25-08-2014, 10:52 AM
“A STUDY ON FINANCIAL PERFORMANCE OF INDIAN OVERSEAS
BANK”
“A STUDY ON FINANCIAL.pdf (Size: 3.7 MB / Downloads: 70)
ABSTRACT
In the era of globalization the utilization of finance is considered as the most
important function of an organization. The firms are facing a stiff competition from the whole
market, so the inflow and outflow of funds will be managed well. Financial analysis is the
process of using financial statements to enable the users to take economic and investment
decisions.
The study of “A STUDY ON FINANCIAL PERFORMANCE OF INDIAN
OVERSEAS BANK” is an attempt being made to find out the soundness of the firm in dealing
with present market competition and in getting a view how the performance is going on for the
last 5 years.
The study begins with framing the objectives of the study and then devising a
methodology for the fulfillment of the objectives.
The purpose of this statement is to summarize for a given period the resources
made available to finance the activities of enterprise and the uses to which such resources have
been put. The statement is prepared to ascertain the performance of the bank.
Ratio Analysis has been introduced to find the quantitative relationship
between figures and groups of figures. Following are the four steps involved in the ratio analysis:
INTRODUTION
In the era of globalization the utilization of finance is considered as the most
important function of an organization. The firms are facing a stiff competition from the whole
market, so the inflow and outflow of funds will be manage well.
Finance is one of the most important aspects of business management. Without
proper financial planning an enterprise is unlikely to be successful. Managing money (a liquid
asset) is essential to ensure a secure future, both for the individual and an organization.
Finance is used by individual’s personal finance, by government’s public
finance, by businesses corporate finance, as well as by a wide variety of organizations including
schools and non-profit organizations. In general, the goals of each of the above activities are
achieved through the use of appropriate financial instruments and methodologies, with
consideration to their institutional setting.
Financial analysis is the process of identifying the financial strengths and
weakness of a firm by properly establishing relationships between the items of Balance Sheet
and Profit and Loss Account. Analysis is the process of critically examining in detail
accounting information given in the financial statements. Analyzing financial statement is a
process of evaluating relationship between component parts of financial statements to obtain
a better understanding of firm’s position and performance. The main aim of the financial
statement analysis is to find out the profitability and financial position of the firm.
Scope of the Study
The financial fund management is the essential function in every
organization for the effective utilization of funds for making profits. The financial fund
management influences the managerial decisions regarding the investment policies.
Scope of the study is limited to the Financial Statement Analysis, the
accounting years 2004-05 to 2008-09 have been taken as base. The process of Financial
Statement Analysis involves compilation and study of financial and operating results and
preparation and interpretation of measuring devices such as Ratio Analysis, Comparative
Balance Sheet, Comparative Income Statement, and Common Size Balance Sheet & Cash
Flow Statement
RATIO ANALYSIS
Ratio Analysis can be defined as the study and interpretation of relationships
between various financial variables, by investors or lenders. It is a qualitative investment
technique used for comparing a company's financial performance to the market in general. A
change in these ratios helps to bring about a change in the way a company works. It helps to
identify areas where the management needs to change. A number of ratios are calculated by
companies for evaluating their short and long term performance and also to know liquidity
and profitability. Ratios standardize numbers and facilitate comparisons. Ratios are used to
highlight weaknesses and strengths.
COMPARATIVE FINANCIAL STATEMENT
Comparative financial statements are those statements, which have been
designed in a way so as to provide time perspective to their consideration of various elements of
financial position embodied in such statements. In these statements figures for two or more
period are place side by side of facilities comparison. Both the income statement and balance
sheet can be prepared in the form of comparative financial statements.
COMPARATIVE AND COMMON SIZE FINANCIAL STATEMENTS ANALYSIS
Comparative financial statements provide information to assess the
direction of change in the business. To know whether the business is moving in a favorable or
unfavorable direction, figures of the current year are compared with those of the previous
years. The amount and percentage of increase or decrease is calculated and then compared. In
common size statements, the sales figure is assumed to be 100 and all figures are expressed as
a percentage of sales in the income statement. In the Balance Sheet, the total of the assets or
liabilities is taken as 100 and all the figures are expressed as a percentage of this total. Using
the past theory for comparison is called as trend analysis. Trend percentages are calculated
only for some important items which can be logically connected with each other. Under this
technique, information for a number of years is taken up and one year, which is usually the
first year, is taken as the base year. Each item of the base year is taken as 100 and on that basis,
the percentage for other years are calculated
INDUSTRY PROFILE
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and location.
Banks are important players in financial markets and offer services such as investment funds and loans. In some countries such as Germany, banks have historically owned major stakes in
industrial corporations while in other countries such as the United States banks are prohibited
from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share
holding entity known as the keiretsu. In France, bancassurance is prevalent, as most banks offer
insurance services (and now real estate services) to their clients.
COMPANY PROFILE
Established in 1937, Indian Overseas Bank (IOB) is a leading bank based in
Chennai, India. IOB had the distinction of simultaneously commencing operations in three
branches at Karaikudi, Chennai, and Yangon (Myanmar). Since IOB aimed to encourage overseas banking and foreign exchange operations, it soon opened its branches in Penang and
Singapore. Today, Indian Overseas Bank boasts of a vast domain in banking sector with over
1400 domestic branches and 6 branches overseas
Community Service
The Bank's role in community services takes many forms covering cultural, religious,
medical, and educational and disaster relief activities. The bank also contributes substantially at
the national and regional levels towards relief and rehabilitation. The Sakthi IOB Chidambaram
Chettyar Memorial Trust set up by the Bank jointly with the Bank's officers' association and
employees' union offers facilities for developing skills by women.
CONCLUSION
Financial analysis is the process of selection, relation and evaluation. The focus
of financial analysis is on key figure in the financial statements and the significant relationship
that exist between them. The analysis of financial statements is a process of evaluating the
relationship between component part of financial statement to obtain a better understanding of
the firm’s position and performance. This financial analysis is done uses the tools like Ratio
Analysis, Comparative Balance Sheet, Comparative Income Statement, Common Size
Balance Sheet & Cash Flow Statement. These tools show us the company position in terms of
liquidity, profitability and stability.
By using these tools we came to a conclusion that the bank has a good financial
position and have a profitability & stability. Now dates all commercial banks improve by
marketing technique like advertisement in newspaper, television, radio etc. so that it can gain
goodwill and publicity. Even it should use the present new technology and improve the
consumption of resource efficiently. On the whole, it can be concluded that the bank’s overall
financial performance process is at desired level and the author has made the realistic
recommendation for the improvement in operational and managerial efficiency of the company
as to maintain and increase further by effective utilization and control of all the fixed assets.