INVESTMENT ANALYSIS OF

EVEREST BANK LIMITED

A Project Work Report

Submitted By:

RAMESH SAPKOTA

T. U. REGISTRATION NO: 7-2-805-45-2019

Group: Finance

BARDIYA MULTIPLE CAMPUS

BARDIYA

Submitted to:

Office of Controller of Examination

The Faculty of Management

TRIBHUVAN UNIVERSITY

In partial fulfillment of the requirement for the degree of

BACHELOR OF BUSINESS STUDIES (B. B. S.)

BARDIYA
 Declaration
I hereby declare that the project work entitled ‘INVESTMENT ANALYSIS of EVEREST BANK Ltd.’
Submitted to the Faculty of Management, T. U., Kathmandu is an original piece of work under
the supervision of Mr. NARAYAN PRASAD SUBEDI, faculty member of BARDIYA MULTIPLE
CAMPUS in BARDIYA and is submitted in partial fulfillment of the requirements for the award of
degree of Bachelor’s in Business Studies. This project work report hasn’t been submitted to any
other university for the award of any Degree or diploma.

RAMESH SAPKOTA

Date: April 15 2024

 SUPERVISOR’S RECOMMENDATION
The project work report entitled ‘INVESTMENT ANALYSIS of Everest Bank Ltd.’ of BARDIYA
MULTIPLE CAMPUS, BARDIYA, is prepared under my supervisor as per the procedure and
format requirement laid by the faculty of management, T.U. as partial fulfillment of the
requirement for the award of the degree of bachelors of business studies. I, therefore
recommend the project work report for evaluation.

……………………………………

NARAYAN PRASAD SUBEDI

BARDIYA MULTIPLE CAMPUS

 Endorsement
We hereby endorse the project work report entitled ‘INVESTMENT ANALYSIS of EVEREST BANK
Ltd’ by RAMESH SAPKOTA of Bardiya Multiple campus BARDIYA, submitted in partial fulfillment
of the requirements for award for the Bachelor of Business Studies for external evaluation.

………………………….
MR. CHANDRA PRASAD JAISHI

PUSHPALAL MEMORIAL COLLAGE

April 15
 Acknowledgement
This study attempts to examine the INVESTMENT ANALYSIS of EVEREST BANK LIMITED, with
available data and information. It deals with the problem identification besides the field study
to acquire the reality of banking operation. For easier study the data has been presented by
tables, graphs and have been interpreted using various statistical methods.

I express my heartiest gratitude to Mr. NARAYAN PRASAD SUBEDI for guiding and inspiring me
to do this work.

Similarly, I am equally thankful to all the teacher of BARDIYA MULTIPLE CAMPUS, Department
of Management who helped me preparing this project. I would like to extend my gratitude to
our college Campus chief Mr. CHANDRA PRASAD JAISHI for his continuous encouragement in
our study.

I would like to extend my sincere thanks to the staff of EVEREST BANK Ltd, for providing me
related data, information and contribution.

Finally, I want to thank my family, friends and colleagues for their continued moral support.

RAMESH SAPKOTA

BARDIYA MULTIPLE CAMPUS

March 17
Table of contents

Declaration

Supervisor’s recommendation

Endorsement

Acknowledgement

Table of contents

List of tables

List of figure

Abbreviation

CHAPTER: 1

Introduction Pages

1.1 Background of the study…………………………………………………………………………………….. 1

1.1.1 Meaning of financial analysis……………………………………………………………………….. 1
1.1.2 Elements of the financial analysis…………………………………………………………………. 1
1.1.3 Commercial Banking Scenario in Nepal………………………………………………………….. 2
1.2 Profile of organization………………………………………………………………………………………….. 2
1.2.1 Shareholding composition……………………………………………………………………………….. 3
1.2.2 Composition of Board of Directors…………………………………………………………………… 5
1.3 Statement of Problem……………………………………………………………………………………………. 6
1.4 Objectives of the study……………………………………………………………………………………………. 6
1.5 Rational of the study……………………………………………………………………………………………….. 7
1.6 Review…………………………………………………………………………………………………………………….. 7
1.6.1 Conceptual…………………………………………………………………………………………………………. 8
1.6.2 Precious study…………………………………………………………………………………………………….. 8
1.7 Methodology………………………………………………………………………………………………………………. 9
1.7.1 Research design……………………………………………………………………………………………………..9
1.7.2 Population and sample…………………………………………………………………………………………… 10
1.7.3 Types of data 12
1.7.4 Data collection procedure……………………………………………………………………………………… 13
1.7.5 Tools used……………………………………………………………………………………………………………… 13
1.8 Limitations………………………………………………………………………………………………………………………. 18

Chapter II

Results and analysis

2.1 Introduction…………………………………………………………………………………………………………………20

2.2 Financial Statement analysis……………………………………………………………………………………….20

2.2.1 Liquidity Ratio……………………………………………………………………………………………………… 22

2.2.2 Profitability Ratio…………………………………………………………………………………………………… 29

2.2.3 Assets management ratio……………………………………………………………………………………….. 36

Chapter III

Summary and conclusions

3.1 Summary……………………………………………………………………………………………………………………….41

3.2 Conclusion……………………………………………………………………………………………………………………..45

BIBLIOGRAPHY………………………………………………………………………………………………………………… 47
List of tables
Table 1: Cash and bank balance to investment ratio.

Table 2: Cash and bank balance to total deposit ratio

Table 3: Cash and bank balance to total assets ratio

Table 4: Current ratio

Table 5: Return on shareholder’s fund

Table 6: Return on total assets

Table 7: Earning Per Share

Table 8: Dividend per share

Table 9: Loan and advances to fixed deposit ratio

Table 10: Loan and advance to total deposit ratio

Table 11: Loan and advances to total assets

 List of figures
Figure 1: Cash and bank balance to investment ratio

Figure 2: Cash and bank balance to total deposit ratio

Figure 3: Cash and bank balance to total assets ratio

Figure 4: Current ratio

Figure 5: Return on shareholder’s fund

Figure 6: Return to total assets

Figure 7: Earning per Share

Figure 8: Dividend per share

Figure 9: Loan and Advance to fixed deposit ratio

Figure 10: Loan and advance to total deposit ratio

Figure 11: Loan and advance to total assets

 List of abbreviations
CB Commercial Bank

CEO : Chief Executive Officer

CBB : Cash and Bank Balance

CV : Coefficient of Variation

DPS : Dividend Per Share

EBL : Everest Bank Limited

EPS : Earning per Share

Ltd. : Limited

NRB : NEPAL RASTRA BANK

NPAT : Net Profit After Tax

P & L Account : Profit and Loss Account
 Chapter I

Introduction
1.1 Background of the Study
1.1.1 Meaning of financial analysis
Financial statement analysis is the process of analyzing a company’s financial statement
for decision-making purposes and to understand the overall health of an organization.
Financial statements record financial data, which must be evaluate through financial
statement analysis to become more useful to investors, shareholders, managers, and
other interested parties. It is the method of evaluating past, present and projected
performance of a company. Analysis track performance measures across financial
statements using several different methods for financial statement analysis, including
vertical, horizontal and ratio analysis. It helps to analysis whether an entity is stable,
solvent, liquid or profitable enough to warrant a monetary investment. It is therefore
essential to analyze the financial statement to know the actual financial performance
and financial position of the organization.
1.1.2 Elements of the Financial analysis:
Profitability
Profitability is the most common measure of an enterprise including the banking
industry. Profitability refers to the state or condition of yielding or earning a financial
profit or gain. It refers to the ability of the company to use its resources to generate
revenues in excess of its expenses. Similarly, profitability ratios are generally considered
to the basic bank financial ratio in order to evaluate how well bank is performing in
terms of profit. For the most part, if a profitability ratio is relatively higher as compared
to the competitor’s, industry averages, guidelines, or previous years same ratios, then it
is taken as indictor of better performance of the bank.

Liquidity
Liquidity refers to a company’s ability to pay its current bills and expenses. In other
words, liquidity relates to the availability of cash and other assets to cover accounts
payable, short-term debt, and other liabilities. It is characterized by the use of
converting an asset into money at a little cost. In the assets side of the balance sheet of
the commercial bank, will be liquid assets, which can be easily converted into cash- such
assets are called liquid assets. Liquidity can also be defined as the bank’s ability to meet
immediate maturing liabilities. Liquid assets mainly include cash and bank balances
money at call and short notice, investment in government securities such as treasury
bills, development bonds, saving bonds etc.
 Leverage ratio:
Companies rely on a mixture of owner’s equity and debt to finance their operations. A
leverage ratio is any one of several financial measurements that look at how much
capital comes in the form of debt, or assesses the ability of a company to meet financial
obligations.

Activity ratio:
Activity ratios measure the relative efficiency of a firm based on its use of its assets,
leverage or other such balance sheet items and are important is determining whether a
company’s management is doing a good enough job of generating revenues and cash
from its resources.

1.1.3 Commercial banking securities in Nepal

NEPAL RASTRA BANK is the central bank of Nepal. It was established in BAISAKH 14,
2013 B.S. under NEPAL RASTRA BANK Act, 2012. It formulates policy to control the
function carried out by the banks. At present, NRB has allowed the commercial banks to
fix the interest rate on deposits as well as credit on the basis of cost and availability of
financial resources. This policy framework has introduced and element of
competitiveness in the financial sectors.
The commercial banks are contributing in the economic development. Resources for
economic development are made available by the commercial banks which ultimately
aids to the overall development of the nations.
In Nepal, “Nepal Bank Limited” was the first commercial bank established in 1994 under
Nepal Bank Act, 1993. Under BANIJYA BANK Act, 2021 B.S. the government launched
“RASTRIYA BANIJYA BANK”. It was fully financed by the government resources. Likewise,
“Agriculture Development Bank” was established on January 2, 1968 under full
ownership of the government for the purpose of developing agriculture sector.
As per the latest data from NEPAL RASTRA BANK, at present, there are 21 commercial
bank in Nepal. Currently, there are seven joint venture banks in operation in Nepal with
there branches located in different part of the country.
1.2 Profile of organization
EVEREST BANK LIMITED
Everest Bank Limited (EBL) is one of the commercial banks in Nepal. It provides
professional and customer friendly banking service in Nepal. It is a registered ‘A’ class
commercial bank, having joint venture with PUNJAB NATIONAL BANK (PNB), India.
Banking services are provided through the wide network of branches and countries to the
entire nation and different section of the society. Deriving strength from the joint venture
partner, Everest Bank Limited is steadily growing in size and operation in last 24 years.
Currently, the bank has 128 branches, located inside and outside the valley. Different types
of saving account and fixed deposit account are offered by the bank in facilities fund
accumulation targeting office and institutions, women, youth, and deprived sectors. In the
same way it also provides various type of loan facilities like home loan, education loan,
vehicle loan, loan against insurance policy and major corporate loan. Correspondingly, the
bank was acknowledgment as the “ Higher Tax Payer among Commercial Banks” by Nepal
Government for FY 2080/81.

Corporate Vision:
To be the Leading Commercial Bank with Pan Nepal presence and become a household
name, providing wide range of financial products and service under on roof.

Mission Statement:
Its mission states “Growth through Banking for A11”.

Motto
It defines its motto as follows:
Consistent in term of Performance and Growth
Strong in terms of its System and Procedures
Dependable in terms of Return to all Stakeholders

Strategic Focus
The bank has set itself the following broad goals:
 Mobilize Deposits through Current, Savings, Term and Call Deposit accounts and
other instruments.
 Grant loans and advances with special thrust on Productive, SME as well as the
Retail Segment.
 Provide Treasury Services following best international practices.
 Facilitates cross border payments services so as to strengthen remittance inflow.
  Provide cash management services, insurance products and other financial
services.
 Provides any other service business that regulator prescribes from time to time.

1.2.1 Shareholding Composition

The present shareholding pattern of bank is presented below:

OWNERSHIP Percent
S.
N

Promoters 49.22%
1

Punjab National Bank 20%

2

3 Public 30.78%

Total 100%

1.2.2 Composition of Board of Directors

The Board of Directors of Everest Bank Limited is chaired by Mr. BISHNU KRISHNA
SHRESTHA along with eight respective Directors. The managerial activities are governed
by Mr. Sudesh Khaling, the respective Chief Executive Officer (CEO) along with three
Deputy General Managers.
1.3 Statement of Problem
A statement of problem is a brief description of an issue to be addressed or a condition to
be improved upon. It aims in identifying and explaining the problem.
In present context of Nepal, commercial bank have good performance. On the basis of
profitability and productivity of commercial banks, public have confidence in their
performance. However, various environmental factors, state of economy, structure of
capital and money market, government policies, taxation policies and various internal
factors have influence upon financial performance and position of commercial banks. In
these circumstances, it is highly useful to make the study on financial statement of Everest
Bank Limited.
Profitability position and stock prices are the general factors considered for evaluating the
financial performance of Everest Bank Ltd. However, one can raise a question, “Are these
the only factors to reflect the performance of the bank?”
Thus, the main problem of the study, is to inquire into the financial performance of Everest
Bank Limited.
This study is targeted to find out answers to the following questions:
 What is the financial performance of Everest Bank Limited?
 Does the overall financial statement depict the financial position indicating any
special strength and weakness of the Bank?
 Is Everest Bank Limited utilizing its assets efficiently?
 Everest Bank Limited is considered to be operationally efficient. But how far it is
efficient?

In this context, the main purpose of the study is analyzing the financial performance of
the Everest Bank Limited in terms of turnover, profitability, liquidity and efficiency in
operation.

1.4 Objective of the Study

The main objective of this study is to analyze the Financial Performance of Everest Bank
Limited. However, the specific objectives of study are as follows:
 To evaluate the financial position of Everest Bank Limited.
 To analyze the financial performance through the use of appropriate financial and
analytical tools.
 To identify the profitability position i. e Earning per share (EPS), Dividend per share
(DPS) and Return on asset (ROA).
 To measure the liquidity, solvency and efficiency.
 To determine the past, present and projected performance of the company.
1.5 Rationale of the study
Optimum utilization of fund makes better impact on the economy of the nation. NBL is one of
the governments owned national bank. So, it has been chosen for the study with below
limitations:

 Importance to shareholders.
 Importance to the management bodies of the bank for the evaluation of the
performance of bank.
 Importance to “outsiders” which are mainly the customers, financing agencies, stock
exchanges etc.
 Importance to the government bodies or the policy makers such as the central bank.
 Interested outside parties such as- investors, customers (depositors as well as credit
takers), and competitors, personnel of the banks, stockbrokers, dealers, and market
makers.
So, this study helps to identify its unseen strength and weakness regarding financial as
well as credit administration.

1.6 Review of Literature

Literature review is the study of the available literature in one’s field of research. The
literature provides us with the knowledge of the status of their field of research. Past study
knowledge provides foundation to the present study. So, analyzing and presenting the
following parts define this chapter:
i. Origin of Bank
ii. Conceptual/Theoretical review
iii. Review of related journal, articles.
Detail explanation of the parts in this chapter is explained below:
i. Origin of Bank
The origin of the word ‘Bank’ is linked to German word ‘Bank’ means a joint stock
company, Latin word ‘Bank’ means a bench, Italian word ‘Bank’ means a bench and
French word ‘banquet’ means a bench. The first bank was set up in Venue, Italy as a
public bank. By the name ‘ Bank of Venice’. Subsequently, ‘Bank of Barcelona’ in
1401 A.D. & ‘Bank of Geneva’ in 1407 A.D. were established. In 1609 A.D, “Bank of
Amsterdam’, a famous bank was established. In reality, the history of modern
banking had started from ‘Bank of England’ in 1694 A.D. But the modern joint stock
banks were established in England only in 1833 A.D. In 1844 A.D., ‘Bank of England’
was established as a first central bank in the world. The ‘Banque De France’ was
 established in France in 1807 A.D. Later, the banks were established in other parts of
the world.
ii. Theoretical Framework
The main objectives of the bank are to collect deposits as much as possible from the
customers and to mobilize into the most profitable sector. If a bank fails to utilize its
collected resources then it cannot generate revenue. Resource mobilization
management of bank includes resource collection, investment portfolio, loans and
advances, working capital, fixed assets management etc. It measures the extent to
which bank is successful to utilize its resources. To measure the bank performance in
many aspects, we should analyze its financial indicator with the help of financial
statements. Financial analysis is the process of identifying the financial strength and
weakness of the concerned bank. It is the process of finding strength and weakness
of the concerned bank. Financial statement analysis is a method of reviewing and
analyzing a company's accounting reports (Financial statements) in order to
gauge its past, present or projected future performance. This process of
reviewing the financial statements allows for better economic decision making.
It is performed to determine the following:
• Profitability
• Liquidity
• Solvency
• Efficiency
The function or the performance of finance can be broken down into three major
decisions i.e. the investment decision, the financing decision, and the dividend
decisions. An optional combination of the three decisions will maximize the value of
the firm.
iii. Review of literature
According to Brigham E.F., L.G. Gapenski, (1992), “financial analysis means assessing
the viability, stability and profitability of a project. It also includes techniques used
for determining the needs of a business.”

According to Ross, Peter S, (2000), “Financial analysis refers to the assessment of a

business to deal with the planning, budgeting, monitoring, forecasting, and
improving of all financial details within an organization.”

Tarawneh (2006) analyzed the financial statement of five Omani banks for the
financial period 1999-2003. In addition, he used simple regression to estimate
the impact of asset management, operation efficiency, and bank size on the
financial performance of these banks. The results showed that financial performance
of the banks was strongly and positively influenced by the operational efficiency,
asset management, and bank size.
Aimazari (2011) in his study attempted basically to measure the financial
performance of seven Jordanian commercial banks for the period 2020-2024, by
using simple regression in order to estimate the impact of independent variable
represented by; the bank size, asset management, and operational efficiency on
dependent variable financial performance represented by; return on assets and
interest income size. It was found that banks with higher total deposits, credits,
assets, and shareholders’ equity do not always mean that has better profitability
performance. Also found that there exists a positive correlation between financial
performance and asset size, asset utilization and operational efficiency, which was
also confirmed with regression analysis that financial performance is greatly
influenced by these independent factors.

Almumani (2014) the purpose of his study is to analyze and compare the
performance of Saudi banks that listed in stocks market for the period 2007-2011.
The study is an evaluator in nature, drawing sources of information from secondary
data. The financial performance of banks is studied on the basis of financial ratios
and variables. Financial performance was measured by two approaches; trend
analysis and inter-firm analysis. It was found that increasing of assets, operating
expenses, and cost to income causes a decrease in Saudi bank’s profitability, while
increasing of operating income causes an increase in the profitability of Saudi Banks.
Analysis shows that all the variables of study have a positive mean value and all
banks are generating income. Saudi joint venture banks proved to be more
proficient in generating profits, absorting loan losses and dominating in ROE, while,
Saudi establishment banks have ,more capacity of absorbing asset losses and
dominating in ROA.

In the Gulf, Samad (2004) investigated the performance of seven locally

incorporated commercial banks during the period 1994-2001. Financial ratios
were used to evaluate the credit quality, profitability, and liquidity
performances. The performance of the seven commercial banks was compared
with the banking industry in Bahrain which was considered a benchmark. The article
applied a Student’s t-test to measure the statistical significance for the measures of
performance. The results revealed that commercial banks in Bahrain were relatively
less profitable, less liquid and were exposed to higher credit risk than the banking.
1.7. Method of study
Research is an organized, systematic, data based, critical, scientific enquiry or
investigation into specific problem, undertaken with the objective of finding answers
or solutions to it. This study focuses on the planned and systematic dealing with the
collection, analysis and interpretation of facts and figure. It consists of research
design, population and sample study, sources of data, data processing procedure
and technique of analyze data.
This chapter describes the methodology employed in this study.

For the purpose of achieving the objectives of study, the applied methodology will
be used.

1.7.1 Research design:

“Research design is a master plan specifying the methods and procedures for
collecting and analyzing the needed information.” (Zikmund, 2007).
It is the formal plan of action for a research project or a blue print of the research
project. It has the researchers to lay out their research questions, methodologies,
implementation procedures, and data collection and analysis to conduct a research
project. The research design then focuses on the data collection methods, the
research instruments utilized, and the sampling plan to be followed.

Specially, research design describes the general plan for collecting, analyzing and
evaluating data after identifying the facts and findings.

What the researcher wants to know and What has to be dealt with in order to obtain
the required information? (Wolf and Pant)
It includes an outline of what the investigator will do from writing the hypotheses
and their operational implications to the final analysis of data. Generally, a common
research design possesses the five basic elements viz.

i. Selection of problem.
ii. Methodology
iii. Data gathering
iv. Data analysis
v. Report writing
 1.7.2 Population and Sample

Population refers to the entire group of people, events, or things of interest

that the researcher wishes to investigate. Survey of each and every group of
population by researcher is not normally possible. For the held research, a portion of
the population is taken as the representation of the entire population. Sample of
items and elements from the population are taken for conducting our study. It
comprises some observations selected from the population.

There are altogether 21 commercial banks functioning all over the nation and most
of their stocks are traded actively in the stock market. Here EBL have been selected
as sample for our study. Similarly, financial statements of this bank for 5 years have
been taken as samples for the same purpose.

1.7.3 Nature and Sources of Data

In regards to the primary data, some personal views and ideas of individual
respondent are collected. But in case of entire study, secondary data which are
basically of the following nature:

 Most of the data taken for the analysis is collected from the material
published by the concerned banks through their annual reports.
 Since the stock of EBL is listed in NEPSE, the figures are all most reliable and
suitable too.

In order to fulfill the objective of the research work, all the secondary data are
collected, processed and tabulated in time series and bar diagram. The reliability
of the data complied in the annual report of the bank is judged and confirmed by
an independent auditor.

So, the major sources of secondary data used for this study are as follows:

 Annual Report of EBL. (2076/77 to 2080/81)

 Official Websites of EBL
 NRB circulars
 NRB directives.

1.7.4 Data processing Procedures

 Data collected from various sources are in raw form. The method of analysis is
directed to find the actual financial performance of the bank. The obtained data are
presented in the tabular form, diagrams and graph with the supporting interpretation.
The collected data are accumulated in organized way and are grouped for calculation using the
method given by the formulas.

1.7.5 Data Analysis tools

Analysis and presentation of the data is the core of each and every research work. Financial and
statistical tools are considered as the most reliable tools to accomplish the objective of the
study. These tools are used in order to make the analysis more effective, convenient, reliable
and authentic.

The various results obtained with the help of financial, accounting and statistical tools are
tabulated under different headlines. Such results are interpreted to portray the current
position and performance of the bank. Two kinds of tools have been used to achieve the certain
goals.

1. Financial Tools

2. Statistical Tools

1. Financial tools

It basically helps to identify the financial strengths and weakness of the firm by establishing
relationship between the items of the financial position and statement of profit of loss account.
Financial tools are categorized into two parts. They are:

i) Ratio Analysis
Ratio analysis is the powerful tool of financial analysis. “A ratio is a mathematical
relationship between two variables. It is significant for financial analysis. It also helps
us to predict the future performance of a company based on study of ratios of
earlier years.” (Benerjee: 1989,95) Thus, ratio analysis is the part of whole process of
analysis of financial statement to make decision regarding the output and credit
for any business and industry. Quantitative relationship are established by the
ratio which facilitates the qualitative judgment to be made.
They are presented below:

1. Liquidity Ratio:
 Liquidity refers to a company’s ability to pay its current bills and expenses. So,
liquidity ratios are used to measure the ability of a firm to meet its short-term
obligations and from them the present cash solvency as well as ability to remain
solvent in the event of adversities of the same can be examined. In other
words, liquidity relates to the availability of cash and other assets to
cover accounts payable, short-term debt, and other liabilities. It is characterized
by the use of converting an asset into money at a little cost. Liquid assets mainly
include cash and bank balances money at call and short notice, investment in
government securities such as treasury bills, development bonds, saving
bonds etc.
i. Cash and Bank Balance to Total Investment Ratio:
This ratio shows the ability of banks immediate funds to cover their investment.
Higher the ratio shows higher liquidity position and ability to cover the deposits
and vice versa. It can be calculated by dividing ‘cash and bank balance’ by
deposits. This ratio can be calculated using the following formula.
Cash and Bank Balance to Total Investment Ratio= Cash and Bank Balance/
Total Investment
ii. Cash and Bank Balance to Total Deposits Ratio:
This ratio is computed to disclose the soundness of the company to compute
cash and bank balance made of total deposits. It can be expressed as:
Cash and Bank Balance to Total Deposit Ratio= Cash and Bank Balance/ Total
Deposit
iii Cash and Bank Balance to Total Assets Ratio:
Cash and Bank Balance to Total Assets Ratio = Cash and Bank Balance /Total
assets

iv. Current Ratio

Current Ratio is the ratio that indicates the relationship between current assets and
current liabilities.
Current Ratio= Current Assets/Current liabilities

1. Profitability
Profitability refers to the state or condition of yielding or earning a financial
profit or gain. It refers to the ability of the company to use its resources to
generate revenues in excess of its expenses. Similarly, profitability ratios are
generally considered to be the basic bank financial ratio in order to evaluate
how well bank is performing in terms of profit. For the most part, if a
 profitability ratio is relatively higher as compared to the competitor(s),
industry averages, guidelines, or previous years’ same ratios, then it is taken as
indicator of better performance of the bank.

i. Return on Shareholder’s Fund:

This ratio, also called Return in Proprietor’s Fund or Return in Net worth.
It measure the percentage of net profit to average shareholder’s fund.

Return on Shareholder’s Fund: Net profit after tax/

Shareholder’s *100

ii. Return on Total Assets

Return on total assets measures the profitability of the total investment
of the company. The ratio is computed by dividing net income after tax
by average total assets.

Return on total assets= Net profit after tax/ total assets*100

iii. Earning Per Share (EPS)

EPS simply shows the profitability of the firm on a per share basis. It is
calculated from the point of view of the ordinary shareholders.

Earning per share: Net profit after tax/ No. of share*100

iv. Dividend Per Share (DPS)

This ratio is calculated by dividing the dividend payable to equity
shareholders by number of equity shares.

Dividend Per Share: Dividend payable to equity shareholders/ No. of equity

shares outstanding*100

2. Asset Management Ratio:

It is also known as turnover or efficiency ratio or assets management

ratio; measures how efficiently the firm employs the assets. Turnover
means; how much number of times the assets flow through a firm’s
operations and into sales (Kulkarni, 1994:138). Greater rate of
turnover or conversion indicates more efficiency of a firm in managing
 and utilizing its assets, being other things equal. Various ratios are
examined under this heading.

i. Loan and Advances to Total Deposits Ratio:

Commercial banks utilize the outsider’s fund for profit
generation purpose. Loan and advances to deposit ratio shows
whether the banks are successful to utilize the outsiders
funds (i.e. total deposits) for the profit generating purpose on
the credit and advances or not.
Credits and Advances to Total Deposits Ratio= Loan and
Advances/ Total deposit

ii. Loan and advances to fixed deposit ratio:

Fixed deposits are the long-term interest bearing obligations
and credits and advances is the major sources of investment.
This ratio measures how many times the amount is used in
credits and advances in comparison to fixed deposit for the
income generating purpose.

Loan and advances to fixed deposit ratio= Loan and advances/

Fixed deposits

iii. Loan and advances to Total assets ratios:

It measures the ability in mobilizing total assets into credits and
advances for profit generating income. The following formula is
used to obtain this ratio.

Loan and advances to total assets ratio= Loan and advances/

Total assets

2) Statistical Tools
For supporting the study, statistical tools have been used under it.

a) Mean
The statistical mean refers to the mean or average that is used to derive the central
tendency of the data in question. It is determining by adding all the data points in a
population and then dividing by total number of points.
It can be calculated as:
Mean = ∑X/ 𝑁

b) Standard Deviation:
Standard deviation is a statistic used as a measure of the dispersion in a distribution,
equal to the square root of the arithmetic mean of the squares of the deviations from
the arithmetic mean.
It can be calculated as:
S.D= √∑(𝑋−𝑀𝑒𝑎𝑛)2/𝑁

c) Coefficient of variance:
It is a standardized measure of dispersion of a profitability distribution. It is often
expressed as a percentage, and is defined as the ratio of the standard deviation to the
mean.
It can be calculated as:
CV= S.D/ mean

1.8. Limitation of the study

Limitation tends to narrow the area of study. It is caused due various undeniable
circumstances. The major limitations of this study are mentioned below:

 The research is based on records of 5 fiscal years analysis only i. e. from FY

2076/77 to FY 2080/81.
 The researcher has used only some statistical tools for presentation and analysis
of data.
 Most of the data used in this study are based on secondary sources mainly
official website of Everest Bank Limited.
 The main focus is given to the quantitative aspect rather than qualitative aspect.
 The study is based on Everest Bank Limited only.
 It is only for partial fulfillment of Bachelor of Business Studies (BBS).
 Chapter II

Results and Findings

2.1 Introduction:
This chapter deals with the presentation, analysis and interpretation of relevant data of Everest
Bank Limited to fulfill the objective of this study. According to the research methodology as
mentioned in the third chapter of this study the data have been analyzed competently. The
purpose of this chapter is to introduce mechanism of data analysis and interpretation. Different
type of analytical methods and tools such as financial ratio analysis and statistical analysis are
used.

2.2 Financial Statement Analysis:

Financial statement analysis is the process of analyzing a company’s financial statement

for decision making purposes and to understand the overall health of an organization. Financial
analysis is done by applying various financial tools in order to have clear picture on the
viability of the project. It is the method of evaluating past, present, and projected performance
of a company. The financial analysis is done to ascertain the liquidity, profitability,
leverage, debt servicing and interest servicing ability of the firm. The concept of financial
statement analysis has been already discussed in previous chapter. Here, we study and analyze
the data by using accounting tools.

2.2.1 Liquidity Ratio:

Liquidity refers to the ability of a firm to meet its short- term or current obligations. So liquidity
ratios are used to measure the ability of a firm to meet its short-term obligations.
Inadequate liquidity can lead to unexpected cash short falls that must be covered 5at excessive
costs reducing profitability. In the worst case, inadequate liquidity can lead to the
liquidity insolvency of the institution. To find - out the ability of the bank to meet their short-
term obligations, which are likely to mature in the short period, the following ratios are
developed under the liquidity ratios to identify the liquidity positions.

i) Cash and Bank Balance to Investment Ratio:

This shows the ratio between cash and bank balance to investment. Cash and bank
balance is the outcome of deposit of customers plus other income and reserves of
the bank. Bank is liable to customer to pay out upon demand of customers so we are
trying to find the comparative study between them.

Cash and bank balance to total investment= Cash and bank

balance/ Total Investment

Table: 1
Cash and Bank Balance to Investment Ratio

(Amount in Rupees)

Cash and Bank Total Investment Ratio Percentage

balance
Fiscal Year

2075/76 13, 172, 782, 867 6, 504, 185, 769 2.0 -

2076/77 25, 116, 482, 060 15, 102, 674, 197 1.7 -15%

2077/78 23, 117, 394, 498 18, 198, 739, 944 1.3 -24%

2078/79 21, 383, 490, 030 11, 964, 561, 347 1.8 38%

2079/80 32, 295, 170, 501 15, 554, 185, 400 2.1 17%

Mean 1.76

SD 0.28

CV 16%
 2.5

1.5
Series 1
Series 2
1 Series 3

0.5

0
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 1 and Figure 1 reveal that the Cash and Bank Balance to Total Investment ratio
is increasing since 2078/79 and 2079/80. EBL’s Cash and Bank Balance to total investment ratio
is the highest of 2.1 times in 2079/80 and lowest in year 2077/78 of 1.3 times. Ratios over the
past five years are found to be decreased in the year 2076/77 and 2077/78. However, the ratios
are found to be increased in the year 2078/79 and 2079/80.

The average is 1.76 times which is greater than 1. Thus, it means that EBL is able to meet the
demand of current depositors during the research period.

Similarly, the standard deviation of the data analyzed is 0.28 which is lower than the mean, it
reveals the most of the numbers are close to the average. And the cash and bank balance and
total investment values are less volatile.

Likewise, the CV represents the ratio of standard deviation to mean. The CV obtained here is 16
percent which means that the ratio of standard deviation to mean is low. Lower the ratio of
standard deviation to mean, the better the risk return trade off. A risk adverse investor
expecting low degree of volatility and high degree of return, in relation to overall market and
industry may want to invest in the bank.
ii. Cash and Bank Balance to total deposit ratio:

This cash and bank balance to total deposit ratio shows that percentage relation between them.
It means the liquid balance available is respect to total deposit of the bank whereas the
difference between the cash and bank balance to total deposit is said as the investment of the
bank.

Cash and Bank Balance to Total deposit= Cash and bank balance/ Total deposit

Table: 2

Cash and Bank Balance to Total Deposit Ratio

(Amount in rupees)

Fiscal Cash and Bank Balance Total Deposit Ratio Percentage

Year
%

2075/76 13, 172, 782, 867 62, 108, 135, 754 0.21 -
2076/77 25, 116, 482, 060 83, 093, 789, 957 0.30 43%

2077/78 23, 117, 394, 498 93, 735, 480, 708 0.25 -17%

2078/79 21, 383, 490, 030 95, 094, 461, 030 0.22 -12%
2079/80 32, 295, 170, 501 115, 511, 705, 922 0.28 27%

Mean 0.25

SD 0.034

CV 14%
 0.35

0.3

0.25

0.2
Series 1
Series 2
0.15 Series 3

0.1

0.05

0
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 2 and Figure 2 Shows that the cash and bank balance to total deposit ratio of
EBL is in fluctuating trend. EBL’s cash and bank balance to total deposit ratio is highest of 0.3
times in 2076/77 and lower in the year 2075/76 of 0.21 times. Ratio over the past five years in
terms of percentage also revels the fluctuation. Ratio are found to be increased in the year
2076/77 whereas decreased in the year 2077/78 and 2078/79. However, the ratio has
subsequently increased in the year 2079/80.

The average is 0.25 which is lower than 1. It means that EBL has more total deposit than cash
and bank balance. In this situation, there is insufficient cash on hand to pay off all the deposit of
the customers. This may not be the bad news if the bank has the condition to extend normal
credit terms to the suppliers and very little credit extended to iys customers.

Similarly, the standard deviation of data analyzed is 0.034 which is very much lower than the
mean, it means that most of the numbers are close to the average. And cash and bank balance
and total deposit are less volatile.

Likewise, the CV shows the extent of variability of the data in relation to the mean of the
population. The CV obtained here is 145 which means that the ratio of SD to mean is low. Lower
the ratio of SD to mean, better the risk return trade off.

iii, Cash and bank balance to total assets ratio:

This cash and bank balance to total assets ratio shows the relation between them. The cash
flows to total assets ratio shows investors how efficiently the business is at using its assets to
collect cash from sales and customer.
 Cash and Bank Balance to total assets= Cash and bank balance/ Total Assets

Table: 3

Cash and bank balance to total assets ratio

Fiscal Cash and Bank Balance Total assets Ratio Percentage

Year
%

2075/76 13, 172, 782, 867 70, 445, 082, 845 0.19 -

2076/77 25, 116, 482, 060 99, 152, 806, 017 0.25 32%

2077/78 23, 117, 394, 498 113, 885, 046, 402 0.20 -20%

2078/79 21, 383, 490, 030 116, 510, 445, 575 0.18 -10%

2079/80 32, 295, 170, 501 144, 811, 151, 443 0.22 22%

Mean 0.21

SD 0.024

CV 12%
 Figure: 3

Cash and bank balance to total assets ratio

0.3

0.25

0.2

Series 1
0.15
Series 2
Series 3
0.1

0.05

0
2075/76 2076/77 2077/78 2078/79 2079/80

Table 3 and Figure 3 shows that the cash and bank balance to total assets ratio of EBL
is in fluctuating trend. EBL’s cash and bank balance to total deposit ratio is highest of 0.25
times in 2076/77 and lower in the year 2078/79 of 0.18 times. Ratio over the past five years in
terms of percentage also reveals the fluctuation. Ratio are found to be positive in the year
2076/77 by 32 percent whereas decreased in the year 2077/78 by 20 percent and 2078/79 by
10 percent. However, the ratio has subsequently increased in the year 2079/80 by 22 percent.

The average is 0.21 which is lower than 1. It means that EBL will not be able to pay off all its
liabilities with available cash and cash equivalents.

Similarly, the standard deviation of data analyzed is 0.024 which is much lower than the mean,
it means that most of the numbers are close to the average. And cash and bank balance and
total assets are less volatile.

Likewise, the CV shows the extent of variability of the data in relation to the mean of the
population. The CV obtained here is 12 percent which reveals that the ratio of SD to mean is
low. Lower the ratio of SD to mean, better the risk return trade off.

iv. Current Ratio

This ratio is used to find the relation between current assets
and current liabilities of the bank. The current ratio is a liquidity
 ratio that measures a company ability to pay short-term
obligations or those due within one year.
Current Ratio= Current Asset/ Current Liabilities

Table: 4

Current Ratio

Fiscal Current Asset Current Ratio Percentage

Year liabilities

2075/76 63,313,902,806 64,519,090,385 0.98 -

2076/77 83, 91,193,583,991 0.91 -7%

419,734,448

2077/78 95,007,318,559 104,302,113,291 0.91 0%

2078/79 11,964,561,347 103,897,018,696 0.99 9%

2079/80 15,554,185,400 127,607,799,028 0.99 0%

Mean 0.96

SD 0.038

CV 4%
 1

0.98

0.96

0.94
Series 1
Series 2
0.92 Series 3

0.9

0.88

0.86
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 4 and figure 4 shows that the current ratio of EBL is fluctuating over the past
five year. EBL’s current ratio is highest of 0.99 times in 2078/79 and 2079/80 and lower in the
year 2076/77 and 2077/78 of 0.91 times. Ratio over the past five years in terms of percentage
also reveals the fluctuation. Ratio are found to be decreased in the year 2076/77 whereas no
change in the year 2077/78, increasement in the year 2078/79 and again no change in the year
2079/80.

The average is 0.96 which is lower than 1. This shows that the current asset of the company is a
bit not sufficient to meet its current liabilities.

Similarly, the standard deviation of data analyzed is 0.038 which is lower than the mean, it
means the most of the numbers are close to the average. And volatility of current assets and
current liabilities are less.

2.2.2 Profitability Ratio:

A profitability ratio is a measure of profitability, it is a way to measure a company’s

performance. Profitability is simply the capacity to make a profit. A profit is what is left over
from income earned after one has deducted all costs and expenses related to earning the
income. It refers to the ability of the company to use its resources to generate revenues in
excess of its expenses. Profitability ratios are generally considered to be the basic bank financial
ratio in order to evaluate how well bank is performing in terms of profit.

i. Return on Shareholder’s Fund:

This ratio, also called Return in Proprietor’s Fund or Return in Net worth. It measure
the percentage of net profit to average shareholder’s fund.

Return on Shareholder’s Fund= Net Profit after Tax/ Shareholder’s* 100

Table: 5
Return on Shareholder’s Fund

Fiscal Year Net Profit after Shareholder’s Ratio Percentage

Tax Fund
%

2076/77 1,549,698,560 5,457,147,460 28% -

1,574,352,443 6,890,337,025 23% -18%

2077/78

2078/79 1,730,207,025 8,514,088,112 20% -13%

2079/80 2,006,247,780 11,544,581,880 17% -15%

2080/81 2,581,681,778 16,134,507,415 16% -6%

Mean 20.8%

SD 4.35%

CV 21%
 Figure: 5

Return on Shareholder’s Funds

30%

25%

20%

Series 1
15%
Series 2
Series 3
10%

5%

0%
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 5 and figure 5 shows that the Return on shareholder’s fund of EBL is in
decreasing trend. EBL’s Return on shareholders fund is the highest of 28 percent in 2075/76
and lowest in year 2079/80 of 17 percent. Ratios over the past five years are found to be
decresed every year. The return on shareholders fund is found to be minimum in 2079/80 at 17
percent.

The average in 20.8 percent which means that the return on shareholders fund is 20.8 percent
of net profit on average.

Similarly, the standard deviation of the data analyzed is 4.35 percent which is lower than the
mean, it reveals that most of the numbers are close to the average. And the net profit after tax
and shareholders fund are less volatile.

Likewise, the CV represents the ratio of standard deviation to mean. The CV obtained here is 21
percent which means that the ratio of standard deviation to mean is low. Lower the ratio of
standard deviation to mean, the better the risk return trade off. A risk averse investor expecting
low degree of volatility and high degree of return, in relation to overall market and industry
may want to invest in the bank.

ii. Return on Total Assets

Return on Total assets measures the profitability of the total investment of the
company. The ratio is computed by dividing net income after tax by average total
assets. The ratio is calculated to measure the profit after tax against the amount
invested in total asets to ascertain whether assets are being utilized properly or not.

Return on Total Assets= Net Profit after Tax/ Total assets * 100

Table: 6

Return on Total assets

Fiscal Year Net profit after tax Total assets Ratio Percent

2075/76 1,549,698,560 70,445,082,845 2.2% 0%

2076/77 1,574,352,443 99,152,806,017 1.6% -27%

2077/78 1,730,207,025 113,885,046,402 1.5% -6%

2078/79 2,006,247,780 116,510,445,574 1.7% 13%

2079/80 2,581,681,778 144,811,151,443 1.8% 6%

Mean 1.76%

SD 0.00058%

CV 0.033%
 Figure: 6

Return on Total assets

2.50%

2.00%

1.50%
Series 1
Series 2
1.00% Series 3

0.50%

0.00%
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 6 and Figure 6 shows that the Return of Total Asset of EBL is in fluctuating
trend. EBL’s return on total assets is highest of 2.2 percent in 2075/76 and lower in the year
2077/78 of 1.5 percent. Ratio over the past five years in terms of percentage also reveals the
fluctuation. Ratio are found to be decreased in the year 2076/77 and 2077/78 whereas increase
in the year 2078/79 and 2079/80.

The average is 1.76 percent which means that EBL, needs to increase the efficiency of assets
utilization to increase the earning.

Similarly, the standard deviation of data analyzed is 0.00058 percent which is much lower than
the mean, it means that most of the numbers are close to the average. And the volatility is
lesser between the values.

Likewise, the CV shows the extent of variability of the data is relation to the mean of the
population. The CV obtained here is 0.033 percent which reveals that the ratio of SD to mean is
low. Lower the ratio of SD to mean, better the risk return trade off.
 iii. Earning Per Share (EPS)
EPS simply shows the profitability of the firm on a per share basis. It is calculated
from the point of view of the ordinary shareholders:
Earning Per Share= Net Profit after Tax/No. of share *100

Table: 7
Earning Per Share

Fiscal Net Profit after tax No. of shares EPS PERCENTAGE

Year
%

2075/76 1,549,698,560 18,012,391 86 0% Figure: 7

Earning per
2076/77 1,574,352,443 20,173,878 78 -9%
share
2077/78 1,730,207,025 20,173,878 86 10%

2078/79 2,006,247,780 60,352,269 33 -62%

2079/80 2,581,681,778 60,352,269 43 30%

The above
Mean 65.2 Table 7 and
Figure 7
SD 22.62 above that
the earning
CV 35%
per share of
EBL, is in
fluctuating trend. EBL’s earning per share is highest of RS. 86 in 2077/78 and lowest in the year
2078/79 of RS. 33.

Ratio over the past five years in terms of percentage also reveals the fluctuation. Ratio are
found to be decreased in the year 2076/77 by 9 percent whereas increase in the year 2077/78
by 10 percent. Again, there has been decrease in the year 2077/78 by 62 percent and further
increase by 30 percent in the year 2079/80 as compare to the relative previous year.

The average is RS. 65.2 which means that EBL shows promising return in terms of EPS in future.
Similarly, the standard deviation of data analyzed is RS. 22.62 which is lower than the mean, it
means that most of the numbers are close to the average. And the volatility is lesser between
the values.

Likewise, the CV shows the extent of variability of the data in relation to the mean of the
population. The CV obtained here is 35 percent which reveals that the ratio of SD to mean is
medium.

iv. Dividend Per Share (DPS)

This ratio is calculated by dividing the dividend payable to equity shareholders by
number of equity shares.

Dividend per share= Dividend payable to equity shareholders/No of equity shares

outstanding *100

Table: 8
Dividend per share

Fiscal Year Dividend payable to No. of equity share DPS Percentage

equity shareholders outstanding
%

2075/76 920,395,772 18,012,391 51 0%

2076/77 141,122,877 20,173,878 7 -86%

2077/78 106,495,939 20,173,878 5 -29%

2078/79 110,422,513 60,352,269 2 -60%

2079/80 1,600,000,000 60,352,269 27 1250%

Mean 18.4

SD 18.52

CV 101%
 Figure: 8

Dividend per share

60

50

40

Series 1
30
Series 2
Series 3
20

10

0
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 8 and Figure 8 shows that the dividend per share of EBL is in fluctuating trend.
EBL’s dividend per share is highest of RS. 51 in 2075/76 and lowest in the year 2079/80 of RS.2.
Ratio over the past five years in terms of percentage also reveals the fluctuation. Ratios are
found to be decreased in the year 2076/77, 2077/78 and 2078/79. However, the ratio has
highly increased in the year 2079/80.

The average is RS. 18.4 which means that EBL has distributed favorable income as dividend to
the investors.

Similarly, the standard deviation of data analyzed is RS. 18.52 which is higher than the mean, it
means that the numbers are more spread out. And the volatility is higher between the values.

Likewise, The CV shows the extent of variability of the data in relation to the mean of the
population. The CV obtained here is 101 percent which reveals that the ratio of SD to mean is
very high.
2.2.3 Assets Management Ratio:
It is also known as turnover or efficiency ratio or assets management ratio. It measures how
efficiently the firm employs the assets. The asset turnover ratio measures the value of a
company’s sales or revenues relative to the value of its assets. The asset turnover ratio can be
used as an indicator of the efficiency with which a company is using its assets to generate
revenue. Higher the asset turnover ratio, the more efficient a company. Conversely, if a
company has a low asset turnover ratio, it indicates it is not efficiently using its assets to
generate sales.

i. Loan and Advances to fixed deposit ratio:

Loan and advances are the assets of the bank and fixed deposit is the liability. So,
this is the ratio between assets and liability. This helps to show the ratio of loan and
advances to fixed deposit. We can also conclude that what part of the credit and
advances is initiated against fixed deposit.

Loan and advances to fixed deposit= Loan and advances/ Fixed deposi

Table: 9

Loan and advances to fixed deposit ratio

Fiscal Loan and advances Fixed deposit Ratio Percentage

Year
%

2075/76 47,572,024,207 14,528,858,311 31% 0%

2076/77 54,482,465,225 19,784,889,538 36% 16%

2077/78 67,955,107,021 25,999,038,315 38% 6%

2078/79 77,287,764,142 36,311,502,599 47% 24%

2079/80 94,182,247,596 54,063,678,682 57% 21%

 Mean 41.9%

SD 9.2%

CV 22%

Figure: 9

Loan and advances to fixed deposit ratio

60%

50%

40%

Series 1
30%
Series 2
Series 3
20%

10%

0%
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 9 and Figure 9 shows that the loan and advances to fixed deposit ratio of EBL
is in increasing trend. EBL’s loan and advance to fixed deposit ratio is highest of 57 percent in
2079/80 and lowest in the year 2075/76 of 31 percent. Ratio over the past five year in terms of
percentage also reveals the increasing trend. Ratio are found to be increased continuously since
2075/76 to 2079/80.

The average is 41.9 percent which means earning of EBL us insufficient to cover unforeseen
fund requirement.

Similarly, the standard deviation of the data analyzed is 9.2 percent which is lower than the
mean, it means that most of the numbers are close to the average. And the volatility is lesser
between the values.
Likewise, the CV shows the extent of variability of the data in relation to the mean of the
population. The CV obtained here is 22 percent which reveals that the ratio of SD to mean is
low. Lower the ratio of standard deviation to mean, the better the risk return trade off.

ii. Loan and Advances to total deposit ratio:

Loan and advances is the investing activities of the bank and total deposits is the
deposit amount of the bank collected from its customers. This ratio measures the
extent to which the bank is successful to manage its total deposit on loan and
advances for the purpose of income generation. A high ratio indicates better
mobilization of collected deposit and vice-versa. However, it should be noted that
too high ratio might not be better from liquidity point of view.
Loan and advances to total deposit ratio= Loan and advances/
Total deposit

Table: 10
Loan and advances to total deposit ratio

Fiscal Loan and advances Total deposit Ratio Percentage

Year

2075/76 47,572,024,207 62,108,135,754 77% 0%

2076/77 54,482,465,225 83,093,789,957 66% -14%

2077/78 67,955,107,021 93,735,480,708 72% 9%

2078/79 77,287,764,142 5,094,461,030 81% 13%

2079/80 94,182,247,596 115,511,705,922 82% 1%

Mean 75.6%

SD 6%

CV 8%
 Figure: 10

Loan and advance to total deposit ratio

90%

80%

70%

60%

50%
Series 1
Series 2
40%
Series 3
30%

20%

10%

0%
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 10 and Figure 10 shows that the loan and advances to total deposit ratio of
EBL is fluctauting trend. EBL’s loan and advances to total deposit ratio is highest of 82 percent in
2079/80 and lowest in the year 2076/77 of 66 percent. Ratio over the past five year in terms of
percentage also reveals the fluctuating trend. Ratio are found to be decreased in the year
2076/77. However, the ratios have continuously increased since 2077/78 to 2079/80.

The average of loan and advance to total deposit ratio is 75.6 percent which means credit
management of EBL is in good position.

Similarly, the standard deviation of data analyzed is 6 percent which is lower than the mean, it
means that most of the numbers are close to the average. And the volatility is lesser between
the values.

Likewise, the CV shows the ratio of standard deviation to mean. The CV obtained here is 8
percent which reveals that the ratio of SD to mean is low. Lower the ratio of standard deviation
to mean the better the risk return trade off.

iii. Loan and advances to total assets ratio:

This ratio is determined to find out the relationship between credit and advances to
total assets. Loan and advances is the part of total assets. This ratio helps to find out
that how much proportion of credit and advances to total assets.
 Loan and advances to total assets: Loan and advances/
Total assets
Table: 11
Loan and advances to total assets

Fiscal Loan and Total Assets Ratio Percentage

Year advances
%

2075/76 47,572,024,207 70,445,082,845 68% 0%

2076/77 54,482,465,225 99,152,086,017 55% -19%

2077/78 67,955,107,021 113,885,046,402 60% 9%

2078/79 77,287,764,142 116,510,445,575 66% 10%

2079/80 94,182,247,596 144,811,151,443 65% -2%

Mean 63%

SD 4.7%

CV 8%

Figure: 11

Loan and Advances to total asset ratio

 80%

70%

60%

50%

Series 1
40%
Series 2
Series 3
30%

20%

10%

0%
2075/76 2076/77 2077/78 2078/79 2079/80

The above Table 11 and Figure 11 shows that the loan and advances to total assets ratio of EBL
is in fluctuating trend. EBL’s loan and advances to total asset ratio is highest of 68 percent in
2075/76 and lowest in the year 2076/77 of 55 percent. Ratio over the past 5 year in terms of
percentage also reveals the fluctuating trend. Ratio are found to be decreased in the year
2076/77 by 19 percent whereas ratio has increased in the year 2077/78 and 2078/79 by 9
percent and 10 percent respectively and further ratio has decreased by 2 percent in the year
2079/80.

The average of loan and advances to total assets ratio is 63 percent which shows that the
capability of utilizing the asset of the bank is good.

Similarly, the standard deviation of data analyzed is 4.7 percent which is lower than the mean,
it means that most of the numbers are close to the average. And the volability is lesser between
the values.

Likewise, the CV shows the ratio of standard deviation to mean. The CV obtained here is 8
percent which reveals that the ratio of SD to mean is low. Lower tha ratio of standard deviation
to mean, the better the risk return trade off.

CHAPTER-III
 SUMMARY AND CONCLUSION
3.1 Summary

The study is mainly based on secondary sources. All data are taken from EBL annual report,
literature publication, balance sheet, profit and loss account, different website, related books
and booklets, journals and articles. After collecting data from different sources, it is analyzed by
using financial and statistical tools. Findings are drawn by applying various financial tools viz.
liquidity, profitability and assets management ratio and statistical tools: mean, standard
deviation and coefficient of variation of cash and bank balance and total deposit. In an attempt
to fulfill the objectives of the research work, all secondary data are compiled, processed and
tabulated as per necessity and figures, diagrams and different types of chart are also used.

This study suffers from different Limitation; it considers study of only EBL, because of time and
resource are the constraints of the study. For the purpose of our study, here we have analyzed
the financial performance of Everest Bank Limited over the period of FY 2076/77 to FY 2080/81.
To evaluate the financial performance of the bank, we have divided the whole report to
different chapters. In every chapter, there are several sub-chapters. The first introduction
chapter gives background information about the project work, introduction of Everest Bank
Limited, Review related studies etc. The second chapter called presentation and analysis of
data; we tried to analyze the financial performance of the bank. Therefore, the study may not
be generalized in all cases and accuracy depends upon the data collected and provided by the
organization.

3.2 Conclusion

Major findings from the study leads to the conclusion of our study. The following are the
findings from our study:

 Cash and Bank Balance to Total Investment Ratio of the bank shows the increasing trend
during the study period. The mean ratio is above 1 which means that EBL is able to meet
the demand of current depositors during the research period.
 Considering the Cash and Bank balance to total deposit ratio of EBL, it shows that total
deposit of EBL is increasing as compare to cash and bank balance. The mean ratio is 0.25
times. It shows that the bank has the condition to external normal credit terms to the
suppliers and very little credit extended to its customers.
 Cash and Bank balance to Total assets ratio of the bank deposits that EBL is able to
maintain satisfactory financial condition. The current ratio of the bank is 0.96 which
shows that the current liabilities of the bank is higher than the current assets. Thus, the
 bank either needs to decrease its current liabilities or increase its current assets, so that
the current ratio would be equal or greater than one.
 Return on shareholders fund shows that the bank is earning 20.8 percent of net profit
after tax against shareholders fund on average which shows good profitability position.
 The average of return on total assets is 1.76 percent which means that EBL needed to
increase the efficiency of assets utilization to increase the earning.
 EPS of the bank has decreased significantly in the year 2079/80. However, it has been
observed that the EPS has increased by 30 percent in the year 2080/81, which shows
that EBL has promising return in terms of EPS in future.
 Considering the DPS, it is seen that dividend distributed by the bank has increased
significantly in the year 2080/81 to RS. 27 per share from RS. 2 per share of 2079/80.
From the study it is known that the bank distributes favorable portion of income as
dividend to the shareholders. However, the huge fluctuation does not show promising
security to the shareholders in terms of dividend.
 Loan and Advances to fixed deposit ratio, loans and advances are assets of the bank
whereas fixed deposit is the liability of the bank. This ratio depicts what part of the
credit and advances is initiated against fixed deposit. The average obtained is 41.9
percent which means earning of EBL is insufficient to cover unforeseen fund
requirement.
 Loan and advances to Total deposit ratio measure the extent to which the bank is
successful to manage its total deposit on loan and advance for the purpose of income
generation. A high ratio indicates better mobilization of collected deposit and vice-versa.
The average of loan and advance to total deposit ratio is 75.6 percent which means
credit management of EBL is in good position.
 Loan and Advances to total assets ratio helps to find out that how much proportion of
credit and advances is total assets. The average of loan and advances tpo total asset
ratio is 63 percent which shows that the capability of utilizing the asset of the bank is
good.

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