A STUDY ON FINANCIAL STATEMENT ANALYSIS OF

CITIZEN BANK LIMITED

A Project Work Report

Submitted by:

SAROJ KASTI

T.U. Regd. No: 7-2-39-52-2017

Campus Roll No:301/074
Shanker Dev Campus
Group: Finance

Submitted to:

Research Management Committee

Shanker Dev Campus
Tribhuwan University

In Partial Fulfillment of the Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Putlisadak, Kathmandu

February, 2022
 Declaration

I hereby declare that the project work entitled A STUDY ON FINANCIAL STATEMENT
ANALYSIS OF CITIZEN BANK LIMITED submitted to the Faculty of Management,
Tribhuwan University, Kathmandu is an original piece of work under the supervision of Mrs.
Meera Gautam, faculty member of Shanker Dev Campus, Putlisadak, Kathmandu and is
submitted in partial fulfillment of the requirements for the degree of Bachelor of Business
Studies (BBS). This project work report has not been submitted to any other university or
institution for the award of any degree or diploma.

…………………

Saroj Kasti

Shanker Dev Campus

Putlisadak, Kathmandu

ii
 Date:................

Supervisor’s Recommendation

The project work report entitled A STUDY ON FINANCIAL STATEMENT ANALYSIS

OF CITIZEN BANK LIMITED submitted by Saroj Kasti of Shanker Dev Campus,
Putlisadak, is prepared under my supervision as per the procedure and format requirements
laid by the Faculty of Management, Tribhuwan University, as partial fulfillment of the
requirements for the degree of Bachelor of Business Studies(BBS). I, therefore, recommend
the project work report for evaluation.

…………………

Ms/Mrs: Meera Gautam

Shanker Dev Campus

Putlisadak, Kathmandu

iii
 Date:.................

Endorsement

We hereby endorse the project work report entitled A STUDY ON FINANCIAL

STATEMENT ANALYSIS OF CITIZEN BANK LIMITED of Shanker Dev Campus,
Putlisadak, in partial fulfillment of the requirements for the degree of the Bachelor of Business
Studies (BBS) for external evaluation.

....................... .......................
Mrs.Meera Gautam Prof.Dr.Keshav Raj Joshi
Chairman, Research Committee Campus Chief / Principal

iv
 ACKNOWLEDGEMENT

This report has been prepared in partial fulfillment of requirement of the Bachelor on Business
Studies final year course. I would like to express my gratitude to Shanker Dev Campus for
providing a great opportunity of preparing a field work report in accordance to its syllabus.
What so ever was the situation this report is finally prepared with the help and guidance of
many of my well-wishers.

I am very much thankful to all the teacher of Shanker Dev Campus; without whose knowledge
and suggestions in several ways, this report would not have been prepared. My special thanks
goes to my teachers and lecturers in Shanker Dev Campus, who helped and guided me a lot in
preparing this report.

I am also very much indebted to Citizens Bank Limited, and its concerned official for providing
me the necessary data and information related with the company. Their friendly behaviour and
warm co-operation very much forced me for heartily thanks.

Further, I would like to express my sincere thanks and gratitude to my teacher for his good
guidance, comment, and suggestion. His help and support has been immeasurable in the
completion of my project.

………………….
Saroj Kasti
Shanker Dev Campus
Putlisadak Kathmandu

v
 Title Page …………………………………………………………………………………….………..i

Declaration ……………………………………………………………………………….…………..ii

Supervisor’s Recommendation ……………………………………………………………….……iii

Endorsement ………………………………………………………………………………………….iv

Acknowledgements …………………………………………………………………………………...v

Table of Contents…………………………………………………………………………….…vi/vii/vii

List of Tables ………………………………………………………………………………………..ix

List of Figures ………………………………………………………………………………………x

Table of Contents
INTRODUCTION...........................................................................................................................1
1.1. Concept of Banking..............................................................................................................1
1.2. The Banking in Nepal...........................................................................................................2
1.3. Background of the study.......................................................................................................3
1.4. Objectives of the study..........................................................................................................4
1.5. Significance of study.............................................................................................................4
1.6. Statement of problems..........................................................................................................4
1.7. Methodology of study...........................................................................................................5
1.8. Literature Review..................................................................................................................5
1.9. Research Methodology.........................................................................................................6
1.9.1. Research Design.............................................................................................................6
1.9.2. Population and Sample..................................................................................................7
1.9.3. Types of Data.................................................................................................................7
1.9.3.1 Primary Data............................................................................................................7
1.9.3.2. Secondary Data.......................................................................................................7
1.9.3.3. Source of Data.........................................................................................................8
1.9.4. Data Analysis Procedure................................................................................................8

vi
 1.9.4.1 Data Presentation and Techniques of Analysis........................................................8
1.9.5. Instruments / Tools Used...............................................................................................9
1.9.5.1. Financial Tools........................................................................................................9
Current Ratio....................................................................................................................9
Acid Test Ratio or Quick Ratio.....................................................................................10
Cash Ratio......................................................................................................................10
Cash and Bank Balance to Total Deposit Ratio............................................................10
Cash and Bank Balance to Current Assets Ratio..........................................................11
Balance with NRB to Total Deposit Ratio.....................................................................11
Loan and Advances to Total Deposit Ratio...................................................................11
1.9.5.2. Statistical Tools.....................................................................................................12
Mean or Average............................................................................................................12
Standard Deviation.........................................................................................................12
Coefficient of variation (C.V)........................................................................................13
1.7. Limitations of the Study......................................................................................................13
1.8. Organization of study:.........................................................................................................14
Chapter – I: INTRODUCTION.............................................................................................14
Chapter - II: RESULT AND ANALYSIS.............................................................................14
Chapter - III: SUMMARY AND CONCLUSION................................................................14
RESULT AND ANALYSIS..........................................................................................................16
2.1 Introduction........................................................................................................................16
2.2 Presentation and Analysis of Data.....................................................................................16
2.2.1 Ratio Analysis...............................................................................................................16
Current Ratio......................................................................................................................16
Acid test or Quick Ratio....................................................................................................18
Cash Ratio..........................................................................................................................20
Cash and Bank Balance to Total Deposit Ratio.................................................................21
Cash and Bank Balance to Current Asset Ratio................................................................23
Balance with NRB to Total Deposit Ratio.........................................................................25
Loan and Advances to Total Deposits Ratio......................................................................27
2.3 Major Findings....................................................................................................................29
vii
SUMMARY AND CONCLUSION..............................................................................................30
3.1 Summary..............................................................................................................................30
3.2 Conclusion...........................................................................................................................30
BIBLIOGRAPHY
APPENDIX

viii
List of Tables
Table No. 1: Current Ratio.............................................................................................................17
Table No. 2: Acid Test or Quick Ratio..........................................................................................18
Table No. 3: Cash ratio..................................................................................................................20
Table No.4: Cash and Bank Balance to Total Deposit Ratio.........................................................22
Table No.5: Cash and Bank Balance to Current Asset Ratio........................................................24
Table No.6: Balance with NRB to Total Deposits Ratio...............................................................26
Table No.7: Loan and Advances to Total Deposits Ratio.............................................................28

ix
List of Figures
Figure No.1: Analysis of Current Ratio.........................................................................................17
Figure No. 2: Analysis of Quick Ratio..........................................................................................19
Figure No.3: Analysis of Cash Ratio.............................................................................................21
Figure No.4: Analysis of Cash and Bank Balance to Total Deposit Ratio..................................23
Figure No.5: Analysis of Cash and Bank Balances to Current Asset Ratio..................................25
Figure No.6: Analysis of Balance with NRB to Total Deposits Ratio..........................................27
Figure No.7: Analysis of Loan and Advances to Total Deposits Ratio.........................................28

x
 Page |1

CHAPTER I

INTRODUCTION
1.1. Concept of Banking
A bank is a financial institution license to receive deposit and loan. Bank may also
provide financial services, such as wealth management, currency exchange and safe
deposit boxes. Generally, Banking began with the first prototype banks of merchants of
the ancient's world which made grains, loans to farmers and traders who carried goods
between cities. This system was known as barter system. This began around 2000 BC in
Assyria and Babylonia. Later in ancient Greece and during Roman empires lender based
in temples made loans and added into two important innovations i.e. they accepted
deposits and changed money. In history the most famous Italian bank was the Medici
Bank, established by Giovanni Medici in 1997. The oldest bank still existence is Banca
Monte Dei Paschi Di Siena headquarters in Siena, Italy.

Commercial bank is an institution or type of bank that provides services such as

accepting deposits, providing business loans and offering basic investment products. It
also refers to types of bank or division of a large bank which are specifically deals with
deposit and loan services provided to co-operations or large/middle sized business as
opposed to individual members of public/small business. The general role of commercial
bank is to provide financial services to general public business and companies insuring,
economic and social stability and sustainable growth of the economy. In history of Nepal
the oldest bank is also commercial bank, named Nepal Bank Limited. Commercial bank
is types of bank along with different types of bank, like central bank, exchange bank,
industrial bank, agricultural bank, saving bank, development bank etc. According to a
latest survey, there are twenty eight commercial banks in Nepal, providing their
difference services.

In general, capital structure is how a firm or bank finances its overall operations and
growth using different sources of funds. The study of the capital structure attempts to
explain the mix of the securities and the financing sources used by the corporations to the
 Page |2

finance real investment. (Myers, 2001,P.81). Debt comes in the form of bond or long
term notes payable, while equity is classified as common stock, preferred stock or
retained earnings. Short term debt such as working capital requirement is also considered
to be part of the capital structures. The main role of the capital structure in bank is to
repay its depositors, customers and other claims in case the bank doesn't have enough
liquidity due to losses. It directly affects in its operations of bank. In summary, capital
structure is the process or way from where banks or financial corporation collects assets
or money in order to run business. The main sources of assets are equity and debt.

1.2. The Banking in Nepal

In the context of Nepal, like as in other country the goldsmiths and landlord was the
ancient banker. The Nepalese people were highly exploited by Shahu Maharjan by
charging higher interest rate that is compound interest rate and even by manipulating the
principle amounts. If we try to see the history of banking transaction in depth then
evidence of money landing function are found in practice before 8 th century in 780 B.S.
Gunakamdev the ruler of Kathmandu reconstructed Kathmandu valley by borrowing dept
from the people. In 14th century tankdhari system had been running in the period of
ranodip shing in Kathmandu established and office called tejarath adda. From the office
the government distributed salary to their employees and provided loan to government
employment 25% of interest against the security gold, silver etc. Because of the
development of economy activities in Nepal the above institutions could not be fulfilled
the need of people. So in Kartik 30, 1994 B.S. Nepal bank was established as one of the
semi government commercial bank which had 10 million authorized capital and 842000
paid of capital. it has done the pioneering function in function spreading the banking
habits among the people. Having felt a need of central bank to control and direct the
commercial bank and help the government for making monitory polices Nepal Rastra
Bank was set up in 14 Baishakh, 2013 B.S. To fulfill the growing credit requirement of
the country. The commercial bank i.e. Rastraya Banijya bank was established in
10th Bhadra 2022 B.S. this bank also provides facility for the economy welfare of the
 Page |3

general public. Nepal is an agricultural country to develop agriculture system. Industry

agriculture development bank and Nepal industrial development corporation was
established in 2024 B.S. 2016 B.S. respectively. The initiation of the financial sector;
liberalization policy by Nepal rastra bank, a board of joint venture banks entered with the
view to accelerate the race of development of nation. At present, there are many joint
venture banks which are running successfully in a competitive environment. His majesty
government deliberates policy of allowing foreign joint venture banks to operate
in Nepal basically targeted, to encourage local tradition commercial bank to enhance their
capacity through competitor’s efficiencies mechanization modernization prompt
customer service. Nepal Arab bank ltd was established in 2041 as a first foreign joint
venture bank.

Now in our country there are 27 commercial bank, 18 development bank, 15 finance
company and 70 Micro finances after mid July 2021(licensed by NRB)

1.3. Background of the study

Liquidity refers to the ease with which an asset, or security, can be converted into ready
cash without affecting its market price. In other words, liquidity describes the degree to
which an asset can be quickly bought or sold in the market at a price reflecting its
intrinsic value. Cash is universally considered the most liquid asset because it can most
quickly and easily be converted into other assets. Tangible assets, such as real estate, fine
art, and collectibles, are all relatively illiquid. Other financial assets, ranging from
equities to partnership units, fall at various places on the liquidity spectrum.

It is established with a vision to be the leading bank known for its service excellence in
the region, Citizens Bank International Limited is located at Sharada Sadan, Kamaladi,
Kathmandu (also known as the heart of the financial sector of the country). The bank
with the mission to be a trustworthy partner for the progress of individuals and
institutions by designing, producing and delivering the best financial solutions is
promoted by eminent personalities, businessmen and industrial houses and reputed
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individuals having high social standing. The bank is managed by a team of experienced
bankers and professionals.

1.4. Objectives of the study

Liquidity ratios are used to determine a company’s ability to meet its short-term debt
obligations. Investors often take a close look at liquidity ratios when performing
fundamental

analysis on a firm. The main objective of the study is to analyze the Citizen Bank
International Ltd liquidity position. Other objectives can be listed below:

● To show the level of current assets relative to current liabilities of the bank.

● To analyze the financial performance, profitability.

1.5. Significance of study

Liquidity is essential in all banks to compensate for expected and unexpected Balance
Sheet fluctuations and to provide funds for growth. The recent liquidity crises faced by
banks and financial institutions have brought to the fore the need to review their existing
Liquidity Management Policies, Practices and Procedures. The significance of the study
are highlighted below:The study helps to know how effectively Citizen Bank
International is managing their deposits and risk assets portfolios and maintaining an
adequate level of liquidity.The study will be a helpful tool for the policy makers of the
banks to review their liquidity management policies. The study shall guide stakeholders
of the bank in better analyzing the performance of their bank. The study benefits fellow
researchers conducting research on similar subjects.

1.6. Statement of problems

Lack of liquidity indicates a great financial problem caused by lack of people's trust. In
such a situation, depositors go on demand for cash rapidly. Furthermore, banks lose their
deposits, rather such immediate demand forces the bank to sell its safer and more liquid
assets to meet short- term obligation which ultimately leads the bank towards insolvency.
 Page |5

Similarly, higher the amount of liquidity, higher will be the opportunity cost of banks
which leads to decrease in profit due to investment in non-earning assets more than
requirement. Thus, banks should maintain the appropriate level of liquidity. In this
context, this study will try to discuss the following issues regarding the liquidity
management of Citizen Bank International.

What is the impact of liquidity in the performance of the Citizen Bank International?

What is the mix of portfolio of deposits and risk assets in Citizen Bank International?

What is the trend of maintaining liquid assets level by Citizen Bank International in
existing practice ?

1.7. Methodology of study

Research deals with an original contribution to the existing knowledge for its
advancement. It is the pursuit of truth with the help of study, observation, comparison
and experiment. The basic objective of the chapter is to provide detailed knowledge about
various methodologies followed in the study. Research methodology is only one way to
reach the objective of the study. The major contents of the research methodology
followed in course of this study are as follows:
 Page |6

1.8. Literature Review

Literature Review is the process of reviewing the past theories, studies. Previous study,
books and research reports related to current research issues considered as literature.
Study of the previous research works and the books with the purpose of knowing the
research issues in detail and find out the appropriate methodologies is known as literature
review. Literature review is the scholarly paper, which includes the current knowledge
including substantive findings, as well as theoretical and methodological contributions to
the topic. The purpose of reviewing the literature is to know the research conducted in the
chosen field, to identify the research gap, to find develop the theoretical framework, to
develop the research design.

1.9. Research Methodology

Research methodology is composed of two words: Research and Methodology, the
process of investigation in values a series of well thought and activates of gathering,
recording, analysing and interpreting the data with the process by which we attempt to
solve problems is called research. While methodology is the research method used to list
hypothesis. In Methodology, researcher uses different criteria for solving/searching the
given research problem. Different sources use different type of methods for solving the
problem. If we think about the word “Methodology”, it is the way of searching or solving
the research problem. Thus “Research Methodology” is the way to solve systematically
about the research problem. For this purpose, the research is exploratory as well as
analytical in order to accomplish the objective of this study. The research methodology
has been designed on the basis of secondary data by using useful financial and statistical
tools. The research methodologies adopted in this study are discussed in the following
manner.
 Page |7

1.9.1. Research Design

Research design is an overall plan specifying the procedures to be undertaken to

accomplish a research work. To fulfil the objectives of the study certain research design
is essential. So, the analysis of this study is based on the nature of data, tools and
technique. There are four types of research design: descriptive, casual, experimental and
exploratory. To fulfil the objectives of the study it emphasizes on historical as well as
descriptive research design.

1.9.2. Population and Sample

In this section, researcher should provide brief information of sample and indicate which
section of the population is represented by the sample. The entire aggregation of terms
from which samples can be drawn is known as a population. A sample is a collection of
items or elements from a population. Thus, to make easier to the study; representative
portion of the population is selected for the study that is known as sample.

There are 27 commercial banks in Nepal. The total numbers of the banks are the
population of the study; citizens bank is as the sample of the study.

1.9.3. Types of Data

Data is defined as reinterpretable representation of the information in a formalized

manner suitable for the communication, interpretation, or the processing. Example of the
data includes a sequence of the bits, table of the numbers, the characters on page, the
recording of the sounds made by a person speaking etc.
 Page |8

1.9.3.1 Primary Data

The data which are collected by the researcher originally from its basic sources for the
first time for any statistical enquiry are known as primary data. They are also called first
hand data as it is collected directly from the informants. These data are generally used in
the cases where secondary data do not provide adequate basis for analysis. Interview,
questionnaire, survey and observation are some example of primary data.

1.9.3.2. Secondary Data

The data which are collected by someone other than the researcher associated with the
current study is known as secondary data. They are the irreplaceable elements of
research.  Such data are cheaper and more quickly obtainable than the primary data. We
can collect those data with the help of different websites, annual reports, literatures,
newspapers and different journals.

Thus, the whole study is based on the secondary sources of the data. So, the data
collection strategy will be as per the secondary sources which are annual reports of the
banks, different publications, literatures, newspapers and various websites

1.9.3.3. Source of Data

The major source of data under this study is based on secondary data of concerned banks.
The review of literature of proposed study was based on the AGM reports of commercial
banks,

websites of Citizen Bank International and sampled banks, bulletins and publications of
different authorities and researchers, journals, unpublished thesis reports, newspapers etc.
Secondary data are used to analyze the historical trend in liquidity management.

1.9.4. Data Analysis Procedure

Data analysis is the most important chapter of the study. It is the process of gathering,
modelling and transforming data with the goal of highlighting useful information,
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suggestions, conclusions and supporting decision making. In this chapter the data
collected will be analysed and presented mathematically. All the financial and statistical
tools will be used to analyse the data. To analyse the financial performance in respect to
capital structure, various presentation and analysis have been presented in this chapter
according to analytical research design by using various financial and statistical tools.
The data will be obtained from various sources such as an annual report, publications and
from different websites.

1.9.4.1 Data Presentation and Techniques of Analysis

The collected data are presented in simple and easily understandable tables to make those
data clear and more informative. Such data have been presented in figures like bar
diagrams, trend lines, whichever is relevant to explain the data more effectively, based on
the nature of data. After presenting such data in the table, figures are analyzed using
various statistical, mathematical and financial tools and techniques.

1.9.5. Instruments / Tools Used

Tool can be defined as the instruments used to measure the particular topic, subject
matters or the objects. Tool is anything that helps to find out true value of the related
fields, or subjects matters. Generally, following two tools are used to measure the
liquidity ratio of the banks or the companies. Different instruments are used for data
collection analysis for all conduction. Instruments have been selected according to the
nature of data as well as subject matter.

1.9.5.1. Financial Tools

A brief explanation about the financial tools is used in this study is as followed:

Current Ratio

The current ratio is a liquidity ratio that measures a company’s ability to pay short-term
obligations or those due within one year. It tells investors and analysts how a company
can maximize the current assets on its balance sheet to satisfy its current debt and other
 P a g e | 10

payables. A current ratio that is in line with the industry average or slightly higher is
generally considered acceptable. A current ratio that is lower than the industry average
may indicate a higher risk of distress or defualt. Similarly, if a company has a very high
current ratio compared with its peer group, it indicates that management may not be using
its assets efficiently. Current assets listed on a company’s balancesheet include
cash, accounts receivable, inventory, and other current assets (OCA) that are expected to
be liquidated or turned into cash in less than one year. Current liabilities include accounts
payable, wages, taxes payable, short-term debts, and the current portion of long-term
debt.

Current Ratio = Current assets/Current liabilities

Acid Test Ratio or Quick Ratio

The acid-test, or quick ratio, compares a company's most short-term assets to its most
short-term liabilities to see if a company has enough cash to pay its immediate liabilities,
such as short-term debt. The acid-test ratio disregards current assets that are difficult to
liquidate quickly such as inventory. The acid-test ratio may not give a reliable picture of
a firm's financial condition if the company has accounts receivable that take longer than
usual to collect or current liabilities that are due but have no immediate payment needed.

Acid Test=(Cash+Marketable Securities+A/R)/Currentliabilities
where:A/R=Accounts receivable

Cash Ratio

The cash ratio is a measurement of a company's liquidity, specifically the ratio of a

company's total cash and cash equivalents to its current liabilities. The metric calculates
a company's ability to repay its short-term debt with cash or near-cash resources, such as
easily marketable securities. This information is useful to creditors when they decide
how much money, if any, they would be willing to loan a company. The cash ratio is
 P a g e | 11

almost like an indicator of a firm’s value under the worst-case scenario—say, where the
company is about to go out of business. It tells creditors and analysts the value of  current
assets that could quickly be turned into cash, and what percentage of the
company’s current liabilities these cash and near-cash assets could cover.

Cash ratio=Cash & cash equivalents/Current liabilities

Cash and Bank Balance to Total Deposit Ratio

Cash and bank balance are the most Liquid Assets, so this ratio measures the bank’s
ability to immediately fund the withdrawal of their depositors. A high ratio represents a
greater ability to cover their deposits and vice versa .This ratio is determined by dividing
cash and bank balance by total deposits.
Symbolically,
Cash and Bank Balance to Total Deposit Ratio = Cash and Bank Balance / Total
Deposit

Cash and Bank Balance to Current Assets Ratio

Cash to current assets is a liquidity ratio that measures how much of the current assets in a
company are made up of cash and cash equivalents. The current assets of a company refer to
any asset that can quickly be sold or consumed in less than twelve months. Companies
depend on such assets to pay for their day-to-day operations, such as employees’ salaries
and other short-term liabilities. Current assets include cash and cash equivalents, short-
term investments such as marketable securities, accounts receivable, inventories, and
prepaid expenses. Cash and cash equivalents and marketable securities form the most
liquid current assets and can generally be referred to as “cash”. When we compare cash to
the total current assets of a company, we get cash to current asset ratio. This ratio allows
investors or analysts to understand exactly what percentage of cash resides in current
assets. This ratio is considered the most conservative measure of a company’s ability to
pay off liabilities.

Cash To Current Assets = (Cash and Bank Balance + Marketable Securities ) / Total Current
Assets
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Balance with NRB to Total Deposit Ratio

This ratio is the share of bank’s total deposit that is mandated by Nepal Rastra Bank (NRB) to
be maintained with latter as reserves in the form of liquid cash.

Balance with NRB to Total Deposits Ratio = Balance with NRB / Total Deposit

Loan and Advances to Total Deposit Ratio

The loan-to-deposit ratio (LDR) is used to assess a bank's liquidity by comparing a

bank's total loans to its total deposits for the same period. The LDR is expressed as a
percentage. If the ratio is too high, it means that the bank may not have enough liquidity
to cover any unforeseen fund requirements. Conversely, if the ratio is too low, the bank
may not be earning as much as it could be.

Loan and Advances to Total Deposits Ratio = Loan and Advances / Total Deposit

1.9.5.2. Statistical Tools

Statistics are numerical statements of facts capable of analysis and interpretation and
science of statistics is the study of the principles and methods used in
collection .presentation analysis and interpretation of numerical data in any sphere of
inquiry. In the present study, following statistical tools have been used to draw
meaningful conclusion.

Mean or Average

An average is value, which represents a group of values. It shows the characteristics of

the whole group. Generally the average value lies somewhere in between the two
extremes, i.e. the largest and the smallest items. It is also known as simple average.

X 1 + X 2 + X 3 +. ..+ X n
X =
N
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Standard Deviation

Karl Pearson introduced the standard deviations concept in 1823. The Measurement of
scatterings of the mass of figures in a series about an average is known as dispersion.
Standard deviation is an absolute measurement of dispersion in which the drawbacks
present in other measures of dispersion are removed. The high amount of dispersion
reflects high standard deviation. The small standard deviations mean a high degree of
uniformity of the observation well as homogeneity of a series and vice-versa. The small
standard deviation means the high degree of homogeneity of the observation. It is
calculated for selected dependent and independent variables specified. It is positive
square root of mean squared deviation from the arithmetic mean and is denoted by and is
calculated as follows:

Standard deviation () =
√ ∑ ( X− X )2
N−1

Where,

N = Number of items in the series

X = variables

Coefficient of variation (C.V)

It is the measurement of the relative dispersion by Karl Pearson. It is used to compare the
variability of two or more series. The series with higher coefficient of variation is said to
be more variable, less consistent, less uniform, less stable and less homogeneous. On the
contrary the series with less coefficient of variation is said to be less variable, more
consistent, more uniform more stable and more homogenous. It is denoted by C.V and is
obtained as

S tan dard Devation

C. V = ×100
Mean
%
 P a g e | 14

σ
C. V= ×100
X
%

1.7. Limitations of the Study

It is the universally accepted truth that everything has its own limitation.

a) This study is concentrated on the liquidity management of Citizen Bank International. So,
the

conclusion drawn from this study may not be relevant for other banks.

b) This study examines and suggests only the subject matter of liquidity management. There
are

many factors that affect the performance of commercial banks.

c) Selected statistical and financial tools and techniques have been used in the analysis,
therefore, the data calculations may contain some errors and a comprehensive finding on
the

Impact of liquidity on performance may not be concluded.

d) This study includes only the period of the last five years.

1.8. Organization of study:

This study has been organized into the following three chapters:

Chapter – I: INTRODUCTION

This chapter includes background of the study, focus of the study, Liquidity and its
management, a brief overview of selected commercial bank for the study, statement of
the problems, objectives of the study, significance of the study, methods of study review
of literature and limitations of the study.
 P a g e | 15

Chapter - II: RESULT AND ANALYSIS

In this chapter collected and processed data are presented, analyzed and interpreted using

financial tools as well as statistical tools.

Chapter - III: SUMMARY AND CONCLUSION

This chapter comprises summary and major conclusion of prevailing issue to the
organization. In this chapter, summary of the whole study, conclusions and
recommendations are made.

BIBLIOGRAPHY
At the end of the study, Bibliography and Appendices have also been incorporated .

CHAPTER II
RESULT AND ANALYSIS

2.1 Introduction
This is chapter of the study where the collected data is analyzed and presented
mathematically. All the above-mentioned financial and statistical tools will be used to
present the data.

To analyze the financial performance in respect to liquidity, various presentation and

analysis have been presented in this chapter according to analytical research design
mentioned in the first chapter using various financial tools.

2.2 Presentation and Analysis of Data

The collected data are presented in simple and easily understandable tables to make those
data clear and more informative. Such data have been presented in figures like bar
diagrams, trend lines, whichever is relevant to explain the data more effectively, based on
the nature of data. After presenting such data in the table, figures are analyzed using
various statistical, mathematical and financial tools and techniques.
 P a g e | 16

2.2.1 Ratio Analysis

The details about the capital structure of the bank can be described in following ways.

Current Ratio

Current Ratio of the Citizens bank can be described through following table and figure
which consists the latest data of the bank of last five years. The ratio is in % whereas
fiscal year is in A.D.

Table No. 1: Current Ratio

Current
Fiscal Current Assets(
Liabilities(in Ratio
Year(A.D) in 000's)
000's)
2016/17 82688545 73908365 1.1188
2017/18 98837332 99667080 0.9917
2018/19 114448002 112463157 1.0176
2019/20 138155721 124246675 1.1119
2020/21 181894919 163779015 1.1106
Average 1.0701
S.D. 0.0605
C.V. 0.0565
(Source:Annual Reports 2016/17-2020/21)
The above table shows the current assets, current liabilities and current ratio of last
five fiscal years. The ratio in times whereas fiscal years in A.D. The average current
ratio of the bank is 1.701 whereas its S.D. and C.V. are 0.605 and 0.565 respectively.
Current ratio measures the company ability to pay short term obligations.

Figure No.1: Analysis of Current Ratio

 P a g e | 17

Current Ratio
200000000
180000000
160000000
140000000
120000000
Amount

100000000
80000000
60000000
40000000
20000000
0
2016/17 2017/18 2018/19 2019/20 2020/21

Ratio
1.1500

1.1000
Current Ratio

1.0500
Ratio
1.0000

0.9500

0.9000
2016/17 2017/18 2018/19 2019/20 2020/21
Year

Acid test or Quick Ratio

Detail brief about the Acid test ratio of the bank can be done though following table
and figure:

Table No. 2: Acid Test or Quick Ratio

Fiscal Quick Assets( in Current Ratio

Year(A.D.) 000's) Liabilities(in
 P a g e | 18

000's)
2016/17 69964427 73908365 0.9466
2017/18 92312948 99667080 0.9262
2018/19 111849512 112463157 0.9945
2019/20 132595628 124246675 1.0672
2020/21 177926276 163779015 1.0864
Average 1.0042
S.D. 0.0711
C.V. 0.0708
(Source:Annual Reports 2016/17-2020/21)
The above table shows the quick assets, current liabilities and quick ratio of last five
fiscal years. The ratio in times whereas fiscal years in A.D. The average quick ratio of
the bank is 1.0042 whereas its S.D. and C.V. are 0.0711 and 0.0708 respectively. The
acid-test, or quick ratio, compares a company's most short-term assets to its most
short-term liabilities to see if a company has enough cash to pay its immediate
liabilities, such as short-term debt.

Figure No. 2: Analysis of Quick Ratio

Quick Ratio
200000000
180000000
160000000
140000000
120000000
Amount

100000000
80000000
60000000
40000000
20000000
0
2016/17 2017/18 2018/19 2019/20 2020/21
 P a g e | 19

Quick Ratio
1.1500

1.1000

1.0500

1.0000 Quick Ratio

0.9500

0.9000

0.8500

0.8000
2016/17 2017/18 2018/19 2019/20 2020/21

Cash Ratio

Detail brief about the Cash ratio of the bank can be done though following table and
figure:
Table No. 3: Cash ratio

Fiscal Cash and Cash Current Liabilities(in

Ratio
Year(A.D) Equivalents ( in 000's) 000's)
2016/17 6559505 73908365 8.8752
2017/18 13925599 99667080 13.9721
2018/19 13871399 112463157 12.3342
2019/20 8810077 124246675 7.0908
2020/21 8856254 163779015 5.4074
Average 9.5359
S.D. 3.57
C.V. 0.3744
(Source:Annual Reports 2016/17-2020/21)
The above table shows the cash and cash equivalents, current liabilities and cash ratio of
last five fiscal years. The ratio in % whereas fiscal years in A.D. The average cash ratio
of the bank is 9.5359% whereas its S.D. and C.V. are 3.57 and 0.3744 respectively. The
cash ratio is a measurement of a company's liquidity, specifically the ratio of a
company's total cash and cash equivalents to its current liabilities. The metric calculates
 P a g e | 20

a company's ability to repay its short-term debt with cash or near-cash resources, such as
easily marketable securities.

Figure No.3: Analysis of Cash Ratio

Cash And Cash Equivalents

16000000
14000000
12000000
10000000
Cash And Cash Equivalents
8000000
6000000
4000000
2000000
0
2016/17 2017/18 2018/19 2019/20 2020/21
 P a g e | 21

16.0000

14.0000

12.0000

10.0000

8.0000
Cash Ratio
6.0000

4.0000

2.0000

0.0000
2016/17 2017/18 2018/19 2019/20 2020/21

Cash and Bank Balance to Total Deposit Ratio

Detail brief about the Cash and Bank Balance to Total Deposit ratio of the bank can be
done though following table and figure:

Table No.4: Cash and Bank Balance to Total Deposit Ratio

Cash and
Fiscal Total
Bank Rati
Year( Deposit(in
Balance o
A.D) 000's)
( in 000's)
2016/1 8.06
7 6559505 81349540 34
2017/1 14.3
8 13925599 97259665 180
2018/1 12.3
9 13871399 112393448 418
2019/2 6.45
0 8810077 136526020 30
2020/2 5.21
1 8856254 169726787 79
Average 9.27
 P a g e | 22

88
S.D. 3.9
0.42
C.V. 03
(Source:Annual Reports 2016/17-2020/21)
The above table shows the cash and bank balances, total deposits and cash and bank
balances to total deposits ratio of last five fiscal years. The ratio in % whereas fiscal years
in A.D. The average cash and bank balances to total deposits ratio of the bank is 9.2788%
whereas its S.D. and C.V. are 3.9 and 0.4203 respectively. This ratio measures the bank’s
ability to immediately fund the withdrawal of their depositors. A high ratio represents a
greater ability to cover their deposits and vice versa.

Figure No.4: Analysis of Cash and Bank Balance to Total Deposit Ratio
 P a g e | 23

Cash and Bank Balance to Total Deposit

Cash and Bank Balance Total Deposits
169726787

136526020
112393448
97259665
81349540

13925599 13871399 8810077 8856254

6559505

2016/17 2017/18 2018/19 2019/20 2020/21

Cash and Bank Balance to Total Deposit

Ratio
16.0000
14.0000
12.0000
Cash and Bank Balance to Total
10.0000 Deposit Ratio
8.0000
6.0000
4.0000
2.0000
0.0000
2016/17 2017/18 2018/19 2019/20 2020/21

Cash and Bank Balance to Current Asset Ratio

Detail brief about the Cash and Bank Balance to Current Asset ratio of the bank can
be done though following table and figure:

Table No.5: Cash and Bank Balance to Current Asset Ratio

 P a g e | 24

Fiscal Cash and Current

Year(A.D Bank Balance Assets(in Ratio
) ( in 000's) 000's)

2016/17 6559505 82688545 7.9328

2017/18 13925599 98837332 14.0894
2018/19 13871399 114448002 12.1203
2019/20 8810077 138155721 6.3769
2020/21 8856254 181894919 4.8689
Average 9.0777
S.D. 3.89
C.V. 0.4285
(Source:Annual Reports 2016/17-2020/21)
The above table shows the cash and bank balances, current assets and cash and bank
balances to current assets ratio of last five fiscal years. The ratio in % whereas fiscal
years in A.D. The average cash and bank balances to current assets ratio of the bank is
9.0777% whereas its S.D. and C.V. are 3.89 and 0.4285 respectively. Cash to current
assets is a liquidity ratio that measures how much of the current assets in a company are made
up of cash and cash equivalents.
 P a g e | 25

Figure No.5: Analysis of Cash and Bank Balances to Current Asset Ratio

Cash and Bank Balance to Current Assets

Cash and Bank Balances Current Assets
181894919

138155721
114448002
98837332
82688545

13925599 13871399 8810077 8856254

6559505

2016/17 2017/18 2018/19 2019/20 2020/21

Cash And Bank Balances to Current Assets

16.0000
14.0000
12.0000
10.0000 Cash And Bank Balances to
Current Assets
8.0000
6.0000
4.0000
2.0000
0.0000
2016/17 2017/18 2018/19 2019/20 2020/21

Balance with NRB to Total Deposit Ratio

Detail brief about the Balance with NRB to Total Deposits ratio of the bank can be
done though following table and figure:

Table No.6: Balance with NRB to Total Deposits Ratio

 P a g e | 26

Fiscal Balance With Total

Year(A.D NRB ( in Deposit(in Ratio
) 000's) 000's)
2016/17 9120743 81349540 11.2118
2017/18 6172041 97259665 6.3459
2018/19 8031269 112393448 7.1457
2019/20 20028379 136526020 14.6700
2020/21 16537178 169726787 9.7434
Average 9.8234
S.D. 3.42
C.V. 0.3481
(Source:Annual Reports 2016/17-2020/21)
The above table shows the balance with NRB, total deposits and balance with NRB to
total deposits ratio of last five fiscal years. The ratio in % whereas fiscal years in A.D.
The average balance with NRB to total deposits ratio of the bank is 9.823% whereas its
S.D. and C.V. are 3.42 and 0.3481 respectively. This ratio is the share of bank’s total
deposit that is mandated by Nepal Rastra Bank (NRB) to be maintained with latter as reserves
in the form of liquid cash.

Figure No.6: Analysis of Balance with NRB to Total Deposits Ratio

 P a g e | 27

Balance with NRB to Total Deposit

Balance with NRB Total Deposit
169726787

136526020
112393448
97259665
81349540

20028379 16537178
9120743 6172041 8031269

2016/17 2017/18 2018/19 2019/20 2020/21

Balance with NRB to Total Deposit

16.0000
14.0000
12.0000
10.0000 Balance with NRB to Total
Deposit
8.0000
6.0000
4.0000
2.0000
0.0000
2016/17 2017/18 2018/19 2019/20 2020/21

Loan and Advances to Total Deposits Ratio

Detail brief about the Loan and Advances to Total Deposits ratio of the bank can be
done though following table and figure:

Table No.7: Loan and Advances to Total Deposits Ratio

 P a g e | 28

Loan and Total

Fiscal
Advances ( in Deposit(in Ratio
Year(A.D)
000's) 000's)
2016/17 61496647 81349540 75.5956
2017/18 76172039 97259665 78.3182
2018/19 89753101 112393448 79.8562
2019/20 103295383 136526020 75.6599
2020/21 142480222 169726787 83.9468
Average 78.6753
S.D. 3.46
C.V. 0.0440
(Source:Annual Reports 2016/17-2020/21)
The above table shows the loan and advances, total deposits and loan and advances to
total deposits ratio of last five fiscal years. The ratio in % whereas fiscal years in A.D.
The average loan and advances to total deposits ratio of the bank is 78.67% whereas its
S.D. and C.V. are 3.46 and 0.0440 respectively.

Figure No.7: Analysis of Loan and Advances to Total Deposits Ratio

Loan and Advances to Total Deposits

Loan and Advances Total Deposit
169726787

136526020 142480222
112393448
97259665 103295383
89753101
81349540 76172039
61496647

2016/17 2017/18 2018/19 2019/20 2020/21

 P a g e | 29

Loan and Advances to Total Deposits

86.0000
84.0000
82.0000
80.0000 Loan and Advances to Total
Deposits
78.0000
76.0000
74.0000
72.0000
70.0000
2016/17 2017/18 2018/19 2019/20 2020/21

2.3 Major Findings

a. The Current Ratio is nearly constant trend. The highest ratio is 1.1188 times in FY
2016/17 and the lowest ratio is 0.9917 times in FY 2017/18.
b. The Quick Ratio is nearly increasing trend. The highest ratio is 1.0864 times in FY
2020/2021 and the lowest ratio is 0.9262 times in FY 2017/18.
c. The Cash and Cash Equivalents to Current Liabilities is fluctuating. The highest ratio
is 13.9721% in FY 2017/18 and the lowest ratio is 5.4074% in FY 2020/21.
d. The Cash and Bank Balance to Total Deposits is fluctuating. The highest ratio is
14.3180 % in FY 2017/18 and the lowest ratio is 5.2179% in FY 2020/21.
e. The Cash and Bank Balance to Current Assets is fluctuating. The highest ratio is
14.0894 % in FY 2017/18 and the lowest ratio is 4.8689% in FY 2020/21.
f. The Cash and Bank Balance to Total Deposits is fluctuating. The highest ratio is 14.67
% in FY 2019/20 and the lowest ratio is 6.3489% in FY 2017/18.
g. The Loan and Advances to Total Deposits is fluctuating. The highest ratio is 83.9468
% in FY 2020/21 and the lowest ratio is 75.5956% in FY 2016/17.
 P a g e | 30

CHAPTER III
SUMMARY AND CONCLUSION

3.1 Summary
Nepal is one of the least developed countries of the world. For most of the developing
process, it is financially depending upon the foreign countries. It is economically too
weak. Thus, the economic condition of the people is weak. In Nepal 85% of the people
are depended upon agricultural sector which is unable to provide full employment to the
people. Nepal government has to activate people in the nation’s development through
overall industrialization of nation. For this purpose, development of sound banking
system is essential.

In Nepalese banking sector, commercial banks including ventures banks are operating at
present. In the absences of modern banking any country cannot develop the economic
activity. Therefore, it is essential to find out whether or not the banks are serving an
important contribution to develop sectors of economy. Liquidity is said to be general
business of fund, which shows the bank ability to meet cash requirement. In this record,
this study has been based upon the objective to evaluate the liquidity position of Citizens
Bank International.

3.2 Conclusion
This study is particularly deals with conclusion about “A Study of financial statement
analysis of Citizens Bank International”. The Liquidity ratio decision is crucial because
of the need to maximize returns to various organizational constituencies, and also
because of the impact such a decision has on an organization’s ability to deal with its
competitive environment. This present study evaluated the liquidity ratios and the
relationship between liquidity components and bank ability to settle its current
obligations.
 BIBLIOGRAPHY
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Gautam D.R. (2072), Business Research Method: Januka Publication.

Gajuaral D.P. (2071), Capital Structure management in Nepalese Enterprise

Joshi P.R. (2017), Fundamental of Investment: Asmita Publication.

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Pathak (1995), A study on capital structure structure management of Gorakhali Rubber

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Websites:
www.ctznbank.com
www.financialmarket.com
 APPENDIX

1. Statement of Financial Position as on 32.03.2075

2. Statement of Financial Position as on 32.03.2076
3. Statement of Financial position as on 32.03 2077 and 32.03.2078