Research Methodology into Ratio Analysis of HSBC Bank

explore Methodology into proportionality abridgment of HSBC rimIn this project my aim is to analysis the proportionality Analysis to find pecuniary coif of the HSBC lodge by victimization the financial faunas and withal to realize the functions of profit Banking System in HSBC Bank. This knowledge based on financial statement such as symmetry analysis and financial mathematical ope symmetryn. This project helps to identify and give suggestion the ara of weaker position of business doing in HSBC. This study is made to evaluate the proportionality analysis as per trend analysis.Here I have given the Title, Aim, Objectives of the project, Introduction and background of the participation chosen. It also gives the summary regarding the literature review, methodology using for the research, info assemblage methods and selective information analyzing procedures.IntroductionFinance is very essential for every business to draw and quarter successfully. To run the bus iness every organization impart need financial support.In our present economic governance finance is be as the provision of m wizy at the m when it is required. Every try whether tolerant or small needs finance to carry on its target. In fact finance is so indispens suitable today. It dope be said as blood of an enterprise. With tabu adequate finance no enterprise can possible accomplish its objectives.In the early years of its evolution it was treated synonymously with the wage increase of funds. In the rate of flow literature pertaining to financial management a broader scope so as to embarrass in addition to procurement of funds effectual use of resources is universally recognized.Nowadays inter solve is gigantic used by all sectors of people. Today bank has introduced various facilities finished inter sack up. E-Banking is a revolution that changes the banking arranging around the world. E-Banking is more comfortable for the customers and bank.TitleCritically ana lyzing the proportions of HSBC bank to study the financial performance of bank during 2010-2011 and also study the functions of internet banking remains in HSBC bank.AimTo study the financial performance of HSBC bank by analyzing the financial ratios from the old five years financial entropy and also study the bureau of internet banking dodge in HSBC bank.Objective of the studyTo analyze and evaluate the financial performance of HSBC BankTo study the growth of HSBC in limits of comparative analysis and trend analysis of financial statements for the past five years, from 2006 to 2010.To study the roles of Internet Banking in HSBCTo review the benefits of internet banking to customer and bankTo make suggestions recommendations for improving the financial positionRationalePersonal RationaleAs I am a finance student, am very much resideed in doing the ratio analysis of the company because of that we can able to come the financial performance of any company. I am very eager to know the financial status of the HSBC bank always. Because this bank is globalized bank, it is in every part of the world. Now it has introduced the lot of facility in Internet banking that benefits the customers. I have the relationship with the bank for the past five years. So, I personally interest in doing with HSBC Bank financial performance and internet banking sector.Organizational RationaleAs it is bank, we have wide range of information available in website, articles, journals, magazines and newspapers. HSBC employees atomic number 18 very friendly to their customers. They are always rig to explain their roles of internet banking system. For the financial info, we will able to get the financial statement from their website so thither is no lack of information availability.Policy RationaleThe system and the procedures followed by the HSBC bank is also one of my interests to choose the HSBC bank. This bank follows the banking rules and regulations given by the government and fair trade practice. Thats make the customer gum elastic banking. In internet banking system, there are umpteen options for doing the transaction easily and safely.Academic Rationale on that point are more resources available for doing this work. There are many financial books available to elaborate the ratio analysis. We have studied in deep about the ratio analysis and Internet banking system.IMPORTANCE OF THIS take awayThe subject matter of financial management is of immense interest for every financial analyzer. It needs finical attention because of the complexities involve in managing coin in present day banking function.The important aspect is the thought of how much of finance.The business organization requires and for what purpose.The most important area of financial management is the working nifty management.Here the study tries to reveal the banks position and performance by evaluating the relationship between various components split of financial statements.R ation analysis has been taken as a tool in assessing the performance of the company in respect of the following aspects. liquid Position.Long-term solvency.Profitability.Activity.This study helps to know the usage and the benefits of internet banking systemThis study helps to study the functions of internet banking in UK HSBC bankLiterature Review1 RATIO abridgmentRatio analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the relationship between component parts of financial statements to sire a better understanding of the business firms position and performance. It is used as tool by the company or individual to analysis the quantitative performance of the company financial statement.MeaningRatio is relationships expressed in mathematical terms between figures which are connected with each other in near manner. Ratio will be calculated from current year figures and it is compared with previous year in order to know the fin ancial performance of the company.It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm as substantially as its historical performance and current financial condition can be determined.The splendour of ratio analysis relies in the fact that it presents facts on a comparative basisConclusions can be pinched regarding the liquidity position of a firm. It is useful for assessing the long-term financial viability of a firm. It throws light on the stagecoach of efficiency in the management and utilization of its assets.It helps in inter-firm comparison and also with industry averages.Liquidity RatiosIt is the ratio which is used to determine the companys capacity to pay its short- period debt obligations. If the value of the ratio is high, then the margin of gum elastic will become high so that the company able to cover its short term debts. Liquidity ratio includes incumbent ratio, Quick/Acid ratio and Ope rating cash flow ratio.Current RatioIt is a quantitative relationship between current assets and current liabilities and indicates and enterprises ability to meet the current obligation. Current assets refer to liquid resources and must be sufficient enough to pay current liabilities when they mature.A relatively high current ratio is an Indication that the firm has ability to pay its current obligations in measure as and on the other hand a relatively low current ratio represents that the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of a firm while a decrease in the current ratio indicates that there has been deterioration in the liquid assets of the firm. The ratio exist to the rule of thumb is 21.Quick/Acid Test RatioThe ratio is ascertained by companys liquid assets and current liabilities. Here liquid assets are those assets which are immediately co nvertible in to cash without much loss. It is also known as liquidity ratio. It shows the ability of the enterprise to meet its short term obligation without sale and collection of inventories.LeverageRatiosIt is the ratio which is used to calculate the financial leverage of the company inorder to know the methods of financing using by the company and to measure the ability of the company to meet its financial obligations.Debt-equity RatioThis ratio indicates the relative proportions of debt and equity in financing the assets of a firm. One approach is to express the debt-equity ratio in terms of the relative proportion of long-term debt and share carriers equity.The debt considered here is exclusive of current liabilities. It is an important tool of financial analysis to appraise the financial structure of a firm. A high ratio shows a large share of financing by the creditors of the firm, a low ratio implies a smaller contain of creditors.Interest Coverage Ratio These ratios are c omputed from information available in the profit and loss account. It is also known as time-interest earned ratio. This ratio measures the debt servicing capacity of a firm insofar as laid interest on long-term loan is concerned. It is determined by dividing the operating cyberspace or earnings before interest and taxes (EBIT) by the fixed interest charges on loans.Proprietary RatioThis ratio indicates whether the firm is employing a reasonable proportion of debt or if heavily loaded with debt in which case its solvency is receptive to serious strain. This ratio relates the owners/proprietors funds with total assets. The ratio indicates the proportion of total assets financed by owners.PROFITABILITY RATIOSThis ratio helps to gateway the ability of business in order to generate the earnings of the business by examine the expenses and relevant costs during the particular proposition period of time.Net profit RatioThis measures the relationship between net profits and sales of a f irm. Depending on the concept of net profit employed.A high net profit margin would ensure adequate return as well as enable a firm to with stand adverse economic conditions when selling price is declining cost of production is rising and subscribe to for the product is failing. A low net profit merging would have the opposite implications.Return on AssetsThus profitability ratio is measured in terms of this relationship between net profit and assets. This may also be called profit-to-asset ratio.The concept of net profit may be net profits after taxes net profits after taxes sum interest and net profits after taxes plus interest minus tax savings. Assets may be defined as total assets fixed assets and actual assets.Return on ceiling EmployedThe term capital employed refers to long-term funds supplied by the creditors and owners of the firm. Here the profits are related to the total capital employed. It can be computed asThe capital employed provides a test of profitability rela ted to the sources of long-term funds. The higher the ratio the more efficient is the use of capital employed. A comparison of this ratio with similar firms with the industry average and over time would provide sufficient insight into how efficiently the long-term funds of owners and creditors are being used.Debtor perturbation ratioDebtor turnover ratio indicates the number of times the debtors are turned over during the year. slackly if the value of debtor turnover is high, then there is more efficient in the management of debts and sales. opposite RATIOSFixed Assets RatioThis ratio relates the net assets and the long-term funds. Here the ratio should be high. That is the handling of fixed asset should be greater than the long-term funds at an appropriate level.E-BankingElectronic banking system is the system that allows the individual to do the banking activities by sitting in one place. Electronic funds transfer way doing the financial transactions electronically. This is use d for the number of different activities like electronic payments and card transactions where the holder makes payment by using their credit or debit cards.Brain Dixon and Mary Dixon 2006Internet banking is also called as online banking, it is an outgrowth of PC banking. Internet banking uses the internet as the delivery channel for conducting banking activity, it is used for the purpose of transferring funds, compensable bills, helps to checking and saving account labyrinthine senses, paying mortgages and also help to purchase financial instruments.Benton E Gup 2005According to Richard H Baker, advancement in technology helps to develop the system of internet banking.According to industry analysts, internet banking provides many facilitiiesAble to access the banking at any timeWorld wide connectivityVery easy to access the information by transacting dataDirect customer control of international movement of funds without mediation of financial institutions in customers jurisdiction According to the report of Global Market for Internet Banking, more than 172 banks in Europe are run the internet banking system and they are very successful in running online banking.RESEARCH METHODOLOGYRESEARCHResearch is a process in which the researcher wishes to find out the end result for a given problem and thus the solution helps in future bunk of action. The research has been defined as A careful investigation or enquiry especially through search for new facts in branch of knowledgeRESEARCH DESIGNRedman and Mory (1923) defined research as a systematic effort to gain new knowledge According to Clifford Woody research comprises delimitate or redefining problems, formulating hypothesis or giving solutions, collecting, organizing, evaluating the data, making deductions and reaching shoemakers lasts and at carefully testing the conclusion to determine whether they fit the formulating hypothesisThe research design used in this project is Analytical in nature the procedure usi ng, which researcher has to use facts or information already available, and analyze these to make a critical evaluation of the performance.With particular reference to working capital management, for the prosecution of the study, both the primary election and indirect data.DATA COLLECTION METHOD particular DataPrimary data is the information collected by the researcher in first hand. This data is collected by the researcher inorder to analysis the research. Primary data is collected from the field organization selected that is from the employees, customers and observing the real life situations. The main benefit of the primary data is collected only for the specific study so it is more relevant to the study. But there is detriment for the collection of primary data it involves more cost and time. It is not suitable for short term study. Primary data for this proposal will be collected from the employees and customers of HSBC bank inorder to know how they run the internet banking system and the functions and benefits of internet banking system in HSBC bank. Primary research may be quantitative and qualitative research. soft research is the method where the researcher set the questionnaire which will give to large number of respondents (Hair, Wolfinbarger, Ortinau, and Bush, 2008, p81). Based on the responses the data will be analysed. In this study, questionnaire will be given to the customers and employees of HSBC bank to analyse the data regarding the functions of Internet Banking.Secondary DataSecondary data is the information which is collected already and it is used for some other studies by different researcher. This data not only used for the current study. The sources of secondary data are books, journals, articles, newspapers, internet, government, corporate reports and library. The advantage of this data it is easily available and also very cheap compared to primary data. In this study we are using secondary data for the analyses of ratio in order to know the financial performance of HSBC bank.From the annual reports maintained by the company.Data are collected from the companys website.Books and journals pertaining to the topic.Research speak toThere are two vitrines of research approaches Inductive and Deductive approaches. Inductive approach is the approach that starts with specific objectives and become frequentized. It begins by identifying the issue by observation or being informed.Deductive approach is the approaches where the conclusions derived from the situation. It begins with general situation and ends by identifying the specific issue. Arguments based on the rules, laws and regulation will be using deductive approaches and the argument based on the observations will be using the inductive approaches.SAMPLING PROGRESS tasteIt is the process of choosing small number of people for doing the research from the large population. That sample group will be tested, analyzed by assuming that sample group represents the entire group (Crouch, S. and Housden, M., 1996, p116).Sampling UnitIn this research the target populations are the customers of HSBC Bank Alperton Branch. The sizes of the sampling will be ascorbic acid customers. Sampling type will be random choosen among the large population group. From the total sample size the study will be done for the 10 customers and 5 employees of HSBC bank.Ethnography procedure will be used for analyzing the data based on the data collection method. In this method it takes account of words, context and non-verbals.STATISTICAL TOOLS bill for Data CollectionQuestionnaire will be used as a tool for data collection as it provides the advantages of allowing the respondents to answer at their convenience and faster data collection. The questionnaire explicitly stated the purpose of study as academic and assured confidentiality of information solicited from the respondent.Percentage methodThis method is used in making comparison between two are more series of d ata. Percentages are used to describe relationship. Percentages can also be used to compare the relative terms, the distribution of two or more series of data.The data collected through questionnaire response method was analyzed in the following manner warm data will be coded and tabulated and the tabulated data will be converted into percentages, to show the percentage of imprint among respondents.Percentage analysis thus involves the simple interpretation / analysis of the various items taken up in the questionnaire on a percentage basis from the data collected. Interpretations of the graphs also include mean scores obtained by the organization on every aspect / item as calculated.Number of respondentPercentage of Respondents = ___________________________________ * 100Total number of people questionedWeighted average methodWeighted average method is defined as an average whose component items are multiplied by certain value (weights) and the aggregate of the products are divided by the total of weightsIn the Weighted Average Method, the weighted average can be calculated by the following formulaK XW = WX/ XHereXW represents the weighted averageX1, X 2, X3.Xn represents the value for variable valuesW1, W2, W3 Wn represents the weight age given to the variable.Steps-Multiply the weights(W) by the variables(X) to obtain WXAdd all WX to obtain WXDivide WX by sum of the weights (X) to get weighted average. correlativityCorrelation is the techniques of determining the degree of correlation between two variables in case of ordinal data where ranks are given to the different values of the variables.Spearmans coefficient of correlation (or)1 6 di r = _____________n (n 1)TOOLS OF ANALYSISRatio Analysis.Comparative Balance Sheet.Trend AnalysisConclusionThis dissertation proposal starts with the introduction of finance, and helps to know the importance of finance for banking sector. The researcher will work towards the financial ratios of HSBC bank from the sources of annual reports, financial statements like balance sheet in orer to know the financial position of HSBC bank and analyze the role of internet banking in HSBC by getting the data from the bank customer and employees.