A STUDY ON RATIO ANALYSIS WITH SPECIAL REFERENCE

TO HDFC BANK

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor of Management Studies
Under the Faculty of Commerce

BY

HARSH KAILAS DESHMUKH ROLL NO.

07

Under the Guidance of

MR. SUMEET MHATRE SIR.

PILLAI HOC INSTITUTE OF MANAGEMENT STUDIES &RESERCH

UNIVERSITY OF MUMBAI

MARCH

2023-24

1
 CERTIFICATE

This is to certify that MR. HARSH KAILAS DESHMUKH has worked

and duly completed his project work for the degree of bachelor of
management study under the faculty of commerce in the subject of and his
project is entitled “A STUDY ON RATIO ANALYSIS WITH
SPECIAL REFERENCE TO HDFC BANK” under my supervision

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any
Degree or Diploma of any University. It is her own work and facts reported
by her personal findings and investigations.

Name and Signature of Guiding Teacher

Assistant [Link] Mhatre

Date of submission

2
 Declaration by learner

I the undersigned Mr. Harsh Kailas Deshmukh here by, declare that the work embodied in this
project work titled “A STUDY ON RATIO ANALYSIS WITH SPECIAL REFERENCE
TO HDFC BANK ”, forms my own contribution to the research work carried out under the
guidance of Assistant Prof. Sumeet mhatre is a result of my own research work and has not
been previously submitted to any other University for any other Degree/Diploma to this or any
other University.
Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and presented in
accordance with academic rules and ethical conduct.

Name and Signature of the learner

Harsh kailas deshmukh

Certified by :
Name and signature of the Guiding Teacher

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 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would like to thank my Principal, [Link] Kasturi Menon for providing the necessary
facilities required for completion of this project.
I take this opportunity to thank our coordinator PROF Sumeet Mhatre, for his moral support
and guidance.
I would also like to express my sincere gratitude towards my Project Guide Assistant Prof.
Vineet Murli whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my
project.

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 INDEX

Chapter Table of content Page

Number
 EXECUTIVE SUMMERY 7

1 INTRODUCTION 9
.

2. RESEARCH METHODOLOGY 11

3. LITERATURE REVIEW 15

4. FINANCIAL ANALYSIS 18

5. RATIO ANALYSIS 19

6. COMPANY DETAILS 43

7. DATA ANALYSIS AND INTERPRETATION 54

8. FINDINGS AND SUGGESSIONS 63

9. CONCLUSION 65

10. BIBLIOGRAPHY 66

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 EXECUTIVE SUMMERY

Finance is a life blood of business it is required from the establishment of

the business to liquidity or winding up of a business, so financial institutions
played a very important role on the operation of the business.
In the early days banking business was been confined to receiving of deposits and
lending of money. But now a modern banker under take wide variety of functions
to assist their customers. They provide various facilities to customers which makes
the transaction easy and comfortable.
Financial institutions such as banks, financial service companies, insurance
companies, securities firms and credit unions have different ways of reporting
financial information. Running a bank is just difficult as analysing it for investment
purposes.
In this project I made an effort to know the financial position of the HDFC
Bank. My topic is "A study on ratio analysis with special reference to HDFC bank"
which means that a process to identify the financial performance of a firm by
properly establishing the relationship between the items of balance sheet and profit
or loss account. Thus we can say that, Financial Analysis is a starting point for
making plans before any sophisticated forecasting and planning.

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 INTRODUCTION

Financial Statements are prepared primarily for decision-making. They play a

dominant role in setting the framework of managerial decisions. But the
information in the financial statement is not an end in itself as no meaningful can
be drawn from these statements alone.

The information provided in the financial statement is of immense use in making

decisions through analysis and interpretation of financial statements. The financial
analysis is the process of identifying the financial strength and weakness of the
firm by properly establishing relationship between the items of the balance sheet
and P&L A/C.

There are various methods or techniques used in analysing financial statement such
as comparative statement, trend analysis, common size statement, schedule of
changes in working capital, fund flow and cash flow analysis, cost volume profit
analysis and "RATIO ANALYSIS".

Ratio analysis is one of the most powerful tool of financial analysis. It is a process
of establishing and interpreting various ratios that the financial statements can be
analysed more clearly and decisions made from such analysis.

Just like a DOCTOR examines his patient by recording his body temperature,
blood pressure etc before making his conclusion regarding the illness and before
giving his treatment, a financial analyst analysis the financial statement with
various tools of analysis before commenting upon the financial health or
weaknesses of an enterprise.

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The purpose of financial analysis is to diagnose the information contained in
financial statements so as to judge the profitability and financial soundness of the
firm. Financial statement analysis is an attempt to determine the significance and
meaning of financial statement data so that forecast may be made of the future
earning, ability to pay interest and debt maturities and profitability of a sound
dividend policy.

A financial ratio is the relationship between two accounting figures expressed

mathematically ratio provide clues to the financial position of the concern. These
are the pointers and indicators of financial strength, soundness, position or
weakness of an enterprise. One can draw conclusions about the exact financial
position of a concern with the help of ratios.

The end products of the business transactions are the Financial Statement
comprising the position statement or Balance Sheet and the Income Statement or
Profit and Loss Account. Financial statements are the basics for the decision
making by the Management and as well as all other Stakeholder who are interested
in the affairs of the firm such as investors, creditors , customers ,suppliers ,
financial institutions, employees ,potential investors, govt., and the general public.

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 RESEARCH METHODOLOGY

OBJECTIVE OF STUDY:

The main objective of the study is to apply theoretical concepts to the practical
situations of HDFC so as to compare and correlate the actual achievements with a
theoretical conclusion.

The main objectives of the study are,

 To evaluate the performance of the bank by using ratios as a

yardstick to measure the efficiency of the HDFC.

 To understand the liquidity, profitability and efficiency positions of the bank

during the study period.

 To evaluate and analyse various facts of the financial performance of the

HDFC.

 To make comparisons between the ratios during different periods.

 To simplifies and summarizes a long array of data and makes them

understandable.

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SCOPE OF STUDY

The scope of the study is limited to collecting financial data published In the
annual reports of the bank every year. The analysis is done to suggest possible
solutions. The study is carried out for last year referring the annual report of
HDFC. using the ratio analysis, firms past, present and future performance can be
analysed and this study has been divided as short term analysis and long term
analysis. The bank should generate enough profits not only to meet the
expectations of owner, but also to expansion activities.

LIMITATIONS OF THE STUDY

Though the project is completed successfully a few limitations may be there. Since
the procedure and polices of the bank will not allow to disclose some confidential
financial information, the project has to be completed with the available data given
to us.

 The study is carried basing on the information and documents provided by

the organization.
 Analysis is limited to the results of HDFC and not compared to industry
standards results.
 Data in some of the ratios has been directly taken from the prepared reports
of MM. due to non-disclosure of input data due to confidentiality.

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DATA COLLECTION METHOD

The present study is based on secondary data analysis. The data has been collected
from various web sources like annual reports of respective Banks, information
bulletins and journals. The data collected were analysed with the help of statistical
tools like Ratio analysis, and trend analysis. Tables are used to represent the
consolidated data. Graphical representation is also used for better comprehension
& presentation.

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 LITERATURE REVIEW

Feroz & et al. (2003) :16 Ratio analysis is a commonly used analytical tool for
verifying the performance of a firm. While ratios are easy to compute, which in
part explains their wide appeal, their interpretation is problematic, especially when
two or more ratios provide conflicting signals. Indeed, ratio analysis is often
criticized on the grounds of subjectivity that is the analyst must pick and choose
ratios in order to assess the overall performance of a firm. In this paper they
demonstrate that Data Envelopment Analysis (DEA) can augment the traditional
ratio analysis. DEA can provide a consistent and reliable measure of managerial or
operational efficiency of a firm. They test the null hypothesis that there is no
relationship between DEA and traditional accounting ratios as measures of
performance of a firm. Their results reject the null hypothesis indicating that DEA
can provide information to analysts that is additional to that provided by traditional
ratio analysis. They also apply DEA to the oil and gas industry to demonstrate.

Thenmozhi S (2010): in her research thesis entitled “Capital Structure,

Productivity and Profitability of select Housing Finance Institutions in India” has
focused on financial and operational performance of housing finance institutions.
The statistical tools like summary statistics, discriminate function analysis,
Stochastic Frontier analysis and Altman’s Z-Score analysis were used for this
purpose. The result of the study has revealed the fact that the select housing
finance institutions have performed well in terms of financial and operating
efficiency. The study has suggested that effective profit planning is to be done by
the select housing finance institutions to improve their profitability position.

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Guruswamy (2012): conducted a comparative analysis of selected HFCs in India
for a sample of four housing finance companies i.e Housing Development Finance
Corporation Ltd LIC Housing Finance Ltd., Can Fin Homes Ltd., and Vysya Bank
Housing Finance Ltd using a secondary data for a period of 10 years from 1991-92
to 2000-2001. The analysis of this based on rankings leads to conclude that it was
LIC Housing Finance Ltd., and Housing Development Finance Corporation Ltd
stood as an excellent housing finance company having the real competition in the
housing finance field.

AbishiekKesari(2012): in his study “Service quality of HDFC bank (2012)]” has

concluded the responsiveness, assurance and reliability are the critical dimensions
of service quality of HDFC bank and they are directly related to overall service
quality. From this study that in the days of intense competition, superior service is
the only differentiator left before the bank banks to attract, retain and partner with
the customers. Superior service quality enables a firm to differentiate itself from its
competition, gain a sustainable completive advantage, and enhance efficiency.
Thus improving service quality leads to the customer satisfaction and ultimately to
customer loyalty.

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 FINANCIAL RATIO ANALYSIS

INTRODUCTION
The traditional financial statements comprising the balance sheet and the profit and
loss account are proving the information related to the financial operation of the
firm. They provide some extremely useful information that mirrors the financial
position on a particular data in terms of the structure of assets, liabilities and
owner's equity and so on. The profit and loss account shows the results of
operations during a certain period of time in terms of the revenues obtained and the
cost incurred during the year. Therefore, much can be learn about a firm from a
careful examination of its financial statement. Users of financial statements can get
further insight about financial strengths and weaknesses of the firm if they properly
analyse information reported in these statement. Management should be
particularly interested in knowing financial weakness of the firm to take suitable
corrective actions. The future plans of the firm should be laid down in view of the
firm's financial strengths and weaknesses. Thus, financial analysis is the starting
point for making plan, before using any sophisticated forecasting and planning
procedures. Understanding the past is a pre-requisite for anticipating the future.

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RATIO ANALYSIS

INTRODUCTION
Ratio analysis is a widely - used tool of financial analysis. It is used to interpret the
financial statements at that the strengths and weaknesses of the firm as well as its
historical performance and current financial condition can be determined. A ratio is
defined as "the indicated quotient of two mathematical expressions" and as the "the
relationship between two or more things". It is a benchmark for evaluating the
financial position and performance of a firm.

When we observed the financial statements comprising the balance sheet and profit
or loss account is that they do not give all the information related to financial
operations of a firm, they can provide some extremely useful information to the
extent that the balance sheet, shows the financial position on a particular date in
terms of structure of assets, liabilities and owner’s equity and profit or loss account
shows the results of operation during the year. Thus the financial statements will
provide a summarized view of the firm. Therefore in order to learn about the firm
the careful examination of in valuable reports and statements through financial
analysis or ratios is required.

MEANING AND DEFINITION

Ratio analysis is one of the powerful techniques which is widely used for
interpreting financial statements. This technique serves as a tool for assessing the
financial soundness of the business. The idea of ratio analysis was introduced by
Alexander wall for the first time in 1919.

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Ratios are quantitative relationship between two or more variables taken from
financial statements. Ratio analysis is defined as, “The systematic use of ratio to
interpret the financial statement so that the strength and weakness of the firm as
well as its historical performance and current financial condition can be
determined. In the financial statements we can find many items are co-related with
each other For example current assets and current liabilities, capital and long term
debt, gross profit and net profit purchase and sales etc. To take managerial decision
the ratio of such items reveals the soundness of financial position. Such
information will be useful for creditors, shareholders management and all other
people who deal with company.

NATURE OF RATIO ANALYSIS

Ratio analysis is a technique of analysis and Interpretation of financial statements.
It is the process of establishing and interpreting various ratios for helping in
making certain decisions. It is only a means of understanding of financial strengths
and weaknesses of a firm. There are a number of ratios which can be calculated
from the information given in the financial statements, but the analyst has to select
the appropriate data and calculate only a few appropriate ratios. The following are
the four steps involved in the ratio analysis:
 Selection of relevant data from the financial statement depending upon the
objective of the analysis.
 Calculation of appropriate ratio from the above data.
 Comparison of the calculated ratios with the ratios of the same firm in the
past, or the ratios developed from projected financial statements.

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 Ratios Are Useful for Several Parties Such As:
 Investors, both present as well as potential investors.
 Financial analyst.
 Mutual funds.
 Stock broker and stock exchange authorities
 Government
 Tax department.
 Competitors.
 Research analysts and students.
 Company's management.
 Creditors and Suppliers
 Lending Institutions- Banks and Financial Institutions
 Financial Manager
 Other Interested parties like credit rating agencies etc.
IMPORTANCE
As a tool of financial management ratio are of crucial significance. The importance
of ratio analysis lies in the fact that it presents facts on a comparative basis and
enables the drawing inferences regarding the performance of a firm. Ratio analysis
is relevant in assessing the performance of a firm in respect of the following
aspects:
 Liquidity position
 Long term solvency
 Operating efficiency
 Overall profitability
 Inter firm comparison
 Trend analysis.

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Liquidity position:
With the help of ratio analysis conclusions can be drawn regarding the liquidity
position of a firm would be satisfactory if it is able to meet its current obligations
when it became due. A firm can be said to have the ability to meet its short term
liabilities if it has sufficient liquid funds to pay the interest on its short maturing
debt usually within a year as well as to repay the principal. This ability is reflected
in the liquidity ratios of a firm. The liquidity ratios are particularly useful in credit
analysis by banks and other suppliers of short term loans.

Long term solvency:

Ratio analysis is equally useful for assessing the long term financial viability of a
firm. This aspect of the financial position of a borrower is of concern to the long
term creditors, security analysts and the present and potential owners of a business.
The long term solvency is measured by the leverage/capital structure and
profitability ratios which focus on earning power and operating efficiency. Ratio
analysis reveals the strengths and weakness of a firm in this respect. The leverage
ratio for instance, will indicate whether a firm has reasonable proportion of various
sources of finance or if it is heavily loaded with debt in which case its solvency is
exposed to serious strain. Similarly the various profitability ratios would reveal
whether or not the firm is able to offer adequate return to its owners consistent with
the risk involved.

Operating Efficiency:
Yet another dimension of the usefulness of the ratio analysis, relevant from the
viewpoint of management, is that it throws light on the degree of

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efficiency in the management and utilization of its assets. The various activity
ratios measure this kind of operational efficiency.
In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales
revenues generated by the use of its assets total as well as its components.

Overall Profitability:
Unlike the outside parties which are interested in one aspect of the financial
position of a firm, the management is constantly concerned about the overall
profitability of the enterprise. That is, they are concerned about the ability of the
firm to meet its short term as well as long term obligations to its creditors, to
ensure a reasonable return to its owners and secure optimum utilization of the
assets of the firm. This is possible if an integrated view is taken and all the ratios
are considered together.

Inter firm Comparison:

Ratio analysis not only throws light on the financial position of a firm but also
serves as a stepping stone to remedial measures. This is made possible due to inter
firm comparison and comparison with industry averages. A single figure of a
particular ratio is meaningless unless it is related to some standard or norm one of
the popular techniques is to compare the ratios of a firm with the industry average.
It should be reasonably expected that the performance of a firm should be in broad
conformity with that of the industry to which it belongs. An interfere comparison
would demonstrate the firm’s position vis-à-vis its competitors.

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If the results are at variance either with the industry average or with those of the
competitors, the firm can seek to identify the probable reasons and, in that light,
take remedial measures.

Trend Analysis:
Finally, ratio analysis enables a firm to take the time dimension into account. In
other words, whether the financial position of a firm is improving or deteriorating
over the years. This is made possible by the use of trend analysis. The significance
of a trend analysis of ratios lies in the fact that the analysts can know the direction
of movement, that is, whether the movement is favourable or unfavourable. For
example, the ratio may be low as compared to the norm but the trend may be
upward. On the other hand, though the present level may be satisfactory but the
trend may be a declining one.

Guidelines or Precautions for the Use of Ratios:

1. Accuracy of Financial Statements:

The ratios are calculated from the data available in financial statements. The
reliability of ratios is linked to the accuracy of information in these statements.
Before calculating ratios one should see whether proper concepts and conventions
have been used for preparing financial statements or not. These statements should
also be properly audited by competent auditors. The precautions will establish the
reliability of data given in financial statements.

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2. Objective or Purpose of Analysis:
The type of ratios to be calculated will depend upon the purpose for which these
are required. If the purpose is to study current financial position then ratios relating
to current assets and current liabilities will be studied. The purpose of ‘user’ is also
important for the analysis of ratios. A creditor, a banker, an investor, a shareholder,
all has different objects for studying ratios. The purpose or object for which ratios
are required to be studied should always be kept in mind for studying various
ratios. Different objects may require the study of different ratios.

3. Selection of Ratios:
Another precaution in ratio analysis is the proper selection of appropriate ratios.
The ratios should match the purpose for which these are required. Calculation of
large number of ratios without determining their need in the present context may
confuse the things instead of solving them. Only those ratios should be selected
which can throw proper light on the matter to be discussed.

4. Use of Standards:
The ratios will give an indication of financial position only when discussed with
reference to certain standards. Unless otherwise these ratios are compared with
certain standards one will not be able to reach at conclusions. These standards may
be rule of thumb as in case of current ratio (2:1) and acid-test ratio (1: 1), may be
industry standards, may be budgeted or projected ratios, etc. The comparison of
calculated ratios with the standards will help the analyst in forming his opinion
about financial situation of the concern.

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5. Calibre of the Analyst:
The ratios are only the tools of analysis and their interpretation will depend upon
the calibre and competence of the analyst. He should be familiar with various
financial statements and the significance of changes, etc. A wrong interpretation
may create havoc for the concern since wrong conclusions may lead to wrong
decisions. The utility of ratios is linked to the expertise of the analyst.

6. Ratios Provide Only a Base:

The ratios are only guidelines for the analyst, he should not base his decisions
entirely on them. He should study any other relevant information, situation in the
concern, general economic environment, etc. before reaching final conclusions.
The study of ratios in isolation may not always prove useful. A businessman will
not afford a single wrong decision because it may have far-reaching consequences.
The interpreter should use the ratios as guide and may try to solicit any other
relevant information which helps in reaching a correct decision.

Limitations:

Ratio analysis is a widely used tool of financial analysis. Yet, it suffers from
various limitations. The operational implication of this is that while using ratios,
the conclusions should not be taken on their face value. Some of the limitations
which characterise ratio analysis are:

1. Difficulty in comparison
2. Impact of inflation, and
3. Conceptual diversity.

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1. Difficulty in Comparison:

One serious limitation of ratio analysis arises out of the difficulty associated with
their comparisons are vitiated by different procedures adopted by various firms.
The differences may relate to:
 Differences in the basis of inventory valuation (e.g. last in first out, first
in first out, average cost and cost);
 Different depreciation methods (i.e. straight line vs. written down basis)
 Estimated working life of assets, particularly of plant and equipment;
 Amortization of intangible assets like good will, patents and so on;
 Amortization of deferred revenue expenditure such as preliminary
expenditure and
 Discount on issue of shares; Capitalization of lease;
 Treatment of extraordinary items of income and expenditure; and so on.

Secondly, apart from different accounting procedures, companies may have

different accounting periods, implying differences in the composition of the assets,
particularly current assets. For these reasons, the ratios of two firms may not be
strictly comparable.

Another basis of comparison is the industry average. This presupposes the

availability, on a comprehensive scale, of various ratios for each industry group
over a period of time. If, however as is likely such information is not compiled and
available, the utility of ratio analysis would be limited.

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Impact of Inflation:

The second major limitation of the ratio analysis as a tool of financial analysis is
associated with price level changes. This, in fact, is a weakness of the traditional
financial statements which are based on historical costs. An implication of this
feature of the financial statements as regards ratio analysis is that assets acquired at
different periods are, in effect, shown at different prices in the balance sheet, as
they are not adjusted for changes in the price level. As a result, ratio analysis will
not yield strictly comparable and, therefore, dependable results. To illustrate, there
are two firms which have identical rates of returns on investments, say 15%. But
one of these had acquired its fixed assets when prices were relatively low, While
the other one had purchased them when prices were high. As a result, the book
value of the fixed assets of the former type of firm would be lower, while that of
the latter higher. From the point of view of profitability, the return on the
investment of the firm with a lower book value would be overstated. Obviously,
identical rates of returns on investment are not indicative of equal profitability of
the two firms. This is a limitation of ratios.

Conceptual diversity:

Yet another factor which influences the usefulness of ratios is that there is
difference of opinion regarding the various concepts used to compute the ratios.
There is always room for diversity of opinion as to what constitutes shareholders
equity, debt, assets, and profit and so on. Different firms may use these terms in
different senses or the same firm may use them to mean different things at
different times.

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Reliance on a single ratio, for a particular purpose may not be a conclusive
indicator. For instance, the current ratio alone is not a as adequate measure of short
term financial strength; it should be supplemented by the acid test ratio, debtors
turnover ratio and inventory turnover ratio to have real insight into the liquidity
aspect. Finally, ratios are only a post mortem analysis of what has happened
between two balance sheet dates. For one thing, the position in the interim period
us bit revealed by ratio analysis. Moreover, they give no clue about the future.

Types of Ratio

Several ratios, calculated from the accounting data, can be grouped into various
classes according to financial activity or function to be evaluated. As staled earlier,
the parties interested in financial analysis are short-term and long-term creditors,
owners and management. Short-term creditors' main interest is in the liquidity
position or the short-term solvency of the firm. Long-term creditors', on the other
hand, are more interested in the long-term solvency and profitability of the firm.
Similarly, owners concentrate on the firm's profitability and financial condition
Management is interested in evaluating every aspect of the firm's performance.
They have to protect the interests of all parties and see that the firm grows
profitably. In view of the requirements of the various users of ratios, we may
classify them into the following four important categories:

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 LIQUIDITY PROFITABILTY
LEVERAGE RATIO ACTIVITY RATIO
RATIOS RATIO
• CURRENT RATIO • DEBT- EQUITY • INVENTORY • GROSS PROFIT
• QUICK RATIO RATIO TURNOVER RATIO RATIO
• DEBTORS • INTEREST • DEBTORS • OPERATING RATIO
TURNOVER RATIO COVERAGE RATIO TURNOVER RATIO • NET PROFIT
• CREDITORS • CAPITAL GEARING • FIXED ASSET RATIO
TURNOVER RATIO TURNOVER RATIO • EXPENCES RATIO
• INVENTORY • WORKING • RETURN ON
TURNOVER RATIO CAPITAL CAPITAL EMPLOYED
TURNOVER RATIO • RETURN ON EQUITY
• PAYABLES • EPS
TURNOVER RATIO • P/E RATIO
• CAPITAL • DIVIDEND YIELD
EMPLOYED RATIO
TURNOVER RATIO

LIQUIDITY RATIOS:
It is extremely essential for firm to be able to mat its obligations as they become
due. Liquidity ratios measure the firm's ability to meet current obligations. In fact,
analysis of liquidity needs the preparation of cash budgets and cash and Fund Flow
statements; but liquidity ratios, by establishing a relationship between cash and
other current assets to current obligations provided a quick measure of liquidity. A
firm should ensure that it does not suffer from lack of liquidity, and also that it
does not have excess liquidity. The failure of a company to meet its obligations due
to lack of sufficient liquidity, will result in a poor creditworthiness, loss of
creditor’s confidence, or even in legal tangles resulting in the closure of the
company. A very high degree of liquidity is also bad; idle assets cam nothing. The
firm's funds will be unnecessarily lied up in current assets. Therefore, it is
necessary to strike a proper balance between high liquidity and lack of liquidity.
The most common ratios, which indicate the extent of liquidity or lack of it, are:

26
Current Ratio: Current ratio shows the relationship between the current assets and
current liabilities. This ratio is measure of the firm’s short term solvency. This ratio
according to accepted standards or idle ratio should be 2:1. Whereas higher the
Current Ratio greater the margin of safety and vice versa. The current ratio of the
select company has been exhibited.

Formula: Current Ratio= Current assets/Current liabilities

Quick Ratio: It is one of the most important ratios to test the ability of business to
meet its short-term obligations on time. It shows a relationship between the liquid
asset and current liabilities present in the business.

Quick assets: Total Current assets minus inventories and prepaid expenses.

Formula: Quick Ratio = Quick assets/Current liabilities

LEVERAGE RATIO

This ratio focus on the long-term solvency of the company with regards to how
much capital comes in the form of debt or assessing the ability of the company to
meet its financial obligation. We can also say that this ratio measures long-term
stability and structure of the firm. This ratio helps the company to determine how
much amount they can borrow so as to increase the profitability of the company.
This ratio also helps in determining the quantum of debt that can be borrowed.

27
Debt To Equity Ratio: This ratio indicates total debt used in the business in
comparison to equity. A higher ratio represents insecurity to the creditors and other
lenders and the low ratio represents more safety or cushion to lenders.

Formula: Total Debt/ Shareholders Fund

Interest Coverage Ratio: This ratio is used by the lenders to check whether the
company will be able to pay off interest due on the instalment on time or not. This
ratio also indicates the extent to which fall in earning won’t impact the payment of
interest. A high ratio means the company can easily meet its interest obligation. A
low ratio indicates inefficient operation.

Formula: EBIT/Interest

Capital Gearing Ratio: This is an important tool used to check the capital
structure of the company. This ratio describes the relationship between the owner’s
capital and the amount borrowed by the company on which periodic payment is
made.

Formula: (Preference share capital + debentures + Long term loan) / (Equity share
capital + Reserve and surplus)

ACTIVITY RATIOS:

Activity ratios measures how efficiently the business is running. We often call this
as “Assets Management Ratio” i.e. how efficiently the assets of the company is
being used by the management to generate maximum possible revenue. Usually,
this ratio indicates how much sales have taken place in comparison to various
categories of assets.

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Fixed Assets Turnover Ratio: This ratio measures the efficiency of the firm in
utilizing its Fixed Assets. A high ratio represents efficient utilization of Fixed
Assets in generating sales.

Formula: (Sales or Cost of Goods Sold)/ Fixed Assets.

Working Capital Turnover Ratio: This ratio measures the efficiency of the firm
in utilizing its Working Capital. A high ratio represents efficient utilization of
working Capital in generating sales.

Formula: (Sales or Cost of Goods Sold)/ Working Capital

Inventory Turnover ratio: This ratio describes the relationship between the cost
of goods sold and inventory held in the business. This ratio indicates how fast
inventory/ Stock is consumed/ sold. A high ratio is good for the company. Low
ratio indicated that stock is not consumed/ sold or remains in a warehouse for a
longer period of time.

Formula: Cost of Goods Sold/Average Inventory Average

Inventory = (Opening Stock + Closing Stock)/2

Debtor Turnover ratio: This ratio helps the company to know the collection and
credit policies of the firm. It measures how efficiently the management is
managing its accounts receivable. A high ratio represents better credit policy as
compared to a low ratio.

Formula: Credit Sales/Average Debtors

Average Debtor = (Opening Debtor + Closing Debtor)/2

29
Creditors Turnover ratio: This ratio helps the company to know the payment
policy that is being offered by the vendors to the company. It also reflects how
management is managing its account payable. A high ratio represents that in the
ability of management to finance its credit purchase and vice versa.

Formula: Credit Purchase/ Average Creditors

Average Creditor = (Opening Creditor + Closing Creditor)/2

PROFITABILITY RATIO
Profit is the key objective of all businesses. To survive and thrive, all businesses
need a consistent and sufficient amount of profit over a period of time with
improvements moving ahead. These ratios help in determining the efficiency of
business to use its resources in generating profit and increasing shareholder value.
Almost all the parties related to a business use profitability ratios for valuation
purposes and understanding the success or failure of business operations against its
competitors.

A strong profitability trend ensures high dividend income and appreciation in the
value of common stock holders. Management needs to ensure sufficient profit is
generated to pay the dividend or to reinvest a portion in the business to increase the
work capacity and improve the overall financial prospects of the business in the
near future. Strong profitability also ensures the creditors and outside provider of
financing safety regarding their fund and income as well as smoother running of
the business.

30
Gross Profit Ratio: It is also known as ‘Gross Margin’ ratio. This ratio is used to
assess the company’s financial health by diagnose the money left after accounting
adjustments of Cost of Goods Sold (COGS), the core expenditure for day to day
production. It disclosed the capacity of company to pay additional expenses and
future savings.

Formula: Gross Profit ratio= (Revenue – COGS)/Revenue

Operating Ratio: This ratio defines the operating efficiency of the management of
the company; managing to reduce the expenses and generate profit of the company
while revenues are decreasing. The smaller ratio is better for the company.
Investors should be aware that this ratio does not include finance cost.

Formula: Operating Ratio= Operating Expense/Net Sales

Net Profit ratio: It is a ratio between net profit after tax and net sales
(denominator). The purpose of this ratio is to evaluate the profits from its primary
operating activities. Higher net profit ratio indicates the efficient management of
the affairs of business with better control on cost.

Net profit: Gross profit minus non-operating revenues and expenses (or Total
revenue less total expense during the period

Formula: Net profit ratio= Net profit after tax/Net sales

31
Expense Ratio: This ratio defines the measure of costs for an investment company
to operate a mutual fund. An asset management company is concerned with the
operating cost and other cost incidental thereto of a mutual fund, those are taken
out of a fund’s asset. It is also known as ‘management expense ratio’.

Formula: Expense ratio= Administrative and Operating Expenses/Average of

Fund’s Asset

Return on Capital Employed Ratio: This ratio indicates the operating

effectiveness of the company and how efficient the company is in using its capital
employed in order to generate the earnings and increase the value of shareholders’
stake. Higher the ratio, better it is for the company. It is a popular ratio used to
compare two different companies under the same industry or performance of the
same company for two different periods to analyse the increase or decrease in
return.

Earnings before Interest and Tax: Revenue less COGS and operating expenses

Capital Employed: Total Assets less Current Liabilities

Formula: Return on Capital Employed= Earnings before interest and tax/Capital

Employed

32
Return on Equity Ratio: This is another tool to quantify the efficiency of
company in generating profits, except it only considers the equity portion of capital
invested by the shareholders. It could also be used in comparison between two
companies having same size of equity capital on the basis of highest ROE.

Formula: ROE= Net Income/Shareholder’s Equity

Earnings Per Share: It is a portion of company’s profit after dividend allocated to

equity shares: allocated to the outstanding share of common stock per share. It is
more accurate to use weighted average number of shares outstanding over the term,
because the number of shares outstanding can different over time. It also includes
‘Diluted EPS’. Diluted EPS expands on the basic EPS by considering the expected
conversions of shares of convertible or warrants outstanding in the outstanding
number of shares. EPS is also the most important metric to determine the share
price, by used in price-earnings ratio.

Formula: EPS= Earnings attributable to common stock/Weighted average number

of outstanding common share

Price Earnings Ratio: This is the most useful and frequently used ratio for
investors, to judge the share price of the company – whether it is overvalued or
undervalued in the market. This ratio enables the investor to know about his
earning on per rupee of investment in the share price of a company.

Formula: Price Earnings Ratio= Market Price/Earnings per share

33
Dividend Yield Ratio: It comprises the per share dividend income for an investor.
By using this metric, investor can analyse the return on his investment in form of
dividend income compared to price paid by him/her in the market. This could be a
better tool to compare two different investments on the basis of their dividend
generating capacity, like equity or mutual fund.

Formula: Dividend Yield= Annual Dividend Per Share/Market Price per Share

34
COMPANY PROFILE:
RITIKA SECURITIES
Ritika Securites was established in the year 2010 based in Mumbai. The firm
seems to be new but analysts and management have an experience of more
than 9 years. It has a very young and enthusiastic team, with ample
experience and knowledge to withstand the volatility of Financial Markets.
Mr. Sushant Kumar Das is the CEO and Managing Director of the firm. He
has over 25 years of experience in Tax and Investment Consultancy. Ritika
Securities has been on a growing under his rich experience and leadership.
He has been the guide all throughout the path of the firm. All employees
have been inculcated with the values of integrity and transparency.
Firm focuses on all segments of market and has customers across the
country from various classes of mass. Ritika Securities is partnered with
Narnolia Financial Advisors and LKP Securities Limited one of growing
financial institutions in India.
Mission:-
Mission of Ritika Securities is to strengthen its endeavours to enable their
client in achieving lifelong financial independence and peace of mind.
Vision:-
Vision is to collaborate with their partners in the relentless pursuit of
meeting their business results through an integrated capability that delivers
on Quality, Value, Cost efficiency & speed to market.

35
 NARNOLIA FINANCIAL ADVISORS LTD

Narnolia Financial Advisors Limited is a Public incorporated on 14 July

1995. It is classified as Non-government company and is registered at
Registrar of Companies, Kolkata. Its authorized share capital is Rs.
52,000,000 and its paid up capital is Rs. 49,435,608. It is involved in other
wholesale [Includes specialized wholesale not covered in any one of the
previous categories and wholesale in a variety of goods without any
particular specialization.]
Directors of Narnolia Financial Advisors Limited are Pankaj Harlalka,
Sandip Agarwal, Shailendra Kumar, Krishnanand Narnolia, Vikram Vilas
Wadekar, and Keval Meghji Bhanushali.
They have developed the best products, systems, processes, technology. But
what differentiates them from others is not the 100 years of combined
national and global experience of the promoters, rather it is their devotion to
the relentless pursuit of generating consistent and superior risk adjusted
returns for investors and provide world class advise based trading experience
for traders with use of innovative, disciplined, client focused and process
driven assent, multi strategy framework. Their business model is completely
based on their vision and mission, the core purpose of the organisation.

36
Narnolia have created the best data driven buy side research teams in the
country. They use extensive in-house data frame work and infrastructure
built over the past decade for both domestic and international securities to
support their research process. They focus on quality returns and have a
objective to maximise returns per unit of risk for investor.

Mission:-
They commit ourselves both in thought and action to raise themselves in the
eyes of true boss- the investors from being a mere transaction broker to a
true family financial advisor and help them to protect and improve their
financial state. Further resolve not to sell gambling in a bottle of investment
and will dare to tell them the difference between the two even if it results
into low revenue in the short term. They shall invest most of time, energy
and resources to reduce gaps at each touch points with our existing investors,
and shall see our growth in their growth.
Vision:-
Narnolia financial Advisors Ltd will be the most understanding, most
trusted, most knowledgeable, and most concerned provider of value added
and customer centric financial services in their strategically chosen and also
mass market.

37
 LKP SECURITIES LTD

With a legacy dating back to 1948, LKP Securities Limited is a ISO- 9002
certified and is a pioneer in the financial services business & has carved a
niche for itself as a one-stop solution for all financial & investment provider.
LKP Securities Limited has been a listed entity on BSE since December
2016.
They have presence PAN India with:-
Presence across 200+ cities in India
1,50,000+ direct active clients
3000+ Business Associates
19 Branches including our Head Office in Nariman Point, Mumbai. 9
Regional Offices
Company is successfully managed by Managing Director, Mr. Pratik Doshi
who has an experience of more than 15 years in capital markets. Company
also has other independent directors who play a key role in the business
operations.
LKP Securities limited has been continuously expanding its operations & IT
in India and is today a leading diversified financial services firm. We would
like to explore the possibility of a strategic tie-up to leverage each other’s
network and scale up our respective operations in India and the GCC
countries, in the areas of Banking and Wealth Management.

38
LKP Securities Limited provides a range of financial services including:-
Equity: BSE & NSE.
Debt Instruments
SEBI Approved: Structured Products (Investment Advisory, LKP Wealth
Advisory Services a subsidiary of LKP Securities Limited): 7Picks a
Quarter, Alpha Trade, Turtle, Whale.
SEBI Approved: Portfolio Management Services.
AMFI Registered Third Party Distribution: MF all Mutual Fund Distributors,
Insurance & Loans.
Commodity & Currency: MCX, NCDEX, DGCX, NSE for Interest Rate
Futures, MCX SX & NSE Currency.
Customized Research & Advisory Services through our Fundamental &
Technical Research Desk.
LKP offers a wide spectrum of services that includes Equity Broking in
Cash and Derivatives, Internet based trading, Demat services & Research
services. When you deal with LKP you are dealing with a professional
broker who has centralized risk management system in place at Mumbai.
LKP follows a hub & spoke model of Branch management where in all the
branches & franchise interact with the hub/regional office & in turn the
regional/hub office talks to Head office. This company a great level of
flexibility in managing the risk level of the clients, which in turn benefit the
client.

39
 BENEFITS

As Ritika Securities is partnered with LKP Securities Ltd and Narnolia

Financials Advisors, they provide lot of financial products and services to its
customers.
Benefits given by LKP Securities Ltd are as follows:-
1) Equity Broking in Cash and Derivatives

2) Internet based trading

3) Demat services

4) Research

5) Debt and Money Market Broking

6) Merchant Banking (category 1)

7) Loan Against Shares And Margin Funding

8) Commodity Trading

9) AMFI registered all India Mutual Fund Distributors

10) IPO (New Issue) Distribution

11) Life Insurance Distribution

LKP is dedicated to serving the needs of our customers and, to that end,
focuses on providing a high level of specialized and personal service. Our
highly experienced broking teams, coupled with our state of the art trading
platforms, provide the trader with everything they need in a competitive
market. Our dealing room is staffed with experienced personnel conversant
in many languages, providing trading services at a personal level to a diverse
client base across India.

40
 As a client of LKP we know we are dealing with a professional broker who
has a centralized risk management system in place at Mumbai. LKP has a
great level of flexibility in managing the risk level of the clients, which in
turn benefits the client.
At Narnolia, they veer towards the latter approach. Their approach to wealth
management has been more of a customized and micro approach. For them,
Wealth Management is all about making the customer the nucleus of the
entire process. They take a 360o view of the customer assets, liabilities,
income, expenses and goals and offer our solution accordingly.

Benefits given by Narnolia Financials Advisors Ltd are as follows:-

1) Financial Management and Wealth Management Services
2) Mutual Funds Services
3) Share Market Stock Tips Services
4) Financial Service
5) Management Service

41
 The Housing Development Finance Corporation Limited (HDFC) was amongst
the first to receive an 'in principle' approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector, as part of RBI's liberalisation of the
Indian Banking Industry in 1994. The bank was incorporated in August 1994 in
the name of 'HDFC Bank Limited', with its registered office in Mumbai, India.
HDFC Bank commenced operations as a Scheduled Commercial Bank in
January 1995.

BUSINESS SEGMENTS:

HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional / branch banking on
the retail side. The bank has three key business segments.

Wholesale Banking: The Bank's target market is primarily large, blue-chip

manufacturing companies in the Indian corporate sector and to a lesser extent,
small & mid-sized corporates and agri-based businesses. For these customers, the
Bank provides a wide range of commercial and transactional banking services,
including working capital finance, trade services, transactional services, cash
management, etc.

The bank is also a leading provider of structured solutions, which combine cash
management services with vendor and distributor finance for facilitating superior
supply chain management for its corporate customers.

42
Based on its superior product delivery / service levels and strong customer
orientation, the Bank has made significant inroads into the banking consortia of a
number of leading Indian corporates including multinationals, companies from the
domestic business houses and prime public sector companies. It is recognised as a
leading provider of cash management and transactional banking solutions to
corporate customers, mutual funds, stock exchange members and banks.

Treasury: Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt Securities, and
Equities. With the liberalisation of the financial markets in India, corporates need
more sophisticated risk management information, advice and product structures.
These and fine pricing on various treasury products are provided through the bank's
Treasury team. To comply with statutory reserve requirements, the bank is required
to hold 25% of its deposits in government securities. The Treasury business is
responsible for managing the returns and market risk on this investment portfolio.

Retail Banking: The objective of the Retail Bank is to provide its target market
customers a full range of financial products and banking services, giving the
customer a one-stop window for all his/her banking requirements. The products
are backed by world-class service and delivered to customers through the growing
branch network, as well as through alternative delivery channels like ATMs, Phone
Banking, Net Banking and Mobile Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC
Bank Plus and the Investment Advisory Services programs have

43
been designed keeping in mind needs of customers who seek distinct financial
solutions, information and advice on various investment avenues. The Bank also
has a wide array of retail loan products including Auto Loans, Loans against
marketable securities, Personal Loans and Loans for Two-wheelers. It is also a
leading provider of Depository Participant (DP) services for retail customers,
providing customers the facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit
card as well. The Bank launched its credit card business in late 2001. By March
2015, the bank had a total card base (debit and credit cards) of over 25 million. The
Bank is also one of the leading players in the "merchant acquiring" business with
over 235,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at
merchant establishments. The Bank is well positioned as a leader in various net
based B2C opportunities including a wide range of internet banking services for
Fixed Deposits, Loans, Bill Payments, etc.

44
 DETA INTERPRETION & ANALYSIS
CURRENT RATIO

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Ratio 0.05 0.05 0.06 0.07 0.04 0.08

0.1
0.08
0.08 0.07
0.06
0.06 0.05 0.05
0.04
0.04

0.02

0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Current ratio

The above chart indicates that the Current Assets to Current Liabilities Ratio for
the year 2014-20115 was 0.04 per cent and for the year 2015- 2016 it was 0.07 per
cent and for the year 2016-2017 was 0.06 per cent, followed by 0.05 and 0.05 per
cent for the years 2017-2018 and 2018-2019 respectively. The ratio is high (0.08
per cent) in the year 2019-2020 and low in the year 2014-2015 (0.04 per cent)
when compared with the other years.

QUICK RATIO

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Ratio 12.66 14.58 11.35 17.40 16.55 16.62

45
 20
18 17.4
16.44 16.62
16 14.58
14 12.66
12 11.35

10
8
6
4
2
0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

QUICK RATIO

A quick ratio that is greater than 1 means that the company has enough quick
assets to pay for its current liabilities. Quick assets are current assets that can be
converted very easily into cash. Hence, companies with good quick ratios are
favoured by creditors. In the above the quick ratio is high in year 2017-18 and low
in the 2016-17.
DEBT TO EUITY RATIO

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Ratio 8.07 8.31 8.08 8.62 7.03 7.56

10 8.62
8.07 8.31 8.08
8 7.56
7.03

0 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

DEBT TO EQUITY RATIO

46
In the year 2014-15 the ratio was 8.07 and it was increase in the year 2015-16 to
8.31 followed by this it was decreased by 0.23 during the year 2016-17. In 2017-
18 it was increased by 0.54 But it was increased in the year 2018-19 was 1.59. and
this year it was increse by 0.53.

FIXED ASSET TURNOVER RATIO

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Ratio 0.10 0.10 0.10 0.09 0.09 0.08

0.12
0.1 0.1 0.1
0.1 0.09 0.09
0.08
0.08

0.06

0.04

0.02

0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

FIXED ASSET TURNOVER RATIO

The fixed assets and long-term funds of the bank In the year 2014-15 fixed assets
ratio is 0.10 which has constant in the year 2015-16. During the year 2016-17 the
ratio was 0.10 and in the year 2017-18 it had decreased by 0.09, 2018-19 the ratio
was [Link] year ratio was 0.08. These ratios are compared with standard norm
of fixed assets ratio, it is very high. Hence a portion of working capital had
financed by long-term funds during the study period.

47
 GROSS PROFIT RATIO

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Ratio 17.22 13.09 19.29 21.20 14.72 11.62

25
21.2
20 19.29
17.22
14.72
15 13.09
11.62

10

0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

GROSS PROFIT RATIO

The above chart shows that the Gross Profit Ratio for the year 2014-2015 was
17.22 and for the year 2015-2016 it was 13.09 per cent in for the year 2016-2017 is
19.29 per cent and followed by 21.20 and 14.72 per cent for the years 2017-2018
and 2018-2019 respectively. The ratio is high (21.20 per cent) in the year 2017-
2018 and low in the year 2019-2020 (11.62 per cent) when compared with the
other years.
NET PROFIT RATIO

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

48
Ratio 21.07 20.41 20.99 21.79 21.29 22.86

49
 24
NET PROFIT RATIO
22.86
23

22 21.79
21.07 20.99 21.29
21
20.41

20

19
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

The above chart shows that the Net Profit Ratios for the year 2014-2015 was 21.07
per cent and for the year 2015-2016 it was 20.41 per cent and for the year 2016-
2017 is 20.99 per cent, followed by 21.79 and 21.29 per cent for the years 2017-
2018 and 2018-2019 respectively. The ratio is high (22.86 per cent) in the year
2019-20 and low in the year 2015-2016 (20.41 per cent) when compared with the
other years.

OPERATING PROFIT RATIO

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Ratio 18.57 14.26 20.49 22.33 15.87 12.66

50
25 22.33
20.49
20 18.57
15.87
14.26
15 12.66

10

0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

OPERATING PROFIT RATIO

51
The above chart shows that the Operating Profit Ratios for the year 2014- 2015
was 18.57 per cent and for the year 2015-2016 it was 14.26 per cent and for the
year 2016-2017 is 20.49 per cent, followed by 22.33 and 15.87 per cent for the
years 2017-2018 and 2018-2019 respectively. The ratio is high (22.33 per cent) in
the year 2017-2018 and low in the year 2019-2020 (12.66 per cent) when
compared with the other years.

EARNIG PER SHARE

Year 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Ratio 40.76 48.64 56.78 67.38 77.40 47.89

90
77.4
80
70 67.38

60 56.78
48.64 47.89
50
40.76
40
30
20
10
0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

EPS

In the above chart of the bank the EPS in 2014-15 was 40.76 which has increased
to 48.64 in the year 2015-16. During the year 2016-17 the EPS was 56.78 and in
the year 2017-18 it was increased by 10.60. In 2018-19 the EPS was increased to
[Link] the above chart we can see that the EPS of the HDFC bank is

52
Increasing year by [Link] this year EPS was decrease to 47.89 . This Chart has is
bank the EPS in 2014-15 was 40.76 which has increased to 48.64 in the year 2015-
16. During the year 2016-17 the EPS was 56.78 and in the year 2017-18 it was
increased by 10.60. In 2018-19 the EPS was increased to [Link] the above
chart we can see that the EPS of the HDFC bank is Increasing year by [Link] this
year EPS was decrease to 47.89 .

53
 FINDINGS AND SUGGETIONS
FINDINGS:
 Current ratio indicates that banks liquidity and its repayment of debts are
sound during the period of study.

 Cash position ratio or Liquidity Ratio is shows during the study period the
bank liquidity position is good.

 The EPS of the HDFC bank is increasing year by year.

 Fixed assets ratio explains portion of working capital had financed by long-
term funds during the study period
.
 Debt equity ratio explains the creditors are safe during the study period.

 Net profit ratio is high (22.86 per cent) in the year 2019-2020 and low in the
year 2015-2016 (20.41 per cent) when compared with the other years.

 Gross profit ratio is high (21.20 per cent) in the year 2017-2018 and low in
the year 2019-2020 (11.62 per cent) when compared with the other years.

54
  Operating profit ratio is high (22.33 per cent) in the year 2017-2018 and low
in the year 2014-2015 (14.26 per cent) when compared with the other years.
Suggestions:

 The overall liquidity position of HDFC Ltd has been fluctuated through the
period of study but it always maintain sufficient funds which are more than
enough to meet short term obligations of the concern.

 The long term solvency of the selected unit is more than adequate and
HDFC is highly depends on outsiders funds rather than equity funds. Hence
the company is better to concentrate to get back the funds from debt to
equity funds and also reduce and long term financial obligations
.
 This study signifies HDFC Ltd have to provide more housing loans to the
people of India.

55
 CONCLUSION

Calculating a large number of ratios without determining their need in the present
context may confuse the things instead of solving them. Only those ratios should
be selected which can throw proper light on the matter to be discussed. Unless
otherwise the ratios calculated are compared with certain standards one will not be
reach at conclusions. These standards may be a rule of thumb as in current ratio
(2:1), may be industry standards, may be projected ratios etc. The comparison of
calculated ratios with the standards will help the analyst in forming his opinion
about financial situation of the concern.
The ratios are only the tools of analysis but their interpretation will
depend upon the calibre and competence of the analyst. He should be familiar with
various financial statements and the significance of changes etc. A wrong
interpretation may create havoc for the concern since wrong conclusions may lead
to wrong decisions. The utility of ratios is linked with expertise of the analyst. The
ratios are only guidelines for the analyst; he should not base his decisions entirely
on them. He should study any also relevant information, situation in the concern
general economic environment etc., before reaching final conclusions.
The HDFC Bank is the largest private sector bank in India. The researcher
finds the financial performance for the past five financial years from 2014-15 to
2019-2020. The data collected from annual reports of the

56
bank and the web site. The data analyzed through various ratios. This research
article finally concluded that the HDFC bank financial performance is strong
during the study period.
BIBLIOGRAPHY
WEBSITES:
[Link] [Link]
[Link]

BOOKS:
Financial Ratio Analysis Financial
Management.

57