Business Research Report - For - BBS - Final - Year - of Puna

WORKING CAPITAL MANAGEMENT OF
COMMERCIAL BANK IN NEPAL
A Project Work Report
By:
Poonam Pahadi
T.U. Regd. No.: 7-2-22-503-2019
Patan Multiple Campus
Patandhoka, Lalitpur
Submitted To:
Office controller of Examination
Faculty of Management
Tribhuwan University
In partial fulfillment of the requirements for the degree of

Bachelor of Business Studies (B.B.S)
July, 2024
2
DECLARATION
I hereby declare that the project work entitled “WORKING CAPITAL
MANAGEMENT OF COMMERCIAL BANK IN NEPAL” submitted to Faculty of
Management, Tribhuvan University, is an original piece of work under the
supervision of Mr. Kabi Raj Acharya faculty member, Patan Multiple Campus,
Patandhoka, Lalitpur and is submitted in the partial fulfillment of the requirements for
the degree of Bachelors of Business Studies (BBS). This Project work has not been
submitted to any other university or institution for the award of any degree or
diploma.
……………………..
Poonam Pahadi
July, 2024
3
SUPERVISOR’S RECOMMENDATION
The project work report entitled “WORKING CAPITAL MANAGEMENT OF

COMMERCIAL BANK IN NEPAL” submitted by POONAM PAHADI of PATAN
MULTIPLE CAMPUS is prepared under my supervision as per the procedure and
format requirements laid by the Faculty of Management, Tribhuvan University, as
partial fulfillment of the requirements for the award of the degree of Bachelor of
Business Studies (BBS). I, therefore, recommend the project work report for
evaluation.
…………………..
Mr. Kabi raj Acharya
July, 2024
4
ENDORSEMENT
We hereby endorse the project work report entitled “WORKING CAPITAL

MANAGEMENT OF COMMERCIAL BANK IN NEPAL” submitted by POONAM
PAHADI of PATAN MULTIPLE CAMPUS, in partial fulfillment of the
requirements for award of the Bachelor of Business Studies (BBS) for external
evaluation.
………………………… ……………………….
Mr. Makshindra Thapa Mr. Laxman Singh Kunwar
Chairman, Research Committee Campus Chief
July, 2024 July, 2024
5
ACKNOWLEDGEMENTS
This project work report entitled “WORKING CAPITAL MANAGEMENT OF

COMMERCIAL BANK IN NEPAL” has been prepared in partial fulfillment for the
degree of Bachelors of business studies (BBS) under the course designed by the
Faculty of Management, T.U. This study is based on the prescribed research format
involving the use of financial ratios in banking sector. At the time of preparing this
study, I have consulted with various personalities. So, I would like to extend my
sincere thanks to all whose works and ideas helped me in conducting the study.
Sincerely, I would like to pay my sincere gratitude to my project work report
supervisor Mr. Kabi Raj Acharya of Patan Multiple Campus who guided through
research work with providing valuable suggestions, supports and supervision. Finally,
I would like to offer my profound gratitude to my family members, my friend,
colleagues, well-wishers for their encouragement and support during the entire period
of my study.
…………………………
Poonam Pahadi
July, 2024
6
TABLE OF CONTENTS
Title…..............................................................................................................................i
Declaration....................................................................................................................ii
Supervisor’s recommendation......................................................................................iii
Endorsement..................................................................................................................iv
Acknowledgements.........................................................................................................v
Table of contents...........................................................................................................vi
List of tables................................................................................................................viii
List of figures................................................................................................................ix
Abbreviations.................................................................................................................x
CHAPTER 1: INTRODUCTION...............................................................................1
1.1 Background..............................................................................................................1
1.2 Statement of Problems.............................................................................................6
1.3 Objectives of the Study............................................................................................6
1.4 Rationale..................................................................................................................7
1.5. Review.....................................................................................................................7
1.5.1. Theoretical Review..........................................................................................8
1.5.2 Review of Previous Study.................................................................................8
1.6. Research Method...................................................................................................10

1.6.1. Research Design.............................................................................................10
1.6.2 Population and Sample....................................................................................10
1.6.3 Types of Data..................................................................................................10
1.6.4 Methods of Data Collection............................................................................10
1.6.5 Tools of Data Analysis....................................................................................11
1.6.5.1 Financial Tools.............................................................................................11
1.6.5.2 Statistical Tools............................................................................................12
1.7. Limitations of the Study........................................................................................13

CHAPTER 2:RESULTS AND FINDING................................................................14
2.1 Results................................................................................................................14
2.1.1 Analysis of secondary data..............................................................................14

7
2.2 Financial Analysis and Statistical Analysis.......................................................14
CHAPTER 3: SUMMARY AND CONCLUSION..................................................31

3.1 Summary............................................................................................................31
3.2 Conclusion..........................................................................................................31
BIBLIOGRAPHY.....................................................................................................33
websites....................................................................................................................33
LIST OF TABLES
8
Table 1: Current Assets to Total Assets Ratio............................................................15

Table 2: Current Asset to Fixed Asset Ratio................................................................18
Table 3: Cash and Bank Balance to Current Asset......................................................19
Table 4: Cash and Bank Balance to Total Assets........................................................21
Table 5: Cash Reserve Ratio........................................................................................23
Table 6: Return on Equity............................................................................................25
LIST OF FIGURES
9
Figure 1: Current asset to total Asset ratio Ratio.........................................................17

Figure 2: Current Asset to Fixed Asset........................................................................19
Figure 3: Cash and Bank balance to current Asset......................................................20
Figure 4: Cash and Bank to Total Asset.......................................................................22
Figure 5: Cash Reserve Ratio.......................................................................................24
Figure 6: Return on Equity...........................................................................................27
ABBREVIATIONS
ADBL Agriculture Development Bank Limited

EPS Earnings Per Share
10
GIME Global IME Bank Limited

HBL Himalayan Bank Limited
i.e. That is
MBL Machhapuchhere bank Limited
MPS Market Price Per Share
NPAT Net profit after tax
NRB Nepal Rastra Bank
ROA Return on Assets
ROE Return on Equity
RONW Return on Net Worth
Rs. Rupees
CHAPTER 1
INTRODUCTION
1.1 Background
1.1.1 Meaning of working capital
A company’s investment in cash, short-term securities, accounts receivable, and
inventories is implied by the term “working capital.” Since short-term liabilities are
used to fund these assets specifically, net working capital is equal to current assets
minus current liabilities. In order to minimize net working capital and optimize free
cash flow, a positive working capital cycle balances incoming and outgoing
payments. Managing the link between the company’s short-term assets and short-term
obligations is part of working capital management, which is the decision-making
process for working capital and short-term financing.
The main goal of working capital management is to allow the business to continue
operating and have adequate cash flow available to pay off approaching operating
expenses as well as maturing short-term debt. Additionally, working capital is defined
as the difference between current assets and current liabilities. The main current assets
are debtors, stock, and cash whereas current liabilities are creditors and accrued
expenses.
Weston and Brigham (1972) – “Working capital refers to a firm’s investment in short
term assets, such as cash amounts receivables, inventories etc.” Working capital is the
amount of money that a company has tied up in funding its day-to-day operations. A
company has to tie up money to fund its stocks, credit sales and other current assets,
but this is offset by its ability to fund this from current liabilities such as purchases on
credit. The term working capital is often referred to “circulating capital” which is
frequently (wes) used to denote those assets which are changed with relative speed
from one form to another i.e., starting from cash, changing to raw materials,
converting into work-in-progress and finished products, sale of finished products and
ending with realization of cash from debtors.
The commercial and financial aspects of credit, inventory and marketing, purchasing,
royalties, and investment strategy are important to the working capital management
concept. If a company has adequate short-term assets to cover its short-term debt, it
can be determined by looking at its working capital ratio, often known as the current
2
ratio (current assets/current liabilities). Any working capital ratio in the range of 1.2
to 2.0 is regarded as satisfactory. A ratio below 1.0 suggests negative working capital
and likely liquidity issues; a ratio above 2.0 could suggest that an organization is not
making the best use of its surplus assets to maximize revenue.
1.1.2 Concept of Banking in Nepal
The banking system of Nepal has seen a drastic change for the better in almost every
aspect. The face of the Nepalese banking sector has changed significantly from few
government banks providing limited services, Nepalese banking sector has come a
long way with large number of banks offering wide range of services. At present the
industry is witnessing a phase of intense competition; consumers have seen a quantum
leap in the quality and variety of service offered by the commercial banks. Banks are
institutions whose debts usually referred to as "bank deposits" are commonly accepted
in final settlement of other people's debt. Bank is also defined as an institution, which
accepts deposits from the public and in turn advances loan by creating credit. Banking
system occupied an important place in nation's economy. Bank is a financial
institution, which plays a significant role, in the development of a country. "Banking
institutions are inevitable for the resources mobilization and alround development of
the country. It is resources for economic development; it maintains economic
confidence of various segments and extends credit to people. The banking sector is
largely responsible for collecting household saving in terms of different types of
deposits and regulating them in the society by lending in different sectors of economy.
The banking sector has now reached to most remote areas of the country and has
experienced a good deal in the growth of the economy. By lending their resources in
small scale industries under intensive banking program has enabled the banks to share
in the economic growth of the economy.
Various types of banking institutions are performing different functions. It is the
organ of government that under takes the major financial operations and by other
means influences the behavior of financial institutions so as to support the economic
policy of the government. But in modern times commercial banks are concentrated in
their activities of fulfilling the financial needs of their customers.
1.1.3 Concept of Commercial Banks
Financial intermediaries play significant role to the development of national economy.
They influence savings and surpluses considerably, which results investments.
Financial intermediaries collect financial resources and supply them to the productive
3
sectors that boosts the trade and industry and at last development of the country's
economy. Commercial Banks are heart of financial system they hold the deposits of
many person, government establishment business unit. They make fund available
through their lending and investing activities to borrowers, individuals, business firms
and services for the producers to customers and the financial activities of the
government. They provide the large portion of the medium of exchange and they are
media through which monetary policy is affected. These facts show that the
commercial banking system of nation is important to the functioning of the economy.
Commercial banks are also financial intermediaries they mediate people who save
money and who want to secure the use of money by accepting the deposits, burrowing
funds and advancing loans. In addition to these primary functions, commercial banks,
collect checks and bills, open later of the credit, guarantee on behalf of customers,
undertake capital and other many activities, exchange foreign currencies etc. As per
source of NRB as of Mid-Jan 2024, there are 20 “A” class bank and financial
institutions in nepal.
Machhapuchchhre Bank Limited

The first regional commercial bank from western Nepal, Machhapuchchhre Bank
Limited, was established in 1998 and has been conducting banking business out of
Pokhara since 2000. The Bank meets the needs of its clients by providing the highest
caliber of services along with cutting edge technology and responsible global
standards. To its esteemed clientele, the bank offers cutting-edge banking services
such ATM (VISA Debit Cards), Safe Deposit Locker facilities, Internet and mobile
banking, telephone and mobile bill paying, and any branch banking. It is currently one
of the fully operational national level commercial banks in the nation, functioning
with a paid up capital of more than 10.25 billion rupees, 164 branch offices, 157
branchless banking units, 7 extension counters, and 201 ATMs dispersed around the
nation in fiscal year 2079/80.
Himalayan Bank Limited

Himalayan Bank Limited, established in 1993 as a Joint Venture of Habib
Bank Limited of Pakistan has been successfully reigning the banking industry
since its inception. Himalayan bank holds the legacy of introducing various banking
services for the first time in Nepal from the very beginning. Products such as
4
Premium Savings Account, HBL Proprietary Card and Millionaire Deposit Scheme
besides services such as ATMs and Tele-banking were first introduced by HBL which
was able to win customers’ hearts during that time. Since its establishment, the bank
has been highly focused on innovative approaches and customer satisfaction. The
bank started its journey from Employees Provident Fund Building, popularly
known as Sanchaya kosh Building at Thamel, Kathmandu.
HBL has also been serving Nepali citizens living in the country and abroad through
remittance service. Presently, HBL is the biggest inward remittance handling bank in
Nepal. With its exclusive and proprietary online money transfer software Himal
Remit, HBL is among the top remittance service providers in Nepal having ties with
financial institutions based in the Middle East, Gulf region, UK, Australia, USA,
Japan, Israel, South Korea, Malaysia, Singapore, Portugal, Spain and Hongkong. With
respect to the Merger and Acquisition Policy introduced by Nepal Rastra Bank,
Himalayan Bank Limited acquired Civil Bank Limited at 100:80.28 swap ratio (A
shareholders holding 100 scrips of CBL will get 80.28 scrips of HBL) and
commenced the joint operation as “Himalayan Bank Limited” from February 24,
2023. Currently, the Banks has been happily serving its customers from total of 176
Branch Offices and 20 Extension Counters spread all over Nepal in fiscal year
2079/80.
Agriculture Development Bank Limited

Agricultural Development Bank Nepal was established in 1968 under the ADBN Act
1967, as successor to the cooperative Bank With the main objective of providing
institutional credit for enhancing the production and productivity of the agricultural
sector in the country. The Land Reform Savings Corporation was merged with ADBN
in 1973. Subsequent amendments to the Act empowered the bank to extend credit to
small farmers under group liability and expand the scope of financing to promote
cottage industries. The amendments also permitted the bank to engage in commercial
banking activities for the mobilization of domestic resources.
The bank worked as a premier rural credit institution since its establishment,
contributing substantial agricultural credit supply in the country. Rural finance has
been the principal operational area of ADBN in the past. However, the bank is also
involved in commercial banking operations since 1984, to provide commercial
banking services.
5
The bank has 51% share of Government of Nepal and 49% of general public. Most of
its shareholders are customers and employees.
The enactment of Banks and Financial Institutions Act (BAFIA) took all the banks
and financial institutions (BFIs) under its umbrella and abolished all the acts related to
the BFIs including the ADBN Act, 1967. Since then, the bank has been working as a
public limited company registered under the Companies Act, 2006 and is licensed as
"A class financial institution" by Nepal Rastra Bank from 2006.
Having glorious history of more than 53 years, the bank is one of the leading
commercial banks of the country. With its investment in agriculture, industry, trade,
commerce and households, the bank has above 1.2 million happily satisfied
customers.
It is spread all over the 7 provinces & 77 districts of the nation with its 278 offices in
fiscal year 2079/80. While providing comprehensive services with complete banking
solution, the bank has main motto of promoting rural agriculture, productive and
deprived sectors. The bank is committed to provide best banking services through its
widespread network and help the government from its part, to achieve the aim of
"Prosperous Nepal, Happy Nepali".
Global IME Bank Ltd

Global IME Bank Ltd. (GIBL) emerged after successful merger of Global Bank Ltd
(an
“A” class commercial bank), IME Financial Institution (a “C” class finance company)
and Lord Buddha Finance Ltd. (a “C” class finance company) in year 2012. Two
more “B” class development banks (Social Development Bank and Gulmi Bikas
Bank) merged with Global IME Bank Ltd in year 2013. Later, in the year 2014,
Global IME Bank made another merger with Commerz and Trust Bank Nepal Ltd. (an
“A” class commercial bank). During 2015-16, Global IME Bank Limited acquired
Pacific Development Bank Limited (a "B" Class Development Bank) and Reliable
Development Bank Limited (a "B" Class Development Bank). During 2019-20,
Global IME Bank Limited acquired Hathway Finance Limited (a “C” class finance
company), merged with Janata Bank Nepal Limited (an “A” class commercial bank)
in year 2019 and merged with Bank of Kathmandu on January 9, 2023, to become the
biggest bank In Nepal. Global Bank Limited (GIBL) was established in 2007 as an
‘A’ class commercial bank in Nepal which provided entire commercial banking
6
services. The bank was established with the largest capital base at the time with paid
up capital of NPR 1.0 billion. The paid-up capital of the bank has since been
increased to NPR 36.1287 billion in 2079/80. The bank's shares are publicly traded as
an 'A' category company in the Nepal Stock Exchange.
1.2 Statement of Problems

One of the conditioning factors in decision-making has been identified as working
capital management. The management of short-term liquidity and working capital are
interchangeable. Any organization’s ability to run smoothly depends on its working
capital, which is thought of as its lifeblood and nerve center. In the majority of
businesses, managing working capital is mistaken for managing finances, and
managers are more concerned with burdening the bank than with effectively using it.
A significant number of public firms have never really dealt with working capital
source management. Even if they make an effort to overcome the working capital
shortages, they are typically found to rely on the Nepali government.
So, following are the major problems that have been identify for the purpose of the
study:
i. What is the working capital position of the HBL, MBL, GIME and ADBL?
ii. What is the relationship between working capital management and profitability
of the HBL, MBL, GIME and ADBL?
iii. What are the component of working Capital, which affect the operating income
of HBL, MBL, GIME and ADBL.
iv. What are the major factor affecting the management of working capital of
HBL, MBL, GIME and ADBL.
1.3 Objectives of the Study

Working capital management is a crucial tool for any kind of business. Every
organization’s investment in current assets determines whether it succeeds or fails. It
is important that they invest at the appropriate percentage to prevent excess liquidity.
This study’s primary goal is to investigate how working capital is managed in
commercial banks. This research work are to examine the working capacity of HBL,
MBL, GIME and ADBL by making a study of working capital taking this 4
commercial banks as a sample. The objective of the study are:
i. To analyze the working capital position of the HBL, MBL, GIME and ADBL.
7
ii. To analyze the relationship between working capital management and

profitability of the HBL, MBL, GIME and ADBL.
iii. To evaluate the components of working capital which affect the operating
income of HBL, MBL, GIME and ADBL.
iv. To evaluate the major factor affecting the management of working capital of
HBL, MBL, GIME and ADBL
1.4 Rationale
Efficient management of working capital is an important prerequisite for successful
working of a business concern. An effective working capital management system
helps businesses not only cover their financial obligations but also boost their
earnings. Management of working capital includes inventory management and
management of accounts receivables and accounts payables. HBL, MBL, GIME and
ADBL are the commercial bank of nepal. So, they have been chosen for the study
with below significance:
i. Importance to shareholders.
ii. Importance to the management bodies of the bank for the evaluation of the
working capital of bank.
iii. Importance to "outsiders" which are mainly the customers, financing agencies,
stock exchanges etc.
iv. Importance to the government bodies or the policy makers such as the central
bank
v. 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.
1.5. Review
Review of literature and prior studies refers to examining research papers or other
relevant propositions in connected fields of study in order to identify all previous
studies, their shortcomings, and their findings so that additional research can be
carried out. Capital is essentially needed by any organization for two reasons. The
first, known as Fixed Capital, is needed for long-term purposes. Such money is
needed to build a production facility. Production activity includes investments in
8
buildings, machinery, land, and plants, among other things. The portion of the
company’s capital that is blocked on a permanent or fixed basis is represented by the
investment in these assets. These assets aren’t bought with the intention of selling
them.
1.5.1. Theoretical Review
Khagendra acharya (2008) has explained in his project, a study on, a comparative
study of working capital in Nepalese. He has stated that in Nepalese Enterprises the
management of money and managers are found over conscious about receiving of
money rather than its efficient utilization. Thus, the existing problems in the finance
are mostly directed toward the management to working capital rather than in any area.
Weston and Brigham (1972) explained that working capital management after their
various research study on it. The bond conceptual findings of their study provide
sound knowledge and guidance for the further study on the field of management
working capital in any enterprises and naturally to this study as well. They explain in
the beginning, the important of working capital the use of short- term vs long term
debt, relationship between current assets to fixed assets. The components of working
capitals they have deal with current assets which are cash, marketable securities,
receivable and inventory. For the efficient management of cash. they have Explain the
different cash management model. They have also explained the major source and
form of short-term financing. Such as trade credit, loan from commercial bank and
commercial paper.
1.5.2 Review of Previous Study
The several researchers have found various studies regarding working capital
management performance of commercial banks. In this study, only relevant subject
maters are reviewed.
Amarjit et. al. (2010) Examine the relationship between working capital management
and profitability. For the study, 88American firms listed on New York Stock
Exchange for a period of three years from 2005 to 2007 were selected as a sample.
9
They found statistically significant relationship between the cash conversion cycle
and profitability, measured through gross operating profits. It also showed that
managers could create profits for their companies by handling correctly the cash
conversion cycle and by keeping accounts receivable at an optimal level. The study
concludes with the observation that profitability can be enhanced if firms manage
their working capital in a more efficient way.
Rahman Mohammad M. (2011) focuses on the co-relation between working capital

and profitability. An effective working capital management has a positive impact on
profitability of firms. From the study it is seen that in the textile industry profitability
and working capital management position are found to be up to the mark.
James Kehinde (2011) focuses on effective working capital management within small
and medium scale enterprises (SMEs). Most of the SMEs have little regard for their
working capital position and they don’t even have standard credit policy. They have
very weak financial position, and rely on credit facility to finance their operations.
This credit facility is available from accounts payable most of the time. In conclusion
the authors recommend that for SMEs to survive within the Nigeria economy they
must design a standard credit policy and ensure good financial report and control
system. Besides, they must give adequate cognizance to the management of working
capital. All this requires systematic planning for the management of working capital
to ensure continuity, growth and solvency
Hassan and zahees abbas (2011) The correlation between working capital and
profitability of firms is analyzed for the management of cash cycle management.
Working capital is made by the three important factors, debtor, creditor and stock.
When we include cash conversion cycle (CCC) to working capital then it becomes
working capital management (WCM). Two sectors are selected as a sample size:
automobile and oil and gas sector. The time period is from 2004 -2009. Different
variables affecting the profitability of firms are selected. In this study, networking
capital, inventory turnover in days, average account receivable and financial asset to
total assets (FATA) are taken as independent variables. The result shows positive
movement of working capital (WC) on firm's profitability. R shows the fitness of the
model which is 49.95%. The independent variables explain 49.95% of the model. Key
10
words: Working capital management (WCM), cash conversion cycle (CCC), account
receivable (AR).
Chandra and Selvaraj (2012) analyses the (selvaraj, 2009/10)a for the period from
2000-01 to 2009-10. To measure the effective utilization of working capital,
operating cycle and cash conversion cycle were used. Besides, to measure the
determinants of cash conversion cycle, the Kieschnick model was used. The study
concludes with the observation that the size of a company plays a vital role in
determining the efficiency of its working capital management. The working capital
ratios across the small, medium and large sized steel companies have played a vital
role in determining the working capital management of the selected Indian steel
companies.
1.6. Research Method

Research method is simply Refers to the process that is used to collect information
and data, which helps to collect reliable data and information from various sources in
order to prepare report writing.
1.6.1. Research Design
It is the conceptual structure within which the research is conducted. General
objective of this research is to examine and evaluate the working capital of
commercial bank especially that of HBL, MBL, GIME and ADBL. In order to
achieve this objective, descriptive research design has been followed. Also, the
research is based on historical research design (used of historical data for analysis).
1.6.2 Population and Sample
The population for this study comprises of 20 “A” class commercial banks currently
operating in the country as of Mid-Jan 2024, there are 20 “A” class bank and financial
institutions in nepal. The sample consists of four judgmentally selected commercial
banks are HBL, MBL, GIME and ADBL.
1.6.3 Types of Data
There are two types of data: primary and secondary but the present study is based on
secondary data only. The necessary data is obtained from published Annual report
containing Statement Of financial posit (M., 2011) (Rahman, 2011)ion, Statement of
Comprehensive Income and other related statements of the bank. According to the
need and objectives, secondary data are compiled, processed and tabulated in time
11
series. In order to judge the reliability of data provided by the bank and other sources
they were complied with the annual reports of the bank. The data used in this study is
mainly based on the annual reports HBL, MBL, GIME and ADBL.
1.6.4 Methods of Data Collection
The study is based on secondary data from annual financial report of HBL, MBL,
GIME, ADBL. It relies on both published and unpublished report that relate to this
study. The conclusion is based on financial statement of -HBL, MBL, GIME and
ADBL.
1.6.5 Tools of Data Analysis
Data Analysis tools are those, that are used for the analysis and interpretation of
financial data. These tools are fruitful in exploring the strengths and weaknesses of
the financial policies and strategies. In the study various financial tools have been
used, which are as follows.
1.6.5.1 Financial Tools
Ratio analysis is the main tools for analyzing data under financial tools which helps to
interpret the financial statement of the company to know its strength and weakness as
well as its historical performance so that the current financial condition can be
determined. Ratio analysis of working capital can be studied by analyzing the
following ratios:
a. Current Assets to Total Assets ratio (CATA)
The ratio of current assets to total assets indicates what percentages of the company’s
total assets are invested in the form of current assets. It is calculated as:
Current Asset to Total Assets ratio = Current Assets
Total Assets
b. Current Assets to Fixed Assets ratio (CAFA)

This ratio shows the relationship between the current assets and fixed assets. It is
calculated as:
Current Assets to Fixed assets ratio = Current Assets
Fixed Assets
c. Cash and Bank Balance to Current Assets (CBBCA):

It is calculated as:
12
Cash∧Bank Balance
Cash and Bank Balance to Current Assets =
Current Assets
The small ratio indicates the sound management and large ratio vice versa. The
working capital is directly affected by it.
d. Cash and Bank Balance to Total Assets (CBBTA):

This ratio is calculated as under and indicates what percentage of total assets is
invested in cash and bank balance.
Cash∧Bank Balance
Cash and Bank Balance to Total Assets =
Total Assets
e. Cash Reserve Ratio:

This ratio can be calculated as:
Cash Balance at NRB
Cash Reserve Ratio =
Total Local Deposit
To ensure the security of the deposit holders, each bank has to keep certain percentage
of the total local deposit collection as cash balance in NRB, as per the provision of
NRB. Currently such requirement is 3%. Thus, this ratio measures the liquidity to be
maintained by the bank.
f. Return on Equity:
Net Profit after Tax
Return on Equity =
Total S h are h older Equity
This ratio measures the relationship between the working capital and total assets of
the bank. This ratio is useful to the management for making policy in the types of
finance to be adopted. This ratio also shows the representation of working capital in
the total assets of the bank.
1.6.5.2 Statistical Tools

a. Mean
Mean is the average of the given data and is calculated by dividing the sum of
given data by total number of observations. It is calculated as:
13
Mean = Sum of all the observations

Total number of observations
b. Standard Deviation
The standard deviation is a measure of the amount of variation of a random variable
expected about its mean.
S.D.= √ ∑ x2/ n − (∑ x /n) 2
c. Coefficient of Variance
C.V. = standard deviation
mean
1.7. Limitations of the Study

The major limitations of the study are as follows:
i. This study covered latest 5 years of data starting from 2075/76 to 2079/80.
ii. This study has used secondary source of data only.
iii. Due to the use of secondary data the validity of this study Depend upon the
validity of secondary data.
iv. This study has concerned with Commercial banks such as HBL, MBL, GIME and
ADBL only therefore the results of the study should not be generalized to others
commercial banks.
v. Out of the numerous variables only variables related with working capital were
considered.
14
CHAPTER 2
RESULTS AND FINDING
2.1 Results
This chapter deals with the presentations, analysis and interpretation of the data using
various analytical tools. In this, data collected from different sources are first
presented in tables, graphs and charts, then these data are analyzed by developing
various analyzing tools and results are then interpreted to find out the reason of
happening. Five year's data period covering from the F/Y 2075/76 to 2079/80 have
been analyzed and interpreted as per the research methodology. In the following
section, the relevant and generated data i.e secondary data relating to the study is
presented in tabular form and analyzed it in systematic way. The chapter has been
divided into two parts, the first part deals with presentation of results and second part
deals with findings of project work.
2.1.1 Analysis of secondary data

This section deals with presentation of collected secondary data in tables and figures.
Various ratios and tabular presentations have been computed which have given an
insight into the financial techniques used by the business to maintain the working
capital. Both financial and statistical approaches have been used along with graphical
representation, in the below analysis.
2.2 Financial Analysis and Statistical Analysis

15
Finance is the language of business. Business goals and objectives are set in financial
terms and their outcomes are measured in financial terms. Financial analysis is an
aspect of the overall business finance function that involves examining historical data
to gain information about the current and future financial health of a company
Statistical Analysis Statistical Analysis is the science of collecting data and
uncovering patterns and trends. It's really just another way of saying "statistics". It is
the science of collecting, exploring and presenting large amount of data to discover
underlying patterns and trends. Statistics are applied every day in research, industry
and government to become more scientific about the decisions that need to be made.
2.2.1 Current Assets to Total Assets (CATA)

This ratio is computed by dividing Currents assets with Total assets.
Current Asset to Total Assets ratio = Current Assets

Total Assets
Table 1: Current Assets to Total Assets Ratio
Bank 2075/ 2076/ 2077/ 2078/ 2079/8 Mean S.D. C.V.

name 76 77 78 79 0
HBL 0.797 0.81 0.662 0.697 0.83 0.76 0.07 9.21%
MBL 0.88 0.88 0.86 0.84 0.65 0.82 0.09 10.98
%
GIME 0.89 0.87 0.83 0.83 0.79 0.84 0.03 3.57%
ADB 0.86 0.83 0.79 0.78 0.74 0.8 0.04 5%

L
(see in annex 1)
Table no. 1 shows that, the highest ratio of HBL is 0.83 during the year 2079/80. The
ratio shows increasing trend from 2075/76 to 2076/77. The ratio increases during the
year 2076/77 and after thar decreases in 2077/78 and then follow increasing trend in
2078/79 to 2079/80 and reaches to highest during the year 2079/80. Overall this
shows that the company has adopted the more aggressive current assets investment
policy.
16
In, Average current asset covers 0.76(76%) of total asset means the company has a
significant portion of its assets allocated to fixed assets, while still maintaining a
substantial amount in current assets to support ongoing operations and financial
stability. This balance is crucial for ensuring that the company can meet its short-term
obligations while also investing in long-term growth through fixed assets. The
standard deviation of data analyzed is 0.07 which is very much lower than the mean,
it means that most of the numbers are close to the average. And current asset and bank
total assets are less volatile. The CV shows the extent of variability of the data in
relation to the mean of the population. The CV obtained here is 9.21 percent which
means that the ratio of SD to mean is low. Lower the ratio of SD to mean, better the
risk return trade off.
Similarly, the highest ratio of MBL is 0.88 during the year 2075/76 and 2076/76. The
ratio shows decreasing trend from 2077/78 to 2079/80. The ratio is highest in first and
second year after that follows decreasing trend. When the current asset to fixed asset
ratio is in a decreasing trend, it typically indicates a shift in the composition or
management of a company's assets. Here are some possible reasons why this trend
might occur: A decreasing trend in this ratio could also signal potential financial
health concerns if it reflects a lack of liquidity or excessive investment in fixed assets
without corresponding growth in current assets.
Average current asset covers 0.82(82%) of total asset means the company has a
Also, the highest ratio of GIME is 0.89 during the year 2075/76. The ratio shows
decreasing trend from 2076/77 to 2079/80. The ratio is highest in first year and after
that follows decreasing trend.
17
Likewise, the highest ratio of ADBL is 0.86 during the year 2075/76. The ratio shows
decreasing trend from 2076/77 to 2079/80. The ratio is highest in first year and after
that follows decreasing trend.
relation to the mean of the population. The CV obtained here is 5 percent which
18
1
0.9
Current asset to total asset ratio

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2075/76 2076/77 2077/78 2078/79 2079/80
fiscal year
HBL MBL GIME ADBL

Figure 1: Current asset to total Asset ratio Ratio
2.2.2 Current asset to Fixed Asset Ratio
This ratio shows the relationship between the current assets and fixed assets. It is
calculated as:
Current Assets to Fixed assets ratio = Current Assets
Fixed Assets
Table 2: Current Asset to Fixed Asset Ratio

Bank 2075/7 2076/7 2077/7 2078/7 2079/8 mean S.D. C.V.
name 6 7 8 9 0
HBL 3.9206 4.07 4.41 3.58 4.31 3.46 0.67 19.36
%
MBL 7.11 7.49 5.96 5.068 1.94 5.513 1.98 35.93
6 1 %
GIME 7.72 6.93 4.76 5.06 3.84 5.662 1.44 25.43
%
ADB 6.069 4.88 3.85 3.46 2.92 4.258 1.13 26.67
L %
19
(See annex 2)
Table no. 2 shows that highest ratio of HBL is 4.41 during the income year 2077/78
and lowest ratio is 3.58 during the year 2078/79. Ratio is in increasing trend from year
2075/76 to 2077/78 and the decreases during the year 2078/79 and again increases
during the year 2079/80.
Similarly, Above table shows that highest ratio of MBL is 7.49 percent during the
income year 2076/77 and lowest ratio is 1.94 during the year 2079/80. Ratio is in
decreasing trend from year 2075/76 to 2077/78 and the increases during the year
2078/79 and again decreases during the year 2079/80.
Likewise, Above table shows that highest ratio of GIME is 7.72 percent during the
decreasing trend from year 2075/76 to 2077/78 and the increases during the year
2078/79 and again decreases during the year 2079/80.
Also, Above table shows that highest ratio of ADBL is 6.069 percent during the
continuously decreasing trend from year 2075/76 to 2079/80.
7
Current asset to Fixed asset
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal year
HBL MBL GIME ADBL
Figure 2: Current Asset to Fixed Asset

2.2.3. Cash and Bank Balance to Current Assets (CBBCA):
It is calculated as:
20
Cas h∧Bank Balance

Cash and Bank Balance to Current Assets = *100%
Current Assets
The small ratio indicates the sound management and large ratio vice versa. The
working capital is directly affected by it.
Table 3: Cash and Bank Balance to Current Asset

Bank 2075/ 2076/ 2077/ 2078/ 2079/8 Mean S.D. C.V.
name 76 77 78 79 0
HBL 7.6% 13.33 8.34% 6.94% 9.43% 9.128 2.26 24.76
% % % %
MBL 10.25 8.91% 6.48% 7.72% 8.83% 8.438 1.27 15.05
% % % %
GIME 8.69 6.5% 7.14% 6.16% 7% 7.098 0.86 12.12
% % % %
ADB 8.83 5.69% 6.01% 3.43% 4.78% 5.748 1.78 30.97

L % % % %
(see in annex 3)
Table no. 3 shows that the proportion of cash and bank to current assets of HBL is
13.33 percent which is highest during the year 2076/77. And then continuously
decreasing except in fiscal year 2075/76 due to more increase in Current assets then
cash and bank balance in later years. In FY 2077/78 the ratio is 8.34 percent which is
continuously decreasing and reaches to 8.34 percent and 6.94 percent during the in
FY 2077/78 and 2078/79 respectively. After that the ratio is increase to 92.43
percent in FY 2079/80.
Similarly, The Figure shows that the proportion of cash and bank to current assets of
MBL is 10.25 percent which is highest during the year 2075/76. And then
continuously decreases to 8.91 percent and 6.48 percent respectively during FY
2076/77 and 2077/78 respectively. After that the ratio continuously increases to
7.72 percent and 8.83 percent during the in FY 2078/79 and 2079/80 respectively.
Likewise, The Figure shows that the proportion of cash and bank to current assets of
GIME is 8.69 percent which is highest during the year 2075/76. And then decreases
to 6.5 percent during FY 2076/77. After that the ratio increases to 7.14 percent
during the FY 2077/78 and again decreases to 6.16 percent during the F.Y. 2078/79
and again increases to 7 percent during the FY 2079/80.
Also, The Figure shows that the proportion of cash and bank to current assets of
ADBL is 8.83 percent which is highest during the year 2075/76. And then decreases
to 5.69 percent during FY 2076/77. After that the ratio increases to 6.01 percent
21
during the FY 2077/78 and again decreases to 3.43 percent during the F.Y. 2078/79
and again increases to 4.78 percent during the FY 2079/80.
14.00%
Cash and bank balance to current asset
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2075/76 2076/77 2077/78 2078/79 2079/80
fiscal year
HBL MBL GIME ADBL

Figure 3: Cash and Bank balance to current Asset
2.2.4 Cash and Bank Balance to Total Assets (CBBTA):

This ratio is calculated as under and indicates what percentage of total assets is
invested in cash and bank balance.
Cas h∧Bank Balance
Cash and Bank Balance to Total Assets = *100%
Total Assets
Table 4: Cash and Bank Balance to Total Assets

Bank 2075/ 2076/ 2077/ 2078/ 2079/8 Mean S.D. C.V.
name 76 77 78 79 0
HBL 6.07 10.79 5.52% 4.84% 7.8% 7.004 2.13 30.41
% % % % %
MBL 8.99 7.86% 5.55% 6.45% 5.7% 6.91 1.32 19.1%
% % %
GIME 7.69 7.5% 4.47% 5.07% 5.56% 6.058 1.30 21.46
% % % %
ADB 7.58 4.72% 4.77% 2.66% 3.56% 4.658 1.66 35.64

L % % % %
(see in annex 4)
22
Above table no. 4 shows the investment in cash out of its total assets in HBL. In FY
2076/77 the ratio is 10.79 percent which is highest ratio among all fiscal year. After
that the ratio is decrease to 5.52 percent in FY 2077/78. Then after the ratio
continuously decrease to 4.84 percent and after that increases to 7.8 percent in FY
2079/80.
Above table shows the investment in cash out of its total assets in MBL. In FY
2075/76 the ratio is 8.99 percent which is highest ratio among all fiscal year. After
that the ratio is continuously decrease to 7.86 percent and 5.55 percent respectively in
FY 2076/77 and 2077/2078 respectively. Then after the ratio increase to 6.45 percent
and after that decreases to 5.7 percent in FY 2079/80.
Similarly, the investment in cash out of its total assets in GIME. In FY 2075/76 the
ratio is 7.69 percent which is highest ratio among all fiscal year. After that the ratio is
decrease to 7.5 percent and 4.47 percent in FY 2076/77 and 2077/78 respectively.
Then after the ratio continuously increase to 5.07 percent and 5.56 percent during the
year 2078/79 and 2079/80 respectively.
Also, the investment in cash out of its total assets in ADBL. In FY 2075/76 the ratio is
7.58 percent which is highest ratio among all fiscal year. After that the ratio is
decrease to 4.72 percent during FY 2076/77 and then increases to 4.77 percent in FY
2077/78. Then after the ratio decreases to 2.66 percent during the year 2078/79 and
then increases to 3.56 percent during the year 2079/80.
Average of HBL, MBL, GIME, ADBL are 7.004 percent, 6.91 percent, 6.058 percent
and 4.658 percent respectively. It means the average proportion of cash and bank
balances to total asset which helps to evaluate liquidity and the ability of organization
to meet its short-term requirement of fund. These average ratios can provide insights
into how conversative or aggressive an organization is in holding liquid assets relative
to its total asset base. It's important for financial analysis and understanding the
liquidity position of a company or entity.
Similarly, the standard deviation of the data analyzed of HBL, MBL, GIME, ADBL
are 2.13 percent, 1.32 percent, 1.30 percent, 1.66 percent respectively which are
lower than the mean, it reveals that most of the numbers are close to the average.
Likewise, the CV represents the ratio of standard deviation to mean. The CV obtained
of HBL, MBL, GIME, ADBL are 30.41 percent, 19.1 percent, 21.46 percent, 35.64
percent respectively which means that the ratio of standard deviation to mean is low.
23
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.
12.00%
Cash and Bank Balance to Total Asset
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal year
HBL MBL GIME ADBL

Figure 4: Cash and Bank to Total Asset
2.2.5 Cash Reserve Ratio:

Cash Balance at NRB
Cash Reserve Ratio =
Total Local Deposit
To ensure the security of the deposit holders, each bank has to keep certain percentage
of the total local deposit collection as cash balance in NRB, as per the provision of
NRB. Currently such requirement is 3%. Thus, this ratio measures the liquidity to be
maintained by the bank.
Table 5: Cash Reserve Ratio

Bank 2075/ 2076/ 2077/ 2078/ 2079/8 Mean S.D. C.V.
name 76 77 78 79 0
HBL 4.47 9.92% 5.35% 4.24% 7.38% 6.272 2.13 33.96
% % % %
MBL 3.8% 4.38% 6.57% 4.05% 6.04% 4.968 1.12 22.54
% % %
GIME 4.33 5.54% 9.39% 4.27% 4.35% 5.576 1.97 35.33
% % % %
24
ADB 10.57 8.75% 5.82% 3.73% 3.56% 6.486 2.77 42.71

L % % % %
(see in annex 5)
Table no. 5 shows that it measures the liquidity of the bank to ensure the security of
deposit holders. The table show the CRR maintained by HBL, MBL, GIME and
ADBL is above the minimum standard set out by NRB i.e. minimum 3 percent in all
the fiscal year. The cash reserve ratio of HBL is highest during the financial year
2076/77 i.e. 9.92 percent which is 3 times more than the required minimum limit 3
percent. Similarly, the CRR is lowest during the F.Y. 2075/76 i.e. 4.47 percent.
The cash reserve ratio of MBL is highest during the financial year 2077/78 i.e. 6.57
percent which is 2 times more than the required minimum limit 3 percent. Similarly,
the CRR is lowest during the F.Y. 2075/76 i.e. 3.8 percent
The cash reserve ratio of GIME is highest during the financial year 2077/78 i.e. 9.39
the CRR is lowest during the F.Y. 2075/76 i.e. 4.33 percent.
The cash reserve ratio of ADBL is highest during the financial year 2075/76 i.e. 10.57
the CRR is lowest during the F.Y. 2079/80 i.e. 3.56 percent.
The average value of HBL, MBL, GIME, ADBL are 6.272, 4.968, 5.576, 6.486
percent respectively which indicates the average level of reserves that banks are hold
over that period. It could reflect changes in monetary policy, economic conditions, or
banking regulations over those years.
Similarly, the standard deviation of the data analyzed of HBL, MBL, GIME, ADBL
are 2.13 percent, 1.12 percent, 1.97 percent, 2.77 percent respectively which are
lower than the mean, it reveals that most of the numbers are close to the average.
of HBL, MBL, GIME, ADBL are 33.96 percent, 22.54 percent, 35.33 percent, 42.71
percent respectively which means that the ratio of standard deviation to mean is low.
25
12.00%
10.00%
8.00%
Cash Reserve Ratio
6.00%
4.00%
2.00%
0.00%
2075/76 2076/77 2077/78 2078/79 2079/80
fiscal year
HBL MBL GIME ADBL
Figure 5: Cash Reserve Ratio
2.2.6 Return on Equity:

Net Profit after Tax
Return on Equity =
Total S h are h older Equity
This ratio measures the relationship between the working capital and total assets of
the bank. This ratio is useful to the management for making policy in the types of
finance to be adopted. This ratio also shows the representation of working capital in
the total assets of the bank.
Table 6: Return on Equity

Bank 2075/ 2076/ 2077/ 2078/ 2079/8 Mean S.D. C.V.
name 76 77 78 79 0
HBL 17.33 14.71 14.89 10.76 4.65% 12.46 4.44 35.61
% % % % 8% % %
MBL 15.14 10.97 12.58 11.58 10.06% 12.06 1.74 14.42
% % % % 6% % %
GIME 17.51 10.6% 14.08 13.06 11.4% 13.33 2.42 18.15
% % % % % %
ADB 14.32 10.75 11.30 6.73% 3.94% 9.408 3.65 38.8%

L % % % % %
(see in annex 6)
26
Table no. 6 shows that the return generated by the equity of HBL during the year
2075/76 is highest 17.33 percent which indicates better financial performance during
the year. The return declined in the next year to 14.71 percent and again spiked and
followed decreasing trend up to year 2079/80 reaching 4.65 percent.
The average is 12.74 percent which means that the return on shareholders fund is
12.74 percent of net profit on average.
Similarly, the standard deviation of the data analyzed is 4.44 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.
here is 35.61 percent which means that the ratio of standard deviation to mean is low.
Similarly, the return generated by the equity of MBL during the year 2075/76 is
highest 15.14 percent which indicates better financial performance during the year.
The return declined in the next year to 10.97 percent and again spiked and followed
decreasing trend up to year 2079/80 reaching 10.06 percent.
Likewise, the return generated by the equity of GIME during the year 2075/76 is
highest 17.51 percent which indicates better financial performance during the year.
The return declined in the next year to 10.75 percent and again spiked and followed
27
Also, the return generated by the equity of ADBL during the year 2075/76 is highest
14.32 percent which indicates better financial performance during the year. The
return declined in the next year to 10.75 percent and again spiked and followed
28
20.00%
18.00%
16.00%
Return on Equity 14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal year
HBL MBL GIME ADBL

Figure 6: Return on Equity
2.2 Major Findings of The Study

The major findings of the study have been summarized below:
 The current Asset to Total Asset Ratio shows that Above table shows that, the
highest ratio of HBL is 0.83 during the year 2079/80. The ratio shows increasing
trend from 2075/76 to 2076/77. The ratio increases during the year 2076/77
and after thar decreases in 2077/78 and then follow increasing trend in
2078/79 to 2079/80 and reaches to highest during the year 2079/80. Overall
this shows that the company has adopted the more aggressive current assets
investment policy.
Similarly, the highest ratio of MBL is 0.88 during the year 2075/76 and 2076/76.
The ratio shows decreasing trend from 2077/78 to 2079/80. The ratio is highest
in first and second year after that follows decreasing trend. When the current
asset to fixed asset ratio is in a decreasing trend, it typically indicates a shift in
the composition or management of a company's assets. Here are some possible
reasons why this trend might occur: A decreasing trend in this ratio could also
signal potential financial health concerns if it reflects a lack of liquidity or
excessive investment in fixed assets without corresponding growth in current
assets.
Also, the highest ratio of GIME is 0.89 during the year 2075/76. The ratio shows
decreasing trend from 2076/77 to 2079/80. The ratio is highest in first year and
after that follows decreasing trend.
29
Likewise, the highest ratio of ADBL is 0.86 during the year 2075/76. The ratio
shows decreasing trend from 2076/77 to 2079/80. The ratio is highest in first
year and after that follows decreasing trend.
 Cash and Bank to Current Assets of HBL is 13.33 percent which is highest
during the year 2076/77. And then continuously decreasing except in fiscal
year 2075/76 due to more increase in Current assets then cash and bank
balance in later years. In FY 2077/78 the ratio is 8.34 percent which is
continuously decreasing and reaches to 8.34 percent and 6.94 percent during
the in FY 2077/78 and 2078/79 respectively. After that the ratio is increase to
92.43 percent in FY 2079/80.
Similarly, Cash and Bank to Current Assets of MBL is 10.25 percent which is
highest during the year 2075/76. And then continuously decreases to 8.91
percent and 6.48 percent respectively during FY 2076/77 and 2077/78
respectively. After that the ratio continuously increases to 7.72 percent and
8.83 percent during the in FY 2078/79 and 2079/80 respectively.
Likewise, Cash and Bank to Current Assets of GIME is 8.69 percent which is
highest during the year 2075/76. And then decreases to 6.5 percent during FY
2076/77. After that the ratio increases to 7.14 percent during the FY
2077/78 and again decreases to 6.16 percent during the F.Y. 2078/79 and
again increases to 7 percent during the FY 2079/80.
Also, Cash and Bank to Current Assets of ADBL is 8.83 percent which is
highest during the year 2075/76. And then decreases to 5.69 percent during FY
2076/77. After that the ratio increases to 6.01 percent during the FY
2077/78 and again decreases to 3.43 percent during the F.Y. 2078/79 and
again increases to 4.78 percent during the FY 2079/80.
 Cash and Bank to total Asset shows the investment in cash out of its total assets
in HBL. In FY 2076/77 the ratio is 10.79 percent which is highest ratio among all
fiscal year. After that the ratio is decrease to 5.52 percent in FY 2077/78. Then
after the ratio continuously decrease to 4.84 percent and after that increases to
7.8 percent in FY 2079/80.
Similarly, Cash and Bank to Total Asset shows the investment in cash out of its
total assets in MBL. In FY 2075/76 the ratio is 8.99 percent which is highest ratio
among all fiscal year. After that the ratio is continuously decrease to 7.86
percent and 5.55 percent respectively in FY 2076/77 and 2077/2078
30
respectively. Then after the ratio increase to 6.45 percent and after that
decreases to 5.7 percent in FY 2079/80.
Likewise, Cash and Bank to Total Asset shows the investment in cash out of its
total assets in GIME. In FY 2075/76 the ratio is 7.69 percent which is highest
ratio among all fiscal year. After that the ratio is decrease to 7.5 percent and 4.47
percent in FY 2076/77 and 2077/78 respectively. Then after the ratio
continuously increase to 5.07 percent and 5.56 percent during the year 2078/79
and 2079/80 respectively.
 Current asset to fixed asset ratio shows that highest ratio of HBL is 4.41
during the income year 2077/78 and lowest ratio is 3.58 during the year
2078/79. Ratio is in increasing trend from year 2075/76 to 2077/78 and the
decreases during the year 2078/79 and again increases during the year
2079/80.
Similarly, Current asset to fixed asset ratio shows that highest ratio of MBL is
7.49 percent during the income year 2076/77 and lowest ratio is 1.94 during
the year 2079/80. Ratio is in decreasing trend from year 2075/76 to 2077/78
and the increases during the year 2078/79 and again decreases during the year
2079/80.
Likewise, Current asset to fixed asset ratio shows that highest ratio of GIME
is 7.72 percent during the income year 2075/76 and lowest ratio is 3.84 during
the year 2079/80. Ratio is in decreasing trend from year 2075/76 to 2077/78
and the increases during the year 2078/79 and again decreases during the year
2079/80.
Also, Current asset to fixed asset ratio shows that highest ratio of ADBL is
6.069 percent during the income year 2075/76 and lowest ratio is 2.92 during
the year 2079/80. Ratio is in continuously decreasing trend from year 2075/76
to 2079/80.
 Also, Cash and Bank to Total Asset shows the investment in cash out of its
total assets in ADBL. In FY 2075/76 the ratio is 7.58 percent which is highest
ratio among all fiscal year. After that the ratio is decrease to 4.72 percent
during FY 2076/77 and then increases to 4.77 percent in FY 2077/78. Then
after the ratio decreases to 2.66 percent during the year 2078/79 and then
increases to 3.56 percent during the year 2079/80.
 Cash Reserve Ratio shows that it measures the liquidity of the bank to ensure
the security of deposit holders. The table show the CRR maintained by HBL,
31
MBL, GIME and ADBL is above the minimum standard set out by NRB i.e.
minimum 3 percent in all the fiscal year.
 Return on Equity shows that the return generated by the equity of HBL during
the year 2075/76 is highest 17.33 percent which indicates better financial
performance during the year. The return declined in the next year to 14.71
percent and again spiked and followed decreasing trend up to year 2079/80
reaching 4.65 percent.
Similarly, the return generated by the equity of MBL during the year 2075/76
is highest 15.14 percent which indicates better financial performance during
the year. The return declined in the next year to 10.97 percent and again
spiked and followed decreasing trend up to year 2079/80 reaching 10.06
percent.
Likewise, the return generated by the equity of GIME during the year 2075/76
is highest 17.51 percent which indicates better financial performance during
the year. The return declined in the next year to 10.75 percent and again
spiked and followed decreasing trend up to year 2079/80 reaching 3.94
percent.
Also, the return generated by the equity of ADBL during the year 2075/76 is
highest 14.32 percent which indicates better financial performance during the
year. The return declined in the next year to 10.75 percent and again spiked
and followed decreasing trend up to year 2079/80 reaching 3.94 percent.
32
CHAPTER 3
SUMMARY AND CONCLUSION
3.1 Summary
The research work entitled Working capital management of commercial Banks in
Nepal. The research work should have reached the destiny where we satisfy with the
queries of research problems which were specified in the statement of the problem in
introductory chapter. To conduct the research work, the researcher consulted mainly
the secondary sources of data such as documents published by concerned bank.
Before presenting and analyzing the data, there was also need to review of related
books, prior research on the topic. Obviously, it helped the researcher to construct
conceptual framework and to analyze and interpret the secondary data according to
objective set forth previously. Then the research work was analyzed and interpreted
by financial tools such as Ratio analysis of current asset to total asset and current
asset to fixed asset. In this way, the researcher analyzed and presented the second
chapter which was the main body of the research work.
On the basis of data analysis and presentation, the researcher extracted some major
findings. It has been explained along with the data analysis and presentation. So, on
the basis of major findings the researcher reached in the conclusions keeping in the
previously set objectives in mind. To know the real working capital management of
the commercial banks, the researcher observed and analyzed the working capital of
the bank for five years period. It is hoped that the working capital of the bank will
give a rational result and represent the overall banking scenario in terms of working
capital management.
The researcher had used the financial and Statistical tools to make this study more
effective and informative. The bank has been able to maintain its position in the
country as one of the leading banks in the country.
3.2 Conclusion
After drawing above finding we can draw the following conclusion. This study is
basically related to various aspect of working capital. This study particularly deals
about the working capital position with financial analysis of HBL, MBL, GIME and
ADBL. The present study is mainly an attempt to give account of comparative study
about HBL, MBL, GIME and ADBL in different aspects such a working capital
33
position of the basis of financial statement. After conducting the working capital
management of commercial banks covering the study period 2075/76 to 2079/80, the
following conclusions can be drawn from the study. The major conclusions derived
from analysis are as follows
 Positive working capital represents the sound financial management of the banks.
Similarly, the negative working capital represents the poor financial management.
In case of concerned Banks, positive working capital is found during the study
period. This bank should be maintained optimum size of current assets and
liabilities.
 The bank should follow moderate policy, to minimize the risk. They should use
equity capital as well in the same level of debt capital.
 The banks should use the long term debt capital instead of large amount of short
term debt capital to reduce the risk.
 The bank should follow the cash reserve ratio directed by NRB to minimize the
liquidity risk.
 Considering the cash and bank balance, the bank should increase the portion of
cash and bank balance in total assets.
 The banks needs to adopt the best capital structure that will best suit its interest
and thus maximizes profitability and liquidity and minimizes cost.
34
BIBLIOGRAPHY
acharya, k. (2008). Comparative study of working capital management of enterprises

in nepal. kathmandu.
al, A. e. (2010). Examined the relationship between working capital management and
profitability.
hassan aftab qazi, z. a. (2011). impact of working capital on firm profitablity. punjab:
african journal of bussiness management.
kehinde, j. (2011). effective working capital management. lagos state: international
journal of business and management.
M., R. m. (2011).
Rahman, M. M. (2011). Relationship between Working Capital Management and
Profitability: A Study on Selected Listed Companies in Bangladesh.
Chittagong, bangladesh: University of chittagong.
selvaraj, c. a. (2009/10). working capital management of selected Steel Companies in
India. india.
Weston, J. (1972). Managerial Finance. New york, Holt saunders: International
editions.
websites
https://www.sc.com/np/
https://www.nrb.org.np
https://www.everest bank ltd.com
https://www.investopedia.com
https://www.simplilearn.com/financial-performance-rar21-article
APPENDICES
Annex 1
Bank 2075/76 2076/77 2077/78 2078/79 2079/80
s
HBL
Curre 1,07,73,26,9 1,27,03,14,5 1,47,52,74,6 1,71,98,71,7 2,80,42,15,7

nt 4,000 4,000 4,000 0,000 9,000
Asset
Total 1,35,20,78,4 1,56,91,77,8 2,22,95,91,8 2,46,86,81,3 339,126,224,
Asset 3,162 8,247 2,116 3,729 388
Ratio 0.797 0.81 0.662 0.697 0.83
35
MB
L
Curr 1,09,69,09,8 1,35,49,51,8 1,49,25,81,2 1,20,43,23,7

ent 92,09,51,28, 6,269 0,297 0,286 3,055
Asse 168
t
Toatl 1,24,33,69,2 1,58,23,39,2 1,78,71,07,2 1,86,43,56,5
Asse 1,05,04,47,0 2,457 5,540 3,115 0,758
t 2,329
Ratio 0.88 0.88 0.86 0.84 0.65
GIM
E
Curr 1,37,42,32,8 2,42,07,25,5 2,91,01,44,9 3,07,97,36,9 4,24,00,96,2

ent 6,226 2,146 7,405 9,530 7,542
Asse
t
Total 1,55,23,51,7 2,76,98,46,8 3,52,11,44,3 3,68,85,06,7 5,34,45,72,1

Asse 8,964 6,611 4,339 1,173 6,201
t
Ratio 0.89 0.87 0.83 0.83 0.79
ADB
L
Curr 1,30,22,68,8 1,49,20,28,4 1,77,02,67,9 1,91,53,89,4 1,98,02,96,4

ent 9,690 5,818 9,830 8,536 5,640
Asse
t
151,683,561, 1,79,74,59,0 2,22,95,91,8 2,46,86,81,3 2,65,92,91,9

Total 714 5,890 2,116 3,729 9,267
Asset
Ratio 0.86 0.83 0.79 0.78 0.74
Noted from Annual Reports of HBL, MBL, GIME and ADBL

Annex 2
Bank 2075/76 2076/77 2077/78 2078/79 2079/80

s
HBL
Curre 1,07,73,26,9 1,27,03,14,5 1,47,52,74,6 1,71,98,71,7 2,80,42,15,7

nt 4,000 4,000 4,000 0,000 9,000
Asset
36
Fixed 27,47,87,05, 31,21,93,51, 33,47,46,67, 48,09,09,29, 65,00,51,88,

Asset 000 000 000 000 000
Ratio 3.9206 4.07 4.41 3.58 4.31
MB
L
Curr 1,09,69,09,8 1,35,49,51,8 1,49,25,81,2 1,20,43,23,7

ent 92,09,51,28, 6,269 0,297 0,286 3,055
Asse 168
t
Fixe 12,94,95,74, 14,64,59,36, 22,73,87,45, 29,45,26,02, 66,00,32,77,
d 161 188 243 829 703
Asse
t
Ratio 7.11 7.49 5.96 5.068 1.94
GIM
E
Curr 1,37,42,32,8 2,42,07,25,5 2,91,01,44,9 3,07,97,36,9 4,24,00,96,2

ent 6,226 2,146 7,405 9,530 7,542
Asse
t
Fixe 17,81,18,92, 34,91,21,34, 61,09,99,36, 60,87,69,71, 1,10,44,75,8

d 738 465 934 643 8,659
Asse
t
Ratio 7.72 6.93 4.76 5.06 3.84
ADB
L
Curr 1,30,22,68,8 1,49,20,28,4 1,77,02,67,9 1,91,53,89,4 1,98,02,96,4

ent 9,690 5,818 9,830 8,536 5,640
Asse
t
21,45,66,72, 30,54,30,60, 45,93,23,82, 55,32,91,85, 67,89,95,53,

Fixed 024 072 286 193 627
Asset
Ratio 6.069 4.88 3.85 3.46 2.92
Annex 3
Bank 2075/76 2076/77 2077/78 2078/79 2079/80
37
s
HBL
Cash 8,20,23,66,0 16,92,89,17, 12,30,27,23, 11,94,37,26, 26,43,96,53,

and 00 000 000 000 000
Bank
balan
ce
Curre 1,07,73,26,9 1,27,03,14,5 1,47,52,74,6 1,71,98,71,7 2,80,42,15,7
nt 4,000 4,000 4,000 0,000 9,000
Asset
Ratio 7.6% 13.33% 8.34% 6.94% 9.43%
MB
L
Cash 9,44,29,00,3 9,77,80,33,4 8,78,41,04,0 11,52,20,97, 10,63,35,20,

and 51 47 32 022 357
Bank
bala
nce
Curr 1,09,69,09,8 1,35,49,51,8 1,49,25,81,2 1,20,43,23,7
ent 92,09,51,28, 6,269 0,297 0,286 3,055
Asset 168
Ratio 10.25% 8.91% 6.48% 7.72% 8.83%
GIM
E
Cash 11,94,38,20, 15,73,18,86, 20,77,64,12, 18,96,80,97, 29,69,59,30,

and 100 191 504 038 524
Bank
balan
ce
Curr 1,37,42,32,8 2,42,07,25,5 2,91,01,44,9 3,07,97,36,9 4,24,00,96,2
ent 6,226 2,146 7,405 9,530 7,542
Asset
Ratio 8.69% 6.5% 7.14% 6.16% 7%
ADB
L
Cash 11,50,28,66, 8,48,99,89,8 10,64,07,79, 6,56,05,30,0 9,46,30,50,4

and 721 13 393 91 16
Bank
balan
ce
Curr 1,30,22,68,8 1,49,20,28,4 1,77,02,67,9 1,91,53,89,4 1,98,02,96,4
38
ent 9,690 5,818 9,830 8,536 5,640

Asset
Ratio 8.83% 5.69% 6.01% 3.43% 4.78%

Annex 4
Bank 2075/76 2076/77 2077/78 2078/79 2079/80
s
HBL
Cash 8,20,23,66,0 16,92,89,17, 12,30,27,23, 11,94,37,26, 26,43,96,53,

and 00 000 000 000 000
Bank
balan
ce
Total 1,35,20,78,4 1,56,91,77,8 2,22,95,91,8 2,46,86,81,3 339,126,224,
Asset 3,162 8,247 2,116 3,729 388
Ratio 6.07% 10.79% 5.52% 4.84% 7.8%
MB
L
Cash 9,77,80,33,4 8,78,41,04,0 11,52,20,97, 10,63,35,20,

and 9,44,29,00,3 47 32 022 357
Bank 51
bala
nce
Total 1,24,33,69,2 1,58,23,39,2 1,78,71,07,2 1,86,43,56,5
Asset 1,05,04,47,0 2,457 5,540 3,115 0,758
2,329
Ratio 8.99% 7.86% 5.55% 6.45% 5.7%
GIM
E
Cash 11,94,38,20, 20,77,64,12, 15,73,18,86, 18,69,80,97, 29,69,59,30,

and 100 504 191 038 524
Bank
balan
ce
Total 1,55,23,51,7 2,76,98,46,8 3,52,11,44,3 3,68,85,06,7 5,34,45,72,1
Asset 8,964 6,611 4,339 1,173 6,201
Ratio 7.69% 7.5% 4.47% 5.07% 5.56%
ADB
L
39
Cash 11,50,28,66, 8,48,99,89,8 10,64,07,79, 6,56,05,30,0 9,46,30,50,4

and 721 13 393 91 16
Bank
balan
ce
Total 151,683,561 1,79,74,59,0 2,22,95,91,8 2,46,86,81,3 2,65,92,91,9
Asset ,714 5,890 2,116 3,729 9,267
Ratio 7.58% 4.72% 4.77% 2.66% 3.56%
Annex 5
Bank 2075/76 2076/77 2077/78 2078/79 2079/80
s
HBL
Cash 4,88,35,35,2 12,40,78,15, 7,53,57,02,7 7,13,35,64,4 20,25,89,62,1

and 25 815 97 50 12
Bank
balan
ce at
NRB
Local 1,09,18,48,0 1,25,09,69,5 1,40,84,86,1 1,68,17,71,5 2,74,34,51,09
depo 1,597 3,881 4,773 8,508 ,061
sit
Ratio 4.47% 9.92% 5.35% 4.24% 7.38%
MB
L
Cash 4,55,20,01,4 8,90,81,82,7 6,04,73,53,5 9,30,91,07,69

and 3,22,69,62,0 88 69 45 7
Bank 97
balan
ce at
NRB
Loca 1,03,90,00,3 1,35,49,51,8 1,49,25,81,2 15,39,11,73,6
l 84,99,09,80, 6,875 0,297 0,286 9,911
depo 346
sit
Ratio 3.8% 4.38% 6.57% 4.05% 6.04%
GIM
E
Cash 5,23,94,66,6 11,80,34,12, 25,37,05,14, 11,93,08,68, 18,64,90,52,8

and 52 752 039 071 88
Bank
40
bala
nce
at
NRB
Loca 1,20,94,32,6 2,12,94,91,1 2,70,11,48,4 2,79,60,02,5 4,28,70,41,03
l 0,203 1,584 2,725 9,178 ,327
depo
sit
Ratio 4.33% 5.54% 9.39% 4.27% 4.35%
ADB
L
Cash 12,56,71,11, 12,56,71,11, 9,47,06,13,3 6,20,89,48,7 7,09,64,95,88

and 166 166 08 46 4
Bank
bala
nce
at
NRB
Loca 1,18,86,42,6 1,43,60,48,8 1,62,79,33,3 1,66,57,08,0 1,99,46,71,39
l 5,141 7,850 3,861 5,157 ,586
depo
sit
Ratio 10.57% 8.75% 5.82% 3.73% 3.56%

Annex 6
Banks 2075/76 2076/77 2077/78 2078/79 2079/80
HBL
NPAT 2,76,38,48,0 2,58,67,23, 2,99,86,23, 2,36,72,93, 1,56,28,18,

00 000 000 000 000
Sharehol 15,94,47,98, 17,58,92,54 20,13,27,13 22,00,99,50 33,63,03,70
der 000 ,000 ,000 ,000 ,000
equity
Ratio 17.33% 14.71% 14.89% 10.76% 4.65%
MBL
NPAT 1,27,27,30, 1,63,16,76, 1,68,82,83, 1,63,57,25,

1,70,31,47,0 967 361 569 421
46
Sharehol 11,59,83,41 12,97,12,26 14,57,73,66 16,25,33,39
der 11,24,29,30, ,947 ,679 ,956 ,407
equity 306
Ratio 15.14% 10.97% 12.58% 11.58% 10.06%
GIME
41
NPAT 2,92,67,61, 3,12,34,50, 4,96,37,38, 5,14,22,12, 6,94,14,83,

605 552 248 509 930
Sharehol 16,70,96,76 29,46,38,49 35,25,75,93 39,37,83,42 60,91,20,68
der ,645 ,893 ,280 ,738 ,808
equity
Ratio 17.51% 10.6% 14.08% 13.06% 11.4%
ADBL
NPAT 4,10,44,75, 3,10,84,57, 3,62,24,26, 2,29,26,55, 1,33,95,86,

045 386 096 154 614
Sharehol 28,66,82,56 28,91,59,27 32,04,47,12 34,06,19,61 34,00,29,06
der ,312 ,492 ,424 ,658 ,351
equity
Ratio 14.32% 10.75% 11.30% 6.73% 3.94%

Business Research Report - For - BBS - Final - Year - of Puna

Uploaded by

Copyright:

Available Formats

Business Research Report - For - BBS - Final - Year - of Puna

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Research Report - For - BBS - Final - Year - of Puna

Uploaded by

Copyright:

Available Formats

WORKING CAPITAL MANAGEMENT OF

COMMERCIAL BANK IN NEPAL

A Project Work Report

In partial fulfillment of the requirements for the degree of

The project work report entitled “WORKING CAPITAL MANAGEMENT OF

Mr. Kabi raj Acharya

We hereby endorse the project work report entitled “WORKING CAPITAL

This project work report entitled “WORKING CAPITAL MANAGEMENT OF

1.5.2 Review of Previous Study.................................................................................8

1.6. Research Method...................................................................................................10

1.6.2 Population and Sample....................................................................................10

1.6.3 Types of Data..................................................................................................10

1.6.4 Methods of Data Collection............................................................................10

1.6.5 Tools of Data Analysis....................................................................................11

1.6.5.1 Financial Tools.............................................................................................11

1.6.5.2 Statistical Tools............................................................................................12

1.7. Limitations of the Study........................................................................................13

2.1.1 Analysis of secondary data..............................................................................14

2.2 Financial Analysis and Statistical Analysis.......................................................14

CHAPTER 3: SUMMARY AND CONCLUSION..................................................31

Table 1: Current Assets to Total Assets Ratio............................................................15

Figure 1: Current asset to total Asset ratio Ratio.........................................................17

ADBL Agriculture Development Bank Limited

GIME Global IME Bank Limited

Machhapuchchhre Bank Limited

Himalayan Bank Limited

Agriculture Development Bank Limited

Global IME Bank Ltd

1.2 Statement of Problems

1.3 Objectives of the Study

ii. To analyze the relationship between working capital management and

1.5.1. Theoretical Review

1.5.2 Review of Previous Study

Rahman Mohammad M. (2011) focuses on the co-relation between working capital

1.6. Research Method

b. Current Assets to Fixed Assets ratio (CAFA)

c. Cash and Bank Balance to Current Assets (CBBCA):

d. Cash and Bank Balance to Total Assets (CBBTA):

e. Cash Reserve Ratio:

1.6.5.2 Statistical Tools

Mean = Sum of all the observations

1.7. Limitations of the Study

RESULTS AND FINDING

2.1.1 Analysis of secondary data

2.2 Financial Analysis and Statistical Analysis

2.2.1 Current Assets to Total Assets (CATA)

Current Asset to Total Assets ratio = Current Assets

Table 1: Current Assets to Total Assets Ratio

Bank 2075/ 2076/ 2077/ 2078/ 2079/8 Mean S.D. C.V.

ADB 0.86 0.83 0.79 0.78 0.74 0.8 0.04 5%

Current asset to total asset ratio

HBL MBL GIME ADBL

2.2.2 Current asset to Fixed Asset Ratio

Table 2: Current Asset to Fixed Asset Ratio

HBL MBL GIME ADBL

Figure 2: Current Asset to Fixed Asset

Cas h∧Bank Balance

Table 3: Cash and Bank Balance to Current Asset

ADB 8.83 5.69% 6.01% 3.43% 4.78% 5.748 1.78 30.97