A Proposal of

LIQUIDITY ANALYSIS OF MACHCHAPUCHHARE BANK LIMITED

By:
Aadarsh Chaudhary

T.U. Regd. No. 7-2-242-329-2020

Symbol No. ……………….

Makawanpur Multiple Campus, Hetauda
(Finance Group)

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Hetauda, Makawanpur
January, 2025
1.1 Background of the study
A liquidity ratio is a measurement which is used to indicate whether a debtor will be
able to pay their short-term debt off with the cash they have readily available, or
whether they’ll need to raise additional capital to cover the amount. This kind of
metric can also show how swiftly the assets held by the debtor can be turned into cash
for the debt. When we talk about liquidity, we’re talking about how quickly or easily
a company’s assets can be turned into cash without losing their value. The more liquid
the assets of a business, the more quickly they can get cash to pay off their debt.
Liquidity ratios are what creditors (and sometimes debtors) use to work out if a
company can repay creditors from the total cash they have available. The higher the
liquidity ratio is for that company, the more liquid their assets are and the more able
they’ll be to pay off short-term debts. There are a number of different liquidity ratios
that can show the status of the debtor – these include:
 Current ratio
 Quick ratio
 Operation cash flow ratio
 Working capital Working capital ratio
 Absolute liquid ratio.

1.2 Profile of organization.

Machhapuchhare Bank Limited.
Machhapuchchhre Bank Limited was registered in 1998 as the first regional
commercial bank from the western region of Nepal and started its banking operations
from Pokhara since year 2000. The Bank facilitates it's customers' need by delivering
the best of services in combination with the latest state of the art technologies and
prudent international practices.The bank provides modern banking facilities such as
Any Branch Banking, Internet Banking, Mobile Banking, Safe Deposit Locker
facilities, Utility Bill payment (Telephone & Mobile), ATM (VISA Debit Cards) to its
valued customers. Besides these, the Bank is providing 365 Days Banking and
Evening Counter services to the customers through many of its offices.
The Bank has been promoted by highly renowned Non-Residential Nepalese,
prominent businessman and industrialists with a vision and dedication to provide the
best financial products and services in the most efficient and professional manner.
Now with a paid up capital of over 11.62 billion rupees, 165 Branch Offices, 99
Branchless Banking Units, 11 Extension Counters and 202 ATMs spread all across
the country, it is one of the full fledged national level commercial banks operating in
Nepal. It takes pride in having its own buildings for its Head and Corporate Office in
Lazimpat, and Branch offices in Naya Bazar, Pokhara, Jomsom, Baglung, Damauli
and Bhairahawa.

1.3 Statement of Problems

Nepal is an economically developing country and it has numerous problems. People
of Nepal are always in shortage of funds for any kinds of purposes like to meet basis
needs; education, standard of living, have a very flexible loan provision that has
facilitated the investors as well as the user of the fund. MBL has made certain criteria
for lending loans to the needy groups with or without collateral. In order to evaluate
the following issues the researcher is motivated to prepare this report.
a) What is the trend of liquidity ratio?
b) What is the trend of ratio of interest income to total loan?
c) What is the trend of ratio of net profit to total loan?
d) What is the diversity of loan?

1.4 Objectives of the study

A research project is based upon certain assumption:
 The study helps to find out how the bank has collected the bank capital it
required.
 The study helps to find out how the bank has managed its bank capital.
 The study helps future researcher to know how the Banks of Nepal collects,
mobilize & maintain their Bank capital.

1.5 Rationale of the study
This report writing of the very crucial part of our courses without this report we can’t
our 4rd year diploma. Report is not beneficial to us only bust also to the other sector of
society mentioned as below:
a) Easy for bank to know their financial strength to absorbed losses and protect
depositors and other creditors.
 b) Easy for general public to know about the condition of bank whether they’re
gaining or bearing losses.
c) Reference for the forth coming student while preparing reports in this
subject.

1.6 Review of literature

Review of Related Studies
There was no formal previous work in the selected topic. It is totally new topic
and field study. Since there is no research in this topic so I select this topic. The
research work is not conducted on this topic till now and I preferred to select
unique topic for my research work. So there is no any sort of formal previous
reports regarding bank's and its profitability analysis.

1.7 Methodology
Research Design & Methodology
Research design is the plan, structure and strategy for conducting the study.
For the research design, first of all the information and data concerned with the study
should be collected. This is a case study and only one sample is taking into
consideration.
1.7.1 Population of Sample Size
As on mid-march 2014, there are 32 commercial banks in Nepal
Sample
Researcher has selected only one bank as a conventional sampling among the
32 commercial banks for the purpose of field work report.
1.7.2 Sources of Data
This study is mainly based on secondary types of data. However primary types
of data are also collected during the field visit. The data collected for the study is
secondary in nature. Information was collected from the statistics published by Nepal
Rastra Bank in its website (www.nrb.org)
Primary Sources of Data
The primary sources of data are collected through field visit and questionnaire
to related officials. However, this report does not contain any primary sources of data.
Secondary Sources of Data
This report consists of only secondary data. I have only included secondary
data. This report is completely based on secondary data has no concerned with
primary sources of data.

1.7.3 Nature and Sources of Information/Data collection procedure

This study is primarily based on the secondary source of data. So, the necessary data
for the study are collected mainly from the concerned institutions. The study is
concerned with the guidelines of NRB on investment policy of commercial banks. For
this purpose commercial banking statistic, annual report, quarterly economic bulletins
published the different commercial banking. These include annual reports for last
three years and report of each year Beside these, the following sources of data are also
being considered.

1.7.4 Tools for analysis and data presentation

Before analyzing the data, the data and information have been presented
systematically in the formats of Tables, Graphs and Charts which will explain a lot
about the data and information collected.
For the analysis of the research study, the following financial tools and statistical tools
are used
Financial Tools
Financial analysis is the process of analyzing various items of financial statements to
access a firm's comparative strengths and weakness. In other words, financial analysis
involves analyzing financial statement prepared in accordance with generally
accepted accounting principles to ascertain information concerning the magnitude,
timing and riskiness of future cash flows.
As we know there is various type of ratio. We have grouped these ratios into tive
types ie Liquidity. Activity. Profitability, Risk and Growth ratios. None of single ratio
gives us accurate information about financial condition and performance of a firm.
Hence, we are analyzing a group of ratios to make reasonable judgment. Following
ratios are calculated from the calculated data.
i. Liquidity Ratio
ii. Activity Ratio
iii. Profitability Ratio
iv. Risk Ratio
1.8 Limitations of the study
As in every field thermo are some limitations in the some way there are also some
limitation on this study. They are as follows:
 The study will be done according to the information provided by the Banks
& not with the help of experience gained on actual working environment.
 Secondary data will occupy its significant positions in the study: research
based on secondary data in not far from limitations.
 This study covers the analysis of only five years data from FY 2021/2012
to FY 2023/2024 hence the conclusion drawn confirms to the above
periods only.
 This study is limited to the study of Machchapuchhare Bank Limited only.
 The only major financial statements like Balance Sheet, Income statement,
Profit & Loss account, Cash Flow statement has been taken for the
analysis.
 The study focuses only on the liquidity & profitability analysis & does not
cover other aspects of activities.
 The ratio & tools that is used in the study may vary due to different
definition of terms given by different authors.

1.9 Organization of the Study

The whole study of the research has been divided into Three different chapters,
including appendices and annexes.
 Chapter one - Introduction: background, profit of the organization, event,
Activates etc., objective of the study, Rational, Review of Literature, Method of
study, limitation of the study.
 Chapter two - Result and Analysis: Presentation of Result, Findings.
 Chapter three - Summary and Conclusion: Summary, Conclusion