ranjit kumar sah (field work report)

8/22/2019 Ranjit Kumar Sah (Field Work Report)

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A REPORT ON FINANCIAL POSITION ANALYSISOFKIST BANK

BRANCH OFFICE, JANAKPUR DHAM (BHANU CHOWK)

SUMBITTED BY:

RANJIT KUMAR SAH

SYMBOL NO. : 250591

P.U. REGD NO. : 112-2-2-05291-2010

A FIELD WORK REPORTSUMBITTED TO:

MODEL PURBANCHAL COLLEGE JANAKPUR DHAMPURBANCHAL UNIVERSITY

In partial fulfillment of the requirement for the degree ofBachelor of Business Administration(B.B.A) of Purbanchal University.

JanakpurJuly/2013


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This is my immense delectation to present the report of Bachelor in Business

Administration ( BBA 5th semester ) assigned by Purbanchal University. This

fieldwork report entitled A REPORT ON FINANCIAL POSITION ANAYLSIS

OF KIST BANK LIMITED BRANCH JANAKPUR is prepared for the partialfulfillment of requirement for the Bachelor of Business Administration under

Purbanchal University. The objective of this report is to be familiar with the practical

and theoretical knowledge.

I would like to express my sincere gratitude and acknowledgement to all

supporters who provided me very informative and precious as well as proper

information on making of this report. I am highly obliged to lecturer Mr. Saroj Kumar

Thakur for his assignment and proper instruction.

I am also grateful to the staff of KIST Bank who have kindly more

available the data and related information required for the preparation of report.At last, my sincere thanks go to my all friends and staff members of

college for their kind co-operation and help for report preparation.

Name:- RANJIT KUMAR SAHSymbol No.:-250591

PU Regd. No.:-112-2-2-05291-2010

Model Purbanchal college Janakpur dham

Acknowledgement


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The Executive Summary

This is the report prepared on the KIST Bank branch office, Janakpur

Dham (Bhanu Chowk) Nepal. The main objective of this study is to

measured the ability of a firm to meet, its short-term obligations and

reflect the financial solvency of the firm.

In my report I have three categories: Part one deals with Introducation. I

have presented Introducation of banking, Purpose of study, Importance ofstudy, Organization Structure, Limitation of the study, and etc are also

presented in the part one.

The part two includes presentations and analysis of data. Analysis

comprises of Financial Ratios. This analysis is very helpful and plays a

vital role for the conclusion and recommendations that are needed to be

drawn out of this report.

The part three is concerned with the summary conclusion and

recommendations. This recommendation is very necessary for the bank to

overcome from its weaknesses and to built its advantage over the other

banks.

The bank has been successfully overcome from economic and competitive

barriers to establish it as a financially sound unit, skills, manpower, strong

organizational culture, strong top managerial team are some of its key

success indications.


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Chapter-1

Contents

TITLE

RECOMMENDATION

ACKNOWLEDGEMENT

EXECUTIVE SUMMARY

TABLE OF CONTENT

LIST OF TABLE

LIST OF FIGUREABBRIVIATION

1.1 Background of Bank1

1.2 Introduction of Kist Bank1

1.3 Purpose of Study3

1.4 Importance of Study..4

1.5 Organization Structure4

1.6 Limitation of Study5

1.7 The Field Work Procedure.6

1.8 Literature Review61.8.1 Review of Previous Study7

1.9 Data Collection..7

1.9.1 Primary Data..7

1.9.2 Secondary Data..7

S.N.

Page No.

Table of

ContentsCcontentCContents

INTRODUCATION

DATA PRESENTATION & ANALYSIS

Chapter-2


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2.1 Data Presentation and Analysis...8

2.2 Financial Analysis...8

A ) Balance Sheet..........................................................................8

B) Income Statement8

2.2.1. Financial Ratio Analysis..9

2.3 Types of Financial Ratios9

2.3.1 Liquidity Ratio .9

2.3.2 Assets Management Ratio12

2.3.3 Debt Management Ratio...13

2.3.4 Profitability Ratio18

2.3.5 Other Ratios.23

2.4 Comparison study of different ratios from the F.Y. 2064/65 to

2066/67252.5 Comparison study of different ratios from the F.Y. 2066/67 to

2068/6926

3.1 Summary28

3.2 Conclusion.29

3.3 Suggestion and Recommendation..30

Other Contents

BIBLIOGRAPHY

APPENDIX

Chapter-3

SUMMARY AND CONCLUSION & RECOMMENDATION


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List of tableTABLE NO.

PAGE NO.1. Current ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069102. Quick ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06911

3. AU Ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..13

4. Debt ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..14

5. FL ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069...16

6. LTD to TC ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..17

7. BEP ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06919

8. ROA of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.20

9. ROE of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.22

10. EPS of Kist Bank Ltd. From the F.Y.2064/065 to 2068/0692311. The comparison studies of diff. ratios from F.Y. 064/065 to 066/67...25

12. The comparison studies of diff. ratios from F.Y. 066/67 to 068/69.26

List of FigureFIGURE NO. PAGE

NO.

1. Current ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06910

2. Quick ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06912

3. AU Ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..13

4. Debt ratio of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..15

5. FL ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069...16

6. LTD to TC ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069..18

7. BEP ratios of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06919


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8. ROA of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.21

9. ROE of Kist Bank Ltd. From the F.Y.2064/065 to 2068/069.22

10. EPS of Kist Bank Ltd. From the F.Y.2064/065 to 2068/06924

A/C = Account

AUR = Assets Utilization Ratio

B.B.A. = Bachelor of Business Administration

B.S. = Bikram Sambat

BOD = Board of Director

BPS = Book Value Per Share

Diff. = Difference

DSO = Days Sales Outstanding

EBIT = Earning Before Interest and Tax

EPS = Earning Per Share

FL = Financial Leverage

FWR = Field Work Report

F.Y. = Financial Year

KBL = Kist Bank Limited

LTD = Long Term Debt

M.P.C. = Model Purbanchal college

MPS = Market Price Per Share

NEPSE = Nepal Stock Exchange Limited

NPAT = Net Profit After TaxNRB = Nepal Rastra Bank

P.U. = Purbanchal University

Pd = Preference dividend

ROA = Return on Assets

ROE = Return on Common Equity

TC = Total Capitalization

TIE = Time Interest Earned

ABBRIVIATION


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TOR = Total Operating Revenue

Chapter - 1

1.1 Backgroundof Bank :

A bank is an institution, which deals with money and credit. It acceptsdeposits from business institution and individuals, which mobilized into productive

sectors mainly business and consumer lending. The bank is also known as a dealer

of the money because it also provides remittance facility to transfer money from the

one place to another. Todays, bank is not only confined to accepting deposits and

disbursing loan it also may be engaged in different types of function i.e. remittance,

exchange currency, joint venture, underwriting, bank guarantee, discounting bill

etc.

Bank is a financial intermediary accepting deposits and granting loans. It

offers the widest menu of services of any financial institution. In fact, a modern

bank performs such a variety of functions that it is difficult to give a precise andgeneral definition of a bank. It is because of this reason that different economist

give different definition of bank. They are:

Prof. Kinley tells, A bank is an establishment which makes to individual such

advance of money as may be required and safely made and to which individual

entrust money when not required by them for use.

According to Oxford Dictionary, Bank is an organization or place that

provides a financial service.

Bank and Financial Institution Act (of Nepal), A commercial bank is a

bank which deals in exchanging currency, accepting deposits and giving loans anddoing commercial transaction.

In conclusion, Bank is an institution, which accepts deposits from the public

and provides, advance loan to business and personal customers. It is a financial

institution, which provides, wide range of banking service i.e. saving, credit

payment, remittance etc. So, a bank provides all kinds of monitory service, which is

necessary for the industrialization and economic development of a country.

1.2 Introduction of Kist Bank :-

INTRODUCATION


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With its vision of becoming the best bank on operational excellence and

superior financial performance, Kist Bank was initially incorporated as a C class

financial performance, Kist Bank was initially incorporated as Bank started

commercial banking activities from May 7,2009 after complying with all the

conditions of Nepal Rastra Bank (Central Bank of Nepal) for becoming a

Commercial Bank.A Field work Report

The Bank is a public limited company incorporated under the Bank and Financial

Institution Act 2006 and the Companies Act 2006. The Bank is licensed by NRB to

undertake commercial banking services and merchant banking activities in the

country. The Authorized Capital of the Bank is Rupees 5 Billion and the Issued and

Paid-Up Capital is Rupees 2 Billion. 60 Percent of the Paid-Up Capital is held by

the promoter and remaining 40% is held by the general public. The share of the

Bank is listed at Nepal Stock Exchange Limited (NEPSE), the only Stock Exchange

in the country, as A category share.

The Bank has a seven member Board of Directors (BOD) out of which three

represents the promoters group, two represents the general public and one

represents the Professional Director. Till the end of fiscal year 2066/67 (2009/10)

the bank has 51 branches across country.

Kist Bank stands for Customers convenience and support:

The Bank is driven by values of efficiency in operations, integrity and a

strong focus on catering the needs of every customer by offering high quality and

cost effective products and services. The professional management team along with

dedicated employees is always looking forward to serve the customers, understand

their needs and design tailored products. The Bank operates in highly automatedenvironment in terms of information technologies and communication systems, thus

enabling delivery of prompt and quality services. It has put in substantial efforts and

investments in acquiring the best technologies available to build necessary banking

infrastructure.

Future Plans of Kist Bank Ltd:

As the Kist Bank has set its vision to be the best bank in terms of

operational excellence and superior financial performance, it has action plan in

place in order to accomplish it. The Bank has given prime focus in physical

infrastructure and human resources development, acquiring of state of art

information technology to equip the Bank in order to make it competitive, satisfy

customers and have the most secured transactions, enhance the distribution outlet so

that the Bank could reach to the un-banked area and serve the needy people and

contribute to the economic development of the country. A few key future plans,

which the Bank has, are:

Have own Bank buildings at possible Branches locations. Currently, the Bank

has been providing services to customers from its own buildings located at

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Anamnagar, Birtamod, Damak, Biratnagar and Narayangarth. The Bank has

planned to construct own multi storey building equipped with modern

technology within Kathmandu Valley for its main Branch and Head Office.

The dream building should be spacious for more than 500 employees. This

dream building has been 60% completed at Anamnagar.A Field work Report

Develop own man power to take the higher responsibilities. Due to increase in

number of players, lack of quality human resources has been felt in the

market. The Bank has therefore planned to hire qualified individuals in large

quantity and train the staffs, in Kist Culture, both theoretically and practically

and prepare them to take the responsibilities. For this, the Bank has

established Training and Development Department at Head Office.

Increase customer base from existing 250 thousand to 300 by Fiscal Year

2068/69 (2011/12).

Launch international Debit and Credit Cards like Visa, Master and Others. Expand the remittance business making accessible to the large strata of

people.

Develop and launch innovative and customer friendly products to meet the

actual needs of the people who are deprived of banking services. For this,

Bank has established Research and Development Department to carry out

research and develop market oriented products and services.

1.3 Purpose of Study :-

A Field Work Report is a systematic study of specificsituation in financial organization. The main objective of this Field Work Report is

to fulfill its partial requirement of Bachelor of Business Administration (B.B.A.) 5 th

semester of Model Purbanchal College under concentration area which is designed

by faculty of management, Purbanchal University.

It provides first hand knowledge to students about the world of work and other

hand it develop interpersonal and communication skill through interacting with

people working in organization.

To every work of study there must be objective and goal. The general earning

ability, Profitability, Liquidity Position etc. through various financial statements and

reports i.e. Income Statement balance sheet of KBL. Beside this, it has followingobjectives:-

To know the financial Position of KBL.

To find out strength and weakness of KBL.

To simplifies accounting figures and facts.

To find liquidity position of KBL.

To compare performance


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To the banks organization structure.

To understand about the services that is provided by KBL.

To know about the different achievement and branch office of KBL.

To know how financial data can be used to analyze a banks past performance

and asserts its present financial strength. To develop research skill in the student.

A Field work Report

To identify the problem and probable reasons for the arise of problem.

To find the possible solution of the problem.

1.4 Importance of Study :-Writing of this report is the very crucial part of our

course, without this report we cant complete our 5 th semester of (B.B.A.) bachelor.

The study of this field work report is very important for student life. It provides to

know the opportunities of behavior knowledge i.e. how do a work, what do, where

do? It develops both the internal and external qualification of the student. By which,

a student can make easily a qualified field report in the future.

Effective management of organization requires effective management of

finance. Nepalese organization must give considerable attention to financial

function, if they want to improve performance and effectiveness of their

organization.

This report is not beneficial to us only but it also to the other sector of society

mentioned as bellow:-

Easy for bank to know their financial strength and to absorbed losses and

protect depositor and other creditor.

Easy for general public to know about the condition of bank where they are

gaining or bearing losses.

Easy for bank management to evaluate their efficiency in present competitive

environment.

Easy for stockholders to know the net benefit of bank that they have received

from investing their capital in banks.

Support for policy maker while changing their ambiguous policy. Reference for the coming student while preparing report in this subject.

1.5 Organization Structure :-Location

Kist Bank Ltd is a commercial bank and is competitor of several

other commercial banks like Nepal Bangladesh Bank, Nabil Bank, Everest Bank Ltd

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etc. This bank is located near in Bhanu chowk, Janakpurdham, by the right side of

Radio Mithila 100.8 MHz. There are many others commercial banks located in

Bhanu chowk as its competitor i.e. Nabil Bank, Laxmi Bank, Nepal Bangladesh

Bank, Citizens Bank & other commercial banks. The centrals organization structure

of KBL did not provided by the manager of janakpur branch because he told me that

it available only on head office and he provided me the organization structure ofjanakpur Branch that is given below:-

A Field work Report

The Organization Structure of Kist Bank Ltd, Janakpur Branch

1.6 Limitation of study :-

To complete any report writing we should be concentrated to the

subject matter or surrounded by the boundary. Similarly, this report writing have also

some boundary, besides the boundary the topic concentration is not diversified. These

boundaries are called limitation of the study.

Time constraint is the major issue of the present study. Due to lack of given

period of time the report could not be prepared of the expected quality. It has also

many limitations that are mentioned below:-

Branch Manager

Operating

Department

Credit

Department

Account

Department

Customer Service

Department Guard


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The topic must be unique.

The field work report must be within 2500-4000 words.

Necessary for partial fulfillment for degree of BBA 5th semester student.

The five years data must be available in continuous form for creating thisreport.

Not allowed to compare with the other organization.A Field work Report

Non availability of required books for the preparation of field work report in

spite of facilities of library.

Shortage of time, lack of source and means.

Non financial help in another problem. Every student is not financially strong to

expend heavy money for this work.

Even after getting authority letter, the firm and organizations hesitate to give

data due to the fear of violation of secrecy, so this report is likely to beincomplete.

Non availability of right person as right time.

Lack of knowledge and experience.

1.7 The Field Work Procedure:-The Field work is specially meant for the partial

fulfillment of BBA course it falls under the core course study area. It includes field

work report in titled core course area. The objective of BBA Programme is to develop

students into competent manager of any sector. Therefore for, the students are givenopportunities to obtain broad knowledge of the concepts and reality based skills,

reports writing also falls one of these.

For preparing this field work report, First of all orientation class is

conducted by our field work report lecturer Mr. Saroj Kumar Thakur till 48 teaching

hours period. Thereafter, I have selected topic for FWR and with this topic included

an application and a bill of Rs.300 also for registered this to subjected lecture Mr.

Saroj Kumar Thakur.

I got authority letter for my concerned Organization i.e. Kist BankLimited. With that letter I went to bank. Letter, the bank related persons provided me

various data is required for my work. Then I prepared field work report based on data

and informations provided by Kist Bank Ltd with consulting my teacher where

problem.

1.8 Literature Review:-

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Review of previous writing and study relevant to the problem being

explored and within the frame work of the theory structure which are called literature

review.

For preparing this report different kind of books of banking related area

has been followed. I also studied previous local, national and newspaper to collect

information about the Kist Bank Ltd.

A Field work Report

1.8.1 Review of Previous Study:-

K.R. Joshi in A study on Financial performance of commercial

banks has concluded the satisfactory liquidity position of the commercial banks.

Local commercial banks have been found relatively highly leveraged compared to

other joint venture bank. Loan and advance have been the main form of the

investment. Two third of the assets has been used for earning purpose.

1.9 Data Collection:-

For the purpose collection required information for the completion of

the report writing assignments, I have relied on both primary and secondary

information after as possible.

1.9.1 Primary Data:-

The data required for a statistical enquiry collected by the investigator

himself his agent for the first time and are original in are based on interview,

questionnaire, observation, employees, service provided, where receive through the

manager and accountant of KBL.

1.9.2 Secondary Data:-

The data used is once is called secondary data. It becomes easier to collected

secondary data from the primary once. The secondary data in this study are Annual

report i.e. Income statement and Balance sheet of Kist Bank Ltd and Newspaper.

In Secondary data 5 years consolidated balance sheet and income statement

of Kist Bank from F.Y. 2064/65-2068/69 are downloaded from banks website

(www.kistbank.com). Parts from this data are also collected from Kist Bank, Janakpur

branch. I also collected from different newspapers and magazines.

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http://www.kistbank.com/http://www.kistbank.com/


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During my study period secondary data becomes a supportive source to

conduct the result and analyze them. Thus annual balance sheet and income statement

was provided by bank through magazine; bulletins and the annual report; the required

data were collected. Therefore on over all contexts secondary data has been used in

maximum number.

A Field work Report

Chapter 2

2.1 Data Presentation and Analysis:-This chapter analyzes and interprets the financial performance of KBL.

In this regards various calculation have been completed in order to assets the strength

and weakness of the company with widely used tools of financial ratios analysis.

2.2 Financial Analysis:-The main objective of financial analysis is to evaluate the financial

strength and weakness of the company by calculating various types of ratios with the

help of the items of balance sheet and income statement. So we have to calculate

different types of ratios by taking the items of balance sheets and income statements.

A) Balance sheet:

Balance sheet shows the position of assets and liabilities at the end of

an accounting period or an interim period. It represents firms resources or assets on

one side and owners equity and liabilities on other side. At a particular point of time,

the balance sheet is prepared. Assets must be equal to sum of liabilities and share

holders equity. The assets and the liabilities side of balance sheet consists of current

assets, fixed assets and other assets and the liabilities side of balance sheet consists ofcurrent liabilities, long term liabilities and share holders equity.

B) Income Statement:

Income statement is a vertical sheet which provides the profit or loss

starting from sales or revenues. It represents a summary of revenues and expenses and

shows profit or loss of firm for the specific period such as a month, a quarter or a year.

It is also called profit and loss A/c. The income statement is co piled on accrual basis,

DATA PRESENTATION AND ANALYSIS

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which means that on attempt is made to match the firms revenues from the period of

operation with the expenses incurred in generating those revenues. Income statement

is important for the organization itself in order to evaluate its work performance as

well as also importance for investor because investors can take the decision that the

money will be invested in the organization or not the basis of analyzing the income

statement.

A Field work Report

2.2.1 Financial Ratio Analysis:-

The mathematical relationship between two numerical figure expressed in

same unit is known as ratio. It shows the relationship between two numerical figures.It can be expressed in proportion of percentage.

Financial analysis is a technique of evaluating and analysis the financial

statement by creating ratio between the figure of income statement and balance sheet.

Ratio analysis is helpful in evaluating the liquidity, solvency, profitability and

efficiency position of the firm. It provides essential information to takes decision. It is

helpful for creditors, owners, investors management, government etc.

2.3 Types of Financial Ratio:-

There are various types of financial ratio to analyze financial statements. They

can be grouped into following types:-

2.3.1 Liquidity Ratio:-

Liquidity ratios are calculated to judge the liquidity or shot term solvency

position of the firm. Liquidity position means the firms ability to pay short term

obligation. Generally, short term creditors are interested liquidity ratios. In liquidity

ratios includes current ratio and quick ratio.

A) Current Ratio:-

The relationship between current assets and current liabilities is known as

current ratio. High current ratio indicates better liquidity position. However, it also

indicates the excess investment in current assets which have less or no earning power.

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Current Ratio = Current Assets

Current Liabilities

(Standard = 2:1)

Where,

Current Assets = Cash Balance + Balance with NRB + Balance with BankCurrent Liabilities = Bills payable + Proposed & Dividend pay

A Field work Report

Table No.:-1

Current ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years Current Assets Current

Liabilities

Calculated

Ratios2064/065 466619283 10714616 4.35:1

2065/066 320516489 20957116 15.29:1

2066/067 948561213 42289746 22.43:1

2067/068 1228158215 93128203 13.19:1

2068/069 1675319537 109030316 15.37:1

Sources: From the Annual Report of Kist Bank Ltd. From the F.Y.2064/065 to

2068/069

The Above table shows that the current ratios of different F.Y. from 2064/065

to 2068/069 are higher than its standard. High current ratio is better for the banks. The

ratio is going an increasing trend per year till 2066/067 but thereafter it decreases and

again increases in last year 2068/069. High current ratio indicates better liquidity

position. However, it also indicates the excess investment in current assets which have

less or no earning power.

Figure:-1

Current ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069

Current Ratios

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times


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Years from 2064/65 to 2068/69

In the given figure x-axis shows the years from 2064/65 to 2068/69 in which the

position of current ratios and y-axis shows the times of current ratios which is

calculated in above table. The current ratio is high in F.Y. 066/067. So, it means this

year the liquidity position of KBL is better.

A Field work ReportB) Quick Ratio

The relationship between quick assets and current liabilities is known as

quick ratio. Its also called liquid ratio or acid test ratio. This judges the firms ability

to pay current liabilities immediately. High quick ratio indicates better liquidity

position and vice-versa.

Quick Ratio = Current Assets

Current Liabilities

(Standard = 2:1)

Note: There is no available of Inventory, Prepaid expenses. So the current assets and

quick assets are the same.

Table No.:-2

Quick ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years Quick Assets Current

Liabilities

Calculated

Ratios2064/065 466619283 10714616 4.35:1

2065/066 320516489 20957116 15.29:1

2066/067 948561213 42289746 22.43:1

2067/068 1228158215 93128203 13.19:1

2068/069 1675319537 109030316 15.37:1

1

0

T

imes

10

times


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2068/069

The Above table shows that the Quick ratios of different F.Y. from

2064/065 to 2068/069 are higher than its standard. The ratio is going an increasingtrend per year till 2066/067 but thereafter it decreases and again increased in last year

2068/069. High quick ratio is good for the organizations. High quick ratio indicates

better liquidity position and vice-versa.

A Field work Report

Figure:-2

Quick ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069

Quick Ratios

Years from 2064/65 to 2068/69

In the given figure x-axis shows the years from 2064/65 to 2068/69 in

which the position of current ratios and y-axis shows the times of quick ratios which

is calculated in above table. The quick ratio is high in F.Y. 066/067. So, it means thisyear the liquidity position of KBL is better.

2.3.2 Assets Management Ratio:-Assets Management ratio is also called efficiency or activity turnover

ratio. Assets management ratios are calculated to test the efficiency of management in

managing the firms resources in generating sales revenue.

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A) Assets Utilization Ratio

Assets utilization ratio is the ratio of total operating revenue and

total assets. The high ratio is prefer for the company.

Assets Utilization Ratio = TOR

Total Assets

= .%

A Field work Report

Table No.:-3

Assets Utilization Ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years TOR Total Assets Calculated

Ratios

2064/065 46059164 896192608 5.14 %

2065/066 71468589 1740429848 4.11 %

2066/067 130622622 3972615135 3.29 %

2067/068 323765877 11151537301 2.90 %

2068/069 655911133 18946218662 3.45 %


2068/069

The Above table shows that the assets utilization ratios of different F.Y. from

2064/065 to 2068/069 are 5.14%, 4.11%, 3.29%, 2.90% and 3.45% respectively.

Which indicates the ratios is going on decreasing trend from 2064/65 to 2067/68

which is not good for the KBL.

Figure:-3Assets Utilization ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069

Assets Utilization Ratios

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X100


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Years from 2064/65 to 2068/69

In the given figure x-axis shows the years from 2064/65 to 2068/69

and y-axis shows the percentage of assets utilization ratio which is calculated in above

table. The ratio is high in F.Y. 064/065, it reflect the better position of assets utilized.

2.3.3 Debt Management Ratio:-This ratio is also called capital structure or leverage or solvency ratio.Leverage ratios are calculated to test the solvency position or long-term financial

position of a firm. Solvency means companys ability to pay all creditors.A Field work Report

Leverage ratios are used to indicate the extent to which a firm has financed its

assets with borrowed funds. We will discuss leverage ratio in terms of two categories

i.e. Balance sheet based on ratio and coverage ratios. Balance sheet based ratio simply

indicate proportion of a firms assets financed by a particular source of fund, while

coverage ratio reflect the ability of the firms earning to convert its fixed finance

payment.

A) Debt ratio / Debt to total Assets Ratio

The relationship between borrowed capital and total assets is known as

debt ratio. This ratio measures the percentage of firms assets financed by creditors.

Creditors prefer low debt ratio since it provided security to their investment in event

of liquidation. On the other hand, share holders like high leverage either to get more

earning or selling new stock.

Debt Ratio (D/A ratio) = Total Debt = . %

Total Assets

Where,

Total Debt = LTD + Borrowing + Current Liabilities

High ratio is not preferable for the company because at some point of time, company

will not get loan without issuing new shares.

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P

ercentage

X100


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Table No.:-4

Debt Ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years Total Debt Total Assets Calculated

Ratios

2064/065 104246073 896192608 11.63 %

2065/066 383104891 1740429848 22 %

2066/067 292553083 3972615135 7.36 %

2067/068 223128203 11151537301 2 %

2068/069 809030316 18946218662 4.27 %


2068/069

The Above table shows that the debt ratio of different F.Y. from2064/065 to 2068/069. The high debt ratio is not preferable for the company. The

A Field work Report

Highest Debt ratio is 22% which incurred in the year 2065/066 and the lowest debt

ratio 2% which incurred in the year 067/068. Creditors prefer low debt ratio since it

provide security to their investment in event of liquidation.

Figure:-4

Debt Ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069

Debt Ratio

Years from 2064/65 to 2068/69

In the given figure x-axis shows the years from 2064/065

to 2068/069 and y-axis shows the percentage of debt ratio which is calculated in

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Percentage


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above table. The ratio is high in F.Y. 065/066, it means this year the bank is utilized

more debt than other years.

B) Equity Multiplier

It is also called financial leverage ratio. The relationship of total assets toequity of the firm is called equity multiplier. It measures the extend to which the total

assets of firm is greater than the firms equity capital.

Financial leverage ratio = Total Assets

Total Equity

Total Equity = Equity share + Reserve & Surplus

A Field work Report

Table No.:-5

Financial leverage Ratio of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years Total Assets Total Equity Calculated

Ratios2064/065 896192608 101988764 8.79 times

2065/066 1740429848 219051845 7.95

2066/067 3972615135 826322511 4.81

2067/068 11151537301 2045118881 5.45

2068/069 18946218662 2089257112 9.09


2068/069

The Above table shows that the equity multipliers of different F.Y.from 2064/065 to 2068/069 are 8.79, 7.95, 4.81, 5.45 and 9.09 times respectively. The

highest equity multiplier is 9.09 times in year 2068/069 and the lowest is 4.81 in year

2066/067.

Figure:-5Financial leverage Ratio of Kist Bank Ltd. from the financial year 2064/065 to 2068/069

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times


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Financial leverage Ratio

Years from 2064/65 to 2068/69


to 2068/069 and y-axis shows the times of equity multiplier which is calculated in

above table. The ratio in high in F.Y. 068/069, it means this year total assets of bank isgreater than the firms equity capital.

A Field work Report

C) Long term debt to Total Capitalization Ratio

The relationship between the long-term debts and total capitalization is

known as long term debt to Total Capitalization Ratio.

Long-term Debt to = Long-term Debt

Total Capitalization Total Capitalization

= . %

Where,

Total Capitalization = Share holders Equity + Borrowing

Table No.:-6

Long term debt to total capitalization Ratio of Kist Bank Ltd. from the year

2064/65 to 2068/069:

Years Long term Debt Total

Capitalization

Calculated

Ratios

2064/065 93531457 195520221 47.84 %

Times

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2065/066 362147775 581199620 62.23

2066/067 250263337 1076585848 23.25

2067/068 130000000 2175118881 59.77

2068/069 900000000 2989257112 30.11


2068/069

The Above table shows that the ratio of long term debt to total

capitalization of different F.Y. from 2064/065 to 2068/069 are 47.84%, 62.23%,

23.25%, 59.77% and 30.11% respectively. The highest ratio is 62.33% in year

2065/066 and the lowest ratio is 23.55% in year 2066/067. The high ratio represent is

greater risk to creditors as well as to share holders. Where as the low ratio represents

security to creditors in extending credit.

A Field work Report

Figure:-6Long term debt to total Capitalization ratios of Kist Bank Ltd. from the financial year

2064/065 to 2068/069

Long term debt to Total capitalization Ratio

Years from 2064/65 to 2068/69


to 2068/069 and y-axis shows the percentage of long term debt to total capitalization

ratios which are calculated in above table. The ratio is high in F.Y. 064/065, and it

represent the bank has greater risk to creditors as well as to share holders in this year.

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Percentage


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2.3.4 Profitability Ratio

Profitability Ratios are used overall measures of the efficiency

effectiveness of the firms managements. Profitability ratios show the combined effect

of liquidity, assets management and debt management on operating results. It

measures the earning of the company for a short term period.

A) Basic Earning Power Ratio

This is the ratio of EBIT to total assets. The ratio indicates the

ability of firms assets to generate operating income.

Basic Earning = EBIT = . %

Power ratio Total Assets

(The increasing ratio is favorable.)

A Field work Report

Table No.:-7

Basic earning power ratios of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years EBIT Total Assets CalculatedRatios

2064/065 26505224 896192608 2.96%

2065/066 37460387 1740429848 2.15

2066/067 64893678 3972615135 1.63

2067/068 136863407 11151537301 1.23

2068/069 217551364 18946218662 1.15


2068/069

The Above table shows that the ratio of basic earning power of different

F.Y. form 2064/065 to 2068/069 are 2.96%, 2.15%, 1.63%, 1.23% and 1.15%

respectively. The highest ratio is 2.96% in year 2064/065 and the lowest ratio is

1.15% in year 2068/069. The high ratio indicates ability of firms assets to generate

high operating income but there are low ratios of KBL.

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Figure:-7Basic earning power ratios of Kist Bank Ltd. from the financial year 2064/065 to

2068/069

Basic Earning Power Ratio

Years from 2064/65 to 2068/69

A Field work Report


to 2068/069 and y-axis shows the percentage of long term debt to total capitalization

ratios which are calculated in above table. The ratio is high in F.Y. 2064/065, and this

year indicates the ability of KBLs assets to generate operating income than otheryears.

B) Return on Total Assets

The ratio of net income to total assets is called return on total assets. It

measures the return on all firms assets after interest and tax. It also measures the

profitability of all financial resources invested in the firms assets.

ROA = Net income = . %

Total Assets

(The increasing ratio is favorable.)

Table No.:-8

Return on assets of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years Net income Total Assets Calculated

Percentage

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Ratios

2064/065 16505526 896192608 1.84%

2065/066 26058081 1740429848 1.50

2066/067 47270666 3972615135 1.19

2067/068 89663093 11151537301 0.80

2068/069 144138231 18946218662 0.76


2068/069

The Above table shows that the ratio of return on assets on different F.Y.

from 2064/065 to 2068/069 are 1.84%, 1.50%, 1.19%, 0.80% and 0.76% respectively.

The highest ratio is 1.84% in year 2064/065 which implies that the available resources

and tools are employs efficiently. And the lowest ratio is 0.76% in year 2068/069

which implies that the available resources and tools are not employs efficiently.

A Field work Report

Figure:-8Return on assets of Kist Bank Ltd. from the financial year 2064/065 to 2068/069

Return on Assets

Years from 2064/65 to 2068/69

In the given figure x-axis shows the years from 2064/065 to 2068/069 and y-axis

shows the percentage of return on assets which are calculated in above table. The

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Percentage


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return on assets ratios of KBL are in decreasing trend per year which is not preferable

for the KBL.

C) Return on Common Equity

The ratio of net income to equity is known as return on common equity.

It measures the rate of return an equity holders investment.

ROE = Net income = . %

Total Assets

Where,

Equity = Share Capital + Accumulated profit + Reserve

(Increasing ratio is favorable for the company.)

A Field work Report

Table No.:-9

Return on common equity of Kist Bank Ltd. from the year 2064/65 to 2068/069:

Years Net income Common Equity CalculatedRatios

2064/065 16505526 101988764 16.18%

2065/066 26058081 219051845 11.90

2066/067 47270666 826322511 5.72

2067/068 89663093 2045118881 4.38

2068/069 144138231 2089257112 6.90


2068/069

The Above table shows that the ratio of return on common equity on

different F.Y. from 2064/065 to 2068/069 are 16.18%, 11.90%, 5.72%, 4.38% and

6.90% respectively. The highest ratio is 16.18% in year 2064/065 which implies that

the rate of return an equity holders investment is good. And the lowest ratio is 4.38%

in year 2067/068 which indicates that the rate of return on investment is low.

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Figure:-9Return on common equity of Kist Bank Ltd. from the financial year 2064/065 to

2068/069

Return on Common Equity

Years from 2064/65 to 2068/69

A Field work Report


shows the percentage of return on common equity which is calculated in above table.

The return on equity of KBL is in decreasing trend per year from 2064/065 to

2068/069 which is not preferable for the KBL but in year 2068/069 it is increased.

2.3.5 Other ratios:

A) Earning Per Share (EPS)

The relationship between net income after tax and number of equity

shares outstanding is known as EPS. It shows the rupee value of per share. High EPS

is preferable for the company.

EPS = NIAT = . times

No. of equity shares outstanding

Table No.:-10

Earning per share of Kist Bank Ltd. from the year 2064/65 to 2068/069:

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Years Net income No. of shares

Outstanding

Calculated

Ratios

2064/065 16505526 889950 Rs. 18.55

2065/066 26058081 2000000 13.03

2066/067 47270666 8000000 5.91

2067/068 89663093 20000000 4.48

2068/069 144138231 20000000 7.21


2068/069

The Above table shows that the ratios of return on common equity on

different F.Y. from 2064/065 to 2068/069 are Rs.18.55, Rs.13.03, Rs.5.91, Rs.4.48

and Rs.7.21 respectively. The highest EPS is Rs.18.55 in year 2064/065 which implies

that the good performance of KBL. And the lowest EPS is Rs.4.48 in year 2067/068

which indicates that the KBLs performance is low than other years.

A Field work Report

Figure:-10

Earning per share of Kist Bank Ltd. from the financial year 2064/065 to 2068/069

Earning Per share

Years from 2064/65 to 2068/69

23

RupeesinRs.


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shows the Rupees in Rs. of EPS which is calculated in above table. The more per

share return, the more excellent it is and less per share return, the worse it is. The

above EPS show that the KBL performance is getting low from 2065/066 to2066/067. But it managed to its figure last year because its EPS is increased from

Rs.4.4s to Rs.7.21.

A Field work Report

2.4 comparison study of different ratios from the F.Y.2064/65 to 2066/67

Table No.:-11

Comparison studies of different ratios from F.Y.2064/65 to 2066/67

Years

Ratios

2064/65 2065/66 2066/67

1. Current Ratios 4.35:1 15.29:1 22.43:1

2. Quick Ratios 4.35:1 15.29:1 22.43:1

3. Assets Utilization Ratios 5.14 % 4.11 % 3.29 %

4. Debt to Total Assets 11.63 % 22 % 7.30 %

5. Financial Leverage Ratios 8.79 times 7.95 times 4.81 times

6. Long term debt to TotalCapitalization Ratios

47.84 % 62.23 % 23.25 %

7. Basic Earning Power Ratios 2.96 % 2.15 % 1.63 %

8. Return on Assets 1.84 % 1.50 % 1.19 %

9. Return on Equity 16.18 % 11.90 % 5.72 %

10. Earning Per Share Rs. 18.55 Rs. 13.03 Rs. 5.91

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In above table, the current ratio is an increasing trend from F.Y.

2064/065 to 2066/067 and the highest current ratio is 22.43:1 in year 2066/067 it

indicates, better liquidity position in this year. The quick ratio is also same as current

ratio. Assets utilization ratio is in decreasing trend from 2064/065 to 2066/067 per

year by more than 1% which is not good for the KBL. The debt to total assets ratio is

increased by double in year 2065/066 and suddenly dropped 7.30% which is good forthe KBL because the creditors prefer low debt ratio since it provide security to their

investment in event of liquidation. For financial leverage ratio, it is high in year first

i.e. 8.79 times and there after it seems to be in decreasing trend. The LTD to total

capitalization ratio is more than year 2064/065 in year 2065/066 i.e. 62.23%>47.84%

which represent is greater risk to creditors as well as to share holders then it decreased

in 23.25% whereas in year 2066/067 shows the low ratio 23.25% which indicates

security to creditors in extending credit. Next, basic earning power ratios is in

decreasing trend per year, it shows the earning power on total assets is high in 1 st year

there after the ability of firms assets to generate operating income is getting low. TheROA is also in decreasing trend per year it indicates, the starting year was good for

the KBL because in that year the banks return on total assets 1.84%. In ROE, it is

also in decreasing way which indicates that the rate of return on investment is getting

low per year but the percentage indicates better return on last 2 year. And in last, the

A Field work Report

EPS is also in decreasing trend it is high in F.Y. 2064/065 i.e. Rs. 18.55 in this year

the KBL shares price was high because the high EPS is better performance for the

company and vice-versa.

After comparing above ratios, the KBLs performance is better in F.Y. 2064/065 thanother F.Y. 2065/066 and 2066/067 because all the ratios are preferable in this year.

2.5 comparison study of different ratios from the F.Y.2066/067 to 2068/069

Table No.:-12

Different ratios from F.Y.2066/067 to 2068/069 are explained below

Years

Ratios

2066/67 2067/68 2068/69

1. Current Ratios 22.43:1 13.19:1 15.37:1

2. Quick Ratios 22.43:1 13.19:1 15.37:1

3. Assets Utilization Ratios 3.29 % 2.90 % 3.45 %

4. Debt to Total Assets 7.30 % 2 % 4.27 %

5. Financial Leverage Ratios 4.81 times 5.45 times 9.09 times

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6. Long term debt to Total

Capitalization Ratios

23.25 % 59.77 % 30.11 %

7. Basic Earning Power Ratios 1.63 % 1.23 % 1.15 %

8. Return on Assets 1.19 % 0.80 % 0.76 %

9. Return on Equity 5.72 % 4.38 % 6.90 %

10. Earning Per Share Rs. 5.91 Rs. 4.48 Rs. 7.21

In above table, the current ratio on year 2067/068 and 2068/069

are less than year 2066/067. The highest current ratio is 22.43:1 in year 2066/067 it

indicates, better liquidity position in this year. The quick ratio is also same as current

ratio, the ratio on year 2066/067 is good for the KBL than other F.Y. The Assets

utilization ratio is high in F.Y. 2068/069 than other 2 year. The debt to total assets

ratio is 7.30% in F.Y. 2066/067 which is good for KBL because the creditors prefer

low debt ratio since it provide security to their investment in event of liquidation. For

financial leverage ratio, it is increasing trend 2066/067 to 2068/069 and it is high inyear 2068/069 i.e. 9.09 times which means the total assets of firm is greater than the

firms equity capital in this year. The LTD to total capitalization ratio is high in year

2067/068 than year 2066/067 and year 2068/069 i.e. 59.77%>23.25%>30.11%, the

high ratio represent is greater risk to creditors as well as to share holders in year 2067/

A Field work Report

068 and low ratio in year 2067/068 indicates security to creditors in extending credit.

Next, basic earning power ratios is in decreasing trend per year, it shows the earning

power on total assets is high in 1st year there after the ability of firms assets to

generate operating income is getting low. The ROA is also in decreasing trend peryear it indicates, the F.Y. in 2066/067 was good for the KBL because in that year the

banks return on total assets 1.19%. In ROE, it is high in year 2068/069 which

indicates better return between 2066/067 and 2067/068, ratio is good when it is more

than 1%. And in last, the EPS is in decreasing trend before 2068/069 but in F.Y.

2068/069 it increased in Rs.7.21 than Rs.5.91 and Rs.4.48. So, in year 2068/069 the

KBL shares price was high because the high EPS shows better performance for the

company and vice-versa.

After comparing above ratios, the KBLs performance is better in F.Y. 2067/068 than

other F.Y. 2066/067 and 2067/068 because all the ratios are preferable in this year.

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A Field work Report

Chapter - 3

3.1 SUMMARY :-A bank is a financial institution, which accepts deposits from the public

and in turn, advance loan to business and personal customer and also provides

banking service i.e. savings, credit payment, remittance etc.

Kist Bank was initially incorporated as a C class financial institution

in 2003 for undertaking limited banking activities and it commercial banking activities

from May 7, 2009 after complying with all the conditions of Nepal Rastra Bank

(Central Bank of Nepal) for becoming a Commercial Bank. The Authorized Capital of

the Bank is Rupees 5 Billion and the Issued and Paid-Up Capital is Rupees 2 Billion.

60 Percent of the Paid-Up Capital is held by the promoter and remaining 40% is held

by the general public.

It has a seven member Board of Directors (BOD) out of which three

represents the promoters group, two represents the general public and one represents

the Professional Director. Till the end of fiscal year 2066/067 (2009/10) the bank has

51 branches across the country.

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SUMMARY AND CONCLUSION


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Its liquidity position, assets management position, debt management

position, profitability position and other ratios position have been thoroughly

calculated and evaluated. On the basis of analysis and finding specific suggestions are

provided which will be beneficial for the bank for improvement in their future

performance of KBL.

For financial position, financial analysis is the process of identifying thefinancial strength and weakness of the firm by properly establishing the relationship

between the items of balance sheets and income statements. In this study, statements

covering five years from 2064/065 to 2068/069 have been received, reviewed and

analyzed.

For analyze the financial data of the KBL. The financial ratios have

been used. As financial analysis is the most widely used tools for the financial

position, five categories of financial ratios i.e. liquidity ratios, assets management

ratios, debt management ratios, profitability ratios and other ratios has been

calculated, analyze and intercept to evaluate the financial performance of KBL. Thisstudy is based on secondary data like annual report of KBL, newspaper and reports

periodically published by various agencies.

A Field work Report

3.2 CONCLUSION :-On the basis of analysis of financial statement of KBL, the following

conclusions are adopted:-

The current ratios of the bank shows the highest ratio is 22.43:1 in F.Y. 2066/067

and in other year it is just more than its standards. It means, the company could

maintain the standard of 2:1. It depicts the company may have not the problem of

meeting immediate liabilities on time.

The liquidity position is high which is not good because higher liquidity position

shows the greater amount of ideal money, which cannot generate the revenue.

The assets utilization ratios is going in decreasing trend by more than 1% from

2064/065 to 2067/068 which is not good for the KBL but it increases last year i.e.2068/069 by 0.55% which is good for the KBL.

The Bank is not used more debt so the total debt is low in all year which is good

for the KBL. It indicates the bank has low risk.

The banks LTD to total capitalization ratio is very high in some year and the high

ratio represent is greater risk to creditors as well as to share holders.

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Ratio of return on total assets is in trend of decreasing by more than 0.30 per year

which implies that available sources and tools are not going to be employed

efficiently.

Return on equity capital ratio is in also decreasing trend per year which depicts

company employed their capital less effectively to earn more but in F.Y. 2068/069

it increased.

The ROE is an increased in last year by 2.42% than F.Y. 2068/069 which is good

for the company.

Basic Earning Power Ratios depicts the relationship between EBIT and total

assets. The ratio of basic earning power of KBL for respectively five years is

decreasing trend by more than 1%.

While going through the study, all the liquidity ratios, assets

Management ratios, debt management ratios, profitability ratios EPS of KBL are quit

better than the previous year. AUR, ROE and EPS are increasing slightly. At lastfrom the study of the financial position under financial analysis of the bank based on

the past years, we conclude that the KBL ltd. According to financial position of KBL,

it is going to be popular in the coming year soon.

A Field work Report

3.3 SUGGESTION AND RECOMMENDATION:-On the basis of financial analysis calculated in second chapter,

the following recommendations are made:-

In other to meet the else current obligation in the time the company should have

to increase in their current assets as well as liquid assets because current ratio is

just double than its standard 2:1.

Its AUR is in decreasing trend per year it means TOR of KBL does not increase

proportion to total assets. So it must be increase in order to better utilize of its

total assets.

The bank should increase its efficiency in utilizing its current assets, total assets

and shareholders fund.

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The ratio of basic earning power of KBL is getting low per year it means ability

of banks assets is to generate low operating income. So it must be high.

The ROA is also decreasing trend which implies that the available resources and

tools are not employs efficiently so, the manager of KBL should manage their

assets in time in order to get good performance.

Total debt of KBL is less; it is good for the bank. It indicates the bank has low

risk. Do not try to taking risk to use of more debt because more debt, more risk

and less debt less risk but it depends on bank what its require.

A Field work Report

Pant Prem Raj, Field Work Assignment and Report writing, Veena

Academic enterprises Pvt. Ltd. Kathmandu, 1997

Howard K. Wolf, Prem R. Pant, A Hand Book for Social Science Research

and Thesis writing, Budha Academic enterprises Pvt. Ltd., 1999

Singh Hriday Bir, Banking and Insurance, Asian Publication Pvt. Ltd,

September 2005

Bibliography

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Sing Hriday BIr, Organizational Behaviour and Human Resource

Managemet, Asmita Publication Kath.,2066

Bhandari Dilli Raj, Banking and Insurance, Ayush publication, January

2003

Kadka S.J & Singh H.B., Banking and Insurance (in Nepali), Asian

Publication, 2062

Bhandari, D.R. (2003). Banking & Insurance. Kathmandu: Aayush

Publication.

Previous 5 Years FIELD Work Report of Kist Bank.

Consulting from the manager of KBL, branch office, Janakpur dham for the

detail information of KBL.

Annual Report of KBL.

Various websites:

www.kistbank.com

www.nrb.gov.np

www.google.com

A Field work Report

Recommendation letter of KBL, branch office, Janakpurdham,Dhanusha.

Voucher and forms are used by KBL, branch office, Janakpur

Dham, Dhanusha.

Appendix
http://www.kistbank.com/http://www.nrb.gov.np/http://www.google.com/http://www.kistbank.com/http://www.nrb.gov.np/http://www.google.com/


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A Field work Report

ranjit kumar sah (field work report)

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