A STUDY ON RATIO ANALYSIS OF HDFC STANDARD

LIFE INSURANCE AT GANGAVATHI

CONTENTS

Chapter-I

Introduction
Statement of the Problems
Objectives of the Study
Scope of the Study
Research Design
Research & Methodology
Limitations of Study
Chapter-II

Industry Profile
Company Profile

Chapter-III
Theoretical Background

Chapter-IV

Data Analysis & Interpretation

Chapter—V

. .Findings
. .Suggestions
. .Conclusion
ANNEXURE

Bibliography

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CHAPTER-I
Introduction
Statement of the Problems
Objectives of the Study
Scope of the Study
Research Design
Research & Methodology
Limitations of Study

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INTRODUCTION
Financial analysis is the process of determining financial strengths and
weakness of the company by establishing strategic relationship between the
components of balance sheet and profit and loss statement and other operative
data.

Analysis of financial performance is the process of critically examining in detail

accounting and financial information given in the financial statements.

Analyzing Financial Statements is the process of evaluating relationship

between component parts of financial statements to obtain a better
understanding of firm’s position and performance.

For the purpose of analysis, individual items are studied, their

interrelationships with other related figures established, the data is sometimes
rearranged to have better understanding of the information with the help of
different techniques or tools for the purpose .

In the words of MYER” financial statements analysis is largely a study of

relationship among the various financial factors as shown in a series of
statements’.

The analysis of financial statements thus refers to the treatment of the

information contained in the financial statements in a way so to afford a full
diagnosis of the profitability and financial position of the firm concerned for
this purpose financial statements are classified methodically, analyses and
compared with the figures of previous years of other similar firms.

Financial analysis is thus an attempt to dissect the financial statements into

their components on the one hand and as between individual components and
totals of these items, on the other alongside this, a study o f trends of various

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important factors over the past several items, on the other alongside this ,a study
of trends of various important factor over the past several years is also
undertaken to have clear understanding of changing profitability and financial
condition of the Business organization.

Financial analysis is the use of financial statements to analyze a company’s

financial position and performance, and to assess future financial performance.
Financial analysis consists of three broad areas-profitability analysis, and risk
analysis, and analysis of sources and uses of funds.

A variety of tools designed to fit specific needs are available to help users
analyze financial statements.

STATEMENT OF PROBLEM
“A Study on Financial Performance With Reference To Ratio Analysis” – in
HDFC STANDARD LIFE INSURANCE ensures
 To find out the financial soundness.
 This had shown a growth with steady pace of increased profits in recent
years.
 This study on proper utilization of financial resources of the firm for last
3 years.
 What about the liquidity and solvency position of the HDFC
STANDARD LIFE INSURANCE so how increase the margins? All these
answers require in depth.
 An attempt has been made to analyze identify the areas where lapses have
occurred and to suggest necessary remedial measure to overcome the
lapses.

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OBJECTIVES OF THE STUDY

 The primary objective is to analyze the financial position of the firm with
reference to Ratio analysis for the past three years.

 To ensure the financial performance of the firm using the following

important ratios were liquidity, solvency, profitability and management
efficiency ratio.

 To study the present and future earning capacity or profitability of the

firm.

 To offer suggestion for the improvement of the firm

 The possibility of the developments in the future by making forecasts

and preparing budgets.

SCOPE OF STUDY

 The study is exclusively conducted for the HDFC STANDARD LIFE

INSURANCE for one financial year.

 The trend indicated may differ from year to year as the pattern of
investment, borrowings, and changes.

 The main purpose is to make the through study on the growth of the firm.

 The purpose is to assess the firm trend specifically for last three years.

 To examine the factor affecting the financial performance of the firm.

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RESEARCH DESIGN

Research design indicates a plan of action to be carried out in

connection with the proposed objective. It provides a guidance to enable to
keep track of action in order to achieve the goals.
It is the design that will help the process of making decisions in
anticipation of probable situation that may arise. Adding design to research will
help in achieving the objectives in a systematic manner.  
The research design helps to collect the information that will result in
decision making that is both valid and reliable. A symbolic construction that
would help information to be retained and also to understand the inter
relationships can be defined as research design.   The data regarding bank
history & profile are collected through “Exploratory Research Design”
particularly through the study of secondary sources and discussions with
individuals.

METHODOLOGY
Data and statistical tool

DATA COLLECTION

Data is defined as group of non-random symbols in the form of text,

image, or voice representing quantities, actions as objects

Data are mainly classified into two groups:

 Primary data

 Secondary data

Primary data

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 Discussion with the Senior Manager & officers of the branch to get
general information about the company.

 Having face to face discussions with the branch officials.

 By taking guidance from branch guide & departmental guide

Secondary data

Collection of data through branch annual reports, company manuals and

other relevant documents.

 Collection of data through the data provided by the company.

 The secondary data collected through internet, magazines etc.

 Website: http://www.HDFC STANDARD LIFE INSURANCE yd.com

Statistical tools

 Tables
 Graphs
 Charts

Software used for data analysis: 

 For the data analysis and the subsequent interpretation, the researcher has
adopted MS- Excel. This application software has facilitated the
researcher to construct the frequency table, various types of graphs. By
this automated data analysis it has minimized the researcher’s time
constraints and reduced human error and also accurate outlay of
information.  

LIMITATIONS OF THE STUDY

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 The study does not consider the impact of non-financial items on

financial performance. This variable includes
 Caliber, reputation and creativity of management
 Public relations
 Personnel management
 It is a general study of financial aspects and analysis of 3 years only.
 This being an academic study suffers from time and cost constraint.
 The study is limited to clients of the HDFC and the banker has looked
some important financial ratios.
 Statistical tools used for analysis of financial performance are limited.

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CHAPTER-II
Industry profile

INSURANCE:

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Insurance can be defined as assurance for uncertainty. Insurance is about

something going wrong. Its’ often about things going right; One of the
Wonders of human nature is that we never believe anything can actually go
wrong.

The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to liberalized market again.
Tracking the development in Indian insurance sector reveals the 360 degree
turn witnessed over a period of almost two centuries.

The business of life insurance in Indian in its existing form started in India in
the year 1818 with the establishment of Oriental Life Insurance Company in
KOLKATTA. Some of the important milestones in life insurance business in India
are.

1912: The Indian Life insurance Companies Act enacted as first statue to
regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government
to collect statistical information about life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the insurance Act

with the objective of protecting the interests of the insuring public.

1965: 245 Indian and foreign insurers and provident societies take over by the
central government and nationalized. LIC formed by an act of parliament viz.
LIC. Act. 1956, with a capital contribution of Rs. 5 Crore from the government
of India.

HISTORICAL PERSPECTIVE

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The history of life insurance in India dates back to 1818 when it was conceived
as a means to provide for English Widows. Interestingly in those days a higher
premium was charged for Indian lives than the non - Indian lives, as Indian lives
were considered more risky to cover. The Bombay Mutual Life Insurance
Society started its business in 1870. It was the first company to charge the
same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General

insurance business in India, on the other hand, can trace its roots to Triton
Insurance Company Limited, the first general insurance company established in
the year 1850 in Calcutta by the British. Till the end of the nineteenth century
insurance business was almost entirely in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life
Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several
frauds during the 1920's and 1930's sullied insurance business in India. By 1938
there were 176 insurance companies.

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

Reforms in the Insurance sector were initiated with the passes of the IRDA Bill
in Parliament in December 1999. The IRDA since its incorporation as a
statutory body in April 2000 has fastidiously such to its schedule of framing
regulations and registering the private sector insurance companies.

The other decision taken simultaneously to provide the supporting systems to

the insurance sector and in particular the life insurance companies was the
launch of the IRDA online service for issue and renewal of licenses to agents.

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Several Companies have entered into the Indian Insurance Market. The
following are the companies are:-

Insurance Companies in India

Bajaj Allianz Life AMP Sanmar Life Birla Sun Life

Insurance Insurance Insurance

Aviva Life HDFC Life Insurance ICICI

Insurance Prudential Life
Insurance
Max Newyork Life MetLife India Insurance Reliance Life
Insurance Insurance

Shiram Life Tata AIG Life Insurance SBI Life

Insurance Insurance
Bharti AXA Life ING Vysya Life Insurance Sahara Life
Insurance Insurance
Kotak Mahindra General Insurance Royal
Insurance Corporation India Sundaram
Insurance

COMPANY PROFILE
PROFILE OF THE HDFC STANDARD LIFE INSURANCE

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COMPANY LIMITED
ORIGIN OF THE COMPANY

HDFC Standard Life Insurance Company Ltd. is one of India's leading private
insurance companies, which offers a range of individual and group insurance
solutions. It is a joint venture between Housing Development Finance
Corporation Limited (HDFC Ltd.), India's leading housing finance institution
and a Group Company of the Standard Life, UK. HDFC as on December 31,
2012 holds 72.38 per cent of equity in the joint venture.

KEY STRENGTHS OF HDFC STANDARD LIFE INSURANCE

COMPANY LIMITED

The key strengths of the HDFC Standard Life insurance Company Limited are
as follows

A) FINANCIAL EXPERTISE

As a joint venture of leading financial services groups, HDFC Standard

Life has the financial expertise required to manage your long-term investments
safely and efficiently

a) RANGE OF SOLUTIONS

The company has a range of individual and group solutions, which can be
easily customized to specific needs. Our group solutions have been designed to
offer you complete flexibility combined with a low charging structure.

b) TRACK RECORDS

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The company’s gross premium income, for the year ending March 31, 2012
stood at Rs. 4,859 crores and new business premium income stood at Rs. 2,685
crores The company has covered over 9,59,000 lives year ending March 31,
2014

STANDARD LIFE IS EUROPE’S LARGEST MUTUAL

LIFE ASSURANCE COMPANY.

Standard Life, which has been in the life insurance business for the past
175 years, is a modern company surviving quite a few changes since selling its

first policy in 1825. The company expanded in the 19th century from its
original Edinburgh premises, opening offices in other towns and
acquiring other similar businesses. Standard Life currently has assets
exceeding over $119 billion under its management and has the
distinction of being accorded rating consequently for the past six
years by Standard and Poor.

HDFC standard life insurance is backed by HDFC, the reputed

housing financial institution operating since several decades and
Standard Life Assurance Company, one of the Europe’s largest mutual fund
company HDFC has 30000 crores of assets and Standard Life has $119
billion of assets so they can comfortably consider has safe as insurers.

HDFC and Standard Life first came together for a possible joint
venture, to enter the Life Insurance market, In January 1995.it was clear
from the outset that both company shared similar values and beliefs and a
strong relationship quickly formed. In October 1995 the company signed
a 3 year joint venture agreement. Around this time Standard Life
purchased a 5% stake in HDFC, Further strengthening the relationship.

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The next 3 years were filled with uncertainties, due to changes in

government and ongoing delay in getting the IRDA (Insurance Regulatory
and Development Authority) Act passed in parliament. Despite this both
companies remained firmly committed to the venture. In October 1998, the
joint venture agreement was renewed and additional resource made
available. Around this time Standard Life purchased 2% of Standard Life
agreed to Infrastructure development Finance Company Limited. (IDFC).Standard
Life Also started to use the services of the HDFC Treasury department to advice
them upon their investments in India.

Towards the end of 1999, the opening of the market looked very
promising and both companies agreed the time was right to move the
operation to the next level. Therefore in January 2000 an expert team
from the UK joined a handpicked team from HDFC to form the core
project team, based in Mumbai. Around this time Standard Life purchased
a further 5% stake in HDFC and 5% stake in HDFC Bank. In a further
development participate in the Asset Management Company promoted by
HDFC to enter the mutual fund market. The mutual fund was launched on

20th July 2000.

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INCORPORATION OF HDFC STANDARD LIFE INSURANCE

COMPANY LIMITED

HDFC Standard Life insurance company Limited was the first company to

Be Granted license by the IRDA to operate in Life insurance sector. Each

of the JV player is highly rated and been conferred with many awards. HDFC is
rated ‘AAA’ by both CRISIL and ICRA. Similarly Standard Life is rated.

both by Moody’s and Standard and Poor’s .these reflect the efficiency with
which HDFC and Standard Life manage their asset base of Rs .30000 Cr and
RS.600,000Cr respectively.

The company was incorporated on 14th August 2000 under the name of
HDFC Standard Life Insurance Company Limited. Our ambition as for back as
October 1995, was to be the first private company to re-enter the life insurance

market in India. On the 23rd of October 2000, this ambition was realized when
HDFC Standard Life was the only life company to be granted a certificate of
registration

HDFC are the main share holders in HDFC Standard Life, with
81.4%, while Standard Life owns 18.6%. Given Standard Life’s existing
investment in the HDFC group, this is the maximum investment
allowed under current regulation.

HDFC and Standard Life a long and close relationship built upon
shared values and trust. The ambition of HDFC Standard Life is to mirror the
success of the parent companies and be the yardstick by which all other
insurance Companies in India are measured.

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A POWERFUL BRAND – HDFC STANDARD LIFE INSURANCE

 It the first private life insurance company to be granted a license

by IRDA.
 It has been rated by Business world magazine as India’s Most
Respected Private Life Insurance Company in2004.
 IT is the one of the fastest growing Private life Insurer and today
has more than 8 lakh policy holder.
 They have one of the widest networks with more than 450
branches and servicing over 700 towns.
 HDFC Standard Life Insurance has one of the highest brand
recalls of around 86%. A high brand recall translates to higher
chances of customers buying insurance from them.

VISSION STATEMANT OF THE COMPANY

“The most successful and admired life Insurance company, which mean that we
are the most trusted company, the easiest to deal with, offer the Best value for
money, and set the standards in the industry. In short “The Most obvious choice
for all”

VALUES OF THE COMPANY

 INTEGRITY

 Honest and trustful in every action.

 Transparency.
 Stick to principles irrespective of outcome.
 Be just and fair to everyone.

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 INNOVATION
 Building a store house of treasures through experiences.
 Looking at every product and process through fresh eyes every
day.
 Achieve competitive advantage.
 Open a world of new possibilities.
 CUSTOMER CENTRIC
 Genuinely understanding the people we work with.
 Understand his expectations by keeping him as the centre –
point.
 Listen actively.
 Understand customer need and deliver solution.
 PEOPLE CARE
 Know them on a personal front.
 Respect for the time of others.
 Genuinely understanding the people we work with.
 TEAM WORK “one for all and all for one”
 Whole team takes the ownership of the deliverables.
 Consult all involved, understand and arrive at a common
objective.
 Cooperate and support across departmental boundaries.
Protection Plans
 HDFC Term Assurance Plan
 HDFC Loan Cover Term Assurance Plan

 HDFC Home Loan Protection Plan

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Children's Plans
 HDFC Children's Plan
 HDFC Unit Linked Young Star II

 HDFC Unit Linked Young Star Plus II

 HDFC Unit Linked Young Star Champion

Retirement Plans
 HDFC Personal Pension Plan

 HDFC Unit Linked Pension II

 HDFC Unit Linked Pension Maximiser II

 HDFC Immediate Annuity

Savings & Investment Plans

 HDFC Unit Linked Endowment Plus II
 HDFC SimpliLife

 HDFC Unit Linked Endowment II

 HDFC Unit Linked Enhanced Life Protection II

 HDFC Unit Linked Wealth Maximiser Plus

 HDFC Unit Linked Endowment Winner

 HDFC Endowment Assurance Plan

 HDFC Money Back Plan

 HDFC Single Premium Whole of Life Insurance Plan

 HDFC Savings Assurance Plan

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Health Plans
 HDFC Critical Care Plan
 HDFC SurgiCare Plan

Group Plans
 Group Term Insurance Plan
 Group Variable Term Insurance Plan

 Group Unit Linked Plan - Gratuity

 Group Unit Linked Plan - Superannuation

 Group Unit Linked Plan - Leave Encashment

Individual Products

Each of us leads a unique life and so has unique needs. HDFC Standard
Life offers a range of products and invites you to choose the one that suits you
best.

With Profits Endowment Assurance:

This policy provides a combination of saving and life insurance. The sum
assured plus any bonuses will be payable at the end of the term or on death if
earlier. The customer commitment is to pay a level premium regularly
throughout the life of the policy. The Endowment Assurance can be customized
to meet your needs by adding any combination of up to_4 rider benefits

Term Assurance Plan:

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Under the Term Assurance plan, a sum assured is payable in case of death
of the life assured during the term of the contract. One can choose the lump sum
that would replace the income lost to one's family in the unfortunate event of
one's death. The Term Assurance Plan comes to you at a minimal cost and is
well suited for the value-conscious customer. The Term Assurance Plan can
also be customized to suit your needs by adding optional rider benefits

Loan Cover Term Assurance:

The Loan Cover Term Assurance plan provides a lump sum on death of
the life assured during the term of the plan. The lump sum will be a decreasing
percentage of the initial sum assured. It is an affordable plan that has been
designed to help your family repay the outstanding loan in case of your
unfortunate death on this product.

Personal Pension Plan

The Personal Pension Plan is basically a savings contract, which is

designed to provide an income for life from retirement, with an option to take
the lump sum elsewhere to buy the annuity, provided it is permitted by the
prevailing regulations. Your commitment is to pay a single premium or level
premiums with installments due every quarter, half-year or year throughout the
deferment period of the policy, after which you will start receiving your
pension.

Children's Plan

The future of your child is most important to you. You need to plan today
to ensure a bright future for your child, whether it is education, marriage or
establishing a professional career. To help you save for your child, we at HDFC
Standard Life present the plan is affordable, customized to your needs, and

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above all, enables you to realize your dreams for your child. This plan is well
suited for the value-conscious customer, and above all, for every loving parent.
Grandparents, other relatives or any adult for the benefit of a child can also
choose the plan.

CHAPTER-III
Theoretical Background

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FINANCIAL MANAGEMENT
Financial management is a managerial activity, which is concerned with
the anticipation of financial needs, acquiring financial resources, allocating
funds in business, administrating the allocation of funds and accounting and
reporting to the management over the financial matters.
OBJECTIVES

The Firm’s investment and financing decisions are unavoidable and

continuous. In order to make them rational, the firm must have certain goals.
The main objectives of financial management are.

1. Profit maximization as a social obligation.

2. To ensure wealth maximization.
3. To have a balance asset structure, that is proper balance between fixed
assets and current assets.
4. To maintain liquidity to meet the upcoming obligation.
5. To ensure fair returns to share holders.

FINANCIAL ANALYSIS

The term analysis means methodical classification of the data given in

the financial statements; financial analysis involves the division of facts on the
basis of some definite plans, classifying them into definite classes on the basis
of certain conditions and presenting them in most convenient simple and
understandable form.

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Financial analysis is the process of determining the significant operation and

financial characteristics of a firm from accounting data and financial
statements. Financial analysis is an examination of the organizations financial
statements and the various ratios derived from information on its balance
sheet and income statement. It is the process of determining financial strengths
and weakness of the company by establishing strategic relationship between the
components of balance sheet and profit and loss statement and other operative
data.

For the purpose of analysis, individual items are studied, their

interrelationships with other related figures established, the data is sometimes
rearranged to have better understanding of the information with the help of
different techniques or tools for the purpose.
In the words of MYER” financial statements analysis is largely a study of
relationship among the various financial factors as shown in a series of
statements’.

The analysis of financial statements thus refers to the treatment of the

information contained in the financial statements in a way so to afford a full
diagnosis of the profitability and financial position of the firm concerned for
this purpose financial statements are classified methodically, analyzed and
compared with the figures of previous years of other similar firms.
It makes an attempt to dissect the financial statements into their
components on the one hand and as between individual components and totals
of these items, on the other alongside this, a study o f trends of various
important factors over the past several items, on the other alongside this ,a study
of trends of various important factor over the past several years is also
undertaken to have clear understanding of changing profitability and financial
condition of the Business organization.

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The term interpretation means explaining the meaning and significance of

the data so simplified financial statements are indicators of the 2 significant
factors.

FINANCIAL PERFORMANCE

Financial performance analysis as the name suggests, is the evaluation

procedure of the performance of the HDFC STANDARD LIFE INSURANCE .
The evaluation is based on financial data provided by HDFC STANDARD
LIFE INSURANCE and the data in the financial statements is used for the
financial performance analysis. Financial performance analysis is the process of
evaluating the relationship between component parts of financial statement to
obtain a better understanding of the insurance company’s position and
performance. The financial statements extremely useful information to the
extent the balance sheet mirrors the financial position on a particular date in
terms of the structure of assets, liabilities and owners equity, etc and the profit
and loss account shows the results of operations during a certain period of time
in terms of the revenues obtained and the costs incurred during the year.
 The first task in the financial analysis is to select the information relevant
to the decision under consideration from the total information contained
in the financial statements.
 The second step involved in this is to arrange the information in a way to
establish the relationship.

 The final step is interpretation and drawing of inferences and conclusions.

In short it is the process of selection, relation and evaluation.

The financial performance analysis can be done using various tools.

Financial ratio analysis is an important tool among the same. The other tools
include the comparative analysis (i.e., inter- firm comparison). Time series

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analysis of ratios, common size statement analysis, indexed statement analysis,

trend analysis, fund flow statement, and cash flow statement etc... But here I’m
used the financial tool can be done through by Ratio analysis.

RATIO ANALYSIS

Ratios are highly important profit tools in financial analysis that help
financial analysts implement plans that improve profitability, liquidity, financial
Structure, leverage, and interest coverage. Although ratios report mostly on past
performances, they can be predictive too, and provide lead indications of
potential problem areas.

Ratio analysis isn't just comparing different numbers from the balance
sheet, income Statement and cash flow statement. It's comparing the number
against previous years, other companies, the industry, or even the economy in
general. Ratios look at the relationships between individual values and related to
them to how a company has performed in the past, and might perform in the
future.

MEANING OF RATIO
A ratio is one figure express in terms of another figure. It is mathematical
yardstick that measures the relationship two figures, which are related to each
other and mutually interdependent. Ratio is express by dividing one figure by
the other related figure. Thus a ratio is an expression relating one number to
another. It is simply the quotient of two numbers. It can be expressed as a
fraction or as a decimal or as a pure ratio or in absolute figures as “so as many
times”. As accounting ratio is an expression relating two figures or accounts or
two sets of account heads or group contain in the financial statements.

MEANING OF RATIO ANALYSIS

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Ratio analysis is the method or process by which the relationship of items

or group of items in the financial statement are computed, determined and
presented.

Ratio analysis is an attempt to derive quantitative measure or guides

concerning the financial health and profitability of business enterprises. Ratio
analysis can be used both in trend and static analysis. There are several ratios at
the disposal of an analyst but their group of ratio he would prefer depends on
the purpose and the objective of analysis.

While a detailed explanation of ratio analysis is beyond the scope of this

section, we will focus on a technique, which is easy to use. It can provide you
with a valuable investment analysis tool.

This technique is called cross-sectional analysis. Cross-sectional

analysis compares financial ratios of several companies from the same industry.
Ratio analysis can provide valuable information about a company's financial
health. A financial ratio measures a company's performance in a specific area.
For example, you could use a ratio of a company's debt to its equity to measure
a company's leverage. By comparing the leverage ratios of two companies, you
can determine which company uses greater debt in the conduct of its business.
A company whose leverage ratio is higher than a competitor's has more debt per
equity. You can use this information to make a judgment as to which company
is a better investment risk. However, you must be careful not to place too much
importance on one ratio. You obtain a better indication of the direction in which
a company is moving when several ratios are taken as a group.

PURPOSE OF THE RATIO ANALYSIS

 To study the short term solvency of the firm- liquidity of the firm.

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 To study of the long term solvency of the firm-leverage position of the

firm.

 To interpret the profitability of the firm-profit earning capacity of the

firm.

 To identify the operating efficiency of the firm- turnover of the ratios.

A more meaningful financial analysis involves ratios and their comparison

relating to a business concern.

a) Over a period of years.

b) Against another unit.

c) Against the industry as a whole.

d) Against the pre determined standards.

e) For one department or division of the same unit.

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. However, ratio analysis is not an end in
itself. It is only a means of better understanding of financial strengths and
weakness of a firm.

Calculation of mere ratios does not serve any purpose, unless several
appropriate ratios are analyzed and interpreted. There are a number of ratios,
which can be calculated and interpreted. There are a number of ratios, which
can be calculated from the information given in the financial statements, but

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the Banker has to select the appropriate data and calculate only a few
appropriate ratios from the same keeping in mind the objective of analysis.

Accounting ratio may indicate not only that financial positioning

precarious but also the past policies or actions which have caused it.

ROLE OF RATIO ANALYSIS

It is true that the technique of ratio analysis is not a creative technique in

the sense that it uses the same figure & information, which is already appearing
in the financial statement. At the same time, it is true that what can be achieved
by the technique of ratio analysis cannot be achieved by the mere preparation of
financial statement.

Ratio analysis helps to appraise the firm in terms of their profitability &
efficiency of Performance, either individually or in relation to those of other
firms in the same industry. The process of this appraisal is not complete until
the ratio so computed can be compared

With something, as the ratio all by them do not mean anything. This comparison
may be in the form of intra firm comparison, inter firm comparison or
comparison with standard ratios. Thus proper comparison of ratios may reveal
where a firm is placed as compared with earlier period or in comparison with
the other firms in the same industry.

Ratio analysis is one of the best possible techniques available to the

management to impart the basic functions like planning & control. As the future
is closely related to the immediate past ratio calculated on the basis of historical
financial statements may be of good assistance to predict the future. Ratio
analysis also helps to locate & point out the various areas, which need the
management attention in order to improve the situation.

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As the ratio analysis is concerned with all the aspect of a firms financial
analysis i.e. liquidity, solvency, activity, profitability & overall performance, it
enables the interested persons to know the financial & operational
characteristics of an organization & take the suitable decision.

STEPS INVOLVED IN RATIO ANALYSIS

1. Selection of relevant data from the financial statements depending upon

the objective of the analysis.

2. Calculating of appropriate ratios from the above data.

3. Comparison of calculated ratios with the ratios of the same firm in the
past or the ratios developed from projected financial statements the ratios
of some other firms of the comparison with the ratios of the industry to
which the firm belong.

4. Interpretation of the ratio.

UTILITY OF THE RATIO ANALYSIS

 Easy to understand the financial position of the firm.

 Measure of expressing the financial performance and position.

 Intra firm analysis of the financial information over many numbers of

years.

 Inter firm analysis on the financial information within the industry.

 Possibility for financial planning and control.

LIMITATIONS OF THE RATIO ANALYSIS

 It is a dependant tool of analysis.

 Ambiguity in the handling of terms

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 Qualitative factor is not considered.

 Not ideal for the future forecast.
 Time value of money is not considered.
 False results if based on incorrect accounting data.
 No idea of probable happenings In future.

FINANCIAL STATEMENT ANALYSIS

Financial statements contain large numbers of accounting data and
figures. But the accounting or financial figures, as found in the financial
statements (i.e.) the absolute financial figures, are not more than a group of
accounting figures. They do not convey anything by themselves to a layman.
However, they may tell a vivid (i.e. clear) story of the financial adventure of
firm, if they are analyzed and interpreted. Through analysis and interpretation,
the financial statements can be made to tell the story of actual progress and the
financial position of the firm in clear and simple language, which can be easily
understood by a layman.

A firm communicates financial information to the users through financial

statements reports. Financial statements are the organized collection of financial
data, undertake according to logical and consistent accounting procedures for
the purpose of presenting a periodical review or report on the financial aspects
of business firm, such as operating results and financial position of a firm at a
particular period of time.

DEFINITION

According to Kennedy and Muller- defines financial statement analysis as

“The analysis and interpretation of financial statements are an attempt to

determine the significance and meaning of financial statement data so that the

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forecast may be made of the prospects for future earnings, ability to pay interest
and debt maturities and profitability and sound dividend policy.”

OBJECTIVES
 Basic objectives are to assist in decision making.
 To provide reliable information about economic resources, and
obligations of a firm.
 To provide financial information that assist in estimating the earning
potential of the enterprise.

Financial Statements, their uses and significance

The two financial statements viz. the Balance Sheet and the Profit and
Loss Account aid the understanding of a firm’s financial performance.

Balance Sheet

The Balance Sheet shows the financial condition of a business at a given

point of time, in terms of assets and liabilities. Assets are classified into the
following categories: fixed assets, investments, current assets, loans and
advances and miscellaneous expenditures and losses. Liabilities are classified as
follows: share capital, reserves and surplus, secured loans, unsecured loans,
current liabilities and provisions. As per the Companies Act, the Balance Sheet
of a company shall be in either the horizontal form or the vertical form.

Profit and Loss Account

The Profit and Loss Account technically is an adjunct to the balance

sheet because it provides details relating to net profit, which represents the

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change in owners’ equity. Yet, in practice it is often considered to be more

important than the Balance Sheet because the details

Of revenues and expenses provided in the Profit and Loss Account shed
considerable light on the performance of the business. There is no prescribed

Standard format to make this account. However, the Companies Act does
require that the information provided should be adequate to reflect a true and a
fair picture of the operations of the company for the accounting period. The
important items in the profit and Loss Account are: net sales, cost of goods sold,
gross profit, operating expenses, operating profit, non-operating surplus/ deficit,
profit before interest and tax, interest, profit before tax, tax, and profit after tax.

Thus the Balance Sheet shows the financial position or condition of a

firm at a given point of time. It provides a snapshot and may be regarded as a
static picture. The income statement referred to in India or Profit and Loss
Account reflects the performance of a firm over a period of time.

STEPS INVOLVED IN THE ANALYSIS OF FINANCIAL

STATEMENTS
From a study of the meaning of analysis of the financial statements, it is
clear that the work of analysis of financial statement involves three steps or
processes they are:

 Analysis
 Comparison
 Interpretation

ANALYSIS

The data shown in the financial statements are either the balances of
individual accounts or groups of balances of many accounts. As a result, they
lack homogenizing and uniformity. They are not of much help to an analyst,

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who requires homogenize and comparable data (i.e. inter connected data) for
judging the profitability and the financial position of a concern. So, to obtain the
desired homogeneous and comparable data (i.e., the inter-connected data) the
figures founding the financial statements have to be analyzed.

COMPARISON

Mere splitting up or regrouping of the figures found in the financial

statements into the desired component parts is not sufficient for judging the
profitability and the financial status of an enterprise. After the figures contained
in the financial statements are dissected or split into the required comparable
compound parts, the comparable component parts (i.e., the inter-connected
figures) must be compared with each other, and their relative magnitudes (i.e.,
their relationship must be measured).

INTERPRETATION

After the financial statements are analyzed or dissected into comparable

component parts and the relative magnitudes of the comparable components
parts (i.e., the relationship of the inter-connected component parts) is measured
through comparison, the results (i.e., the relationship between the inter-
connected components parts) must be interpreted.

VARIOUS ACCOUNTING RATIOS

Accounting ratios can also be classified into liquidity ratios, leverage
ratios, activity ratios, profitability ratios & turnover ratios.

1] Liquidity ratios:

It shows the relationship between the current assets & current liabilities
of the concern e.g. liquid ratios & current ratios.

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2] Leverage ratios:

It shows the relationship between proprietor’s funds & debts used in

financing the assets of the concern e.g. capital gearing ratios, debt equity ratios,
&Proprietary ratios.

3] Activity ratios:

It shows relationship between the sales & the assets. It is also known as
Turnover ratios & productivity ratios e.g. stock turnover ratios, debtor’s
turnover ratios.

4] Profitability ratios:

a) It shows the relationship between profits & sales e.g. operating ratios,
gross profit ratios, operating net profit ratios, expenses ratios.

b) It shows the relationship between profit & investment e.g. returns on

investment, return on equity capital.

5] Coverage ratios:

It shows the relationship between the profit on the one hand & the claims
of the outsiders to be paid out of such profit e.g. dividend payout ratios & debt
service ratio.

LIQUIDITY RATIO

Liquidity refers to the ability of a firm to meet its short-term (usually up

to 1 year) obligations. The ratios, which indicate the liquidity of a company, are
Current ratio, Quick/Acid-Test ratio, and Cash ratio. These ratios are discussed
below

A. Current Ratio

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It’s one of the important accounting ratios for the finding out the ability of
the business fleeces to meet the short-term financial commitments. This ratio
establishes the relationship between the current assets and current liabilities.

For the calculation of this ratio current assets will include cash, bank
balance, short term investment, bills receivable, trade debtors, short term loans
and advances, inventories and pre-paid payment sand current liabilities will
include bank overdraft, bills payable, trade creditors, provision for taxation,
proposed dividends, unclaimed dividends, advance payments and unexpired
discounts, accrued interest on loans and debentures outstanding expenses and
the portion of long term debt to mature within one year.

B. Quick asset ratio (Acid Test Ratio)

It’s a ratio that expresses the relationship between the quick assets and
current liabilities. Liquid assets are those assets which are readily converted in
to cash and will include cash balances, bills receivable, sundry debtors and
short-term, investments. Inventories and prepaid expenses are not included in
liquid assets because the emphasis in on the ready availability of cash in case of
liquid assets.

Liquid liabilities include all items of current liabilities except bank

overdraft. This ratio is the ‘acid test’ of a concern’s financial soundness. It is
calculated as under:

LEVERAGE RATIO

Leverage ratios are ratios which are used to judge the long-term
financial position of the firms. Financial leverage or capital structure ratios are
calculated. These ratios indicate mix of funds provided by owners and lenders.

a. Debt Equity ratio

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This ratio b/w long term loans and share holders’ funds, Share holders
funds consist of preference share capital, equity share capital, profit & Loss A/c,
capital reserves, revenue reserve and reserves representing marked surplus, like
reserves for contingencies, etc,, less fictitious assets. Whether a given debt to
equity ratio shows a favorable or unfavorable financial position of the concern
depends on the industry and the pattern of earning.

Lower ratio more comfortable is the position of the creditors because it

means that they can be called upon to suffer losses only if the losses are
exceptionally heavy.

The ratio illustrates the relationship between the owner’s contribution and
the total volume of assets or how much funds are contributed by the owners in
financing the assets of the firm. The greater ratio means that greater is the
contribution made by the owners in financing the assets.

C. Fixed assets ratio

This ratio established the relationship between the fixed assets and long
term source of funds. Whatever the source of long-term funds raised, they
should be used for the acquisition of long term assets.

PROFITABILITY RATIO

Profits enable of firm to improve its financial strength therefore ratio’s

based on profitability are termed “causal” ratio indicating the cause of the
present of repeated financial position.

The ratios are measuring the profitability of the firms in various angles viz:

 On sales

 On investments

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 On capital employed and so on

The profits are normally classified into various categories:

1. Gross profit Ratio

The ratio elucidated the relationship between the gross profit and sales
volume. It facilitates t study the profit earning capacity of the firm out of the
manufacturing or trading operations.

The ratio expresses the relationship between the net profit and sales
volume; it helps to portray the overall operating efficiency of the firm. The net
profit ratio is an indicator of overall earning capacity of the firm in term of
return out of sales volume.

This ratio explains per rupee profit generating capacity of sales. if the
cost of sales is lower, then the net profit will be higher and then we divide it
with the net sales, the result is the efficiency. If lower is the net profit per rupee
of sales, lower will be the sales efficiency. The net profit ratio is calculated as
follows.

2. Operating Ratio

The operating ratio establishes the relationship between the cost of goods
sold and operating expenses with the sales volume.

4. Return on Assets

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This ratio portrays the relationship between the earning and total assets
employed in the business enterprise. The effective utilization of the assets of the
firm through the determining of return on total assets employed.

5. Return on capital employed

Capital employed refers to the long-term funds invested by the creditors

and the owners of a firm. It is the sum of long-term liabilities and owner's
equity. ROCE indicates the efficiency with which the long-term funds of a firm
are utilized.

Earning power is a measure of business performance which is not

affected by interest charges and tax burden. It abstracts away the effect of
capital structure and tax factor and focuses on operating performance. Hence it
is eminently suited for inter- firm comparison.

Further, it is internally consistent. The numerator represents a measure of pretax

earnings belonging to all sources of finance and the denominator represents
total financing.

6. Return on equity

A measure of great interest to equity shareholders, the return on equity

(ROE) is defined as

The return on equity measures the profitability of equity funds invested in the
firm. Because maximizing the shareholders wealth is the dominant financial
objective, ROE is the most important measure of performance in an accounting
sense. It is influenced by several factors, earning power, debt equity ratio and
tax rate.

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COVERAGE RATIO

It shows the relationship between the profit on the one hand & the claims
of the outsiders to be paid out of such profit.

I. Earnings per share

Earnings per Share are calculated to find out overall profitability of the
organization. Earnings per Share represent earning of the company. Whether or
not dividends are declared. If there is only one class of shares, the earning per
share are determined by dividing net profit by the number of equity shares.EPS
measures the profits available to the equity shareholders on each share held

The higher EPS will attract more investors to acquire shares in the
company as it indicates that the business is more profitable enough to pay the
dividends in time. But remember not all profit earned is going to be distributed
as dividends the company also retains some profits for the business.

II. Dividend per share

DPS shows how much is paid as dividend to the shareholders on each

share held.

III. Dividend payout ratio

Dividend Pay-out Ratio shows the relationship between the dividends

paid to equity shareholders out of the profit available to the equity shareholders.

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CHAPTER-IV
Data analysis and interpretation

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1. Current ratio:

Current assets
Current ratio =
Current liabilities

Table No-1: The table showing calculation of current ratio

(Rs in cr)

Particulars 2015-16 2016-17 2017-18

Current assets 7781.67 9490.5 11792.24

Current 5008.82 8817.2 11064.66

liabilities

Current ratio 1.35 1.07 1.07

Standard Norm of the Current Ratio:

The ideal norm is 2:1 i.e. current assets should be twice of the current
liabilities.

Graph No -1:
The graph showing
position of
current Ratio

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2015/16 2016/17 2017/18

Interpretation of current ratio:

An increase in the current ratio represents improvement in the liquidity

position of the firm, while a decrease in the current ratio indicates that there
has been deterioration in the liquidity position of the firm.

The CR of HDFC STANDARD LIFE INSURANCE is 1.35, 1.07, &1.07

times in the financial year ending 2016/17, 2015/16 and 2017/18 respectively.
The CR has been decreased in the financial year ending 2015/16, 2016/17
compare to the financial year ending 2017/18.

However it is not good indicator to the bank and it is considered to be

quite cruel. So bank has to improve the CR to meet the standard frequency. The
average ratio of the three financial years is 1.16. This has not met the ideal
norm. Bank has to increase the current assets or either by decrease the current
liabilities otherwise it may create problems in meeting the current liabilities and
face the financial crises with reference to working capital.

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2. Quick assets ratio (acid test ratio)

Quick Assets
QAR =
Current liabilities

Liquid asset = current assets-(closing stock + Prepaid Expenses)

Table No -2: The table showing calculation of quick ratio

(Rs in cr)

Particulars 2015-16 2016-17 2017-18

Quick assets 4563.05 6313.81 6956.21

Current 5008.82 8817.25 11064.66
liabilities
Quick asset ratio 0.91 0.71 0.62

Standard Norm of the ratio:

The ideal norm is 1:1; which means that one rupee of current liabilities is
matched with one rupee of quick assets
.

Graph No-2: The graph showing position of quick ratio

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2015/16 2016/17 2017/18

3. Debt equity ratio: DER = Debt

Equity
Table No- 3: The table showing calculation of debt equity ratio

(Rs in cr)

Particulars 2015-16 2016-17 2017-18

Debt 393.43 948.57 2364.47

Equity 2540.84 2694.15 3208.33

Debt Equity 0.15 0.35 0.74

Ratio

Standard Norm of the ratio:

The ideal norm is 1:2 which means that every one rupee of debt finance is
covered by two rupees of shareholders’ fund.

Graph No- 3: The graph showing position of debt equity ratio

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2015/16 2016/17 2017/18

Interpretation of Debt Equity Ratio:

If debt equity ratio is high, the owners are putting up relatively less
money of their own. It is a danger signal for the creditors. If the project should
fail financially, the creditors would lose heavily. The greater the ratio the
greater the risk to the creditors.

The D/E ratio of HDFC STANDARD LIFE INSURANCE during the

financial year ending 2014/15, 2015/16, & 2016/17 is 0.15, 0.35, & 0.74
respectively. The ratio has been increased year by year. In the financial year
ending 2016/17 is 0.74 it is greater, compare to the financial year ending
2015/16 & 2017/18.

The ideal norm of debt equity ratio is 1:2. The ratios are low compare to
the standard frequency. In the financial year ending 2018 it has tried to reach
but still very far to reach the standard norm. It has not met the standard norm in
any of the three financial years but it has increased the ratio year by year. The
average ratio is 0.41. It shows that it is not satisfactory as it is below the
standard. So bank has to improve the D/E ratio to reach the ideal norm.

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4. Proprietary Ratio:

Share holders fund

Proprietary Ratio =
Total Asset

Table No-4: The table showing calculation of Proprietary ratio

(Rs in cr)

Particulars 2015-16 2016-17 2017-18

Owners funds 2540.84 2694.15 3208.33

Total asset 49052.33 61619.72 76721.89

Proprietary ratio 0.05 0.04 0.04

Standard norm of the ratio:

The idle norm is 0.50:1 is good.

Graph No- 4: The graph showing position of proprietary ratio

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2015/16 2016/17 2017/18

Interpretation of Proprietary ratio:

This ratio expresses the relation between the net worth and total assets.
The ideal ratio 0.50:1 is considered as good. Higher the proprietary ratio
stronger is the position of the concern.

The HDFC STANDARD LIFE INSURANCE proprietary ratio is 0.05,

0.04 & 0.04 in the financial year ending 2015/16, 2016/17 & 2016/17
respectively. This ratio has been decreased in the financial year ending 2013/14,
2017/18 compare to the financial year ending 2015/16. It indicates that the ratio
is not satisfactory level. The average ratio is 0.04 is below the standard. So bank
has to take effective measures to increase the ratio & to reach the standard
norm.

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5.Fixed Assets to net worth ratio:

Net fixed assets

Fixed Assets to net worth ratio = X 100

Share holders fund

Table -5: The table showing calculation of fixed assets to net worth ratio

(Rs in cr)

Particular 2015-16 2016-17 2017-18

Net Fixed Asset 242.23 253.32 268.82

Net worth 2540.84 2694.15 3208.33

Fixed Asset to net 9.53 9.40 8.38

worth ratio

Graph No- 5: The graph showing position of fixed assets to net worth.

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2015/16 2016/17 2017/18

Interpretation of fixed assets to net worth ratio:

Ideal ratio is 2/3 or 67%. That the fixed assets should not constitute more
than 2/3 or 67% of the proprietor’s fund. It indicates that the proprietors fund is
mostly sunk in the fixed assets out of the current assets are mostly financial out
of loaned funds. This indicates financial weakness of the concern and greater
risks for the creditors. The HDFC STANDARD LIFE INSURANCE fixed
assets to net worth is 9.53, 9.40, and 8.38 in the financial year ending 2015/16,
2016/17 and 2016/17 respectively. From the above table the ratio is decreased
year by year. It is indicating that the fund utilized in a perfect way. The banks
funds are invested in improving the assets. So the bank is in a smooth way.

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Table -6: The table showing calculation of solvency ratio

(Rs in cr)

Particular 2015-16 2016-17 2017-18

Total assets 49052.32 61619.72 76721.90

Total liabilities 46511.49 58925.57 73513.57

Solvency Ratio 1.05 1.04 1.04

Graph No- 6: The graph showing position of solvency ratio

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2015/16 2016/17 2017/18

Interpretation of solvency ratio:

There is no ideal norm for the solvency ratio. Higher the solvency ratio of
the concern the stronger is the financial position.

From the above table total assets of the bank are more than the total
liabilities. It indicates that bank has good financial position.

The HDFC STANDARD LIFE INSURANCE solvency ratio is 1.05, 1.04

& 1.04 in the financial year ending 2015/16, 2016/17 & 2017/18 respectively.
The ratio has decreased in the financial year ending 2015/16, 2016/17 compare
to the financial year ending 2017/18. So bank has to increase the ratio through
improvement in the total assets.

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7. Return on Assets:
Profit after tax
Return on Assets = X 100

Ave assets
Table No: 7 the table showing calculation of Return on Assets ratio
(Rs in cr)
Particulars
2015-16 2016-17 2017-18

Profit after tax 505.50 556.99 615.85

Average assets 501.85 556.95 680.82

Return on assets 1.15 1.00 0.90

Standard norm of the ratio:

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The higher ratio illustrates that the firm has greater effectiveness in the
utilization of assets, means greater profits reaped by the total assets and vice
versa.

Graph No- 7: The graph showing position of return on assets

2015/16 2016/17 2017/18

Int erpr
etation of Return on Asset:

Return on assets is an old measure because its numerator measures the

return to shareholders whereas its denominator represents the contribution of all
investors.

The HDFC STANDARD LIFE INSURANCE return on assets ratio for

the financial year ending 2015/16, 2016/17 & 2017/18 is 1.15, 1.00. & 0.90
respectively. The percentage of return has been decreased year by year. The
percentage of return in the financial year ending 2014/15 is greater than the
2015/16, 2016/17. The average percentage of return for the three financial years
is 1.02. So bank has to improve the ratio either by increasing the net profit
through effective utilization of assets.

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8. Return on equity: ROE= NAPT

Net worth

Table No: 8 The table showing calculation of Return on equity

(Rs in cr)

Particulars
2015-16 2016-17 2017-18

NPAT 505.55 556.99 615.81

Average equity 2540.84 2694.15 3208.33

Return on Equity 22.23 22.59 23.03

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Graph No- 8: The graph showing position of return on equity

2015/16 2016/17 2017/18

Interpretation of Return on equity

The return on equity measures the profitability of equity funds invested in

the firm. Because maximizing shareholder wealth is the dominant financial
objective, ROE is the dominant measure of performance in an accounting sense.
The HDFC STANDARD LIFE INSURANCE percentage of return on
equity is 22.23, 22.59 and 23.03 in the financial year ending 2015/16, 2016/17
and 2017/18 respectively. The return on equity has increased year by year.
Which are in a improving trend for three years. It shows that the bank is having
good profitability position with respect to shareholders fund. The average return
for the three financial years is 22.62. So bank a good return on the equity
capital.

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In the financial year 2016/17 net profit to net worth is more compared to
other years and it speaks banks better performance. Whereas the ratio has
increased year by year this brings confidence in the minds of the shareholders
because of high rate of return.

9. Dividend payout ratio: DPS= Dividend per share

Earnings per share

Table No: 9 the table showing calculation of dividend payout ratio

(Rs in cr)

Particulars
2015-16 2016-17 2017-18

DPS 400 480 480

EPS 2930.41 3228.92 3569.91

Dividend payout 0.13 0.14 0.13

Ratio

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Graph No- 9: The graph showing position of Dividend payout ratio

2015/16 2016/17 2017/18

Interpretation of dividend payout ratio:

Dividend payout ratio shows the percentage share of net profit after tax
and preference dividend has been paid to the equity shareholders.

The HDFC STANDARD LIFE INSURANCE dividend payout ratio is

0.13, 0.14 & 0.13 in the financial year ending 2015/16, 2016/17 & 2017/18
respectively. This ratio has increased in the financial year ending 2013/14
compare to the financial year ending 2015/16 then it is decreased in the in the
financial year ending 2017/18 compare to the financial year ending 2016/17.
Because of the dividend has declared Rs 480 in the financial year ending
2017/18 There is fluctuation in dividend payout ratio. So bank has to increase

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the earning per share it helps to declare high rate of dividend. However it
improves the dividend payout ratio.

10.Earning power: EP= EBIT

Ave assets
Table No: 10 the table showing calculation of earning power
(Rs in cr)
Particulars
2015-16 2016-17 2017-18

EBIT 1003.80 991.19 1302.96

Ave assets 49052.33 61619.72 76721.89

Earning power 2.04 1.61 1.70

Graph No- 10: The graph showing position of earning power

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2015/16 2016/17 2017/18

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Interpretation of earning power:

The graph shows position of earning power. It is a measure of business

performance. This is not affected by interest charges and tax burden.
The HDFC STANDARD LIFE INSURANCE earning power in the
financial year ending 2015/16, 2016/17 & 2017-18 is 2.04, 1.61, & 1.70
respectively. The earning power has decreased in the financial year ending
2015/16, 2016/17 compare to the financial year ending 2017/18 The banks
earning power is very good in the financial year 2015/16. The earning power
has increased in the year 2016/17. There is increase or decrease in the earnings.
The average earning power for three years is 1.78 still it has to improve the
earning power.

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CHAPTER-V
Finding
Suggestion
Conclusion

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FINDINGS

 The current ratio of the HDFC STANDARD LIFE INSURANCE is less

than the ideal norm i.e 2:1 in all the three financial year. It is decreased in
the financial year ending 2013/14 and 2015/16 compare to the financial
year ending 2017/18.

 The liquide ratio of the HDFC STANDARD LIFE INSURANCE is less

than the ideal norm i.e 1:1 in all the three financial year. This ratio has
reduced year by year.

 The debt equity ratio of HDFC STANDARD LIFE INSURANCE is less

than the ideal norm i.e 2:1 in all the three financial year. But this ratio has
increased year by year.

 The proprietory ratio of HDFC STANDARD LIFE INSURANCE is less

than the ideal norm i.e 0.5:1 in all the three financial year. The ratio in the
financial year ending 2015/16 is more compare to the financial year
ending 2016/17 and 2017/18.

 The fixed assets to the net worth of HDFC STANDARD LIFE

INSURANCE is less than the ideal norm i.e 2:3 or 67% in all the three
financial year. The percentage of ratio decreased year by year.

 The solvency ratio of HDFC STANDARD LIFE INSURANCE has

decreased in the financial year ending 2015/16 and 2016/17 compare to
the financial year ending 2013/14.

 The return on assets of HDFC STANDARD LIFE INSURANCE has

decreased in the financial year. It is decreased year by year.

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SUGGESTIONS

 The current ratio must be improved as it is less than the ideal norm,
which can be done either by increasing the current assets or decreasing
the current liabilities.

 The quick assets ratio must be improved as it is less than the ideal norm.
which can be done by improving the quick assets.

 The debt equity ratio must be improved to reach the ideal norm. It is
incrased year by year but far to the ideal norm.

 The proprietory ratio must be improved as it is less than the ideal norm.
which can be done by increasing the shareholders fund.

 The fixed assets to net worth ratio must be improved as it is less than the
ideal norm.which can be done by increasing the net fixed assets.

 The solvency ratio must be improved either by increasing the total assets
or decreasing the liabilities.

 The return on assets ratio must be improved either by increasing the

assets or increasing the net profit.

 The return on equity ratio must be improved in all the three financial
year. Further improvement helps to increase the shareholders value.

 The dividend payout ratio must be improved, there is flactuation in the

ratio. It can be done by increasing the earning per share.

 The earning power must be improved as it is decreased year by year, it

can done by increasing the net profit.

 The capital adequacy ratio must be improved.

CONCLUSION

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On the basis of the study it can be conducted that, the finance of the
HDFC STANDARD LIFE INSURANCE are maintained satisfactory. The
borrowings of deposits and advances to public has improved in all the three
financial year. The net profit is also improved by 10.19% to 10.56%.

The important ratios i.e current, quick, debt equity, proprietory, return on
eqity, earning power. Dividend payout are decreased,increased and in
flactuation so it should take the effective measures, it improves the financial
soundness and better performance.

In the same time it can also be observed that handsome dividend is paid
to the shareholders. Earning per share is also increased because of which the
HDFC STANDARD LIFE INSURANCE is able to increase the share
capital.

The business per employee and profit per employee increased in all the
three financial year of the HDFC STANDARD LIFE INSURANCE .

HDFC STANDARD LIFE INSURANCE is playing a very important

role in the banking sector. It is brining the new products and services year by
year and performing the well banking functions.

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ANNEXURE
Bibliography

BIBLIOGRAPHY

BOOKS REFERED:

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1. Prasanna Chandra, Financial management

2. I.M. Pandey, Financial management, Page number

3. S.P.Jain,K.L.Narang, Simmi Agarwal,-Accounting for managers

4. Management Accounting – Pandith Kumar

5. Accounting Theory and Practice – S.P Jain and Narang

WEBSITE

 Websites

 www.hdfcinsurance.com
 www.hdfc.com
 www.managementparadise.com

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