Chapter I

                                 Introduction

1.1 Background of the study

Investors review important factors in a company's economic status by analyzing financial
statements. These elements include solvency, liquidity, risk management and profitability. A
financial statement is an accounting document summarizing an organization's economic events
and their impacts on the firm's competitive position. There are four types of economic data
summaries: balance sheets or statements of financial position, statements of profit and loss,
statements of cash flows and reports on shareholders' equity, also known as statements of
retained earnings. The objective of financial statements is to provide information about the
financial position, performance and changes in financial position of an enterprise that is useful to
a wide range of users in making economic decisions. To this report the researcher tried to
analyses the financial condition with the ratio analysis of Mangala Gauri Saving & Credit
Cooperative Ltd. This research report covered the essential sector of financial department of the
company. This report included the Liquidity Ratio Analysis and the Debt Management Ratio
Analysis of the Financial Data of Mangala Gauri Saving & Credit Cooperative Ltd. from FY
2075/76. Thus, it would be appropriate to say the report supported the subject matter of the field
of financial sector of Business Company.
Objectives of the Study
Ratio analysis can provide an early warning of potential improvement or, deterioration in a
company’s financial situation or, performance. The main objectives behind this research are as
follows:
 To find out the liquidity ratio of this cooperative
 To analyze the strength and weaknesses of financial position
 To evaluate the organization's operating efficiency
 To evaluate the organization's efficiency in managing and utilizing its assets
Limitation of Study
 In the research time, we are not able to use primary data of this organization. We used secondary
data like annual general meeting report, other published and unpublished data. The following
factors are the basic limitations:
 The main constraints of the study are insufficient of information which is highly required
for the study.
 This study is limited to the information that was available from the secondary data.
 This study is mainly carried out to attain the partial fulfillment of BBS 4th year study.
 Only few financial tools are used in this study.

Methodology
Research methodology implies the basic research method to be carried out through the entire
study. Methodology is the most important part for the study. It describes the site selection,
research design, population and sample, sources of data, method of data collection, data analysis
tools, analysis model and limitation of the methodology.

The task began with the collection of necessary data and information concerning the study. The
data and information collected were studied carefully and presented them systematically and get
them analyzed so as to meet the objective of the report. All data provided were thoroughly
studied and then search design was to plan systematically.

                      Chapter-2    Results and Analysis

Data Analysis and Interpretation

Financial ratios related to the financial performance are presented to analyze the performance of
Mangala Gauri Saving & credit Co-operative Ltd. Some important financial ratios are calculated
in the point of view of financial performance. The ratios are designed and calculated to highlight
the relationship between financial performances. The main sources of data are secondary data
related to financial performance of the organization. Thus, here are some of the elements to be
noted in the process of presentation and analysis of financial position of the organization where
we used various financial tools and there are as follows:
Current ratio:           
               The current ratio is a liquidity ratio that measures a company's ability to pay short-term
and long-term obligations. To gauge this ability, the current ratio considers the current total
 assets of a company (both liquid and illiquid) relative to that company’s current total liabilities.
The formula for calculating a company’s current ratio is following as:
·         Current Ratio = 
Higher current ratio indicates better liquidity position.
Table 1: Current Ratio Analysis
Year Current Assets Current Liabilities Ratio
2070/71 32535534 3128647 10.40
2071/72 31780985 2788369 11.40
2072/73 37341941 2647174 14.11
2073/74 48844035 3842567 12.71
2074/75 24376485 5352266 4.55

Generally, higher current ratio indicates better liquidity position and 2:1 time or more is
considered satisfactory. Here in the context of the Mangla Gauri Saving & Credit cooperative
Ltd., the current ratio of 2070/71 is 10.4, 2071/72 is 11.4, 2072/73 is 14.71, 2073/74 is 12.71 and
2074/75 is 4.55 times.
Return on Equity Ratio (ROE):
Return on equity is used in finance as a measure of a company’s profitability. It reveals how
much profit a company generates with the money that equity shareholders have invested. This
ratio is useful for comparing the profitability of a company to that of other firms in the same
industry. It is calculated as following:
Return on Equity =
    Table 3: Return on Equity
Year Net profit Net Equity Ratio (%)
2070/71 1294621 15556700 8.32
2071/72 1102260 15556700 7.10
2072/73 990969 15563200 6.70
2073/74 1162860 15566000 7.50

The return on equity of the MGS&CC Ltd. Over the five year. The trend is fluctuating. Return on
equity are: from 2070/71 to 2073/74 is 8.32%, 7.1%, 6.7% and 7.5%.
Return on Total Assets (ROA):
It is calculated as following:
·     Return on Total assets =
Table 4: Return on Total Assets
Year Net profit Total Asset Ratio (%)
2070/71 1294621 142079216 0.911
2071/72 1102260 166552808 0.66
2072/73 990969 199236382 0.50
2073/74 1162860 213112326 0.55

Return on total assets is obtained by dividing net income after tax by total assets. This ratio
measures the efficiency of cooperative in utilization of overall assets. High ratio indicates the
success of management in overall operation, all low ratio means inefficient operation of
organization. The ratio from 2070/71 to 2073/74 is 0.911%, 0.66%, 0.50% and 0.66%.
Profit Margin Ratio: 
Profit margin is a profitability ratios calculated as net income divided by revenue, or net profits
divided by sales. It is calculated as following:
Profit Margin Ratio =
              Table 5: Profit margin Ratio
Year Net profit Sales/Revenue Ratio (%)

2069/70 2292538 15153865 15.13

2070/71 1294621 18491552 7.00
2071/72 1102260 19150971 5.67
2072/73 990969 20737476 4.78
2073/74 1162860 26495991 4.39

The Net Profit Margin ratio of the cooperative is 15.13%, 7%, 5.76%, 4.78% and 4.39%. The
trend of net profit margin ratio is decreasing trend.
Major Finding
This field work report has following major finding about MGSCC Ltd.:
a) MGSCC Ltd. Is one of the cooperative organizations in Nepal. The function of the
cooperative is similar to banking role, in which provide loan and collecting deposit from
public.
b) The study shows the current ratio of MGSCC Ltd. Over the study years, in 2070/71 the
current ratio is 10.4 times, in 2071/72 it is 11.4 times, in 2072/73 it is 14.11 times, in
2073/74 it is 12.71 times and 2073.74 it is 4.55 times. The trend of current ratio is
 fluctuating trend. The current ratio helps to know the ability to pay the short-term
borrowing.
c) The study shows the cash reserve ratio of MGSCC Ltd. Over the study years, in 2070/71
the cash reserve ratio is 26.94%, in 2071/72 it is 23.93%, in 2072/73 it is 21.16% and in
2073/74 it is 25.93%. The cash reserve ratio measures the liquidity position of
organization. The trend of cash reserve ratio is fluctuating.
d) The return on equity ratio shows the return position of the organization. The ratio of
MGSCC Ltd. Over the five years is; in 2070/71 the return on equity is 8.3%, in 2071/72 it
is 7%, in 2072/73 it is 6.7% and in 2073/74 it is 7.5%.
e) The study of  net profit margin ratio of MGSCC Ltd over the study years, in 2069/70  the
net profit margin ratio is 15.13%, in 2070/71 it is 7%, in 2071/72 it is 5.67%, in 2072/73
it is 4.78% and 2073/74 it is 4.93%. The net profit margin ratio measured the earning
capacity of organization. The trend of organization is fluctuating.

Chapter-3 Conclusion and Recommendation

The summary and conclusion of the study are concluded in this chapter. The final and most
important task of the researchers is to enlist fact-finding of the study and suggestions for further
improvement. The analysis is performed with the help of the financial tools and a statistical tool,
which is associated with the comparisons and interpretation under financial analysis, various
ratios related to financial performance analysis are used and under statistical analysis some
relevant statistical tools are used.

Conclusion
As per my stated objective, I would like to clearly conclude my report.
i. To know about the financial/liquidity position of MGSCC Ltd., I have clearly used
various indicators that clearly define the liquidity position of this organization. Using
various indicators like current ratio, return on equity and other, I have shown result of
each indicators. From above analysis we could say that the financial position of MGSCC
Ltd is satisfactory by seeing the over the study years result. In all years generally
MGSCC Ltd has been keeping optimal liquidity position so that it could pay off short
term debt easily.
 ii. As per my stated objective another was to know about the liquidity management policies.
The liquidity management policies could be certainly found out by seeing how company
handles the liquidity terms. So, I find that the liquidity management policy of MGSCC
Ltd is average. They have optimal level of liquidity capacity. They have successfully
generated more earning than more debts. There is less chance of insolvency or being
unable to pay debts in case of MGSCC Ltd. The liquidity management policy is generally
good and better.
iii. ROA is an indicator of how profitable a company is relative to its to total assets. ROA
gives an idea as how efficient management is at using its assets to generate earning.
Calculated by dividing a company’s annual earning by its total assets. ROA is displayed
as a percentage.
iv. ROE is the amount of net income returned as a percentage of shareholders equity. Return
on equity measures a cooperative’s profitability by revealing how much profit a company
generates with the money shareholders have invested. These indicators are profitability
indicator of this cooperative. So, in conclusion we can say that the profitability of
MGSCC Ltd is average. We could see are return in both ROA & ROE.
v. Another is MGSCC Ltd has been able to clear its liabilities in over study years as it has a
more current assets and positions of MGSCC Ltd is quite bit satisfactory. Their liquidity
position is optimal level. The management policy for financial of the organization is quite
good.
So as to conclude the study or to write some brief term about the study, only the chief point has
been focused. Following conclusion can be derived from this study report of MGSCC Ltd:
a) Current ratio is decreasing level over the study years.
b) ROA, ROE and NPM is fluctuating nature.

Implication
Every report is made with some objectives and aim which can be use full to others doing related
to that field. The one of the objectives of this report is to provide the information about the
hardware business to the students who are thinking about to start this business.
            

                                       REFERENCES
·         Adhikari, D.R. & Pandey D.L. (2074), Business Research Methods,  Asmita publication,
Kathmandu
·         Thapa, K., parajuli, M., Dodhari, S.& Shrestha, R.(2073), Fundamentals of Financials
Markets & Institutions, Januka publication, kathmandu
·         Sharma, D.R., Thapa,K.,Pandeya, Chudamani, Joshi,R., Lamsal, L.P. (2073), Fundamentals
of   Investment, Khanal publication, Kathmandu
·         Bhattarai, J. K., Ghimire, S. (2073), Fundamental of Corporate Finance, K.P. Pustak
bhandar,  Kathmandu.
Thesis
Sapkota, S., (2066). “FINANCIAL ANALYSIS BETWEEN EVEREST BANK LIMITED AND
PRIME COMMERCIAL BANK LIMITED” an unpublished master degree thesis: Tribhuvan
University