Friday 24 May 2013

Ratio Analysis of Bank of Baroda and Bank of India



Performance Evaluations & Ratio Analysis of Banks in India: A Comparative Study between Bank of Baroda and Bank of India

Project Report on Finance Topic in Banking Industry in India

Case Study on Financial Analysis-Bank of Baroda and Bank of India

 


Introduction, Importance and Significance of the Study
The Indian banking sector is currently facing problems associated with excess liquidity. While deposits have been registering healthy growth, advances offtake has been rather muted due to the slowdown in economic growth and improved access to other sources of funds such as equity and borrowings abroad   As a result, the incremental credit to deposit ratio has nosedived to around 47 per cent as of December 2009 from 66 per cent in March 2009

Advances growth of the banking system is projected to improve to 18-19 per cent in 2010-11 on the back of expectations of higher economic growth, some revival in exports and continued thrust on infrastructure and investments. In 2010-11, our sample of PSBs are likely to continue to post higher credit growth of 25 per cent, sample of private banks are estimated to rebound to 21 per cent growth, and remaining banks would grow moderately at around 14 per cent.

Rationale for the Study
Company Valuation is carried out to protect the interest of the investors and also to give the big picture view to the Internal Stake Holders such that they can align their strategies towards the positive direction.  The case study of Bank of Baroda and  Bank of India is expected to bring to table the detailed valuation techniques. The significance of this research is that this project report would be useful as a reference guide for not only carrying out analysis of the theoretical framework of company valuation but also presenting practical analytics by virtue of the case studies of Bank of Baroda and Bank of India using financial statements and analytics that are published on the Internet and Databases.

This document may serve as a first hand guide for researchers to understand and appreciate company valuation techniques and also get a practical viewpoint about analytics of the published data in order to build perceptions about a public listed company.

Objectives of the Study
This study has the following broad objectives:

  • to investigate into investor’s perception of determining the performance of the  banks and how much knowledge they have about financial statements;
  • to investigate how management of the bank measure their performance as compared to theoretical accounting standards;
  • To find out what financial and Strategic analytics reveal about Bank of Baroda and Bank of India and how do they compare.

Hypothesis for the Study
The following hypotheses will be formulated and tested in the present study:

H0: There is no significant difference between the liquidity, profitability and solvency of Bank of Baroda and Bank of India; and

H1: There is a significant difference between the liquidity, profitability and solvency of Bank of Baroda and Bank of India.

Research Methodology
Sample Size: 200 customers
Sample technique: convenient sampling or non probability sampling
Sources of Data:
Primary Source:  Questionnaire from customers
Secondary Source: Annual reports and financial statements for the past 5 years.
Research Instrument: Questionnaire
Tools of Data Analysis: The collected data will be analyzed by using the ratio analysis. Further, statistical tools like percentage, trends and tabulation, mean standard deviation, coefficient of variation and growth rate are also used for the purpose of the study.

Expected Contribution from the Study
The finance is the scarcest resource in India, needs to be utilized optimally. The sound performance of a  firm depends on the well planning of capital structure, investment and distribution. Any firm that fails to apply the sound principles of capital structure like cost, control and flexibility and the firm that fails to adopt scientific tools of investment and distribution in managing funds will not survive in long run. Further, the firm should apply the wealth maximization as criteria in taking financial decisions like financing, investment and distribution. Since, the finance is the lifeblood and nervous system of an enterprise, the importance of the timely appraisal the performance of the firm should not be overemphasized. In addition, it is clear from the review of earlier literature that there has been no study on performance appraisal of the Bank of Baroda and Bank of India.

Chapterisation
·         Introduction
·         Literature Review
·         Research Methodology
·         Data Analysis and Findings
·         Recommendations & Conclusion
  



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