Final Project On Cash Flow Analysis For Union Bank of India

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UNION BANK OF INDIA BANGALORE UNIVERSITY
Introduction
Cash is the basic input needed to keep the operations of the business
going on a continuing basis; it is also the final output expected to be realized
by selling the product manufactured by the manufacturing unit. Cash is the
both the beginning and the end of the business operations.
Sometimes, it so happens that a business unit earns sufficient profit,

but in spite of this it is not able to pay its liabilities when the become due.
Therefore, a business should be always try to keep sufficient cash, neither
more nor less because shortage of cash will threaten the firms liquidity and
solvency, whereas excessive cash will not be fruitful utilized, will simply
remain ideal and affect the profitability of a concern. Effective cash
management, therefore, implies a proper balancing between the two
conflicting objectives of liquidity
The management of cash also assumes importance because it is

difficult to predict cash inflows and outflows accurately and there is no
perfect coincidence between the inflows and outflows of cash giving rise to
either cash outflows exceeding inflows or cash inflows exceeding outflows.
CASH FLOW ANALYSIS B.B.M IN FINANCE

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Cash flow statement is one important tool of cash management because it

throws light on cash inflows and cash outflows of a particular period.
Meaning of Cash Flow Statement
A funds flow statement based on working capital is very useful in long-

range financial planning but this statement may conceal or exclude too
much. This is so because it does not take into considerations the movements
among the individual current assets and current liabilities i.e. it shows net
change in working capital. Moreover, this statement treats increases in
receivables, inventories and prepaid expenses and decreases in accounts
payable, outstanding expenses and bank over draft as equivalent to decrease
in cash. Likewise, decreases in receivables, inventories and prepaid
expenses and increases in creditors, bills payable, outstanding expenses and
bank overdraft are treated as equivalent to increases in cash. This is not a
correct treatment because this items do not decrease cash or make cash
available. Sundry creditors, bills payable, outstanding expenses become
payable in the next period. Similarly, inventories and receivable make cash
available in the next period. It is quite possible that there may be sufficient
working capital as revealed by the funds flow statement and still the
company may be unable to meet its current liabilities as and when they fall
due. It may be due to an accumulation of inventories and an increase in
trade debtors caused by a slow down in collections. In such a situation, a
cash flow statement is more useful because it gives detailed information to
the management about the sources of cash inflows and outflows. A cash

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flow statement can be defined as a statement which summarizes sources of

cash inflows and uses of cash outflows of a firm during a particular period
of time, say a month or a year. Such a statement can be prepaid from the
data made available from comparative balance sheet, profit and loss account
and additional information. This statement reports cash receipts and
payments classified according to entities major activities operating,
investing and financing during the period a format that reconciles the
begging and ending cash balances. It reports a net cash inflow or net cash
outflow for each activity and for the overall business. It also reports from
where cash has come and how it has been spent.
Objectives
Information about the cash flows of an enterprise is useful in providing

users of financial statements with a basis to assess the ability of the
enterprise to generate cash and cash equivalents and the needs of the
enterprise to utilize those cash flows. The economic decisions that are
taken by users require an evaluation of the ability of an enterprise to
generate cash and cash equivalents and the timing and certainty of their
generation.
The Statement deals with the provision of information about the

historical changes in cash and cash equivalents of an enterprise by means
of a cash flow statement which classifies cash flows during the period from
operating, investing and financing activities.

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Scope
1. An enterprise should prepare a cash flow statement and should

present it for each period for which financial statements are presented.
2. Users of an enterprise’s financial statements are interested in

how the enterprise generates and uses cash and cash equivalents. This is
the case regardless of the nature of the enterprise’s activities and
irrespective of whether cash can be viewed as the product of the enterprise,
as may be the case with a financial enterprise. Enterprises need cash for
essentially the same reasons, however different their principal revenue-
producing activities might be. They need cash to conduct their operations, to
pay their obligations, and to provide returns to their investors.
Usefulness of Cash Flow Statement
Cash Flow Statement is very useful to the management for short

term planning due to the following reasons:-

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(i) Predict future cash flows. This statement is often use as an

indicator of the amount, timing and certainty of future cash flows on the
basis of what happened in the past. This approach is better than accrual basis
data presented by profit and loss account and balance sheet.
(ii) Determine the ability to pay dividends and other

commitments. This statement indicates the sources and uses of cash under
operating, investing and financing activities, helps share holders to know
whether the business can make the payment of amount of dividends on their
investments in shares and creditors to receive interest and principal amount
in time.
(iii) Show the relationship of net income to changes in the

business cash. Generally there is direct relation between net income and
cash. I net income leads to increase in cash and wise versa. But there may
be a situation where a company’s net income is high but decrease in cash
balance and increase in cash balance when net income is low. Every user is
interested to know the reasons or difference between the net income and net
cash provided by operations. The net income generally tells the progress of
the business while cash flow relates to the liquidity of business. The uses or
helped to assess the reliability of net profit with the help of this statement.
(iv) Efficiency in Cash Management. This statement is very

useful to the management in evaluating financial policies and cash position.
It will help the management to make the reliable cash flow projections for

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the immediate future and will tell surplus or deficiency of cash so that
management may be able to make plan for investment of surplus cash or to
tap the sources where from the deficiency is to be met. Thus it is an
important financial tool for the management as it helps in the efficient cash
management.
(v) Discloses Movement of Cash. Previous year cash flow

statement when compared with the budget of that year will indicate as to
what extent the resources of the enterprise were raised and applied. Actual
results when compared with the original forecast may highlight the trend of
the movement of cash that may otherwise remain undetected,
(vi) Discloses Success or Failure of Cash Planning. A

Comparison of projected Cash flow Statement with the actual Cash flow
Statement will reveal the success or failure of cash planning and incase of
failure, necessary remedial steps can be taken to improve the position. It also
provides better measure for inter period and inter firm comparison.
(vii) Evaluate Management Decision. This statement, by

providing information relating to companies investing and financial
activities, gives the investors and creditors about cash flow information
which help them evaluate management decisions.
(viii) Enhances the Comparability of Report. It enhance the

comparability of the reporting of operating performances by different

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enterprises, because it eliminates the effect of using different accounting

treatments for the same transactions and events.
Limitations of Cash Flow Statement
Inspite of various uses of Cash Flow Statement, it has the

following limitations:
1. Cash Flow Statement gives the main items of inflow and

outflow of cash only and does not show the liquidity position of the
company.
2. This statement is not a substitute of income statement which

shows both cash and non cash items. Therefore, net cash flow does not
necessarily mean net income of the business.
3. It cannot replace funds flow statement as it cannot show the

financial position of the concern in totality.

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Definitions
The following terms are used in this Statement with the meanings
specified:
(i) Cash comprises cash on hand and demand deposits with

banks.
(ii) Cash equivalents are short term, highly liquid investments that
are readily convertible into known amounts of cash and which are subject
to an insignificant risk of changes in value.
(iii) Cash flows are inflows and outflows of cash and cash
equivalents.
(iv) Operating activities are the principal revenue-producing

activities of the enterprise and other activities that are not investing or
financing activities.
(v) Investing activities are the acquisition and disposal of long-

term assets and other investments not included in cash equivalents.

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(vi) Financing activities are activities that result in changes in the

size and composition of the owners’ capital (including preference share
capital in the case of a company) and borrowings of the enterprise.
(vii) Cash and Cash Equivalents Cash equivalents are held for the
purpose of meeting short-term cash commitments rather than for investment
or other purposes. For an investment to qualify as a cash equivalent, it must
be readily convertible to a known amount of cash and be subject to an
insignificant risk of changes in value. Therefore, an investment normally
qualifies as a cash equivalent only when it has a short maturity of, say, three
months or less from the date of acquisition. Investments in shares are
excluded from cash equivalents unless they are, in substance, cash
equivalents; for example, preference shares of a company acquired shortly
before their specified redemption date (provided there is only an
insignificant risk of failure of the company to repay the amount at
maturity). Cash flows exclude movements between items that constitute
cash or cash equivalents because these components are part of the cash
management of an enterprise rather than part of its operating, investing
and financing activities. Cash management includes the investment of excess
cash in cash equivalents.

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CLASSIFICATION OF CASH FLOWS
(i) Cash Flows from Operating Activities
The amount of cash flows arising from operating activities is a key

indicator of the extent to which the operations of the enterprise have generated
sufficient cash flows to maintain the operating capability of the enterprise,
pay dividends, repay loans and make new investments without recourse to
external sources of financing. Information about the specific
components of historical operating cash flows is useful, in conjunction
with other information, in forecasting future operating cash flows.
Cash flows from operating activities are primarily derived from the
principal revenue-producing activities of the enterprise. Therefore,
they generally result from the transactions and other events that enter
into the determination of net profit or loss. Examples of cash flows from
operating activities are:
(a) Cash receipts from the sale of goods and the rendering of
services;
(b) Cash receipts from royalties, fees, commissions and other

revenue;

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(c) Cash payments to suppliers for goods and services;
(d) Cash payments to and on behalf of employees;
(e) Cash receipts and cash payments of an insurance enterprise

for premiums and claims, annuities and other policy benefits;
(f) Cash payments or refunds of income taxes unless they can be

specifically identified with financing and investing activities; and
(g) Cash receipts and payments relating to futures contracts,

forward contracts, option contracts and swap contracts when the contracts
are held for dealing or trading purposes.
Some transactions, such as the sale of an item of plant, may give rise
to a gain or loss which is included in the determination of net profit or loss.
However, the cash flows relating to such transactions are cash flows from
investing activities.
An enterprise may hold securities and loans for dealing or trading

purposes, in which case they are similar to inventory acquired specifically
for resale. Therefore, cash flows arising from the purchase and sale of
dealing or trading securities are classified as operating activities. Similarly,
cash advances and loans made by financial enterprises are usually classified
as operating activities since they relate to the main revenue-producing

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activity of that enterprise.
(ii) Cash Flows from Investing Activities
The separate disclosure of cash flows arising from investing activities

is important because the cash flows represent the extent to which
expenditures have been made for resources intended to generate future
income and cash flows. Examples of cash flows arising from investing
activities are:
(a) Cash payments to acquire fixed assets (including

intangibles). These payments include those relating to capitalized research
and development costs and self-constructed fixed assets;
(b) Cash receipts from disposal of fixed assets (including

intangibles);
(c) Cash payments to acquire shares, warrants or debt instruments

of other enterprises and interests in joint ventures (other than payments
for those instruments considered to be cash equivalents and those held for
dealing or trading purposes);

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(d) Cash receipts from disposal of shares, warrants or debt

instruments of other enterprises and interests in joint ventures (other than
receipts from those instruments considered to be cash equivalents and those
held for dealing or trading purposes);
(e) Cash advances and loans made to third parties (other than
advances and loans made by a financial enterprise);
(f)Cash receipts from the repayment of advances and loans made to

third parties (other than advances and loans of a financial enterprise);
(g) Cash payments for futures contracts, forward contracts, option

contracts and swap contracts except when the contracts are held for dealing
or trading purposes, or the payments are classified as financing activities;
and
(h) Cash receipts from futures contracts, forward contracts, option

contracts and swap contracts except when the contracts are held for dealing
or trading purposes, or the receipts are classified as financing activities.
When a contract is accounted for as a hedge of an identifiable position,

the cash flows of the contract are classified in the same manner as the cash
flows of the position being hedged.

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Financing Activities
The separate disclosure of cash flows arising from financing activities

is important because it is useful in predicting claims on future cash flows by
providers of funds (both capital and borrowings) to the enterprise.
Examples of cash flows arising from financing activities are:
(a) Cash proceeds from issuing shares or other similar

instruments;
(b) Cash proceeds from issuing debentures, loans, notes, bonds,
and other short or long term borrowings;
(c) Cash repayments of amounts borrowed.
(d) Cash payments to redeem preference shares and
(e) Payment of dividend.

Preparation 0f cash flow statement
An organization should prepare a cash flow statement according to

according to Account standard-3. The following basic information are
required for the preparation for the cash flow statement:
(1) Comparative Balance Sheets. Balance sheets at the beginning and at
the end of the accounting period are required to indicate to indicate
the amount of changes that have taken place in assets and liabilities
and capital.

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(2) Profit and loss account. This account of the current period enables to
determine the amount of cash provided by or used in operating
activities during the accounting period after making adjustments for
non cash current assets and current liabilities.
(3) Additional data. In addition to the above statements, additional data
are collected to determine how cash has been provided or used e.g.
sale or purchase of asset for cash.
This statement is prepared in three stages as given below :

1. Net profit before taxation and extra ordinary items.
2. Cash flows from operating, investing and financing activities.
3. Cash flow statement
These are discussed one by one
1. Net profit before taxation and extraordinary items. This will not be equal
to the net profit as reported in the profit and loss account. It is so because of
taxation and certain non operating items (e.g., loss or profit on sale of fixed
assets, dividend received or paid, amount transferred to general, provision
for taxation, fictitious assets written of f etc.) charged to the profit and loss
account . Tax paid and non-operating items are adjusted to the figure of
profit or loss in order to get the net profit before taxation and extraordinary
items.
2. Cash flows from operating, investing and financing activities. Net profit
before taxation and extraordinary items is further adjusted with reference to
depreciation in order to get the figure of operating profit before working
capital changes. This figure is further adjusted for changes in current assets

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(except cash)/bank balance), current liabilities and tax paid deducted to get
the amount of net cash provided or used by operating activities. All the
increases in current assets except cash and decreases in current liabilities
decrease cash. It is so because increase in debtors takes place as current
sales are greater than cash collections; inventories increase when the current
cost of goods purchased is more than the current cost of goods sold leading
to reduction in cash. Increase in prepaid expenses reduces cash from
operations because more cash is paid than is required for their current
services. Likewise, decrease in current liabilities reduces cash from
operations because decrease in current liabilities takes place when they are
paid in cash. Similarly all decreases in current assets except cash and
increases in current liabilities increase cash from operations. Creditors
would increase because current purchases are more than the cash paid to
them during the current period. Decrease in prepaid expenses indicates that
less payment has been made for services than are currently used, i.e., some
cash has been saved causing an increase in cash from operations.
Changes in fixed assets and fixed liabilities have not been adjusted
as these are shown separately in the cash flow statement. It is so because
current assets (i.e., debtors as a result of credit sales, inventories as a result
of purchases and sales and prepaid expenses caused by operating expenses)
and current liabilities (i.e., creditors because of credit purchases and
outstanding expenses caused by non-payment of some of the expenses of the
current period) are directly related to operations.

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Reporting Cash Flows from Operating Activities .
An enterprise should report cash flows from operating activities

using either:
(a) the direct method, whereby major classes of gross cash receipts and
gross cash payments are disclosed; or
(b) the indirect method, whereby net profit or loss is adjusted for the
effects of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or payments,
and items of income or expense associated with investing or
financing cash flows.
The direct method provides information which may be useful in

estimating future cash flows and which is not available under the indirect
method and is, therefore, considered more appropriate than the
indirect method. Under the direct method, information about major classes
of gross cash receipts and gross cash payments may be obtained either:
(a) from the accounting records of the enterprise; or
(b) by adjusting sales, cost of sales (interest and similar income and
interest expense and similar charges for a financial enterprise)
and other items in the statement of profit and loss for:

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i) changes during the period in inventories and operating

receivables and payables;
ii) other non-cash items; and
iii) other items for which the cash effects are investing or
financing cash flows
Under the indirect method, the net cash flow from operating
activities is determined by adjusting net profit or loss for the effects of:
(a) changes during the period in inventories and operating receivables

and payables;
(b) non-cash items such as depreciation, provisions, deferred taxes,

and unrealized foreign exchange gains and losses; and
(c) all other items for which the cash effects are investing or financing
cash flows.
Alternatively, the net cash flow from operating activities may be presented
under the indirect method by showing the operating revenues and expenses
excluding non-cash items disclosed in the statement of profit and loss and
the changes during the period in inventories and operating receivables and
payables.

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Reporting Cash Flows from Investing and Financing Activities
An enterprise should report separately major classes of gross cash

receipts and gross cash payments arising from investing and financing
activities, except to the extent that cash flows described in paragraphs 22
and 24 are reported on a net basis.
Reporting Cash Flows on a Net Basis
Cash flows arising from the following operating, investing or

financing activities may be reported on a net basis:
(a) cash receipts and payments on behalf of customers when the cash
flows reflect the activities of the customer rather than those of the
enterprise; and
(b) cash receipts and payments for items in which the turnover is quick,
the amounts are large, and the maturities are short.
Examples of cash receipts and payments referred to in paragraph

22(a) are:
(a) the acceptance and repayment of demand deposits by a bank;
(b) funds held for customers by an investment enterprise; and

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c) rents collected on behalf of, and paid over to, the owners of
properties
Examples of cash receipts and payments referred to in paragraph 22(b) are

advances made for, and the repayments of:
(a) principal amounts relating to credit card customers;
(b) the purchase and sale of investments; and
(c) other short-term borrowings, for example, those which have a

maturity period of three months or less.
Cash flows arising from each of the following activities of a financial

enterprise may be reported on a net basis:
(a) cash receipts and payments for the acceptance and repayment of
deposits with a fixed maturity date;
(b) the placement of deposits with and withdrawal of deposits from other
financial enterprises; and
cash advances and loans made to customers and the repayment of those
advances and loans
Special items
1 Foreign Currency Cash Flows

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Cash flows arising from transactions in a foreign currency should be

recorded in an enterprise’s reporting currency by applying to the foreign
currency amount the exchange rate between the reporting currency and the
foreign currency at the date of the cash flow. A rate that approximates the
actual rate may be used if the result is substantially the same as would arise
if the rates at the dates of the cash flows were used. The effect of changes in
exchange rates on cash and cash equivalents held in a foreign currency should
be reported as a separate part of the reconciliation of the changes in cash and
cash equivalents during the period.
Cash flows denominated in foreign currency are reported in a manner

consistent with Accounting Standard (AS) 11, Accounting for the Effects
of
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Changes in Foreign Exchange Rates . This permits the use of an exchange
rate that approximates the actual rate. For example, a weighted average
exchange rate for a period may be used for recording foreign currency
transactions.
Unrealized gains and losses arising from changes in foreign

exchange rates are not cash flows. However, the effect of exchange rate
changes on cash and cash equivalents held or due in a foreign currency is
reported in the cash flow statement in order to reconcile cash and cash
equivalents at the beginning and the end of the period. This amount is
presented separately from cash flows from operating, investing and

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financing activities and includes the differences, if any, had those cash
flows been reported at the end-of-period exchange rates
2 Extraordinary Items
The cash flows associated with extraordinary items should be classified as

arising from operating, investing or financing activities as appropriate and
separately disclosed .
The cash flows associated with extraordinary items are disclosed

separately as arising from operating, investing or financing activities in the
cash flow statement, to enable users to understand their nature and effect on
the present and future cash flows of the enterprise. These disclosures are in
addition to the separate disclosures of the nature and amount of extraordinary
items required by Accounting Standard (AS) 5, Net Profit or Loss for the
Period, Prior Period Items and Changes in Accounting Policies
3 Interest and Dividends
Cash flows from interest and dividends received and paid should each
be disclosed separately. Cash flows arising from interest paid and interest
and dividends received in the case of a financial enterprise should be
classified as cash flows arising from operating activities. In the case of other
enterprises, cash flows arising from interest paid should be classified as cash
flows from financing activities while interest and dividends received
should be classified as cash flows from investing activities. Dividends paid
should be classified as cash flows from financing activities.

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The total amount of interest paid during the period is disclosed in the
cash flow statement whether it has been recognized as an expense in the
statement of profit and loss or capitalized in accordance with Accounting
Standard (AS) 10, Accounting for Fixed Assets.
Interest paid and interest and dividends received are usually classified
as operating cash flows for a financial enterprise. However, there is
no consensus on the classification of these cash flows for other
enterprises. Some argue that interest paid and interest and dividends
received may be classified as operating cash flows because they
enter into the determination of net profit or loss. However, it is more
appropriate that interest paid and interest and dividends received are
classified as financing cash flows and investing cash flows
respectively, because they are cost of obtaining financial resources or
returns on investments.
Some argue that dividends paid may be classified as a component of

cash flows from operating activities in order to assist users to determine the
ability of an enterprise to pay dividends out of operating cash flows.
However, it is considered more appropriate that dividends paid should be
classified as cash flows from financing activities because they are cost of
obtaining financial resources.

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4 Taxes on Income
Cash flows arising from taxes on income should be separately

disclosed and should be classified as cash flows from operating activities
unless they can be specifically identified with financing and investing
activities.
Taxes on income arise on transactions that give rise to cash flows that are
classified as operating, investing or financing activities in a cash flow
statement. While tax expense may be readily identifiable with investing or
financing activities, the related tax cash flows are often impracticable to
identify and may arise in a different period from the cash flows of the
underlying transactions. Therefore, taxes paid are usually classified as cash
flows from operating activities. However, when it is practicable to identify
the tax cash flow with an individual transaction that gives rise to cash
flows that are classified as investing or financing activities, the tax cash
flow is classified as an investing or financing activity as appropriate. When
tax cash flow are allocated over more than one class of activity, the total
amount of taxes paid is disclosed
5. Investments in Subsidiaries, Associates and Joint Ventures

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When accounting for an investment in an associate or a subsidiary

or a joint venture, an investor restricts its reporting in the cash flow
statement to the cash flows between itself and the investee/joint venture,
for example, cash flows relating to dividends and advances.
6 Acquisitions and Disposals of Subsidiaries and Other Business Units
The aggregate cash flows arising from acquisitions and from

disposals of subsidiaries or other business units should be presented
separately and classified as investing activities.
An enterprise should disclose, in aggregate, in respect of both

acquisition and disposal of subsidiaries or other business units during the
period each of the following:
(a) the total purchase or disposal consideration; and
(b) the portion of the purchase or disposal consideration discharged by

means of cash and cash equivalents.
The separate presentation of the cash flow effects of acquisitions and

disposals of subsidiaries and other business units as single line items
helps to distinguish those cash flows from other cash flows. The cash flow
effects of disposals are not deducted from those of acquisitions.

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7 Non-cash Transactions
Investing and financing transactions that do not require the use of cash or
cash equivalents should be excluded from a cash flow statement. Such
transactions should be disclosed elsewhere in the financial statements in a
way that provides all the relevant information about these investing and
financing activities
Many investing and financing activities do not have a direct impact on

current cash flows although they do affect the capital and asset structure
of an enterprise. The exclusion of non-cash transactions from the cash flow
statement is consistent with the objective of a cash flow statement as these
items do not involve cash flows in the current period. Examples of non-cash
transactions are:
(a) the acquisition of assets by assuming directly related liabilities;
(b) the acquisition of an enterprise by means of issue of shares; and
(c) the conversion of debt to equity.
Components of Cash and Cash Equivalents
An enterprise should disclose the components of cash and cash

equivalents and should present a reconciliation of the amounts in its cash
flow statement with the equivalent items reported in the balance sheet.

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In view of the variety of cash management practices, an enterprise

discloses the policy which it adopts in determining the composition of cash
and cash equivalents.
The effect of any change in the policy for determining components

of cash and cash equivalents is reported in accordance with Accounting
Standard (AS) 5, Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies.
Other Disclosures
An enterprise should disclose, together with a commentary by

management, the amount of significant cash and cash equivalent balances
held by the enterprise that are not available for use by it.
There are various circumstances in which cash and cash equivalent

balances held by an enterprise are not available for use by it. Examples
include cash and cash equivalent balances held by a branch of the enterprise
that operates in a country where exchange controls or other legal restrictions
apply as a result of which the balances are not available for use by the
enterprise.
Additional information may be relevant to users in understanding

the financial position and liquidity of an enterprise. Disclosure of this

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information, together with a commentary by management, is

encouraged and may include:
(a) the amount of undrawn borrowing facilities that may be available

for future operating activities and to settle capital commitments,
indicating any restrictions on the use of these facilities; and
(b) the aggregate amount of cash flows that represent increases in

operating capacity separately from those cash flows that are
required to maintain operating capacity.
The separate disclosure of cash flows that represent increases in

operating capacity and cash flows that are required to maintain operating
capacity is useful in enabling the user to determine whether the enterprise is
investing adequately in the maintenance of its operating capacity. An
enterprise that does not invest adequately in the maintenance of its operating
capacity may be prejudicing future profitability for the sake of current
liquidity and distributions to owners.

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RESEARCH DESIGN
STATEMENT OF THE PROBLEM:
A financial statement contains income statement

showing sales, Revenues, tax, expenses etc. on the

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other side; the balance sheet shows the liabilities and

assets position during the year.
The study of financial performance is composed of
the following:
1. Analysis of the liquidity and between current
liabilities and assets.

2. Analysis of the liquidity and profitability of the
current assets and current liabilities.

3. Analysis of the long term financial of the firm
over a period of time.

4. Analysis of various components of working
capital E.g.: Cash Marketable securities

receivable and inventories
The study takes into consideration the external analyst point of view and
with the help of the past and latest financial statements, financial position,
will tried to be analyzed impartially.
OBJECTIVES OF THE STUDY:
Based on the information furnished in the financial statements, various

objectives of the cash flow statement

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1. explain importance of cash flow statement for investors and other

stockholders;
2. compare the differences between cash flow statement with other

financial
statements;
3. explain regulations relating to preparation of cash flows;
4. familiar with the methodology for preparation of cash flow statement

and
different components of cash flow statement; and
5. comprehend how cash flow statement can be used in real life for
different
decision making.
SCOPE OF STUDY:

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The scope of the study is confined to detail analysis of cash flow

statement in union bank of india
1. An enterprise should prepare a cash flow statement and should
present it for each period for which financial statements are presented.
2. Users of an enterprise’s financial statements are interested

in how the enterprise generates and uses cash and cash equivalents.
This is the case regardless of the nature of the enterprise’s activities

and irrespective of whether cash can be viewed as the product of the
enterprise, as may be the case with a financial enterprise.
Enterprises need cash for essentially the same reasons, however

different their principal revenue-producing activities might be.
They need cash to conduct their operations, to pay their obligations,

and to provide returns to their investors.

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METHODOLOGY:
The schedule that was planned to be executed or the methodology of approach may
be explained as follows.
➢ An in depth study of the banking norms & procedures that are used in
analyzing the data obtained from the corporal clients.
➢ An overview of the procedures followed in analyzing the data

obtained. The methods followed are: Ratio analysis an effective tool
in analysis.
➢ Proper & effective collection of the various data required in to with the
analysis in relevance with the current economic growth.
➢ An efficient analysis with an eye for errors or blunders that may occur
due to inefficiency. This is the most prominent feature of the study &
was executed with utmost care & diligence.
➢ It also included the study of various circulars & notes that were passed
by the management in this regard. Thus having a higher hand on the
literature study of the project as a whole.

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TOOLS FOR DATA COLLECTION:

The data so collected from various annual reports & financial Statements for 5 years
been classified & tabulated for better understanding & to give a complete picture at 1
place.
TOOLS FOR ANALYSIS:
The tabulated data has been analyzed thoroughly through various ratios and graphs,
which is used.
LIMITATION OF THE STUDY:
1. Time: The time allotted for the project has been only around 2 months.
The study could be done only for the past 5 years.
2. Finance: Due to limited financial resources as in depth research could not be
undertaken.
3. The face value of the figures given in the balance sheet was used for the
project.
ANALYSIS AND INTERPRETATION:

35
For the purpose of Analysis and interpretation, statement of Current Assets and
Current Liabilities, master tables and graphs were used for the effective presentation.
CHAPTER SCHEME:
Chapter 1: - Introduction
Chapter 2: - Research design Consists of research design with the statement of

problem, objective of Study, materials and tools used, limitation and overview
required.
Chapter 3: - Company Profile
Chapter 4: - Contains the analysis and interpretation of cash flow statement . It

mainly, forms a part of our evaluation process in analyzing their financial
performance. It also includes the required graphical presentations wherever
necessary.
Chapter 5: - Contains the findings and recommendations & bibliography and

annexure to the report that has aided the study.

36
PROFILE OF UNION BANK OF INDIA
THE VISION STATEMENT

37

38
THE HISTORY
The dawn of twentieth century witnesses the birth of a banking

enterprise par excellence- UNION BANK OF INDIA- that was flagged off
by none other than the Father of the Nation, Mahatma Gandhi.
Since that the golden moment, Union Bank of India has this far
unflinchingly traveled the arduous road to successful banking........ A
journey that spans 88 years.
We at Union Bank of India, reiterate the objectivity of our inception to the

profound thoughts of the great Mahatma... "We should have the ability to
carry on a big bank, to manage efficiently crores of rupees in the course of
our national activities. Though we have not many banks among us, it does
not follow that we are not capable of efficiently managing crores and tens of
crores of rupees." Union Bank of India is firmly committed to consolidating
and maintaining its identity as a leading, innovative commercial Bank, with
a proactive approach to the changing needs of the society. This has resulted
in a wide gamut of products and services, made available to its valuable
clientele in catering to the smallest of their needs.
Today, with its efficient, value-added services, sustained growth, consistent

profitability and development of new technologies, Union Bank has ensured
complete customer delight, living up to its image of, “GOOD PEOPLE TO
BANK WITH”. Anticipative banking- the ability to gauge the customer's

39
needs well ahead of real-time - forms the vital ingredient in value-based

services to effectively reduce the gap between expectations and deliverables.
The key to the success of any organization lies with its people. No wonder,
Union Bank's unique family of about 26,000 qualified / skilled employees is
and ever will be dedicated and delighted to serve the discerning customer
with professionalism and wholeheartedness.
Union Bank is a Public Sector Unit with 55.43% Share Capital held by the
Government of India. The Bank came out with its Initial Public Offer (IPO)
in August 20, 2002 and Follow on Public Offer in February 2006. Presently
44.57 % of Share Capital is presently held by Institutions, Individuals and
Others. Over the years, the Bank has earned the reputation of being a
techno-savvy and is a front runner among public sector banks in modern-day
banking trends. It is one of the pioneer public sector banks, which launched
Core Banking Solution in 2002. Under this solution umbrella, All Branches
of the Bank have been 1135 networked ATMs, with online telebanking
facility made available to all its Core Banking Customers - individual as
well as corporate. In addition to this, the versatile Internet Banking provides
extensive information pertaining to accounts and facets of banking. Regular
banking services apart, the customer can also avail of a variety of other
value-added services like Cash Management Service, Insurance, Mutual
Funds and Demat. The Bank will ever strive in its endeavour to provide
services to its customer and enhance its businesses thereby fulfilling its
vision of becoming “THE BANK OF FIRST CHOICE IN OUR CHOSEN
AREA BY BUILDING BENEFICIAL AND LASTING RELATIONSHIP

40
WITH CUSTOMERS THROUGH A PROCESS OF CONTINUOUS

IMPROVEMENT”.
CORPORATE MISSION
• A logical extension of the Vision Statement is the Mission of the Bank,

which is to gain market recognition in the chosen areas.
• To build sizeable markets share in each of the chosen areas of business

through effective strategies in terms of pricing, product packaging and
promoting the product in the market.
• To facilitate a process of restructuring of branches to support a greater

efficiency in the retail banking field.
• To sustain the mission objective through harnessing technology driven

banking and delivery channels.
• To promote confidence and commitment among the staff members, to

address the expectations of the customers efficiently and handle technology
banking with ease.
ORGANIZATION STRUCTURE
has a lean three-tier structure. The delegated powers have been enhanced.
The decentralized power structure has accelerated decision making process
and thereby Bank quickly responds to changing needs of the customers and
has also been able to adjust with the changing environment. Bank has nine
General Manager Offices at Ahmedabad, Pune, Lucknow, Delhi, Bangalore,

41
Bhopal, Mumbai, Calcutta and Chennai which function as an extended arm

of corporate office. It also has two Zonal Offices at Bhopal and Pune. Tier 3
comprises of 54 Regional Offices at various geographical center of the
country.
OBJECTIVES OF THE STUDY
• To analyze the risk management in Banks.
• To analyze the risk management in Union Bank of India.
• To analyze the Gross NPA, Net NPA and Capital Adequacy Ratio of
Union Bank of India.
RESEARCH METHODOLOGY
Analysis of past data a helps to understand the effectiveness of Risk

Management Strategies of Bank. This is a conclusive research.
DATA COLLECTION
Basically there are methods of data collection they Secondary data To

achieve the objective, information is¬ Primary data ¬are: collected through
secondary data. Secondary data one those which have been already been
collected. it may be published or unpublished data. Some of the data are
collected through visit and personal observation. But mainly data are
collected form financial statement (annual report) of Union Bank of India.

42
all the information which are collected, through data are analyzed
interpreted and tabulated to full fill be objective. In this study I have used
Secondary Data.
TOOLS OF ANALYSIS
It is essential to use a systematic research methodology for the assessment of

a project because without the use of a research methodology analysis of any
company or organization will not be possible. In the present analysis mostly
secondary data have been used. It is worth a while to mention that I have
used the following types of published data :
• Balance Sheet • Profit & Loss A/c
• Prospectus of the Company
• General Body meeting reports
• Schedules
LIMITATIONS OF THE STUDY
• The research work is mainly based on secondary data that is, it is based on
audited accounts and its audited accounts are ambiguous then the result will
be misleading.
• Less importance has been given to primary data which is actually the
original data and more reliable.

43
• The research work is completed in five months, which is not enough for
any type of proper and reliable research work.
Business Operations
Union Bank has huge and varied customer base approximating to 24

millions. Bank is targeting customers from all demographic and economic
profiles and introducing products and services to meet their needs. The Bank
operates in all the areas including retail lending, personal banking, corporate
banking, international banking and investments & treasury. Bank’s lending
also caters to the rural and semi urban centers, financing Agriculture and
allied activities, rural artisans, micro & medium enterprises in these areas.
Bank has opened 198 “Village Knowledge Centres” to provide information
to the local community on better agriculture practices, commodities,
marketing facilities and financial education. Bank also offers third party
products like life and general insurance, mutual funds, on-line trading,
wealth management services through tie- up with other FIs. Bank places
customer at the centre of all its operations and has transformed the process,
people and organizational structure. Bank has initiated a large scale
transformation process named “Nav Nirman” to address two critical aspects
of growth-instilling the drive of sales & marketing across bank staff and
reconfiguration of bank’s business model. The transformation process
focuses on four key initiatives
a) Retail Asset ( marketing & processing)

44
b) SME marketing & processing)
c) Branch sales and services( improving the customer experience in the

branch)
d) Centralization of key processes
Bank has brought all its branches under Core banking solutions .Union Bank
is the first large bank to achieve 100% CBS roll out. Bank has taken lead to
establish alternate delivery channels in the form of ATMs, internet banking,
phone banking and Mobile Banking. Bank has introduced many technology
based services like RTGS, online NEFT free of cost, on line application for
products and services and online redressel of grievances.
Diversification
Union Bank in partnership with Bank of India and Dai-Ichi of Japan has
formed a subsidiary for distribution of Life insurance products, which has
started selling the products.
Bank has signed an agreement with Belgian KBC group for setting up a joint
venture AMC in India. Union Bank has signed MoU with NSIC for training
and setting up Incubation cum Training centers to promote first generation
entrepreneurs in MSME segment.
Bank has entered into MoU with NCMSL for financing against
warehouse receipts for agri. commodities kept at NCMSL warehouses.

45
Bank has announced opening 100 specialised Business Banking branches

across the country to focus exclusively on MSME sector with turn around
time of 2 weeks for sanction of proposals.
Bank has launched mobile banking facility “Umobile” which facilitates
limited transactions and other services through mobile phones.
Growth & Performance
Total business of the Bank at the end of Dec’08 stood at Rs.2,22,625 crore
registering a growth of 28.33 % over Dec’07.The bank’s total deposits as on
31st Dec’08 reached a level of Rs.1,29,647 crore from Rs.99227 crore as on
Dec’07 ,an increase of 30.66%. Gross advances of the Bank reached a
st
level of Rs.92,978 crore as on 31 Dec’08,registering a growth of 25.22%
over Dec’07.The Capital Adequacy Ratio of the Bank (BASEL I ) is at
12.32% & BASEL II at 13.41 % as on Dec’08.The net interest margin of
the Bank increased to 2.97% for the nine months period ended Dec’08.Return
on average assets improved f rom 1.31% in Dec’07 to 1.92% in
Dec’08(QoQ) indicating more efficient use of Funds. The asset quality
recorded a significant improvement with steep reduction in Net NPAs from
0.35% in Dec’07 to 0.14% in Dec’08 and the Gross NPAs from 2.10% to
1.68%.

46
OUR TRAINING SYSTEM
Seldom has there been a time in which it has been necessary for
Organizations to attune Attitudes, upgrade Skills and kindle sparks of
Knowledge in their human force to the extent and with the rapidity required
today.
Those who dominate the market in times to come will be those who are
prepared to seize opportunities as they come.
At Union Bank, the training facilities offer an admirable approach to these
opportunities.
Ask and it shall be Given.
TO BE THE BEST COME TO BEST
Union bank has one of the best training systems in India. The training
experience here goes back to over four decades. Presently the training
structure consists of the Staff College at Bangalore, and seven centers in
various parts of the country. The training is designed, delivered and
assessed, based on systems suggested and put in place by our overseas
consultants M/s. Vinstar Limited (AGL Group) of New Zealand. These
systems have been tested and refined by practical application.
The training system of Union Bank has been awarded the prestigious

47
Golden Peacock National Training Award instituted by the Institute of

Directors, New Delhi for the best training system in the Country.
In our pursuit of achieving higher standards we have further upgraded our

systems and sized up to 'international norms'. After a rigorous audit, in
February 2001, the College is awarded ISO 9001 certification (for Design
and Development of Customised Training Programs) by Det Norske Veritas,
of the Netherlands. We are the only Bank to obtain ISO certification for the
training system.
FROM PHILOSOPHY TO REALITY
We have devised an outcome-oriented training process. Each and every

module is designed so that learning takes place through interaction. It is also
ensured that this learning is translated into action at the work place. Our
training programs actually deliver value to the Organization. Post course
surveys conducted by us have confirmed this.
Yes, we have translated yet another cliché into reality. We invite

Organizations to give the enriching experience to the employees, to create
learning and growing organizations.
THE COLLEGE AMBIENCE FOR LEARNING

48
Union Bank Staff College stretching over 36 acres of sylvan setting, on the
out skirts of Bangalore city, has been the cynosure of appreciation as an apt
option, for the best ambience for learning. Here physical, mental, spiritual
and social upgradation of self for an individual and building of teams of
performers of outstanding Organizations take place in the most natural way.
We have got excellent, air-conditioned learning centers [we call them
"channels" of learning], computer-backed presentation packages, interactive
learning processes, salubrious living conditions in hostel rooms with
provisions for intellectual and physical games, group exercises and
teambuilding fun in verdurous mango-groves, where mimicking monkeys
and shy sheep are, perhaps, the only onlookers! Yoga, somnolent reverie
after a relaxed splash in the swimming pool, or a stroll down the jogging
tracks and exercise stations or a stretch of paddling or rowing on the boat
around the natural pond are true tonics for invigoration. If the weather does
not encourage outdoor relaxation (unusual in the 'Garden City' of
Bangalore!) a workout in the luxury of the Gymnasium, a game of snooker,
a solitary tryst with computer games or online learning facilities - are other
options.
THE FACILITATORS
Our 'facilitators' to learning - "Faculty" or "Trainers" in the common

parlance- are experienced bank officers with many years of exposure in the

49
entire gamut of banking. All the facilitators have been through an intensive
orientation program on adult learning processes drawn up by Vinstar of New
Zealand. They are also exposed periodically to updating of skills and
awareness in leading institutions in the country. Some have also been
nurtured with professional training abroad at premiere institutions like
Columbia Business School, New York and the Manchester Business School,
England.
THE PROGRAMS
Currently the College is running training programs in the following

disciplines: 1.International Banking 2.Credit 3.Information Technology
4.General Banking 5.Marketing and 6.Management and human resource
development.
Union Bank is also organizing executive education programs in association

with Icfian Business School - an arm of the Institute of Chartered Financial
Analysts of India, Hyderabad. In this stream following programs are offered:
1.Finance for Non-Finance executives 2.Treasury and forex management

3.Software- project management 4.The Service edge - improving service
quality

50
RISK MANAGEMENT
1 Risk is inherent part of Bank’s business. Effective Risk Management is

critical to any Bank for achieving financial soundness. In view of this,
aligning Risk Management to Bank’s organizational structure and business
strategy has become integral in banking business. Over a period of year,
Union Bank of India (UBI) has taken various initiatives for strengthening
risk management practices. Bank has an integrated approach for
management of risk and in tune with this, formulated policy documents
taking into account the business requirements / best international practices
or as per the guidelines of the national supervisor. These policies address the
different risk classes viz., Credit Risk, Market Risk and Operational Risk.

51
2 The issues related to Credit Risk are addressed in the Policies stated
below;
1 Loan Policy.
2 Credit Monitoring Policy.
3 Real Estate Policy.
4 Credit Risk Management Policy.
5 Collateral Risk Management Policy.
6 Recovery Policy.
7 Treasury Policy.
3 The Policies and procedures for Market Risks are articulated in the ALM
Policy and Treasury Policy.
4 The Operational Risk Management involves framework for management

of operational risks faced by the Bank. The issues related to this risk is
addressed by;
1 Operational Risk Management Policy.

2 Business Continuity Policy.
3 Outsourcing Policy.
4 Disclosure Policy.
5 Besides, the above Board mandated Policies, Bank has detailed ‘Internal
Control Principles’ communicated to the business lines for ensuring

52
adherence to various norms like Anti-Money Laundering, Information

Security, Customer complaints, Reconciliation of accounts, Book-keeping
etc.
OVER SIGHT MECHANISM

1 Our Board of Directors has the overall responsibility of ensuring that
adequate structures, policies and procedures are in place for risk
management and that they are properly implemented. Board approves our
risk management policies and also sets limits by assessing our risk appetite,
skills available for managing risk and our risk bearing capacity.
2 Board has delegated this responsibility to a sub-committee: the

Supervisory Committee of Directors on Risk Management & Asset Liability
Management. This is the Apex body / Committee is responsible for
supervising the risk management activities of the Bank.
3 Further, Bank has the following separate committees of top executives and
dedicated Risk Management Department:
1 Credit Risk Management Committee (CRMC): This Committee deals

with issues relating to credit policies and procedure and manages the credit
risk on a Bank-wide basis.

53
2 Asset Liability Management Committee (ALCO): This Committee is

the decision-making unit responsible for balance sheet planning and
management from the angle of risk-return perspective including
management of market risk.
3 Operational Risk Management Committee (ORMC): This Committee
is responsible for overseeing Bank’s operational risk management policy
and process.
4 Risk Management Department of the Bank provides support functions to
the risk management committees mentioned above through analysis of risks
and reporting of risk positions and making recommendations as to the level
and degree of risks to be assumed. The department has the responsibility of
identifying, measuring and monitoring the various risk faced the bank, assist
in developing the policies and verifying the models that are used for risk
measurement from time to time.
CREDIT RISK
1 Credit Risk Management Policy of the Bank dictates the Credit Risk
Strategy.
2 These Polices spell out the target markets, risk acceptance / avoidance

54
levels, risk tolerance limits, preferred levels of diversification and

concentration, credit risk measurement, monitoring and controlling
mechanisms.
3 Standardized Credit Approval Process with well-established methods of

appraisal and rating is the pivot of the credit management of the bank.
4 Bank has comprehensive credit rating / scoring models being applied in

the spheres of retail and non-retail portfolios of the bank.
5 The Credit rating system of the Bank has eight borrower grades for
standard accounts and three grades for defaulted borrowers.
6 Proactive credit risk management practices in the form of studies of rating-

wise distribution, rating migration, probability of defaults of borrowers,
Portfolio Analysis of retail lending assets, periodic industry review, Review
of Country, Currency, Counter-party and Group exposures are only some of
the prudent measures, the bank is engaged in mitigating risk exposures.
7 The current focus is on augmenting the bank’s abilities to quantify risk in

a consistent, reliable and valid fashion, which will ensure advanced level of
sophistication in the Credit Risk Measurement and Management in the years
ahead.
MARKET WRISK

55
1 Bank has well-established framework for Market Risk management with

the Asset Liability Management Policy and the Treasury Policy forming the
fulcrum for procedures, processes and structure. It has a major objective of
protecting the bank’s net interest income in the short run and market value
of the equity in the long run for enhancing shareholders wealth. The
important aspect of the Market Risk includes liquidity management, interest
rate risk management and the pricing of assets and liabilities. Further, Bank
views the Asset Liability Management exercise as the total balance sheet
management with regard to its size, quality and risk.
2 The ALCO is primarily entrusted with the task of market risk

management. The Committee decides on product pricing, mix of assets and
liabilities, stipulates liquidity and interest rate risk limits, monitors them,
articulates Bank’s interest rate view and determines the business strategy of
the Bank.
3 Bank has put in place a structured ALM system with 100% coverage of
data on both assets and liabilities. To measure liquidity and interest rate risk,
Bank prepares various reports such as Structural Liquidity, Interest Rate
Sensitivity, Fortnightly Dynamic Statement etc. Besides RBI reporting many
meaningful analytical reports such as Duration Gap analysis, Contingency
Funding Plan, Contractual Maturity report etc. are generated at periodic
intervals for ALCO, which meets regularly. Statistical and mathematical
models are used to analyze the core and volatile components of assets and

56
liabilities.
4 The objective of liquidity management is to ensure adequate liquidity

without affecting the profitability. In tune with this, Bank ensures adequate
liquidity at all times through systematic funds planning, maintenance of
liquid investments and focusing on more stable funding sources.
5 The Mid Office group positioned in treasury with independent reporting

structure on risk aspects ensure compliance in terms of exposure analysis,
limits fixed and calculation of risk sensitive parameters like VaR, PV01,
Duration, Defeasance Period etc. and their analysis.
OPERATIONAL RISK
1 Operational Risk, which is intrinsic to the bank in all its material products,
activities, processes and systems, is emerging as an important component of
the enterprise-wide risk management system. Recognizing the importance of
Operational Risk Management, Bank has adopted a Comprehensive
Operational Risk Management Policy. This would entail the bank to move
towards enhanced level of sophistication in the years ahead and to capture
qualitative and quantitative measures of Operational Risk indicators in
management of operational risk.
2 Bank has comprehensive system of internal controls, systems and

57
procedures to monitor and mitigate risk. Bank has also institutionalized new
product approval process to identify the risk inherent in the new product and
activities.
3 The Internal audit function of the Bank and the Risk Based Internal Audit,
compliments the banks ability to control and mitigate risk.
Bank’s Preparedness to meet Basel II norms
1.Bank carried out a comprehensive Self-Assessment exercise spanning

all the risk areas and evolved a road map to move towards
implementation of Basel II as per RBI’s directions. The program in
implementation of Risk Management, Organizational Structure, Risk
measures, risk data compilation and reporting etc. is as per this laid down
road map.
2. The Polices framed and procedures / practices adopted are

benchmarked to the best in the industry on a continuous basis and the
Bank has a clear intent to reach an advanced level of sophistication in
management of risks in the coming year.
3 The ever-improving risk management practices in the Bank will result

in Bank emerging stronger, which in turn would confer competitive

58
advantage in the Market.
4 Bank will implement New Capital Accord w.e.f. 31/03/2008. The

parallel run, till implementation, is currently underway.

59
ANALYSIS AND INTERPRETATION OF DATA

4.1 TABLE SHOWING DIVIDEND PAYOUT RATIO
NET PROFIT
Particulars Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Rs. In crores
Dividend 29.85 24.20 17.04 17.11 15.66
Payout Ratio
Net Profit
Interpretation:-
The dividend payout ratio net profit is constantly decreasing year by year.
In the year 2006 it was 29.85 crores while in the year 2009 it has decreased
to 24.20 crores, but it has gradually decreased to 17.04 crores in 2007 and
stays constant in 2009 with 17.11 crores but again it is decreased to 15.66 in
2010. This shows that the dividend payout ratio net profit was decreasing
during those years.

60
4.1.1GRAPH SHOWING DIVIDEND PAYOUT RATIO NET PROFIT
Inference:
From the above graph it clear shows that the net profit of dividend payout
ratio is decreasing gradually.
4.2 TABLE SHOWING DIVIDEND PAYOUT RATIO CASH

PROFIT
Dividend 26.47 21.95 15.87 15.85 14.54
Payout Ratio
Cash Profit

61
INTERPRETATION :
The cash profit dividend payout ratio is also decreasing year by year . In the
year 2006 it was 26.47 crores and it has gradually decreased to 21.95 crores
in 2007 and again gradually decreases as it was decreased in the previous
year , it has decreased to 15.87 crores in 2008 and stays constant with 15.85
crores in 2009 and again it has just decreased to 14.54 crores in 2010. This
shows that the cash profit dividend payout ratio has only decreased and
never increased during these 5 years
4.2.1 GRAPH SHOWING THE CASH PROFIT OF DIVIDEND PAYOUT

RATIO
Inference:

62
From the above graph it clear shows that the cash profit of dividend payout
ratio is decreasing gradually for the following years.
4.3 TABLE SHOWING EARNING RETENTION RATIO
Earning 70.11 75.82 82.97 82.80 84.35
Retention
Ratio
INTERPRETATION
The earning retention ratio was 70.11 crores during the year 2006 and has
increased to 75.82 crores in 2007 and again gradually increases in the year
2008 with 82.97 crores and stays constant in the next year 82.80 and again it
has just increased to 84.35 in 2010. This shows that earning retention ratio
has increased year by year. The increase in earning retention ratio is good
for the bank

63
4.3.1 GRAPH SHOWING EARNING RETENTION RATIO
Inference:
From the above graph it clear shows that the earning retention ratio is
increasing gradually.
4.4 TABLE SHOWING CASH EARNING RETENTION RATIO
particulars Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Cash 73.49 78.06 84.13 84.07 85.47
Earning
Retention
Ratio

64
INTERPRETATION :
The cash earning retention ratio is constantly increasing year by year . the
cash earning retention ratio was 73.49 crores in 2006 . in the year 2007 it is
increased to 84.13 crores and again it is increased in the next year as it is
increased in the previous year to 84.13 crores in 2008 and remains constant
in the next year with 84.13 crores in 2009 and in the year 2010 it is just
increased to 85.47 crores … this shows that the cash earning retention ratio
is only increased and not decreased during thoese 5 years
4.4.1 GRAPH SHOWING CASH EARNING RETENTION RATIO

65
Inference:
From the above graph it clear shows that the cash earning retention ratio is
increasing gradually.
4.5. TABLE SHOWING ADJUSTED CASH FLOW TIMES
AdjustedCas 97.44 91.38 69.74 74.82 76.06
h Flow
Times
INTERPRETATION :
The adjusted cash flow times is constantly decreasing year by year . the
adjusted cash flow times was 97.44 crores in 2006 and in the year 2007 it is

66
just decreased to 91.38 crores . in the year 2008 it is gradually decreased to

69.74 crores but only from 2009 it has started increasing , it is increased to
74.82 crores in 2009 . in the year 2010 again it is just increased to 76.06
crores
4.5.1 GRAPH SHOWING ADJUSTED CASH FLOW TIMES
Inference:
From the above graph it is inferred that the adjusted cash flow times were
fluctuating during these years
4.6 TABLE SHOWING EARNINGS PER SHARE

67
Earnings Per 13.37 16.74 27.46 34.18 41.08
Share
INTERPRETATION :
The earning per share is constantly increasing year by year. The earning per
share was 13.37 crores in 2006 and in the year 2007 it is just increased to
16.74 crores . in the year 2008 it is gradually increased to 27.46 crores . in
the year 2009 it is increased to 34.18 crores and again it is increased in
2010 as it was increased in previous year , it is increase to 34.18 crores by
2010 . this shows that the earning per share is only increasing and has never
decreased during those 5 year

68
4.6.1 GRAPH SHOWING EARNINGS PER SHARE
Inference:
From the above graph it clear shows that the earnings per share is increasing
gradually.
4.7 TABLE SHOWING NET CASH FROM OPERATING

ACTIVITIES
Net Cash -1124.99 1956.28 1930.64 5599.13 -505.07
From

69
Operating
Activities
INTERPRETATION:
The netcash from operating activities was -1124.99 crores in the year 2006
and the bank was not in good position during that year. Later in the year
2007 there was some improvement , like it is increased to 1956.28 crores
and there was no big changes in 2007 as it is just decreased to 1930.64
crores but it is gradually increased to 5599.13 in 2009 . in the year 2010 it is
totally decreased to -505.97 crores. This shows that the bank is facing
problem in operating activities.
4.7.1 GRAPH SHOWING NET CASH FROM OPERATING

ACTIVITIES
INFERENCE

70
From the above graph it is inferred that the net cash from operating activities
of the bank is not good and were fluctuating during these years.
4.8 TABLE SHOWING NET CASH FROM INVESTING ACTTIVIIES
Net Cash
(used in)/from
-53.87 -101.33 -209.32 -309.76 -200.43
Investing
Activities
INTREPRETATION :

71
The net cash from investing activities was -53.87 crores in 2006 and It is
just decreased to -101.33 crores in 2007 . In the year 2008 it is again
decreased to -209.32 crores and again it is decreased in the next year as it
was decreased in previous year to -309.76 crores in 2009 . only in the year
2010 it has increased to -200.43 crores and this shows that there were no
improvement during these 5 years .
4.8.1 GRAPH SHOWING NET CASH FROM INVESTING ACTIVITIES
Inference:
From the above graph it clearly shows that the net cash from investing
activities is decreasing gradually.
4.9 TABLE SHOWING NET CASH FROM FINANCING ACTIVITIES

72
Net Cash
(used
in)/from 997.41 180.98 -49.92 597.72 497.26
Financing
Activities
INTERPRETATION
The net cash from financing activities was 997.41 crores during the year 2006 and was
gradually decreased to 180.98 crores in 2007 and again it has decreased to -49.92 crores
in 2008 but only in 2009 it is increased to 597.72 crores and again it has just decreased
to 497.26 crores . during the 5 years there were ups and downs in the net cash from
financing activities but at last it has only decreased from 997.41 to 497.26

73
4.9.1 GRAPH SHOWING NET CASH FROM FINANCING

ACTIVITIES
INFERENCE
From the above graph it is inferred that the net cash from financing activities
is decreasing gradually and were fluctuating during these years.
4.10 TABLE SHOWING NET CASH AND CASH EQUIVALENTS
Net
(decrease)/increase
-181.45 2035.93 1671.40 5887.09 -208.24
In Cash and Cash
Equivalents

74
INTERPRETATION :
The net cash and cash equivalents were increased and decreased in the last 5
years . in the year 2006 it is -181.45 crores and it has increased to 2035.93
crores in 2007 and it is just decreased to 1671.40 crores but in the next
year 2009 it has gradually increased to 5887.09 cores and finally it is
gradually decreased to -208.24 crores in the last year 2010. This shows that
the bank was good in . the middle years and there were no improvement
during those 5 years
4.10.1 GRAPH SHOWING NET CASH AND CASH EQUIVALENTS
INFERENCE

75
From the above graph it is inferred that the net cash and cash equivalents
increased and decreased gradually and were fluctuating during these years.
4.11 TABLE SHOWING OPENING CASH AND CASH

EQUIVALENTS
Opening
Cash &
6571.97 6390.51 8426.44 10097.84 15984.93
Cash
Equivalents
INTERPRETATION :
The opening cash and cash equivalents was 6571.97 crores in the year 2006
and it is just decreased to 6390.51 crores in 2007 . in the year 2008 it is

76
increased to 8426.44 crores and again it is increased to 10097.84 crores but

it is gradually increased to 15984.93 crores in the year 2010. This shows that
the opening cash and cash equivalents has only increased during those 5
years.
4.11.1 GRAPH SHOWING OPENING CASH AND CASH

EQUIVALENTS
Inference:
From the above graph it clear shows that the opening cash and cash
equivalents is increasing gradually
4.12 TABLE SHOWING CLOSING CASH AND CASH

EQUIVALENTS

77
Closing
Cash &
6390.52 8426.44 10097.84 15984.93 15776.69
Cash
Equivalents
INTERPRETATION :
The closing cash and cash equivalents was 6390.52 crores in 2006. And it is
increased to 8426.44 crores in 2007 and again in the year 2008 it is
increased to 10097.84 crores. In the year 2009 it is gradually increased to
15984.93 crores and it is just decreased to 15776.69 crores by the year
2010. This shows that the closing cash and cash equivalents is only
increased during these years.
4.12.1 GRAPH SHOWING CLOSING CASH AND CASH

EQUIVALENTS

78
Inference:
From the above graph it clearly shows that the closing cash and cash
equivalents is also increasing gradually
FINDINGS
1. The dividend payout ratio net profit is constantly decreasing year by year.
In the year 2006 it was 29.85 crores while in the year 2009 it has decreased
to 24.20 crores, but it has gradually decreased to 17.04 crores in 2007 and
was constant during the year 2009 with 17.11 crores but again it is decreased
to 15.66 in 2010. This shows that the dividend payout ratio net profit has
only decreased and it has never increased during those years.
2. The cash profit dividend payout ratio is also decreasing year by year . In
the year 2006 it was 26.47 crores and it has gradually decreased to 21.95
crores in 2007 and again gradually decreases as it was decreased in the
previous year , it has decreased to 15.87 crores in 2008 and stays constant
with 15.85 crores in 2009 and again it has just decreased to 14.54 crores in
2010. This shows that the cash profit dividend payout ratio has only
decreased and never increased during
3. The earning retention ratio was 70.11 crores during the year 2006 and has
increased to 75.82 crores in 2007 and again gradually increases in the year
2008 with 82.97 crores and stays constant in the next year 82.80 and again it
has just increased to 84.35 in 2010. This shows that earning retention ratio

79
has increased year by year. The increase in earning retention ratio is good
for the bank
4. The cash earning retention ratio is constantly increasing year by year . the
cash earning retention ratio was 73.49 crores in 2006 . in the year 2007 it is
increased to 84.13 crores and again it is increased in the next year as it is
increased in the previous year to 84.13 crores in 2008 and remains constant
in the next year with 84.13 crores in 2009 and in the year 2010 it is just
increased to 85.47 crores … this shows that the cash earning retention ratio
is only increased and not decreased during thoese 5 years
5. The adjusted cash flow times is constantly decreasing year by year . the
adjusted cash flow times was 97.44 crores in 2006 and in the year 2007 it is
just decreased to 91.38 crores . in the year 2008 it is gradually decreased to
69.74 crores but only from 2009 it has started increasing , it is increased to
74.82 crores in 2009 . in the year 2010 again it is just increased to 76.06
crores.
6. The earning per share is constantly increasing year by year. The earning
per share was 13.37 crores in 2006 and in the year 2007 it is just increased
to 16.74 crores . in the year 2008 it is gradually increased to 27.46 crores . in
the year 2009 it is increased to 34.18 crores and again it is increased in
2010 as it was increased in previous year , it is increase to 34.18 crores by
2010 . this shows that the earning per share is only increasing and has never
decreased during those 5 years
7. The net cash from operating activities was -1124.99 crores in the year
2006 and the bank was not in good position during that year. Later in the
year 2007 there was some improvement , like it is increased to 1956.28
crores and there was no big changes in 2007 as it is just decreased to
1930.64 crores but it is gradually increased to 5599.13 in 2009 . in the year
2010 it is totally decreased to -505.97 crores. This shows that the bank is
facing problem in operating activities.

80
8. The net cash from investing activities was -53.87 crores in 2006 and It is
just decreased to -101.33 crores in 2007. In the year 2008 it is again
decreased to -209.32 crores and again it is decreased in the next year as it
was decreased in previous year to -309.76 crores in 2009. Only in the year
2010 it has increased to -200.43 crores and this shows that there were no
improvements during these 5 years.
9.The net cash from financing activities was 997.41 crores during the year
2006 and was gradually decreased to 180.98 crores in 2007 and again it has
decreased to -49.92 crores in 2008 but only in 2009 it is increased to
597.72 crores and again it has just decreased to 497.26 crores . during the 5
years there were ups and downs in the net cash from financing activities but
at last it has only decreased from 997.41 to 497.26
10.The net cash and cash equivalents were increased and decreased in the
last 5 years . in the year 2006 it is -181.45 crores and it has increased to
2035.93 crores in 2007 and it is just decreased to 1671.40 crores but in the
next year 2009 it has gradually increased to 5887.09 cores and finally it is
gradually decreased to -208.24 crores in the last year 2010. This shows that
the bank was good in . the middle years and there were no improvement
during those 5 years
11.The opening cash and cash equivalents was 6571.97 crores in the year
2006 and it is just decreased to 6390.51 crores in 2007 . in the year 2008 it is
increased to 8426.44 crores and again it is increased to 10097.84 crores but
it is gradually increased to 15984.93 crores in the year 2010. This shows that
the opening cash and cash equivalents has only increased during those 5
years.
12.The closing cash and cash equivalents was 6390.52 crores in 2006. And
it is increased to 8426.44 crores in 2007 and again in the year 2008 it is
increased to 10097.84 crores. In the year 2009 it is gradually increased to
15984.93 crores and it is just decreased to 15776.69 crores by the year

81
2010. This shows that the closing cash and cash equivalents is only
increased during these years.
SUGGESTION
1. The dividend payout ratio should be maintained as the shareholders

would prefer to invest only if the dividend payout increases.
2. The EPS is increasing for the bank on yearly basis. So, the bank should
maintain the EPS so that the holders are retained by the bank.
3. The adjusted cash flow is decreasing for the past few years and this
cash flow is considered as operating or working capital of any bank.
But the cash flow is neither stable nor increasing as it is fluctuating the
adjusted cash flow should be maintained and the cash flow should be

82
planned in such a way that the cash flow should increase on a yearly
basis.
4. Net Cash is the cash that is reserved in the bank for any investing or
financing activities. The cash should be increasing in any business to
maintain it sound and healthy bank. The Net cash should increase on a
yearly basis and the net cash is the life blood of any company or bank
for diversification or expansion of it respectively.
5. Opening cash and cash equivalent is the initial investment or opening
balance of any business. But in this case it is for bank, so as per that
the opening cash is increasing for bank and this should be maintained
as this will have a drastic impact on the balance and the bank should
also keep up this performance to improve in positive direction.
6. Closing cash and cash equivalent is the closing balance or net balance
available at the end of the year. The closing cash was increasing
substantially for all the years except for the year 2010 as the balance
has pitched down this should be maintained and focused for better
closing balance at the end of each year. The closing balance should be
looked for positive increase as it decreased when compared to other
years.
• Risk Management strategies of Union Bank of India must be revised.
• Bank must try to reduce its Net and Gross NPA.

• Bank must try to improve its Capital Adequacy Ratio.
• Bank must do proper investigation before lending.
• Bank must do pre and post monitoring of Loans.
• Credit worthiness must be checked before giving loans.
• Bank must not try to take financial risk

83
CONCLUSIONS
The process of financial risk management is an ongoing one.Strategies

need to be implemented and refined as the market and requirements
change. Refinements may reflect changing expectations about market
rates, changes to the business environment, or changing international
political conditions, for example. In general, the process can be
summarized as follows:
• Identify and prioritize key financial risks.
• Determine an appropriate level of risk tolerance.
• Implement risk management strategy in accordance with policy.

84
• Measure, report, monitor, and refine as needed. Risk management needs

to be looked at as an organizational approach, as management of risks
independently cannot have the desired effect over the long term. In this
project I have analyzed the risk management process of Union Bank of
India. It was found that Net and Gross NPA of the bank is increasing which
is not good for the bank. Thus we can say that Bank must improve its risk
management strategies
Credit Appraisal is a process of appraising the credit worthiness of

loan applicants.
The funds of depositor’s i.e general public are mobilized by means of
such advance / investment.
Thus it extremely important for the lender bank to assess the risk
associated with credit, thereby ensure the security for the funds
deposited by the depositors.
In UBI the credit appraisal is done by thorough study of the project
which involves Following.
1) Evaluation of Management: A detailed study about the promoters
is carried out in order to ensure promoters are experienced in the line
of business and are capable to implement and run the project
2) Technical Feasibility: A detailed study about the technical
aspects is done to determine the technical soundness of the project

85
3) Financial Viability: A detailed study relating to financial viability of

the project is done; thereby ensuring that project will generate
sufficient surplus to repay the lan installment and interest
4) Risk analysis: It determines the risk associated with the project
this is done by performing a Sensitivity analysis and Credit Rating.
With Sensitivity Analysis the projects capacity to service debts under
worsened conditions is determined. Credit rating, provides rating for
various parameters like management, financial, market and so,
thereby determine the credit worthiness of the borrower
5) It is on the basis of the credit risk level, collateral securities to be
given by the borrower are determined. This shows Union Bank of
India has sound system for credit appraisal
BIBLIOGRAPHY
Books :-
• “Management Accounting-Principles and Practice.”,
- By Sharma R.K & Gupta Shashi K Eighth Edition,
Kalyani Publisher’s, New Delhi.

86
• “Financial Management and Policy”, - By

Bhalla V.K
First Edition, Annual Publications, New Delhi.
• “Management Accounting and Financial Control”,
- By Maheshwari S.N
Thirteen Edition, Sultan Chand & Sons, New Delhi(2002).
• “Research Methodology-Methods & Techniques”,
- By Kothari C.R
Second Edition, Vishwa Prakashan Delhi (1990).
• “Management of Working Capital”, -
By Gupta Sunita. First Edition, New Century
Publications, New Delhi(2003).
• “Cost and Financial Analysis”, - By
Jain.S.P. & Narang.K.L. Third Revised Edition, Kalyani
Publisher’s, New Delhi.
• “Management Accounting”, -
By MN Arora First Edition, New
Century Publications, New Delhi(2003).
• “Cost and Financial Analysis”, - By
Jawaharlal Third Edition, Himalaya
Publisher’s, New Delh
Websites:-
• www.unionbankofindia.com
• www.scribd.com

87
ANNEXUES
CASH FLOW STATEMENT FOR THE YEAR 2006

88
AMOUN
PARTICULARS
T
Net Profit Before Tax 0.00
Net Cash From Operating Activities -1124.99
Net Cash (used in)/from

-53.87
Investing Activities
Net Cash (used in)/from Financing Activities 997.41
Net (decrease)/increase In Cash and Cash

-181.45
Equivalents
Opening Cash & Cash Equivalents 6571.97
Closing Cash & Cash Equivalents 6390.52

89
BALANCE SHEET AS ON 31st MARCH 2006
LIABILITIES AMOUNT ASSETS AMOUNT

Rs Rs
Cash & Balances with

Total Share Capital 505.12 4,387.27
RBI
Balance with Banks,
Equity Share Capital 505.12 2,003.24
Money at Call
Share Application
0.00 Advances 53,379.96
Money

90
Preference Share
0.00 Investments 25,917.65
Capital
Reserves 3,587.36 Gross Block 1,382.03
Accumulated
Revaluation Reserves 465.68 587.17
Depreciation
Net Worth 4,558.16 Net Block 794.86
Capital Work In
Deposits 74,094.30 15.56
Progress
Borrowings 3,974.40 Other Assets 2,627.50
Total Debt 78,068.70
Other Liabilities &

6,499.18
Provisions
Total Liabilities 89,126.04 Total Assets 89,126.04
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2006
PARTICULARS AMOUNT
Income
Interest Earned 5,863.71
Other Income 625.10
Total Income 6,488.81

91
Expenditure
Interest expended 3,489.42
Employee Cost 866.91
Selling and Admin Expenses 414.23
Depreciation 86.13
Miscellaneous Expenses 956.93
Preoperative Exp Capitalised 0.00
Operating Expenses 1,558.15
Provisions & Contingencies 766.05
Total Expenses 5,813.62
Net Profit for the Year 675.18
Extraordionary Items 0.00
Profit brought forward 40.99
Total 716.17
Preference Dividend 0.00
Equity Dividend 176.79
Corporate Dividend Tax 24.80
Per share data (annualised)
Earning Per Share (Rs) 13.37
Equity Dividend (%) 35.00
Book Value (Rs) 81.02
Appropriations
Transfer to Statutory Reserves 514.04
Transfer to Other Reserves -0.01
Proposed Dividend/Transfer to Govt 201.59
Balance c/f to Balance Sheet 0.55
Total 716.17

92
AMOUN
PARTICULARS
T
Net Cash From Operating Activities 1956.28

-101.33
Net (decrease)/increase In Cash and Cash Equivalents 2035.93

93

Rs Rs
Cash & Balances
with RBI
Balance with Banks,
Money at Call
Share Application
0.00 Advances 62,386.43
Money
Preference Share
Capital
Revaluation Accumulated
456.59 664.49
Reserves Depreciation
Net Worth 5,189.87 Net Block 822.72
Capital Work In
Deposits 85,180.22 2.28
Progress
Other Liabilities &
8,092.26
Provisions

94
PARTICULARS AMOUNT
income
Interest earned 7,382.18
Other Income 841.80
Expenditure
Depreciation 86.37
Miscellaneous Expenses 1,206.30
Net Profit for the Year 845.39
Total 845.94
Appropriations
Transfer to Other Reserves 211.99
Total 845.93

95
PARTICULARS AMOUNT

-209.32
Net Cash (used in)/from Financing Activities -49.92

96

Rs RS
Cash & Balances with

RBI
Balance with Banks,
Equity Share Capital 505.12 643.10
Money at Call
Share Application
0.00 Advances 74,348.29
Money
Preference Share
Capital
Accumulated
Revaluation Reserves 1,724.40 741.62
Depreciation
Net Worth 7,347.71 Net Block 2,195.83
Deposits 103,858.65 Capital Work In Progress 4.57
Other Liabilities &

8,106.43
Provisions

97
PARTICULARS AMOUNT
Income
Interest earned 9,447.30
Other Income 1,232.67
Expenditure
Depreciation 101.82
Net Profit for the Year 1,387.03
Total 1,387.51
Appropriations
Total 1,387.51

98
AMOUN
PARTICULARS
T

-309.76

99

RS RS

10
UNION BANK OF INDIA 0 BANGALORE UNIVERSITY
Cash & Balances

with RBI
Balance with Banks,
Money at Call
Share Application
0.00 Advances 96,534.23
Money
Preference Share
Capital
Revaluation Accumulated
1,685.98 893.35
Reserves Depreciation
Capital Work In
Deposits 138,702.83 7.86
Progress
Other Liabilities &

9,647.43
Provisions

10
AMOUN
PARTICULARS
T
Income
Expenditure
Employee Cost 1,152.36
Selling and Admin Expenses 1,082.54
Depreciation 136.58
Total 1,727.20
Appropriations
Transfer to Statutory Reserves 1,171.89
Total 1,727.20

10

10
PARTICULARS AMOUNT
Net Cash From Operating Activities -505.07

-200.43
Net (decrease)/increase In Cash and Cash Equivalents -208.24

10

Rs Rs
Cash & Balances
with RBI
Balance with Banks,
Money at Call
Share Application
0.00 Advances 119,315.30
Money
Preference Share
Capital
Accumulated
Revaluation Reserves 1,615.97 1,101.50
Depreciation

10
Capital Work In
Deposits 170,039.74 9.96
Progress
Other Liabilities &

5,483.01
Provisions
PARTICULARS AMOUNT
Income
Expenditure
Employee Cost 1,354.99
Selling and Admin Expenses 1,225.57
Depreciation 160.14

10
Total 2,075.75
Appropriations
Transfer to Statutory Reserves 1,177.09
Total 2,075.75

10

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1

UNION BANK OF INDIA BANGALORE UNIVERSITY

Sometimes, it so happens that a business unit earns sufficient profit,

The management of cash also assumes importance because it is

CASH FLOW ANALYSIS B.B.M IN FINANCE

Cash flow statement is one important tool of cash management because it

Meaning of Cash Flow Statement

A funds flow statement based on working capital is very useful in long-

CASH FLOW ANALYSIS B.B.M IN FINANCE

flow statement can be defined as a statement which summarizes sources of

Information about the cash flows of an enterprise is useful in providing

The Statement deals with the provision of information about the

CASH FLOW ANALYSIS B.B.M IN FINANCE

1. An enterprise should prepare a cash flow statement and should

2. Users of an enterprise’s financial statements are interested in

Usefulness of Cash Flow Statement

Cash Flow Statement is very useful to the management for short

CASH FLOW ANALYSIS B.B.M IN FINANCE

(i) Predict future cash flows. This statement is often use as an

(ii) Determine the ability to pay dividends and other

(iii) Show the relationship of net income to changes in the

(iv) Efficiency in Cash Management. This statement is very

CASH FLOW ANALYSIS B.B.M IN FINANCE

(v) Discloses Movement of Cash. Previous year cash flow

(vi) Discloses Success or Failure of Cash Planning. A

(vii) Evaluate Management Decision. This statement, by

(viii) Enhances the Comparability of Report. It enhance the

CASH FLOW ANALYSIS B.B.M IN FINANCE

enterprises, because it eliminates the effect of using different accounting

Limitations of Cash Flow Statement

Inspite of various uses of Cash Flow Statement, it has the

1. Cash Flow Statement gives the main items of inflow and

2. This statement is not a substitute of income statement which

3. It cannot replace funds flow statement as it cannot show the

CASH FLOW ANALYSIS B.B.M IN FINANCE

(i) Cash comprises cash on hand and demand deposits with

(iv) Operating activities are the principal revenue-producing

(v) Investing activities are the acquisition and disposal of long-

CASH FLOW ANALYSIS B.B.M IN FINANCE

(vi) Financing activities are activities that result in changes in the

CASH FLOW ANALYSIS B.B.M IN FINANCE

CLASSIFICATION OF CASH FLOWS

(i) Cash Flows from Operating Activities

The amount of cash flows arising from operating activities is a key

(b) Cash receipts from royalties, fees, commissions and other

CASH FLOW ANALYSIS B.B.M IN FINANCE

(c) Cash payments to suppliers for goods and services;

(d) Cash payments to and on behalf of employees;

(e) Cash receipts and cash payments of an insurance enterprise

(f) Cash payments or refunds of income taxes unless they can be

(g) Cash receipts and payments relating to futures contracts,

An enterprise may hold securities and loans for dealing or trading

CASH FLOW ANALYSIS B.B.M IN FINANCE

activity of that enterprise.

(ii) Cash Flows from Investing Activities

The separate disclosure of cash flows arising from investing activities

(a) Cash payments to acquire fixed assets (including

(b) Cash receipts from disposal of fixed assets (including

(c) Cash payments to acquire shares, warrants or debt instruments

CASH FLOW ANALYSIS B.B.M IN FINANCE

(d) Cash receipts from disposal of shares, warrants or debt

(f)Cash receipts from the repayment of advances and loans made to

(g) Cash payments for futures contracts, forward contracts, option