.38
7.63
14.78
21.92

25
21.92
20
15.38

14.78

15

Price Earning (P/E)

11.83
10

7.63

BANK OF BARODA
Bank of Baroda (BoB) (BSE: 532134) (Hindi: ) is the third largest bank
in India, after the State Bank of India and the Punjab National Bank and ahead of
ICICI Bank.[3] BoB is ranked 763 in Forbes Global 2000 list. BoB has total assets in
excess of Rs. 3.58 lakh crores, or Rs. 3,583 billion, a network of over 3,409 branches
and offices, and about 1,657 ATMs. It plans to open 400 new branches in the coming
year. It offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, credit
cards and asset management. Its total business was Rs. 5,452 billion as of June 30.
[4]

As of August 2010, the bank has 78 branches abroad and by the end of FY11 this number should
climb to 90. In 2010, BOB opened a branch in Auckland, New Zealand, and its tenth branch in
the United Kingdom. The bank also plans to open five branches in Africa. Besides branches,
BoB plans to open three outlets in the Persian Gulf region that will consist of ATMs with a
couple of people.
The Maharajah of Baroda, Sir Sayajirao Gaekwad III, founded the bank on 20 July 1908 in the
princely state of Baroda, in Gujarat. The bank, along with 13 other major commercial banks of
India, was nationalized on 19 July 1969, by the government of India.

RATIO ANALYSIS OF BANK OF BARODA:

Current ratio:
CURRENT ASSETS/ CURRENT LIABILITIES
20

Current
Ratio
2007
2008
2009
2010
2011

year

0.04
0.03
0.02
0.02
0.02

Current Ratio
0.05
0.04

0.04

0.04

0.03

0.03

Current Ratio

0.03

0.02

0.02
0.02
0.01
0.01
0

QUICK RATIO:

Quick
Ratio

year

21

2007
2008
2009
2010
2011

11.29
9.56
9.62
21.88
26.38

0.02

0.02

Quick Ratio
30

26.38

25

21.88
Quick Ratio

20
15

11.29

9.62

9.56

10
5
0

EPS:
Earning
s Per
Share

year

2007
2008
2009
2010
2011

28.18
39.41
61.14
83.96
108.33

Earnings Per Share

120

108.33

100

83.96
Earnings Per Share

80
61.14

60
40

39.41
28.18

20
0

Assets Turnover Ratio

22

Asset
Turnover
Ratio
2007
2008
2009
2010
2011

year

4.25
3.47
4.2
4.48
5.25

Asset Turnover Ratio

6
5
4

5.25
4.25

4.2

4.48
Asset Turnover Ratio

3.47

3
2
1
0

Total Assets
Turnover Ratios

Year

23

2007
2008
2009
2010
2011

0.07
0.08
0.08
0.08
0.08

Total Assets Turnover Ratios

0.08

0.08

0.08

0.08

0.08

0.08

0.08

Total Assets Turnover

Ratios

0.08
0.07
0.07
0.07

0.07

0.07
0.07
0.06

Total Income /
Capital
Employed(%)
2007
2008
2009
2010
2011

year

7.83
8.57
8.51
7.86
7.75

Total Income / Capital Employed(%)

8.8
8.57

8.6

8.51

8.4

Total Income / Capital

Employed(%)

8.2
8
7.8
7.6
7.4
7.2

24

7.83

7.86

7.75

Net Profit /
Total Funds
2007
2008
2009
2010
2011

year

0.8
0.89
1.09
1.21
1.33

Net Profit / Total Funds

1.33

1.4
1.21

1.2

1.09

1
0.8

0.8

0.89

Net Profit / Total Funds

0.6
0.4
0.2
0

Dividend Per
Share

Year

25

2007
2008
2009
2010
2011

6
8
9
15
16.5

Dividend Per Share

18

16.5
15

16
14

Dividend Per Share

12
10
8
6

4
2
0

PRICE- EARNING RATIO:

Price earnings ratio = market price per share/ earnings per share
PRICEEARNIN
G

YEAR

26

2007
2008
2009
2010
2011

7.93
7.49
3.95
7.87
9.15

10
9
8

9.15
7.93

7.87

7.49

7
6
5
4
3
2
1
0

27

PRICE- EARNING
3.95

IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS

ARE
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current obligations as & when there
becomes due. The short term obligations of a firm can be met only when there are
sufficient liquid assets. The short term obligations are met by realizing amounts from
current, floating (or) circulating assets The current assets should either be calculated
liquid (or) near liquidity. They should be convertible into cash for paying obligations of
short term nature. The sufficiency (or) insufficiency of current assets should
be assessed by comparing them with short-term current liabilities. If current assets can
pay off current liabilities, then liquidity position will be satisfactory.
28

To measure the liquidity of a firm the following ratios can be

calculated
Current ratio
Quick (or) Acid-test (or) Liquid ratio
Absolute liquid ratio (or) Cash position ratio
(a) CURRENT RATIO:
Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio also known as Working capital ratio is a measure of general liquidity
and is most widely used to
make the analysis of a short-term financial position (or) liquidity of a firm.

Current ratio= current assets/ current liabilities

Components of current ratio:
Current Assets

Current Liabilities

CuCash in handrrent AcunnnnSSETS

Outstanding expenses

Cash at bank
Bills receivable
Inventories
Work-in-progress
Marketable securities
Short-term investments
Sundry debtors
Prepaid expenses

Bank overdraft
Bill payable
Short term advances
Sundry creditors
Dividend payable
Income-tax payable

(b) QUICK RATIO

Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to the
ability of a firm to pay its short-term obligations as & when they become due. Quick ratio
may be defined as the relationship
between quick or liquid assets and current liabilities. An asset is said to be liquid if it is
converted into cash with in a short period without loss of value.
Quick or liquid assets

29

Quick Ratio= quick or liquid assets/ current liabilities

Components
Quick Assets
Cash in hand
Cash at bank
Bills receivable
Sundry debtors
Marketable securities
Temporary investments

Current liabilities
Outstanding or accrued expenses
Bank overdraft
Bills payable
Short term advances
Sundry creditors
Dividend payable
Income tax payable

(c) ABSOLUTE LIQUID RATIO

Although receivable, debtors and bills receivable are generally
more liquid than inventories, yet there may be doubts regarding their
realization into cash immediately or in time. Hence, absolute liquid ratio
should also be calculated together with current ratio and quick ratio so as to
exclude even receivables from the current assets and find out the absolute
liquid assets.
Absolute liquid ratio = Absolute liquid assets/Current liabilities

Absolute liquid assets include cash in hand etc. The acceptable

forms for this ratio is 50% (or) 0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid
assets are considered to pay Rs.2 worth current liabilities in time as all the creditors are
nor accepted to demand cash at the same time and then cash
may also be realized from debtors and inventories.
Components:
Absolute liquid assets

Current liabilities

Cash in hand
Cash in bank
Interest on fixed deposits

Outstanding or accrued expenses

Bank overdraft
Bills payable
Dividend payable
Sundry creditors
Short term advances
Income tax payable

2. ACTIVITY RATIOS
Funds are invested in various assets in business to make sales
30

and earn profits. The efficiency with which assets are managed directly
effect the volume of sales. Activity ratios measure the efficiency (or)
effectiveness with which a firm manages its resources (or) assets. These
ratios are also called Turn over ratios because they indicate the speed with which
assets are converted or turned over into sales.
W
orking capital turnover ratio
Fixed assets turnover ratio
Capital turnover ratio
Current assets to fixed assets ratio
(a) WORKING CAPITAL TURNOVER RATIO
Working capital of a concern is directly related to sales.
Working capital= current assets current liabilities
It indicates the velocity of the utilization of net working capital.
This indicates the no. of times the working capital is turned over in the
course of a year. A higher ratio indicates efficient utilization of working
capital and a lower ratio indicates inefficient utilization.
Working capital turnover ratio=cost of goods sold/workingcapital.
Components of working capital:
Current assets

Current liabilities

Cash in hand

Outstanding or accrued expenses

Cash at bank

Bank overdraft

Bills receivable

Bills payable

Prepaid expenses

Short term advances

Short term investments

Sundry creditors

Inventories

Dividend payable

Work in progress

Income tax payable

Marketable securities

31

Sundry debtors
(b) FIXED ASSETS TURNOVER RATIO
It is also known as sales to fixed assets ratio. This ratio measures the efficiency and
profit earning capacity of the firm. Higher the
ratio, greater is the intensive utilization of fixed assets. Lower ratio means
under-utilization of fixed assets.
Fixed assets turnover ratio = Cost of Sales/ Net fixed assets
Cost of Sales = Income from Services
Net Fixed Assets = Fixed Assets - Depreciation
(c) CAPITAL TURNOVER RATIOS
Sometimes the efficiency and effectiveness of the operations
are judged by comparing the cost of sales or sales with amount of capital
invested in the business and not with assets held in the business, though in
both cases the same result is expected. Capital invested in the business may be
classified as long-term and short-term capital or as fixed capital and working capital or
Owned Capital and Loaned Capital. All Capital
Turnovers are calculated to study the uses of various types of capital.
Capital turnover ratio= cost of goods sold/capital employed
Capital employed = capital+ reserves& surplus
Cost of goods sold = income from services
(d) CURRENT ASSETS TO FIXED ASSETS RATIO
This ratio differs from industry to industry. The increase in the
ratio means that trading is slack or mechanization has been used. A decline in the ratio
means that debtors and stocks are increased too much or fixed assets are more
intensively used. If current assets increase with the corresponding increase in profit, it
will show that the business is expanding.
Current assets to fixed assets ratio= current assets/ fixed assets
Current assets
32

Fixed assets

Cash in hand

Plant

Cash at bank

Machinery

Bills receivables

Land

Short term investment

Building

Inventories

Vehicles

Sundry debtors
Work in progress
Marketable securities
3. PROFITABILITY RATIOS
The primary objectives of business undertaking are to earn profits. Because profit is the
engine, that drives the business enterprise.
Net profit ratio
Return on total assets
Reserves and surplus to capital ratio
Earnings per share
Operating profit ratio
Price earning ratio
Return on investments
(a) NET PROFIT RATIO
Net profit ratio establishes a relationship between net profit (after tax) and sales and
indicates the efficiency of the management in manufacturing, selling administrative and
other activities of the firm.

Net profit after tax = net profit-( depreciation+ interest+ income tax)

Net sales = income from services

Net profit ratio = net profit after tax/ net sales

33

It also indicates the firms capacity to face adverse economic

conditions such as price competitors, low demand etc. Obviously higher the
ratio, the better is the profitability.
(b) RETURN ON TOTAL ASSETS
Profitability can be measured in terms of relationship between
net profit and assets. This ratio is also known as profit-to-assets ratio. It
measures the profitability of investments. The overall profitability can be
known.
Returns on assets = net profit / total assets

Net profit = earnings before interest and tax

Total assets = current assets+ fixed assets

(c) RESERVES AND SURPLUS TO CAPITAL RATIO
It reveals the policy pursued by the company with regard to
growth shares. A very high ratio indicates a conservative dividend policy
and increased ploughing back to profit. Higher the ratio better will be the
position.

Reserves& surplus to capital ratio = reserves& surplus/capital

(d) EARNINGS PER SHARE
Earnings per share is a small verification of return of equity and
is calculated by dividing the net profits earned by the company and those
profits after taxes and preference dividend by total no. of equity shares.

34

Earning per share = net profit after tax/ no. of equity shares
The Earnings per share is a good measure of profitability when
compared with EPS of similar other components (or) companies, it gives a
view of the comparative earnings of a firm.
(e) OPERATING PROFIT RATIO
Operating ratio establishes the relationship between cost of goods sold and other
operating expenses on the one hand and the sales on
the other.
Operating ratio = operating cost / net sales
However 75 to 85% may be considered to be a good ratio in case of a manufacturing
under taking.
Operating profit ratio is calculated by dividing operating profit
by sales.
Operating profit = net sales operating cost

Operating profit ratio = operating profit / sales

(f) PRICE - EARNING RATIO
Price earning ratio is the ratio between market price per equity
share and earnings per share. The ratio is calculated to make an estimate of
appreciation in the value of a share of a company and is widely used by
investors to decide whether (or) not to buy shares in a particular company.
Generally, higher the price-earning ratio, the better it is. If the
price earning ratio falls, the management should look into the causes that
have resulted into the fall of the ratio.
Price earning ratio = market price per share/ earning per share

35

Market price per share = capital + reserves& surplus / no. of equity shares

Earning per share = earnings before interest and tax / no. of equity shares
(g) RETURN ON INVESTMENTS
Return on share holders investment, popularly known as Return on investments (or)
return on share holders or proprietors funds is
the relationship between net profit (after interest and tax) and the
proprietors funds.
Return on shareholders investment =

net profit after interest and tax /

shareholders fund
The ratio is generally calculated as percentages by multiplying
the above with 100.

FINANCIAL COMPARATIVE ANALYSIS

BALANCE SHEET OF STATE BANK OF INDIA
FOR THE YEAR ENDING ON MARCH 2007-2011
IN RS CR.

Capital &
Liabilities
Capital
Reserve&
surplus
deposits
borrowings
Other
36

20072008
Absolute
change

20082009
%
Absolute
change change

%
Absolute
change change

20102011
%
Absolute
change change

105.17
17628.83

19.98
57.28

3.41
8910.91

0.0054
18.41

0.00
8001.5

0.00
13.96

0.12
(963.28)

0.018
(1.47)

101882.8
5
12024.07
23320.04

23.39

204669.1
9
1986.27
27335.27

38.08

62043.1

8.36

16.14

3.83
32.79

49297.92
(30360.30

91.77
(27.42

129816.5
8
16557.36
24911.69

30.28
38.83

2009-2010

%
chang
e

16.07
31.009

liabilities and
provisions
TOTAL
CAPITAL
AND
LIABILITIE
S

Assets:
Investments
Advances
Fixed assets
Capital Work
In Progress
Current assets
TOTAL
ASSETS:

88981.65

9.226

27.35

2007-08
Absolute
change

2008-09
%
Absolute
change change

2009-10
%
Absolute
change change

2010-11
%
Absolute
change change

40352.39
79431.71
(314.22)

86452.69
125735
(543.32)

45.62
30.16
(0.13)

9836.11
89410.95
543.32

3.56
16.48
0.15

9810.5
124805.3
314.22

3.43
19.75
0.076

(37.05)

27.055
23.54
(0.070
)
(0.11)

(31.74)

31.74

0.1204

37.05

0.1255

(8665.09)

(0.19)

2620.51

(0.107
)
0.074

(2620.51)

8665.09

0.24

33.66

88981.65

(0.069
)
9.226

170322.4
7

16.16

242905.7
7

33.66

154961.0
6

154961.0 27.35
6
Interpretation :

242905.7
7

170322.4
7

16.16

%
chang
e

The capital of bank increased by 19.98%in 07-08, 0.0054% in 08-09, 0.018% in 10-11.
There is no change in capital of the bank in the year 09-10
There is a huge fluctuation in the rate of increasing in reserves& surplus .
The bank is utilizing its reserves &surplus in an effective manner.
In 07-08 deposits increase by 23.39%, 08-09 it increase by 38.08%, 8.36% in 09-10,16.14% in
10-11.
There is a huge fluctuating rate of increase . in 08-09 it had fluctuate to 3.83%.
The investment in 10-11 has increased with a low rate as compared to the preceding years .
27.55% in 07-08,45.62% in 08-09,3.56% in 09-10,3.43% in 10-11.
The advances rose by 23.54% in 07-08,30.16% in 08-09,16.48% in 09-10, 19.75% in 10-11.
There has been a consistent decline in fixed assets in 07-08 and 08-09 0.070% ,0.13%
respectively. Increased by 0.15% in 09-10, 0.076% in 10-11.
There is a fall of current assets 0.19% in 07-08 mainly due to the repayment of deposits.0.074%
in 08-09, subsequent fall of current assets 0.069% in 09-10, and increase of 0.24% in 10-11.
PROFIT AND LOSS OF STATE BANK OF INDIA FOR THE YEAR ENDING ON
MARCH 2007-2011 IN RS CR.
37

Particulars

INCOME:
operating income
EXPENDITURE
:
interest expended
operating
expenses
total expenses
provision and
contingencies
net profit of the
year
extraordinary
items
profit brought
forward
total profit/(loss):

2007-08
absolute
change

%
change

2008-09
absolute
change

%
change

2009-10
absolute
change

2010-11
% change

absolute change

%
change

11410.95

0.24

18131.04

0.31

9482.29

0.12

10367.38

0.12

8492.26

0.36

10986.21
3514.11

0.18

4407.19

0.10

1545.48

0.032

1357.77
9223.14

0.10

0.24

6817.35

0.37

6489.87

0.26

0.21

15738.93

0.30

9437.47

0.14

12163.1

0.15

-626.89

-0.10

1238.61

0.24

-1787.07

0.14

12163.1

0.15

2187.81

0.48

2392.11

0.35

44.82

0.004914

-1795.68

-0.19

0
2187.81

0
0.48

0
2392.11

0
0.35

0
44.82

0
0.004914

0
-1795.68

0
-0.19

INTERPRETATION:
Net Profit Of The Year: it shows a fluctuating trend i.e., increased by 48% in2007-08,35% in
2008-09,0.49% in 2009-10 and decline by 19% in 2010-11due to increased tax liability.
Interest Expended: it increases from 36% in 2007-08,18% in 2008-09, 10% in 2009-10 and
3.20% in 2010-11.

BALANCE SHEET OF BANK OF BARODA FOR THE YEAR ENDING ON MARCH

2007-2011
IN RS CR.
20072008
absolute
change

%
change

20082009
absolute
change

%
change

20092010
absolute
change

%
change

20102011
absolute
change

%
change

capital &
liabilities:
Capital
reserves&
surplus

Deposits

2393.99
27118.1
5

Borrowings

2784.49

38

0
0.28897
5
0.21709
1
2.43706
2

0
1791.61
40362.8
2
1709.04

0
0.16777
9
0.26548
5
0.43519
7

0
2270.85
48647.3
1
7714

0
0.18210
5
0.25284
9
1.36867
9

27.28
5859.44
64395.2
2
8957.76

0.07463
1
0.39749
6
0.26715
1
0.67098
9

other
liabilities
TOTAL
LIABILITIE
S:

4156.71
36453.3
4
2007-08
absolute
change

0.49263
5

3943.74

0.25465
8

0.31313
4

7722.18

0.46693

0.26618
8

0.22387
2

%
change

50909.9
8
2009-10
absolute
change

840.76

0.09536
8

%
change

47807.2
1
2008-09
absolute
change

0.28773
1

%
change

80080.4
6
2010-11
absolute
change

0.25545
3
0.27601
3
1.2

8575.81
37284.5
8
(117)

0.19548
2
0.34942
9
(0.05)

8736.5
31049.3
9
(25)

0.16658
1
0.21564
2
(0.01)

10078.2
5
53641.0
7
15

0.16472
5
0.30645
9
0.01

0
47807.2
3

0
0.26618
8

0
50909.9
8

0
0.22387
2

0
80080.4
7

0
0.28773
1

%
change

ASSETS
Investments

8926.44
23080.4
5
1338

Advances
fixed assets
capital work in
progress
0
0
36453.3 0.25465
Total assets
2
8
INTERPRETATION:

The capital of the bank shows no change till 2009-10 but it increases by 7.40% in 2010-11.
There is a huge fluctuation in the increase of reserves and surplus. It increases by 28% in 200708,16%in 2008-09,18% in 2009-10 and 39% in 2010-11.
The investments has increased with a low rate . 2007-08- 25%,2008-09 19%, 2009-10 16.6%,
2010-11-16.47%
There is a fluctuating in increase in advances 27% in 2007-08,34.9% in 2008-09, 21.5%in 200910, 30.64% in 2010-11.
There is decline of fixed assets in 2008-09 and 2009-10 with 5% and 1% respectively. The
reason may be the increase in the rate of depreciation in the subsequent years.
There has been an increase in borrowings. 243% in 2007-08, 43.5% in 2008-09, 136% in 200910,67% in 2010-11.
PROFIT AND LOSS OF BANK OF BARODA FOR THE YEAR ENDING ON MARCH
2007-11
absolute
change

2007-08

absolute change

absolute
change

2008-09

2009-10

absolute
change

2010-11

particulars
income:
total income

3,270.1

30.87%

3,984.7

28.74%

1,655.5

9.27%

5,190.4

26.61%

2,475.11

45.61%

2,066.50

26.15%

791

7.93%

2,324.8

21.61%

expenditure:
interest expended

39

operating expenses
other provisions and
contingencies

598.82

21.61%

474.39

14.08%

866.57

958.65

20.35%

-832.92

22.54%
46.04%

-212.90

-15.54%

652.15

56.36%

723.60

74.12%

total expenses

2,861.0

29.90%

3,193.0

25.69%

824.3

5.28%

4,007.1

24.36%

net profit of the year

409.06

39.85%

791.68

55.15%

831.13

37.32%

1,183.35

38.69%

extra ordinary items

0.00%

0.00%

0.00%

0.00%

profit brought forward

0.00%

0.00%

0.00%

0.00%

409.06

39.85%

791.68

55.15%

831.13

37.32%

1,183.35

38.69%

total

INTERPRETATION:
The net profit of the year shows a fluctuating trend i.e., 39.85% in 2007-08,55.15% in200809,37.32% in 2009-10and 38.69% in 2010-11.
The interest expended shows a fluctuating trend in 2007-08 to 2010-11
2007-08-45.61%,2008-2009-26.51% ,

CONCLUSIONS:
1. State Bank Of India has overall better efficiency and has performed better in the banking
institution as compared to Bank Of Baroda.
2. EPS And DPS Of State Bank Of India is increasing due to increase in the use of debt
rather than the use of improved operations.
3. The P/E Ratio Of State Bank Of India is high as compared to its industry and Bank Of
Baroda which means that SBI is using its funds in a better manner and it is fundamentally
sound in nature.
4. Beta Of State Bank Of India And Bank Of Baroda is less than the market beta which
means that both banks are giving less returns but they are less risky and investors can
invest in these shares.
5. The Average Sustainable Earnings Of State Bank Of India is high and the standard
deviation is low so the bank has its earnings is sustain and more robust in nature as
compared to Bank of Baroda.
40

6. The Credit Deposit Of State Bank Of India And Bank Of Baroda is close but the ratio is
high which means that State Bank Of India has overall good efficiency and better
performance, i.e., the bank has high credit deposit ratio.

REFERENCES:

http://en.wikipedia.org/wiki/State_Bank_of_India
http://en.wikipedia.org/wiki/Bank_of_Baroda
http://www.moneycontrol.com/financials/state bank of India/balance-sheet/SBI
http://www.moneycontrol.com/financials/bankofbaroda/balance-sheet/BOB
http://www.moneycontrol.com/financials/bankofbaroda/profit&loss/BOB
http://www.moneycontrol.com/financials/bankofbaroda/profit&loss/SBI
www.google.com
www.capitaline.com

41

www.sbi.com
www.investopedia.com

42