Performance Evaluation of Selected Banks using Ratio Analysis

Ratio analysis a accounting tool, which can be used to measure the solvency, the probability and the over all financial strength of a business, by analyzing its financial accounts (specifically the balance sheet and profit and loss account) . It is a quantitative method of gaining insight into company’s liquidity,operational efficiency, and profitability by comparing information contained in its financial statements. Ratio analysis can be used to establish a trend line for one company’s results over a large number of financial reporting periods. This can highlight company changes that would not be evident if looking at a given ratio that represents just one point in time. Banks are life blood & the nervous system of the Indian economy. Banking plays an important role in the economic development of a country & forms the core of money market in an advanced country. In India, the money market is characterized by the existence of both the organized & unorganized sectors. The organized sector includes commercial bank, co-operative banks & regional Rural banks while the unorganized sectors includes indigenous bankers and private money lenders. Among the banking institutions in the organized sector , the commercial banks are the oldest institutions having a wide network of branches, commanding utmost public confidence and having the lion’s share in the total banking operations.