INTRODUCTION

1.1 Background of the Study:

A ratio analysis is a quantitative analysis of information contained in a

company’s financial statements. Ratio analysis is based on line items in financial
statements like the balance sheet, income statement and cash flow statement; the
ratios of one item – or a combination of items - to another item or combination are
then calculated. Ratio analysis is used to evaluate various aspects of a company’s
operating and financial performance such as its efficiency, liquidity, profitability
and solvency. The trend of these ratios over time is studied to check whether they are
improving or deteriorating. Ratios are also compared across different companies in
the same sector to see how they stack up, and to get an idea of
comparative valuations. Ratio analysis is a cornerstone of fundamental analysis.
While there are numerous financial ratios, most investors are familiar with a few key
ratios, particularly the ones that are relatively easy to calculate. Some of these ratios
include the current ratio, return on equity, the debt-equity ratio, the dividend payout
ratio and the price/earnings (P/E) ratio.

For a specific ratio, most companies have values that fall within a certain
range. A company whose ratio falls outside the range may be regarded as
grossly undervalued or overvalued, depending on the ratio. Ratio analysis can provide
an early warning of a potential improvement or deterioration in a company’s financial
situation or performance. Analysts engage in extensive number-crunching of the
financial data in a company’s quarterly financial reports for any such hints.

Successful companies generally have solid ratios in all areas, and any hints of
weakness in one area may spark a significant sell-off in the stock. Certain ratios are
closely scrutinized because of their relevance to a certain sector, as for
instance inventory turnover for the retail sector and days sales outstanding (DSOs) for
technology companies.

Bank is the mediator of financial activities. Its function is regarded to be very

sensitive it does the business of currency. Accepts deposit from the public and it
provides loan to the needed one. Nowadays s are considered as the most important

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financial institution in the economy and as well as in the business world. In other
word s are choose financial institution that offer widest range of financial services
especially credit saving and payment services, mobilizes the resources of finance. It
serves the public by providing hire purchase loan, housing loan, term loan and other
loan, it provides opportunities for the different sector of the business which are
essential in the economic development. The Nepalese financial sector are divided as
Development s, Commercial s, finance companies, co-operative societies, non
government organization insurance companies, Nepal stock exchange, citizen
investment trust, employees provident fund and postal saving service financial
institution.
Global IME Bank Ltd. (GIBL) emerged after successful merger of Global Bank Ltd
(an “A” class commercial bank), IME Financial Institution (a “C” class finance
company) and Lord Buddha Finance Ltd. (a “C” class finance company) in year 2012.
Two more development banks (Social Development Bank and Gulmi Bikas Bank)
merged with Global IME Bank Ltd in year 2013. Later, in the year 2014, Global IME
Bank made another merger with Commerz and Trust Bank Nepal Ltd. (an “A” class
Commercial bank).
Global Bank Limited (GBL) was established in 2007 as an ‘A’ class commercial bank
in Nepal which provided entire commercial banking services. The bank was
established with the largest capital base at the time with paid up capital of NPR 1.0
billion. The paid up capital of the bank has since been increased to NPR 6.16 billion.
The bank's shares are publicly traded as an 'A' category company in the Nepal Stock
Exchange.
It is in line with the aim of the bank to be “The Bank for All” by giving necessary
impetus to the economy through world class banking service.

For the day to day operations, the bank has been using the world renowned FINACLE
software that provides real time access to customer database across all branches and
corporate locations of the bank. This state of the art customer database has also been
linked to a Management Information System that provides easy reach to all possible
database information for balanced and informed decision making. A disaster recovery
system (DRS) of the Bank has also been established in the Western Region of Nepal
(200 kms west of Kathmand). The bank has been able to achieve excellent
diversification of its assets. A well balanced distribution of exposure in areas of
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national interest has been possible through long term forecasting and timely strategic
planning. The bank has diversified interests in hydro power, manufacturing, textiles,
services industry, aviation, exports, trading and microfinance projects, just to mention
afew.
The exemplary performance of the bank in these last eight years has elevated it to a
premier status in the industry. The bank has been handling government transactions
and is officially among one of the few commercial banks trusted by the Government
in handing Government revenue transactions of various offices. The bank has been
able to earn the trust and confidence of the public, which is reflect- ed in the large and
ever expanding customer base with more than 550,000 number of accounts in deposit
base and above 16,000 in credit. Through all this the bank has been able to truly
achieve its vision of being “The Bank for All”. Even with all this success, the bank
remains internally focused towards manpower development, product innovation and
process innovation etc, to have a strong and solid foundation, which are ongoing and
continuous improvement initiatives undertaken by the management and staff alike.

GIBL has been conferred with “The Bank of the Year Award 2014” for Nepal by
the Bankers Magazine (Publication of the Financial Times, UK) and “Best Internet
Bank 2016- Nepal” by International Finance Magazine, London.

1.3 Statement of the problem.

There are many problems that are bugging the Nepalese banking Industry. Some of
them are identified below.

 How to find the percentage change in different types of ratios?

 How to find out standard deviation and mean of cash and bank balance total
deposit?
 What is the relationship between cash balance and total deposit of Global IME
h Bank limited.
 What are the suggestions which will help to enhance the profitability of the
bank and give vision and discrimination to the bank?

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1.2 Literature Review:
A literature review is both summary and explanation of the complete and
current state of knowledge on ratio analysis found in academic books and journals
articles. Literature review refers to the documentation of the comprehensive review of
published works from secondary sources of information. Review of the literature is an
essential part of research –it is a way to discover what other research in the area of our
problem has uncovered. Thus, the task in the literature review is to learn as much as
one can from the efforts and work of others. This activity however cannot be
haphazard if it is to be efficient. Like most aspect of research it needs thought and
planning. So, the review of these ideas is important to know what kind of gap exists in
the literature.

Bhattarai R. (2014) has conducted study on "A Study on Ratio Analysis of Nepal
Investment Bank Limited" (Unpublished B.B.S. Report).

Adhikari, Sabita(2015) has conducted report on " A Study on Ratio Analysis

Machhapuchhre Bank Ltd " (Unpublished BBA Report, Pokhara Universtiy)

1.4 Objective the Study

The purpose of the study at Ratio Analysis of Global IME h Bank limited is
performed by descriptive and analytical research methodology. The study is focused
on ratio analysis which shows the overall performance of the bank. The main purpose
of the study is:

 To analyze the Assets quality of Global IME h Bank

 To assess the Assets composition.
 To analyze the loan loss Ratio
 To assess the Net Profit and Total Assets
 To analyze Net interest Margin
 To assess Return of Equity of Global IME h Bank.
 To analyze Earning Per Share.
 To identify the Capital Adequacy Ratio

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1.5 Significance of the Study:

This research work will be supplementary unit to measure the ratio analysis of
Siddhartha Bank limited. This research work will study the ratio in micro level. So
the required data and information concerns to its aspects can be acquired and studies
by its stakeholders, Publishers, School, colleges, Students etc. This study will be
helpful to everyone from every aspect. The businessmen, taxpayers, donor parties and
central government can be benefited. The findings and the conclusions drawn from
the study will be helpful for the officials to take corrective measures.

1.6 Research Methodology:

This study has intense relation with ratio regarding the objectives to analyze, examine
and interpret towards cooperative. The research methodology includes, research
design, data collection procedures and research variable and tools use. The following
step provides useful procedural guidelines so far as research methodology is
concerned.

1.6.1 Research Design:

A research design is a framework or plan for the activities to be undertaken during the
course of study. The study is concerned single unit thus will be followed the case
study research design. Under the case study research design, descriptive research
approach will be applied.

1.6.2 Population and Sample:

The objective of the study is to analyze the ratio of the Bank on its financial activities.
There are 206 different Bank in Kaski district. Out of them Global IME h Bank is
taken as sample. I would like to select this Bank because this organization is earning
high profit. The organization is the population for the research works. Convenience
sampling method will be used.

1.6.3 Nature and Sources of Data:

This research is mainly based on secondary sources. However, primary data will be
obtained as research requirement. The secondary data will be gathered from annual

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reports, published documents, meeting minute of the board and website. Moreover,
other necessary data and information can be collected from newspaper, related
publications and websites. Primary data are taken by interview and questionnaire
method. The following data collection procedures are used:

1.6.4 Data collection procedure

Data collection is the main part to complete these report. Without data a report cannot
be completed. Under data collection Pre-project work procedure, Project work
procedure and post -project procedure are applied to complete these report.

1.6.5 Data Analysis Tools

Various statistical tools are used for data presentation. The data was processed
tabulated and graphed to analyze achieve the objective of the study. Hence for the
analysis and evaluation of the report the following tools are used.
 loan loss Ratio
 Net Profit and Total Assets ratio
 Net interest Margin
 Return of Equity
 Earning Per Share.
 Capital Adequacy Ratio
 Dividend payout Ratio
 Debt equity ratio
 Table
 Bar diagram

1.7 Limitation of the Study:

This study particularly involves the ratio analysis of Global IME h Bank limited. It is
also trying to examine overall performance in terms of revenue collections, allocation,
customer satisfaction and utilization. So the limitations of the study are:
a. This study is only concentrated to ratio analysis which does not show the overall
performance of the Bank.
b. It does not focus on Income and Expenditure of Bank.

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c. This study is Just for academic propose.
d. This study based on Secondary data.
e. Time and cost constraints are also short to the area of the study.
f. This study analyzes the data of 5 years from fiscal year 2067/68 to 2071/72 B.S.
only.

1.8 Organization of the Study:

The whole study will be divided into five chapters, which includes:

Chapter I – Introduction

The first chapter deals with introduction. This includes Background of the study,
Statement of problems, Objectives of the Study, Limitations of the study,
Organization of the Study.

Chapter II – Review of Literature

The second chapter deals with the review of available literature. Which includes
'Literature Review' where include conceptual review, review of related studies and
research gap.

Chapter III – Research Methodology

Third chapter explains the research methodology used in the study, which includes
research design, resource of data, population and samples, methods and techniques of
data analysis.

Chapter IV – Data presentation and analysis

The fourth chapter, which is the important chapter of the study, will be including
Presentation and analysis of data using different mathematical and financial tools and
technique.

Chapter V – Discussion and Implementation

The fifth chapter summarizes the main conclusion that flows from the study and
offers suggestions for further improvement and conclusion of the study. A
bibliography and appendices will be attached at the end of the study.

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1.9 Work Schedule:

It requires certain time to complete any dissertation. Some preliminary works, data
collection, analysis, drafting and completion are the major works for thesis
completion. Allocation of time is managed in following manner for this dissertation.
S.N Activities Poush, Magh, Falgun, Chaitra
. 2073 2073 2073 2073

I Preliminary studies.
II Data collection.
III Data analysis and interpretation
IV Preparing the draft of the research.
V Completion of the final form of the
research & Submission.

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 REFERENCE

Karki, Bir Bahadur (2008). "Financial Performance Fewa Finance Company

Limited". Tribhuwan University.

Monzon, J. L. & Chaves, R. (2008) "The European Social Economy: Concept and
Dimensions of the Third Sector", Annals of Public and Cooperative
Economics, 79(3/4): 549-577
Pant, Prem Raj (1998). Field work Assignment and Report writting.
Kathmandu, Veera Academic Enterprise pvt.ltd.

Global IME Bank Limited, Annual Reports (2067/68-2072/73).

Williams, Jan R.(2008). Financial & Managerial Accounting. McGraw-Hill Irwin.