STUDY ON FINANCIAL RATIO ANALYSIS OF AFRICAN NATIONAL

BANK OF SOUTH SUDAN

THESIS

In partial fulfillment of the requirement for the degree of

MASTER OF COMMERCE

Submitted to

SAVITRIBAI PHULE PUNE UNIVERSITY

BY

ACUIL DENG ADIANG ACUIL

UNDER THE GUIDANCE OF

PROF: Dr. Jayashri Mundewadikar (PHD)

During the Academic year 2018-2019

DEPARTMENT OF COMMERCE

SURYADATTA COLLEGE OF MANAGEMENT,INFORMATION RESEARCH AND

TECHNOLOGY (SCMIRT)

PUNE CITY 411048

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 .

CERTIFICATE FROM THE INSTITUTE

SIGNATURE OF STUDENT SIGNATURE OF THE GUIDE

ACUIL DENG ADIANG ACUIL ……………….

.............................................

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Page reserve for certificate of internship

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 DECLARATION

I hereby declare that the project report work entitled, " A STUDY ON FINANCIAL RATIO

ANALYSIS OF AFRICAN NATIONAL BANK OF SOUTH SUDAN", submitted to

SAVITRIBAI PHULE PUNE UNIVERSITY , under the supervision of Suryadatta college

(SCMIRT) during the academic year 2018-2019 is my original work and it has not formed basis

for an award of degree/ fellowship or any other project in the same context .

place: Pune City( India) Signature Of Student

date: …………….. ACUIL DENG ADIANG ACUIL

…………………………

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 ACKNOWLEDGEMENT

Its gives me pleasure to thanks Dr Jayashri mundewadikar ( PHD) ,Professor, AT

Department of Commerce Savitribai phule Pune university , for her motivating guidance, as well

as giving me important suggestion and support for the completion of this work in time and in her

great successful approaches tactics

I am also immensely pleased to record my deep sense of gratitude to all the lecturers of

commerce department of Suryadatta college ,for their encouragement and suggestion to

complete this work successfully

I record my sincere thanks to the Management and Principal of Suryadatta college , for

providing necessary facilities in undertaking this work.

My sincere thanks are also due to my father and my Mother and all my family ,friends for

cooperation and blessing that I have got , throughout my academic journey .

Signature of the Student

Place: Pune city (India) ACUIL DENG ADIANG ACUIL

Date: ……………... ………………………………

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 Executive Summary

In today’s financial world, financial performance is a requirement amongst the perspective of

various stakeholders, be it in the management, lenders, owners and investors’ perspective. And it
is out of analysis of financial statements. Financial performance is crucial for taking financial
decisions related to planning and control. Hence, it forms the basis as one of the importance for
taking financial decisions effectively.

Banking Sector plays an important role in economic development of any particular country. The
banking system of South Sudan is featured by a small network of bank branches, serving many
kinds of financial services of the people; African National bank of South Sudan today is amongst
the leading player in South Sudan banking industry and is deeply engaged in human and
economic development at the national level.

The Bank works closely with the Government regulated as commercial bank like any other
private bank in the country .bank emerged as a pioneer venture on the horizon of offering an
expanded range of banking products and financial services for corporate and retail customers
through its diverse delivery channels and specialized subsidiaries in the areas of investment
banking, asset management, venture capital and insurance.

In the light of its strategic importance in the nation interest, it is crucial to evaluate the financial
performance of the African National Bank (ANB). And the present study focused on operational
control of the asset, profitability and solvency etc. This research paper is aimed to analyze the
Financial Performance of African National (ANB) Bank in five years period and offer
suggestions for the improvement of efficiency in the Bank.

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TABLE OF CONTENT

Contents
DECLARATION................................................................................................................................. 1
ACKNOWLEDGEMENT ................................................................................................................... 2
ABSTRACT............................................................................................... Error! Bookmark not defined.
TABLE OF CONTENT....................................................................................................................... 4
CHAPTER I............................................................................................... Error! Bookmark not defined.
INTRODUCTION............................................................................................................................... 6
1.1 BACKGROUND ........................................................................................................................... 7
1.2 PROBLEM STATEMENT ............................................................................................................ 8
1.3 OBJECTIVE OF THE STUDY...................................................................................................... 8
1.4 SCOPE OF THE STUDY .............................................................................................................. 9
1.5 SIGNIFICANCE OF THE STUDY................................................................................................ 9
1.6 LIMITATION OF THE STUDY.................................................................................................. 10
1.7 RESEARCH DESIGN ................................................................................................................. 11
1.8 STATISTICAL TOOLS............................................................................................................... 11
1.9 PERIOD OF THE STUDY .......................................................................................................... 12
1.10 SCHEME OF CHAPTERISATION 12

1.11 OPERATIONAL KEY TERMS DEFINITION .......................................................................... 12

CHAPTER II.......................................................................................... Error! Bookmark not defined.
COMPANY INDUSTRY PROFILE.................................................................................................. 15
2.1 WORLD BANKS SCENARIO .................................................................................................... 15
2.2 NATIONAL SCENARIO ............................................................................................................ 17
CHAPTER III......................................................................................... Error! Bookmark not defined.
REVIEW OF LITERATURE............................................................................................................. 26
3.1 LIQUIDITY ................................................................................................................................ 26
3.2 PROFITABILITY........................................................................................................................ 28

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 3.3 EFFICIENCY USE OF CAPITAL EMPLOYED ......................................................................... 30
CHAPTER IV ........................................................................................ Error! Bookmark not defined.
RESEARCH METHODOLOGY ....................................................................................................... 32
4.1 DATA COLLECTION ................................................................................................................ 32
4.2 DATA ANALYSIS...................................................................................................................... 32
4.3 SECONDARY DATA ................................................................................................................. 33
4.4 RESEARCH INSTRUMENTS .................................................................................................... 34
4.6 RATIO ANALYSIS FORMULAS............................................................................................... 34
CHAPTER V.......................................................................................... Error! Bookmark not defined.
DATA ANALYSIS AND INTERPRETATION................................................................................. 39
5.1 Data Analysis .............................................................................................................................. 39
CHAPTER VI ........................................................................................ Error! Bookmark not defined.
FINDINGS, SUGGESTIONS, AND CONCLUSION ....................................................................... 65
6.1 Findings....................................................................................................................................... 65
6.2 Suggestions ................................................................................................................................. 67
6.2 Conclusion................................................................................................................................... 66
APPENDIX A ................................................................................................................................... 68
APPENDIX B ................................................................................................................................. 707
Bibliography………………………………………………………………………………….72

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INTRODUCTION

1.1 BACKGROUND

The banking sector is one of the most important instrument of the national development, its
occupies a unique place in a nation’s economy. Economic development of the country is evident
through the soundness of the banking system. Deregulation in the financial market, market
liberalization, economic reforms have witnessed important changes in banking industry leading
to incredible competitiveness and technological sophistication leading to a new era of in banking.
Since then, every bank is relentless in their endeavor to become financial strong and
operationally efficient and effective. South Sudan and others foreign banks are the dominant
financial intermediaries in South Sudan and have made good progress during the global
financial crisis sometime before the war that later on affected economic growth ; it is evident
from its annual credit growth and profitability.

Today a large section of people, who have minimal financial literacy, always want to know the
financial performance status of the banks where their deposits are invested. They may be as an
investor, manager, employee, owners, lender, customer, government and public at large.
Financial performance is not available from the records and files in any organization. It has to be
derived by the usage of financial statement analysis techniques.

The selection and usage of technique is subject to the option of the user. Some of the important
and commonly used techniques are: Ratio Analysis, Cross section analysis Comparative
statement analysis, Time series analysis, and Common size analysis. The usefulness of ratios
depends on skilful interpretation and intelligence of the user. The present study is devoted to
analysis of the financial ratios of African National bank (ANB) by using ratio analysis with a
view to give meaningful interpretations, for the users Financial Ratios are used in the evaluation
of the financial condition and profitability of a company. The ratios are calculated from the
financial information provided in the balance sheet and income statements. While analyzing the
financial statements you should keep in mind the principles/practices that accountants use in

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preparing statements to examine the financial condition and preference of a company. Ratio
Analysis is one of the techniques of financial analysis where ratios are used to evaluating the
financial condition and performance of a firm. Analysis and interpretation of various accounting
ratios gives a skilled and experienced analyst a better understanding of the financial condition
and performance of the firm.

1.2 : PROBLEM STATEMENT

Generally banking System is the backbone of every country’s economy. It is generally agreed
that a strong and healthy banking system is a prerequisite for sustainable economic growth The
banking system of South Sudan is featured by a small network of banks, serving many kinds of
financial needs of the people The African National bank ( ANB) popularly is one of the leading
banks in the country with only one main branch and variety of products. the investigation in this
study is the financial performance of the bank. The study will mainly explore the financial tools
to measure and interpret a performance.

The main objective of any company is the creation of wealth for its stakeholders although this
mostly applies market facts This means that progress needs to be measured to show the bank
return in total by highlighting the major strengths and opportunities of the bank and on the other
hand, weaknesses and threats facing the bank. Also an analysis indicates the level of efficiency,
liquidity, debt management and adequate cash flow. No research is completed until it has
formulated a specific problem. The problem of the study is to analyze the financial status of
African National Bank (ANB)

1.3 : OBJECTIVES OF THE STUDY

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  To know the liquidity position and solvency
 To study the profitability of African National bank ( ANB)
 To find financial performance and efficiency use of capital employed

1.4 : SCOPE OF THE STUDY

The current study choose one private sector bank to evaluate the financial performance The main
scope of the study was to put into practical the aspect of the study into real life work experience.
The study applies Ratio analysis based on last 4 years Annual financial reports of ANB bank in
south Sudan.

1.5 : SIGNIFICANCE OF THE STUDY

Government regulation, in most of the countries shielded the banks from the forces of
competition. In South Sudan no exception for this. With the nationalization of the most of the
major commercial banks after the independent in 2011, restrictions on entry and expansion of
private and foreign banks were gradually increased. The Central Bank of South Sudan also began
enforcing uniform interest rates, spreads and service changes among commercial banks.

This cause lack of free market competition either among public and private banks. Gradually the
force of competition from the banking sector is still remain. In addition some areas of concern
in the form of increasing non-performing assets, declining profitability and efficiency, which
were threatening the viability of commercial banks. Commercial banks have played a vital role
in giving direction to economic development by catering the financial requirement of trade and
industry in countries. By encouraging saving among the people, commercial banks have fastened
the process of capital formation. Banks draw the community savings into the organized sector
which can then be allotted among the different economic activities according to the priorities laid
down by planning authorities in the country. ‘The banks are not only the safe deposit vaults for

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these savings, but taking the banking system as a whole, they also create deposits in the process
of their lending operations. However, the important function of a banker is the provision of
convenient machinery by which people can make payments to each other without having to walk
round each other’s house with bags of coins. Banks also exercise influence on the level of
economic activities through the creation of manufacturing of money. Through their lending
policies, they divert the economic activity to the needs of the country. In view of this, the role of
commercial banks in underdeveloped countries and planned economies like South Sudan
becomes particularly important. The present study seeks to examine the trends in the financial
performances of one of the leading commercial bank in banking sector of the country (ANB -
Bank)

1.6: LIMITATION OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer from certain limitations.
Some of these are mentioned here under so that the findings of the study may be understood in a
proper perspective. The limitations of the study are:
 The study is based on the secondary data and the limitation of using secondary data may
affect the results.
 The secondary data was taken from the five years annual reports of the ANB- Bank of
South Sudan. It may be possible that the data shown in the annual reports may be limited
period of time which does not effectively show the actual fluctuation of the bank
profitability.

 Financial analysis is mainly done to compare the growth, profitability and financial
soundness of bank by diagnosing the information contained in the financial statements.

 Financial ratio analysis is done to identify the financial strengths and weaknesses of the
bank by properly establishing relationship between the items of Balance Sheet and Profit
& Loss Account for period of five years depend on the country banking policies. It helps

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 in better understanding of bank financial position, growth and performance by analyzing
the financial statements with various tools and evaluating the relationship between
various elements of financial statements

1.7 RESEARCH DESIGN

In the present descriptive study is employed. an attempt has been made to measure, evaluate and
analyze the financial performance of the Bank. The analysis partitioned two side aspects of
stakeholders. The shareholders wealth and other external stakeholders. The study is based on
secondary data that has been collected from annual reports of the bank website, magazines,
journals, documents and other published information. The study covers the period of 5 years
from year (2011-12 ,2012-13, 2013-14, 2014 -15 , 2015-16). Ratio Analysis was applied to
analyze and compare the trends in banking business and financial performance.

1.8 : STATISTICAL TOOLS

The Researcher has used the following tools to present and analysis data

Data presentation
I. tables
II. Diagrams
Data analysis
I. Microsoft excel 2007

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1.9 PERIOD OF THE STUDY

This study of financial ratio analysis is limited to five years from 2010 to 2015. The accounting
year starts from 1 April to 31 march.

1.10 SCHEME OF CHAPTERISATION

The researcher is prepared the following scheme of chapters setting.

1. The first chapter deals with introduction and research design of the study.

2. The second chapters describes the Industry and company profile

3. The third chapter deals with literature review.

4. The fourth chapter is devoted to the research methodology.

5. The fifth chapter is data analysis and interpretation.

6. The sixth chapter gives findings of the study

1.11 OPERATIONAL KEY TERMS DEFINITION

Ratios: are the simplest mathematical (statistical) tools that reveal significant relationships hidden
in the mass of data, and allow meaningful comparisons. Some ratios are expressed as fractions or
decimals, and some as percentages. Major types of business ratios include Efficiency, Liquidity,
Profitability, and Solvency ratios.

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Analysis: Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are categorized as
Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios, Profitability
Ratios, and Market Value Ratios

Profit: The surplus remaining after total costs are deducted from total revenue, and the basis on
which tax is computed and dividend is paid. It is the best known measure of success in an
enterprise.

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 COMPANY INDUSTRY PROFILE

2.1 WORLD BANKS SCENARIO

The global financial system suffered a profound and traumatic shock in September 2008 when
US investment bank Lehman Brothers collapsed. As market players withdrew from the
financial system, credit dried up and world trade collapsed, there was a real and immediate fear
that the world was heading for a repeat of the Great Depression of the 1930s. Two years on and
there is growing optimism that both the world economy and the banking industry are recovering
from the impact of the financial crisis. But it is equally clear that the financial world has changed
permanently, both in terms of who holds the balance of power within global industry and how
banks will be allowed to operate in future Global shifts in banking While the growing power of
emerging markets is a long-term structural phenomenon, it has accelerated in the banking
industry thanks as much to the relative decline of the west as to expansion in the east as well as
Africa. There has been a pronounced shift from west to east – and, to some extent, from north to
south – in the wake of the crisis. Banks on both sides of the Atlantic are expected to have written
down more than $2.1trn of assets by the end of 2010, according to the International Monetary
Fund. The equivalent figure for Asian banks is just $115bn. Banks in emerging markets are now
well capitalized and well funded and big enough to be able to compete directly against their
western counterparts in the global marketplace. The two largest banks by market capitalization
are both Chinese – ICBC and China Construction Bank. Although third place is taken by a
British bank, HSBC, it is largely an Asian operation. A league table, compiled by Bloomberg in
April, shows that Citi bank once the world’s largest bank, comes in at fifth, while banks from

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Brazil, Russia and India – the other members of the BRIC grouping alongside China – are all in
the top 25. There are already signs that customers are questioning the ability of banks to look out
for their financial well-being. Only 36 percent of consumers believe what banks tell them,
according to a Forrester survey. A separate survey also indicates that over 60 percent of U.S.
house- holds conduct their own research before buying financial services products. As a result,
banks have begun to rethink what, where and how they serve an increasingly informed and
demanding customer base. At the same time, a confluence of industry developments, including
consolidation, regulation, industry specialization, changing workforce needs and new
technologies are putting additional pressure on banks’ operating models and raising questions
about traditional strategies for growth and value creation. in 2014, the global economy entered a
period of adjustment leading to differentiated bank performance results The banking industry in
the US and the UK saw an upturn, while that in Japan and Euro Zone remained sluggish and
facing challenges. Against the backdrop of the “New Normal” economic pattern in China, the
assets and liabilities and net profit growth of China’s banking industry slowed down, and credit
risk pressure increased but was controllable. In 2015, the global banking industry faced large and
challenging operating pressure, and difficulties and differentiated performances that became the
key words in the banking industry experienced a strong recovery after the worst of the financial
crisis, but continued to be weighed down due to the ongoing Euro zone crisis and concerns of
sluggish growth in the United States. An evolving banking landscape in emerging economies
(especially China and Latin America) is expected to transform the banking industry in the future.
Meanwhile, regulations continue to evolve and create an ever-tightening regulatory environment
for the banking industry Assets of the Top 1000 banks globally grew by 4.9% in 2012 and
registered a growth across all regions in 2012, except in Europe where asset growth was down
0.5% due to concerns about Euro zone debt. The Latin America region registered an impressive
growth of 20.5% in assets in 2012, as compared to the other global regions. This resurgence of
the economies in the region was driven primarily by rising consumerism and financial inclusion
Pre-tax profitability of the banking sector has witnessed a moderate growth of 4.6% during
2011–12. This growth has been largely driven by the emerging economies while the profitability
of European banks has continued to be negatively impacted due to the Euro zone crisis For
banks, top priorities include regulatory compliance, improving asset quality, enhancing customer
centricity, focusing on digital convergence, and tackling competition from non-banks. Banks are

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therefore making business and technology investments to change their business models to
comply with new regulatory requirements, enhancing capital adequacy, rolling out new channels
such as social media, and leveraging customer data analytics and predictive analytics to enhance
customer understanding and prevent fraud

2.2 NATIONAL SCENARIO

Modern banking in South Sudan could be traced back to the establishment of Bank of South
Sudan act 2011, the central bank of South Sudan is statutorily mandated to regulate the
operation of all financial institutions in the country , including commercial banks. The central
bank fulfills this mandate by issuing prudential guidelines and regulations as provided for under
the act .in theory ,the licensed commercial banks are obligated to operate in accordance with
these laws and guidelines but many said , this is not happening.

Before independence

Prior to 9 July 2011,when South Sudan attained independence ,banking operations in the country
were controlled and governed by the bank of Sudan based Khartoum . the Sudanese central bank
operated branches in south sudan in the cities of Juba , Wau and Malakal . the legal tender was
the Sudanese pound. Beginning in 2005, with the signing of comprehensive peace agreement
( CPA) most of the the Sudanese banks operating in south sudan began to close operations . also
as part of CPA deal , the three branches of Sudanese central bank located in south Sudan became
known as bank of southern Sudan ,from January 2005 untill july 9th 2011. Bank of southern
Sudan was headquartered in juba with branches in wau and malakal .it is estimated that the total
Sudanese currency circulating in south sudan was valued at approximately US 700 million as of
July 2011.

Commercial banks

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After independence ,the one of commercial banks were operating in the country under license
from the central bank of south sudan , amongst them were ,agricultural bank of sudan , Buffalo
commercial bank, commercial Bank of Ethiopia ,Equity bank , Ivory Bank ,Kenya commercial
bank ,mountain trade development bank, Nile commercial bank, African National Bank etc.

Bank supervision.

Banking in the country is under supervision and regulation of south sudan’s central bank, the
central bank of south sudan .the country’s capital and largest city .it is responsible for monitoring
monetary policies and and ensuring price stability and a stable exchange rate ,the first governor
of central bank was Elijah malok.

 Objectives of central banks:

currency
authority

Bankers to
Advisor to the
goverment commercial
bank

manager of monetary
the external polices
reserves regulated

Banking crisis

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 In april 2017 , the Reuters reported that banks were running out of cash and exacerbating famine
in the war –torn nation

‘’ if you go to the commercial banks ,you do not find south Sudanese pounds and dollars ‘’

‘’They are all in the black market’’ said the deputy minister of finance Mou Ambrose thiik , he
said a parallel economy had emerged and people were hoarding cash. Black market rates have
reached 150 south Sudanese pounds to the dollar, up from 105 in min- February.

South Sudan Banking at a Glance:

Gross Domestic product

At current prices ( ssp – m)

Particulars 2008 2009 2010 2011 2012 2013 2014

Final consumexp gov’t 4,362 5,908 9,253 8,223 8,025 9,285
4,769
Final consumexp,households 11,051 11,959 18,527 27,231 26,325 29,127
10,468
Final consumexp NPISH 394 640 776 388 1,017 4,907 3,899

Gross fixed capital formation 4,478 3,857 3,732 5,626 3,687 4,128 4,758

Charges in inventories 45 424 89 0 15 18 125

Gross domestic expenditure 20,154 19,485 22,464 33,795 40,173 43,403 47,193

Exports of goods & services 21,472 17,040 22,270 35,201 3,096 6,334 10,636

Imports goods & services 9,703 9,146 10,228 14,747 13,133 14,914 15,918

GDP at current pricess 31,923 27,379 34,507 54,249 30,135 34,823 41,911

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Source: Secondary Data

Number of Banks, Group Wise

Source: Secondary Data

2.3: COMPANY PROFILE

ANB -Bank is a leading private sector bank and financial services company in South Sudan
offering a wide range of products and services to corporate and retail customers through a variety
of delivery channels. Since commencing operations in 2012, the Bank has grown both in terms
of its physical network, although it has no branches, extension counters and but it’s does not
have more ATMs, as well as in terms of the size of asset base.. The Bank has a wide presence
throughout the capital city Extension Counters across Juba. As of March 31, 2015,
.
Retail asset products include home loans, personal loans, auto loans, consumer loans, educational
loans as well as security-backed loans of various types. The Bank also offers other products and
services such as debit and travel currency cards, financial advisory services, bill payment

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services and wealth management services. As of 31 March 2015, the Bank had 2.93 million retail
customers. The Bank also markets third party products such as mutual funds and Government
savings bonds. A wide range of liability and asset products and services are also offered to south
Sudanese with dual passport.
The Treasury department manages the funding position of the Bank and also manages and
maintains its regulatory reserve requirements. The Treasury department also invests in sovereign
and corporate debt instruments, undertakes proprietary trading in equity and fixed income
securities and foreign exchange. The Treasury department also undertakes investments in
commercial paper, mutual funds and floating rate instruments as part of the management of
short-term surplus liquidity. A wide range of treasury products and services are also offered to
corporate customers in the form of derivative instruments such as forward contracts, interest rate
swaps, currency swaps and foreign currency options.

Products and Services The Bank offers a wide spectrum of financial services to the corporate
sector. The Bank serves the large corporate sector, the growing SME sector and the agricultural
sector. A broad classification of products and services offered by the Bank is set out below.
Fund-based products.

, micro finance and other rural institutions and non-governmental organizations that have close
links to the agricultural sector. The Bank has also devised a separate risk evaluation model for
agricultural loans with an objective to measure and mitigate the risk involved in financing this
sector. There has been considerable improvement in the rural infrastructure in select geographies
in India in recent years.

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Organizational Structure

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MISSION OF THE ORGANIZATION

‘’MOTO’’ ‘’Committed to those we serve’’

They believe in creating and maintaining a professional environment that invites the ideas of
their employees, fosters the confidence of our shareholders and exceeds the expectations of our
customers.

They also believe, they will provide a specialized solution provider that:

 Adds valve for their customers

 Creates a positive economic impact in the communities they serve.
 Creates positive personal and professional opportunities for their employees.

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VISSION OF THE ORGANIZATION

 To be a financially viable, independent community bank that is committed to improving

the quality of life of the communities they serve

 To earn the loyalty of employees, customers and the community by operating with
integrity and fairness at all times.

 To demonstrate behavior that totally focuses on the customer and recognize they are the
reason we are here.

 To have employees who are empowered to build long-term relationships with our
customers.

 To provide our shareholders long-term growth and an attractive return on their

investment in the bank.

 To satisfy the customers’ needs by offering a myriad of products that are driven by a
sales and services philosophy.

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 REVIEW OF LITERATURE

3.1 : LIQUIDITY

Corporate liquidity can be examined along two basic dimensions: static and dynamic (Uyar,
2009). Static analysis is focused on traditional ratios (current and quick ratios) based on the data
from the balance sheet. These ratios assess to what extent current liabilities are covered by
current assets. Dynamic analysis is based on cash outflows and inflows and uses cash conversion
cycle (CCC) to measure effectiveness of a company’s ability to generate cash. It comprises both
balance sheet and income statement data to create a measure with a time dimension (cash flow
within the operating cycle of the firm). To conduct a comprehensive liquidity analysis both types
of ratios are used. the essential part in management of working capital lies in maintaining
liquidity in day-to-day operations is to ensure smooth running of the business and that it meets its
obligations . Liquidity management, which refers to management of current assets and liabilities,
plays an important role in the successful management of a business and secures future growth.
The liquidity position of a business is about the degree in which it can dispose money. Liquidity
management is necessary for all businesses, small, medium or large. Nevertheless, this is not an
effortless task because managers must ensure that the firm is running in an efficient and
profitable manner and in most cases there are high possibilities of mismatch of current assets and
current liabilities during this process. If this happens and firm’s manager failed to manage it
properly then it will affect firm’s growth and profitability which will further lead to financial
distress and finally firms can go bankrupt. Qasim&Ramiz (2011) indicate the fact that liquidity
refers to the available cash for the near future, after taking into account the financial obligations
corresponding to that period. Liquidity risk consist in the probability that the organization should
not be able to make its payments to creditors, as a result of the changes in the proportion of long
term credits and short term credits and the un correlation with the structure of organization's
liabilities. Further, Qazim and Ramiz (2011) posit that liquidity management is very important
for every organization that means to pay current obligations on business that include operating

26
and financial expenses that are short term. Liquidity is particularly important to shareholders,
long-term lenders and creditors, as it provides information about a particular business's safety
margins afforded to creditors and its ability to repay loans. The levels of inventory, credit,
accounts payable and cash that form part of the overall cash flow of a business affect the
liquidity of the firm . By maintaining an appropriate level of liquidity a business should be in a
position to survive down turns and moreover, it may be able to exploit profitable opportunities as
they arise . On the other hand, as asserted by Cooper, et al (1998), illiquidity, unless remedied,
will give rise to insolvency and eventually bankruptcy as the Business’s liabilities exceed its
assets. Excessive debt exposes the business to potentially large interest costs and the risk of
potential bankruptcy. Shareholders, long term lenders and creditors evaluate the level of risk they
bear, and require compensation for the risks, which arise from a business's capital structure. The
proportion of assets financed by creditors are of particular importance to shareholders, since
creditors have a prior claim on the Liquidity ratios measure a business' ability to meet the
payment obligations by comparing the cash and near-cash with the payment obligations. If the
coverage of the latter by the former is insufficient, it indicates that the business might face
difficulties in meeting its immediate financial obligations. This can, in turn, affect the company's
business operations and profitability. The Liquidity versus Profitability Principle: There is a
trade-off between liquidity and profitability; gaining more of one ordinarily means giving up
some of the other. Morris and Shin (2010) conceptually defines the liquidity ratio as “realizable
cash on the balance sheet to short term liabilities.” In turn, “realizable cash” is defined as liquid
assets plus other assets to which a haircut has been applied. Ration analysis is one of the
conventional way that use financial statements to evaluate the company and create standards that
have simply interpreted financial sense. Raheman and Nasr (2007) in their study in which
average collection period, inventory turnover in days, average payment period, CCC, current
ratio, debt ratio, size of the firm, and financial assets to total assets ratio were the selected
independent variables and net operating profit was the dependent variable found a strong
negative relationship between the current ratio and debt ratio and profitability of the firms. The
study also established a negative relationship between liquidity and profitability. Furthermore,
they found out a significant negative relationship between debt used by the firm and its
profitability. Benjamin and Kamalavali (2006) in their study in which the independent variables
used were current ratio, quick ratio, inventory turnover ratio, working capital turnover ratio,

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debtor’s turnover ratio, ratio of current asset to total asset, ratio of current asset to operating
income, comprehensive liquidity index, net liquid balance size and leverage and growth while
dependent variable (profitability) was measured in terms of return on investment ROI established
a negative association between ROI and the current ratio, cash turnover ratio, current asset to
operating income and leverage. On the other hand they established a positive association
between ROI and the quick ratio, debtor’s turnover ratio, current asset to total asset and growth
rate. Dong (2010) in his study that focused on the variables that include profitability, conversion
cycle and its related elements and the relationship that exists between them reported that the
firms’ profitability and liquidity are affected by working capital management. The relationship
among these variables was found to be strongly negative. This denote that decrease in the
profitability occur due to increase in cash conversion cycle. It is also found that if the number of
days of account receivable and inventories are diminished then the profitability will increase
numbers of days of accounts receivable and inventories. Saswata Chatterjee (2010) focused on
the importance of the fixed and current assets in the successful running of any organization. It
poses direct impacts on the profitability and liquidity. There have been a phenomenon observed
in the business that most of the companies increase the margin for the profits and losses because
this act shrinks the size of working capital relative to sales. But if the companies want to increase
or improve its liquidity, then it has to increase its working capital.

3.2 : PROFITABILITY

Reilly and Brown (2005) stated that financial statement analysis seeks to evaluate managerial
performance in several important areas including profitability, efficiency and risk. The ultimate
goal of that analysis is to provide insights that will help us project future managerial
performance. They also suggest that financial ratios should be examined relating to the economy,
the firm’s industry, firm’s main competitors and the firm’s past relative ratios. The issue of
trade-off between liquidity and profitability has been discussed intensively since this it is
crucially important for companies. Ross (2000) and Myers (2003) mention that excess liquidity
is an expense for the company. Money tied up in current assets can be alternatively deposited or

28
invested and generate interest income. Thus, the price of working capital over financing is the
interest rate. In the case of liquidity deficit the company must either attract short term loan or sell
some liquid assets, which is also an expense. Only the optimal level of liquidity benefits
profitability. Taping and Stephan (2008) in their research on profit determinants found that
liquidity of Ukrainian firms, measured by current ratio, has a significant positive influence on
profitability. One can name the size of the company, intangible assets and liquidity among other
important determinants of profitability for companies operating in the emerging markets.
Therefore, liquidity has a considerable impact on firm’s profitability and that is why it requires
proper management. Banking Sector plays an important role in economic development of a
country. The banking system of South Sudan is featured by a small network of bank branches,
serving many kinds of financial services of the people. The ANB-Bank, popularly known as
ANB is one of the leading bank of public sector in South Sudan.

Internal determinants of bank profitability can be defined as those factors that are influenced by
the banks management decisions and policy objectives. Management effects are the results of
differences in bank management objectives, policies, decisions, and actions reflected in
differences in bank operating results, including profitability. Zimmerman (1996) found that
management decisions, especially regarding loan portfolio concentration, were an important
contributing factor in bank performance. Researchers frequently attribute good bank
performance to quality management. Management quality is assessed in terms of senior officers‟
awareness and control of the banks policies and performance. Haslem (1968, 1969) computed
balance sheet and income statement ratios for all the member banks of the US Federal Reserve
System in a two-year study. His results indicated that most of the ratios were significantly related
to profitability, particularly capital ratios, interest paid and received, salaries and wages. a
number of studies have concluded that expense control is the primary determinant of bank
profitability. Expense management offers a major and consistent opportunity for profitability
improvement. With the large size and the large differences in salaries and wages, the efficient
use of labor is a key determinant of relative profitability. Staff expenses, as conventional wisdom
proposes, is expected to be inversely related to profitability because these costs reduce the
„bottom line‟ or the total operations of the bank. The level of staff expenses appears to have a
negative impact on banks‟ ROA in the study of Bourke (1989).However, Molyneux (1993)

29
found a positive relationship between staff expenses and total profits. As he suggests high profits
earned by firms in a regulated industry, may be appropriated in the form of higher payroll
expenditures.

3.3 : EFFICIENCY USE OF CAPITAL EMPLOYED

One of the most important areas in the day to day management of the firm is the management of
efficiency use of capital employed.

From the present study it is found that company financial position was seeing to be sound
because the company tries to increase its production and also net profit (Srinivas K T, 2012).
Eljelly, (2004): elucidated that efficient liquidity management involves planning and controlling
current assets and current liabilities in such a manner that eliminates the risk of inability to meet
due short-term obligations and avoids excessive investment in these assets. The relation between
profitability and liquidity was examined, as measured by current ratio and cash gap (cash
conversion cycle) on a sample of joint stock companies in Saudi Arabia using correlation and
regression analysis. The study found that the cash conversion cycle was of more importance as a
measure of liquidity than the current ratio that affects profitability. The size variable was found
to have significant effect on profitability at the industry level. The results were stable and had
important implications for liquidity management in various Saudi companies. First, it was clear
that there was a negative relationship between profitability and liquidity indicators such as
current ratio and cash gap in the Saudi sample examined. Second, the study also revealed that
there was great variation among industries with respect to the significant measure of liquidity.
Deloof,( 2003): discussed that most firms had a large amount of cash invested in working capital.
It can therefore be expected that the way in which working capital is managed will have a
significant impact on profitability of those firms. Using correlation and regression tests he found
a significant negative relationship between gross operating income and the number of days
accounts receivable, inventories and accounts payable of Belgian firms. On basis of these results
he suggested that managers could create value for their shareholders by reducing the number of
days’ accounts receivable and inventories to a reasonable minimum. the negative relationship

30
between accounts payable and profitability is consistent with the view that less profitable firms
wait longer to pay their bills. Ghosh and Maji, (2003):

Setting industry norms as target-efficiency levels of the individual firms, this paper also tested
the speed of achieving that target level of efficiency by an individual firm during the period of
study. Findings of the study indicated that the Indian Cement Industry as a whole did not
perform remarkably well during this period

31
 RESEARCH METHODOLOGY

The researcher adopted the analysis of data in a manner that to combine relevance to purpose
with economy in procedure. Research design is the based define of a research problem. The
preparation of the design of the project is standard analytical of researcher favorite. It was used
in secondary data that was published already as annual reports of the bank in bank website,
journals, magazines and newspapers and other secondary data sources. This Secondary data may
be already collected and analyzed by someone else but gap is period of the study and variables
which we want to know. The study mainly connected annual financial reports that are last five
years 2011-2016 company final accounts (balance sheet and profit and loss)

4.1: DATA COLLECTION

Main purposes of this study is based to the annual financial reports ANB- bank from in 2011 to
2016. also researcher used four main financial statements for ratio analysis of bank such as;
balance sheets, an income statement, cash flow statement; statement of shareholder's equity
although study strongly emphasis the first main reports

4.2 : DATA ANALYSIS

32
the study used all important tools of ratio analysis for profitability evaluation of bank. It indicates
the different steps such Selection of financial report, Identification of balance sheet, income
statement and cash flow statement, ratio analysis, mathematical calculation, statistical analysis of
bank financial report year by year comparison and among industry First step of model, we do a
selection of financial report that means a choose of annual financial report. The annual financial
report present financial data of a company's position, operating performance, and funds flow for
an accounting period .We use the annual reporting of bank in 2011 to 2016. Second step of
model, researcher identify the balance sheet, income statement, cash flow statement from the
annual financial report. Study used some data from balance sheets for different kind of ratio such
as liquidity ratios, asset management ratios, debt management ratios. In contrast, we also used
some sources from income statement. When we analysis the ratio of profitability and debt
management ratio employment of bank income statement and balance sheet is must. However
the use of some data from the cash flow statement for ratio analysis such as market value ratio is
also possible. The third step of model, study identify the suitable ratio for profitability analysis
and evaluation the ratio such as current ratio, liquidity ratio, asset management ratio, profitability
ratio, debt coverage ratio, market value etc. All types of ratio are most important for how well a
bank to generate its assets, liquidity, revenue, expense, share holder equity profit or loss are also
here . The Forth step of model, study used the Mathematical calculation of bank. some figure
from the income statement and balance sheet. Financial calculators was used to determine the
results a financial ratio calculations a graphical analysis for evaluation of bank using Microsoft
excel is employed and finally study compares the results to manipulate objectives

4.3: SECONDARY DATA

The major source of data for this project was collected through Balance sheet and Profit and
loss of ANB- bank account of 5 year period from 2011-2016 Descriptive research is used in this
study because it will ensure the minimization of bias and maximization of reliability of data
collected. The researcher had to use fact and information already available through financial

33
statements of earlier years and analyze these to make critical evaluation of the available material.
Hence by making the type of the research conducted to be both Descriptive and Analytical in nature

4.4: RESEARCH INSTRUMENTS

study used secondary data collected from publishers of the bank final accounts it is limited to last
five years 2011-2016 annual financial reports

4.5: RATIO ANALYSIS FORMULAS

For most of us, accounting is not the easiest thing in the world to understand, and often the
terminology used by accountants is part of the problem. “Financial ratio analysis” sounds pretty
complicated. the analysis of the financial statements and interpretations of financial results of a
particular period of operations with the help of 'ratio' is termed as "ratio analysis." Ratio analysis
used to determine the financial soundness of a business concern. the term 'ratio' refers to the
mathematical relationship between any two inter-related variables. In other words, it establishes
relationship between two items expressed in quantitative form. According J. Batty, Ratio can be
defined as "the term accounting ratio is used to describe significant relationships which exist
between figures shown in a balance sheet and profit and loss account in a budgetary control
system or any other part of the accounting management

34
4.6.1: CLASSIFICATION OF RATIOS

Accounting Ratios are classified on the basis of the different parties interested in making use of
the ratios. A very large number of accounting ratios are used for the purpose of determining the
financial position of a concern for different purposes. Ratios may be broadly classified in to:

 Classification of Ratios on the basis of Balance Sheet.

 Classification of Ratios on the basis of Profit and Loss Account.
 Classification of Ratios on the basis of Mixed Statement (or) Balance Sheet and Profit
and Loss account
To meet the objective, the study groups ratios should divides three main parts which are
Liquidity ratios, profitability ratios, and asset management ratios

4.6.2: Common size ratios

One of the most useful ways for the owner of a business to look at the company’s financial
statements is by using “common size” ratios. Common size ratios can be developed from both
balance sheet and income statement items. The phrase “common size ratio” may be unfamiliar to
most people , but it is simple in concept and just as simple to create. You just calculate each line
item on the statement as a percentage of the total

35
4.6.3 : Liquidity ratio

Liquidity ratio refers to the ability of a company to interact its assets that is most readily
converted into cash. Assets are converted into cash in a short period of time that are concerns to
liquidity position. However, the ratio made the relationship between cash and current liability
 Current Ratio:
Current Ratio = Current assets /Current liabilities

 Quick Ratio:
Quick Ratio= (Quick Assets-Inventories)/ Quick Liabilities
Quick Asset= current asset-(stock + prepaid expense)
Quick Liabilities = current liabilities -Bank Overdraft
 Cash Ratio:
Cash Ratio = Cash / Current Liabilities

4.6.4: Profitability Ratio

Profitability ratios designate a bank's overall efficiency and performance. It measures how to use
assets and how to control its expenses to generate an acceptable rate of return. It also used to
examine how well the bank is operating or how well current performance compares to past
records of bank:

 Net Profit margin

Net Profit margin = Net profit /sales

 Return on common stock equity ratio

36
Return on common stock equity ratio = Net income / Common stockholders' equity

 Return on Total Assets

Return on Total Assets = Net profits / total assets

4.6.5: Asset management ratios

Asset management ratios are most notable ratios of financial ratios analysis. It measure how
effectively any organization uses and controls its assets. It is analysis how a company quickly
converted to cash or sale on their resources. It is also called Turnover ratios because it indicates
the asset converted or turnover in to sales.

 current asset turnover ratio

current asset turnover ratio=sales/current asset

 Fixed asset turnover

Fixed asset turnover = Sales / Net fixed asset
 Total asset turnover
Total asset turnover = Sales / Total asset
 Debt Ratio
Debt Ratio =Total liabilities / Total assets

37
38
 DATA ANALYSIS AND INTERPRETATION

5.1: Data Analysis

The previous chapter discussed a detailed description of the research methodology. In this
chapter, the data comes from the ANB- Bank in South Sudan with relation to the research
objectives, all data is Secondary data which is already published to Secondary data sources
mainly bank website and email exchange . The data will be analyzed by using Microsoft excel
2007. also In this section study present the result from our data analysis, the study briefly
examined the performance of liquidity position of the bank. Second part present the overall
profitability of the bank and third part is asset management condition after analysis the study also
discussion the debt management position and finally comments represent the market value of the
bank

39
 CURRENT RATIO

Table 5.1 Showing The Bank's Current Ratio

Year Current Asset Current Liabilities Ratio

(A) SSP (B) SSP (A/B)
2011-2012 1,684,486,052 1,974,466,637 0.853

2012-2013 1,901,763,825 2,287,475,790 0.831

2013-2014 2,244,674,794 2,635,017,001 0.852

2014-2015 2,672,862,432 2,947,334,592 0.907

2015-2016 3,270,752,520 3,374,976,103 0.969

Source: Secondary Data From Financial Statements Of ANB- Bank

INFERENCE:

Table 5.1 presents current ratio of five years from 2011 to 2016. in the above ratios the bank
current ratio of 2011 is 0.853, 2012 is 0.831, 2013 is 0.852, 2014 is 0.907, and 2015 is 0.969 it
shows us that bank current ratio is increasing positive growth year by year

40
 Figure No:1

The Bank Current Ratio

Ratio
current Ratio
1

0.95

0.9

current Ratio
0.85

0.8

0.75
2011-12 2012-13 2013-14 2014-15 2015-16

Number of years

41
 Quick Ratio

Table 5.2 Showing The Bank's Quick Ratio

Year Quick Assets Current Liabilities Ratio

(A) SSP (B) SSP (A/B)
2011-2012 214,086,559 1,974,466,637 0.108

2012-2013 139,339,157 2,287,475,790 0.061

2013-2014 204,349,599 2,635,017,001 0.078

2014-2015 282,386,946 2,947,334,592 0.096

2015-2016 360,990,318 3,374,976,103 0.107

Source: Secondary Data From Financial Statements Of ANB- Bank

INFERENCE:

Table 5.2 presents Quick ratio of five years from 2010 to 2015. in the above ratios the bank
quick / asset test ratio of 2011 is 0.108, 2012 is 0.061, 2013 is 0.078 , 2014 is 0.096, and 2015 is
0.107 it shows us that bank liquidity is normally good with small increasing of growth

42
 Figure No:2

Quick Ratio

ratio
Return on common stock equity
18

16

14

12

10

8
Return on common stock
6 equity

Number of the years

43
Table 5.3 Showing The Bank's cash position Ratio

Year Cash Current Liabilities Ratio

(A) SSP (B) SSP (A/B)
2011-2012 138,861,630 1,974,466,637 0.070

2012-2013 107,029,214 2,287,475,790 0.047

2013-2014 147,920,883 2,635,017,001 0.056

2014-2015 170,413,196 2,947,334,592 0.058

2015-2016 198,188,397 3,374,976,103 0.059

Source: Secondary Data From Financial Statements Of ANB- Bank

INFERENCE:

Table 5.3 presents cash ratio of five years from 2011 to 2016. in the above ratios the bank cash
position ratio of 2011 is 0.070, 2012 is 0.047, 2013 is 0.056 , 2014 is 0.058, and 2015 is 0.059 it
shows us that bank liquidity is normally good but there is little decrease of current liabilities in
recent years .

44
 Figure No:3

The Bank Cash Position Ratio

Return on common stock equity

18

16

14

12

10
Return on common stock
8
equity
6

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
ratio

Numbers years

45
 Table 5.4 Showing The Bank's Net Profit Margin Ratio

Year Net Profit Current Liabilities Ratio

(A) SSP (B) SSP (A/B)
2011-2012 33,884,906 1,974,466,637 0.171

2012-2013 42,422,054 2,287,475,790 0.155

2013-2014 51,794,329 2,635,017,001 0.154

2015-2015 62,176,666 2,947,334,592 0.163

2015-2016 73,578,223 3,374,976,103 0.168

Source: Secondary Data From Financial Statements Of ANB- Bank

INFERENCE:

Table 5.4 presents net profit margin ratio of five years from 2011 to 2016. in the above ratios the
bank net profit margin ratio of 2011 is 0.171, 2012 is 0.155, 2013 is 0.154 , 2014 is 0.163, and
2015 is 0.168 it shows us that bank profitability is satisfactory

46
 Figure No:4

Bank's Net Profit Margin

Return on common stock equity

18

Ratios 16

14

12

10
Return on common stock
8 equity

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Number of the years

47
 Table 5.5 Showing The Bank's Return On Common Stock Equity

Year Net Profit Common stock equity Ratio

(A) SSP (B) SSP (A/B)
2011-2012 33,884,906 4,105,458 8.254

2012-2013 42,422,054 4,132,039 10.267

2013-2014 51,794,329 4,679,545 11.068

2014-2015 62,176,666 4,698,446 13.233

2015-2016 73,578,223 4,741,044 15.519

Source: Secondary Data From Financial Statements Of ANB -Bank

INFERENCE:

Table 5.5 presents Return on common stock equity ratio of five years from 2011 to 2016. in the
above ratios the bank net profit margin ratio of 2011 is 8.254, 2012 is 10.267, 2013 is 11.068 ,
2014 is 13.233, and 2015 is 15.519 it shows us that bank profitability is satisfactory

48
 Figure No:5

Bank's Return On Common Stock Equity

Return on common stock equity

18

16

14

12

10
Return on common stock
8 equity

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
Ratio

Number years

49
 Table 5.6 Showing The Bank's Return on Asset Ratio

Year Net Profit Total Assets Ratio

(A) SSP (B) SSP (A/B)
2011-2012 33,884,906 2,427,133,716 0.014

2012-2013 42,422,054 2,856,277,934 0.015

2013-2014 51,794,329 3,405,606,584 0.015

2014-2015 62,176,666 3,832,448,882 0.016

2015-2016 73,578,223 4,619,323,942 0.016

Source: Secondary Data From Financial Statements Of ANB-Bank

INFERENCE:

Table 5.6 presents Return on Asset Ratio of five years from 2010 to 2015. in the above ratios the
bank Return on Asset Ratio of 2011 is 0.014, 2012 is 0.015, 2013 is 0.015 , 2014 is 0.016, and
2015 is 0.016 it shows us that bank profitability is satisfactory

50
 Figure No:6

Bank's Return On Asset

Ratio
The Bank's Return on Asset Ratio
0.0165

0.016

0.0155

0.015

The Bank's Return on Asset Ratio

0.0145

0.014

0.0135

0.013
2011-12 2012-13 2013-14 2014-15 2015-16

Number years

51
 Table 5.7 Showing The Bank's Current Asset Turnover Ratio

Year SALES Current Asset Ratio

(A) SSP (B) SSP (A/B)
2010-2011 197,869,396 1,684,486,052 0.117

2011-2012 274,148,637 1,901,763,825 0.144

2012-2013 337,336,807 2,244,674,794 0.150

2013-2014 380,463,801 2,672,862,432 0.142

2014-2015 438,436,435 3,270,752,520 0.134

Source: Secondary Data From Financial Statements Of ANB- Bank

INFERENCE:

Table 5.7 presents Current Asset Turnover Ratio of five years from 2011 to 2016. in the above
ratios the bank Current Asset Turnover Ratio of 2011 is 0.117, 2012 is 0.144, 2013 is 0.150,
2014 is 0.142, and 2015 is 0.134 it shows us that bank Current Asset Turnover Ratio is not
good as liquidity

Figure No:7

Bank's Current Asset Turnover

52
 Bank's Current Asset Turnover
Ratio 0.16

0.14

0.12

0.1

0.08 Bank's Current Asset

Turnover
0.06

0.04

0.02

0
2011-12 2012-13 2013-14 2014-15 2015-16

Number of years

53
 Table 5.8 Showing The Bank's Fixed Asset Turnover Ratio

Year SALES Fixed Asset Ratio

(A) SSP (B) SSP (A/B)
2011-2012 197,869,396 742,647,664 0.266

2012-2013 274,148,637 954,514,109 0.287

2013-2014 337,336,807 1,160,931,790 0.291

2014-2015 380,463,801 1,159,586,450 0.328

2015-2016 438,436,435 1,348,571,422 0.325

Source: Secondary Data From Financial Statements Of ANB-Bank

INFERENCE:

Table 5.8 presents Bank's Fixed Asset Turnover Ratio of five years from 2011 to 2016. in the
above ratios the bank Fixed Asset Turnover Ratio of 2011 is 0.226, 2012 is 0.287, 2013 is
0.291, 2014 is 0.328, and 2015 is 0.325 it shows us that bank Fixed Asset Turnover Ratio is not
good as liquidity

54
 Figure No:8

The Bank's Fixed Asset Turnover Ratio

The Bank's Fixed Asset Turnover Ratio

Ratio 0.35

0.3

0.25

0.2

The Bank's Fixed Asset

0.15 Turnover Ratio

0.1

0.05

0
2011-12 2012-13 2013-14 2014-15 2015-16

number of years

55
 Table 5.9 Showing The Bank's Total Asset Turnover Ratio

Year SALES Total Asset Ratio

(A) (B) (A/B)
2010-2011 197,869,396 2,427,133,716 0.082

2011-2012 274,148,637 2,856,277,934 0.096

2012-2013 337,336,807 3,405,606,584 0.099

2013-2014 380,463,801 3,832,448,882 0.099

2014-2015 438,436,435 4,619,323,942 0.095

Source: Secondary Data From Financial Statements Of ANB- Bank

INFERENCE:

Table 5.9 presents Bank's Total Asset Turnover Ratio of five years from 2011 to 2016. in the
above ratios the bank Total Asset Turnover Ratio of 2011 is 0.082, 2012 is 0.096, 2013 is 0.099,
2014 is 0.099, and 2015 is 0.095 it shows us that bank Total Asset Turnover Ratio is not good as
liquidity

56
 Figure No:9

The Bank's Total Asset Turnover Ratio

Ratio The Bank's Total Asset Turnover Ratio

0.12

0.1

0.08

0.06 The Bank's Total Asset

Turnover Ratio

0.04

0.02

0
2011-12 2012-13 2013-14 2014-15 2015-16

Number of years

57
 Table 5.10 Showing The Bank's Debt Ratio

Year Total Liabilities Total Asset Ratio

(A) (B) (A/B)
2011-2012 2,237,145,461 2,427,133,716 0.922

2012-2013 2,628,192,511 2,856,277,934 0.920

2013-2014 3,074,527,985 3,405,606,584 0.903

2014-2015 3,450,244,017 3,832,448,882 0.900

2015-2016 4,172,558,792 4,619,323,942 0.903

Source: Secondary Data From Financial Statements Of Axis Bank

INFERENCE:

Table 5.10 presents Bank's Debt Ratio of five years from 2011 to 2016. in the above ratios the
bank Debt Ratio of 2011 is 0.922, 2012 is 0.920, 2013 is 0.903, 2014 is 0.900, and 2015 is
0.903 it shows us that bank Debt Ratio is Favorable. Comparison of years the bank debt ratio is
getting better according to recent years debt ratio

58
 Figure No:10

Table 5.10 Showing The Bank's Debt Ratio

The Bank's Debt Ratio The Bank's Debt Ratio

0.925

0.92

Ratio 0.915

0.91

0.905
The Bank's Debt Ratio
0.9

0.895

0.89

0.885
2011-12 2012-13 2013-14 2014-15 2015-16

Number of the years

59
 COMMON SIZE STATEMENT

Table No:11 Shows ANB- Bank of South Sudan Profit And Loss Account For The Year
End 31 March (Five Years Period)

INCOME 2011 2012 2013 2014 2015

1 Interest earned 76.6% 80.2% 80.6% 80.5% 80.9%
other income 23.4% 19.8% 19.4% 19.5% 19.1%
Total income 100.0% 100.0% 100.0% 100.0% 100.0%
2 Expenditure
Interest expended 43.4% 51.0% 51.9% 49.1% 48.5%
Operating expenses 24.2% 21.9% 20.5% 20.8% 21.0%
Provisions and contingencies 15.3% 11.6% 12.2% 13.8% 13.7%
Total exp 82.9% 84.5% 84.6% 83.7% 83.2%
3 NET PROFIT FOR THE YEAR
(1-2) 17.1% 15.5% 15.4% 16.3% 16.8%
Balance in Profit & Loss Account
brought forward from previous year 17% 18% 22% 26% 31%
4 AMOUNT AVAILABLE FOR
APPROPRIATION 34.4% 33.6% 37.1% 42.7% 47.6%
5 APPROPRIATIONS
Transfer to Statutory Reserve 4.3% 3.9% 3.8% 4.1% 4.2%
Transfer to/(from) Investment
Reserve -0.1% 0.0% 0.2% 0.1% 0.1%
Transfer to Capital Reserve 0.0% 0.2% 0.4% 0.1% 0.1%
Transfer to General Reserve 1.7% 0.0% 0.0% 0.0% 0.0%
Proposed dividend (includes tax on
dividend) 3.4% 2.8% 2.9% 2.9% 3.0%
Balance in Profit & Loss Account
carried forward 25.1% 26.7% 29.7% 35.5% 40.2%
TOTAL 34.4% 33.6% 37.1% 42.7% 47.6%

60
INFERENCE:

The interest earned is has been higher in the all five years period it was mainly due to more
positive investment in the other opportunities. how over due to paying other more interest
expenditure profit is not higher. The bank maintain net profit average of (16%). the other income
also was average of (20%) of total income that is mean 80% of the income is interest earning. the
investment reserve was negative in 2010 and 2011 was zero but maintain 0.1% in the rest of the
years. operating expense also maintain 20.5%. The share capital dividend has earning of 3% of
income of the bank which is not higher but it is satisfactory because there are other more
categories of reserve. finally axis bank owners/ investors are happy unless they see other higher
profit opportunities

61
 COMMON SIZE STATEMENT

Table No:12 Shows ANB- Balance Sheet For The Year End 31 March (Five Years Period)

2011 2012 2013 2014 2015

CAPITAL AND
LIABILITIES
Capital 0.17% 0.14% 0.14% 0.12% 0.10%
Reserves & Surplus 7.66% 7.84% 9.58% 9.85% 9.57%
Total Capital 7.83% 7.99% 9.72% 9.97% 9.67%
Deposits 77.97% 77.06% 74.18% 73.31% 69.80%
Other Liabilities and
Provisions 3.38% 3.03% 3.20% 3.60% 3.26%
total Current Liabilities 81.35% 80.09% 77.37% 76.90% 73.06%
Borrowings 10.82% 11.93% 12.91% 13.12% 17.27%
total Debt 92.17% 92.01% 90.28% 90.03% 90.33%
TOTAL debt and capital 100.00% 100.00% 100.00% 100.00% 100.00%
ASSETS
Cash and Balances with
Reserve Bank of India 5.72% 3.75% 4.34% 4.45% 4.29%
Balances with Banks and
Money at Call and Short
Notice 3.10% 1.13% 1.66% 2.92% 3.52%
total cash on hand 8.82% 4.88% 6.00% 7.37% 7.81%
Advances 58.67% 59.43% 57.84% 60.03% 60.85%
Other Assets 1.91% 2.27% 2.07% 2.34% 2.14%
TOTAL Current Asset 69.40% 66.58% 65.91% 69.74% 70.81%
Fixed Assets 0.94% 0.79% 0.69% 0.63% 0.54%
Investments 29.66% 32.63% 33.40% 29.63% 28.65%
total Fixed Assets 30.60% 33.42% 34.09% 30.26% 29.19%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00%

62
INFERENCE:

The Liabilities is has been higher in the all five years period it was mainly due to more
borrowing and deposits in the bank. The bank maintain net profit average of (17%) Fixed asset
has been grown up 4% in 2013 but down to -5%. the current asset 70% has gone up while it was
69% in 2010 this current assets growth shows positive but still the bank maintain same earning
able to manage with a lower investment in current assets on average The share capital has
decreased in 0.17% to 0.10% but there is reserve and surplus that has been growth 7.6% to
9.6% due to profit appropriations and transfers.the current liability has been higher in 2010
(81%) but down in 2015 (73%) it was due to huge depositors because axis bank is one of
leading private sector in India. finally Axis bank has a normal financial health but better to take
two steps controlling current liabilities maximum of 50% while now is 73% and investing more
higher paying opportunities to increase earning

63
64
 FINDINGS, CONCLUSION AND SUGGESTIONS

6.1 : Findings

After the study of the components of current assets & current liabilities and the trends of working
capital, it was found that:

 The liquidity position of the bank is not good. The current ratio is below 1(current
liabilities exceed current assets) for the study period, then the bank may have problems
paying its bills on time. However, low values do not indicate a critical problem but
should concern the management.

 The debt of the bank is quite high as it indicates debt ratio. there is leverage risk. to
address this concern, bank can also analyze the firm's interest coverage ratio, which is the
company's operating income divided by debt service payments. A high operating income
will allow even a debt-burdened firm to meets its obligations

 Asset turnover ratio should be improved together with the bank's financing mix and its
profit margin for a better analysis. A lower turnover ratio means that the bank is not using
its assets optimally. Total asset turnover ratio is a key driver of return on equity which is
quite constant according to axis bank ratios

 year after year from 2011 to 2016 is the indication of continuous improvement in the
earning power of the bank. This increasing EPS is the sign of favorable earnings, health
financial position and, therefore, a reliable firm to invest money

65
  6.2: Conclusion

The conclusion chapter is directly connected to the purpose. The analysis will be summarized in
order fulfill the purpose of the study since the start of the financial institutions in the financial
sector were introduced in South Sudan, banking sector has undergone major transformation. The
underlying objectives of the study were to know financial health make the banking system more
competitive, productive and profitable. Since 2008 world Financial Crisis and meltdown which
may institutions in Banking Industry there Liquidated and drop out of market. The greater
presence of international financial players in the South Sudan Financial system and some of the
Indian banks would become international players in the recent years. The key to success in the
competitive environment is increased productivity. This research has analyzed the productivity
of selected private sector bank ( ANB-bank) in India during 2010-15 This Study concludes that
though the per ratio of the bank financial productivity of axis bank is far better than other
improving. This study is based on three main research objectives. First, we analysis of liquidity
measures indicates that current ratio is bed condition for the bank. Quick and asset measures is
found that the same position of previous ratio and cash ratio measures the bank is little bit better
than the previous years. So we notice that the bank is better condition of liquidity position
compare that 2010 and 2011.
Second the study analysis’s profitability measures indicates the different kind of ratio. The
bank compare are more profitable recent years in net profit margin, return on assets (ROA),
return on equity (ROE), and overall, net profit margin is found rising for bank and falling of debt
ratio for bank during 2012-2015. net profit margin of bank is found to increase than it return of
asset to increase. Whereas, the opposite debt is decrease year by year. Return in Equity is also
found increase during those years in bank. On the other, study ensures that the Axis bank is
better condition for profitable. Third, study analysis is all efficiency measures of Asset accounts.
Current assets turnover.

Fixed assets turnover, total asset turnover. the bank are significant increase in asset account side
also increases some measure and decreases some measures but increasing point is so significant

66
and betters then decreasing parts so study ensure that the axis bank is standards position for
asset management measure.

6.2: Suggestions

1. It is recommended that bank to use more ratios, especially those in the study which are so
significant as improvement of their financial performance measures. ANB-bank of South
Sudan should probably consider the use of the fund to invest other opportunities to get a
profit, since they seem to be paying or expending more interest not only for the majority
of participants, but for businesses in general.

2. It is also recommended that axis bank owners/ managers request more research study and
financial analysis to their financial staff and also external examiner on bankruptcy
prediction models at relevant institutions such as universities. The few models presented
in this study may be used by ANB-bank as well, since they are simple and important to
know financial health of the bank,

3. The ANB- bank should have increased its current assets than its current liabilities to
make positive working capital. The bank should have decreased its current liabilities by
paying through the profit which is being made. The debt should been minimized to keep
debt ratio and debt-equity ratio to a minimum value

4. efficiency use of asset good as liquidity measures of Asset accounts such us total asset
turnover of the bank are significant increase in positive account side but decreases some
accounts the point is that there is no proper efficiency use of asset so axis bank
executive have to consider best asset position use

67
APPENDIX A

ANB –Bank profit And Loss Account For The Year End 31 March
1 INCOME 2011 2012 2013 2014 2015
Interest earned 151,548,058 219,946,474 271,825,744 306,411,554 354,785,977
other income 46,321,338 54,202,163 65,511,063 74,052,247 83,650,458
Total income 197,869,396 274,148,637 337,336,807 380,463,801 438,436,435
2 Expenditure
Interest expended 85,918,230 139,769,024 175,163,111 186,895,220 212,544,595
Operating expenses 47,794,281 60,070,995 69,142,375 79,007,739 92,037,456
Provisions and
contingencies 30,271,979 31,886,564 41,236,992 52,384,176 60,276,161
Total exp 163,984,490 231,726,583 285,542,478 318,287,135 364,858,212
3 NET PROFIT FOR
THE YEAR (1-2) 33,884,906 42,422,054 51,794,329 62,176,666 73,578,223
Balance in Profit &
Loss Account brought
forward from previous
year 34,274,337 49,697,707 73,294,476 100,292,624 135,014,461
4 AMOUNT
AVAILABLE FOR
APPROPRIATION 68,159,243 92,119,761 125,088,805 162,469,290 208,592,684
5 APPROPRIATIONS
Transfer to Statutory
Reserve 8,471,227 10,605,513 12,948,583 15,544,167 18,394,555
Transfer to/(from)
Investment Reserve -149,372 0 534,571 500,289 254,885

68
 Transfer to Capital
Reserve 47,630 519,047 1,414,579 388,664 631,421
Transfer to General
Reserve 3,388,491 0 26,084 10,465 -12,664
Proposed dividend
(includes tax on
dividend) 6,703,560 7,700,725 9,872,364 11,011,244 13,089,573
Balance in Profit &
Loss Account carried
forward 49,697,707 73,294,476 100,292,624 135,014,461 176,234,914
TOTAL 68,159,243 92,119,761 125,088,805 162,469,290 208,592,684
6 EARNINGS PER
EQUITY SHARE 82.95 102.94 119.67 132.56 31.18

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APPENDIX B

ANB- Bank Balance Sheet As At 31 March,

Particulars 2011 2012 2013 2014 2015
CAPITAL
AND
LIABILITIES
Capital 4,105,458 4,132,039 4,679,545 4,698,446 4,741,044
Reserves &
Surplus 185,882,797 223,953,384 326,399,054 377,506,419 442,024,106
Total Capital 189,988,255 228,085,423 331,078,599 382,204,865 446,765,150
Employees’
Stock Options
Outstanding
(Net) 0 0 0 0 0
1,892,378,01 2,201,043,03 2,526,135,88 2,809,445,64 3,224,419,36
Deposits 0 3 1 9 9
Other
Liabilities and
Provisions 82,088,627 86,432,757 108,881,120 137,888,943 150,556,734
total Current 1,974,466,63 2,287,475,79 2,635,017,00 2,947,334,59 3,374,976,10
Liabilities 7 0 1 2 3
Borrowings 262,678,824 340,716,721 439,510,984 502,909,425 797,582,689
2,237,145,46 2,628,192,51 3,074,527,98 3,450,244,01 4,172,558,79
total Debt 1 1 5 7 2
TOTAL debt 2,427,133,71 2,856,277,93 3,405,606,58 3,832,448,88 4,619,323,94

70
and capital 6 4 4 2 2
ASSETS
Cash and
Balances with
Reserve Bank
of India 138,861,630 107,029,214 147,920,883 170,413,196 198,188,397
Balances with
Banks and
Money at Call
and Short
Notice 75,224,929 32,309,943 56,428,716 111,973,750 162,801,921
total cash on
hand 214,086,559 139,339,157 204,349,599 282,386,946 360,990,318
1,424,078,28 1,697,595,38 1,969,659,57 2,300,667,58 2,810,830,29
Advances 6 6 4 4 7
Other Assets 46,321,207 64,829,282 70,665,621 89,807,902 98,931,905
TOTAL 1,684,486,05 1,901,763,82 2,244,674,79 2,672,862,43 3,270,752,52
Current Asset 2 5 4 2 0
Fixed Assets 22,731,456 22,593,250 23,556,420 24,102,106 25,143,105
1,137,375,37 1,135,484,34 1,323,428,31
Investments 719,916,208 931,920,859 0 4 7
total Fixed 1,160,931,79 1,159,586,45 1,348,571,42
Assets 742,647,664 954,514,109 0 0 2
TOTAL 2,427,133,71 2,856,277,93 3,405,606,58 3,832,448,88 4,619,323,94
ASSETS 6 4 4 2 2

71
72
 LIST OF TABLES

Table 5.1 Showing The Bank's Current Ratio.................................................42

Table 5.2 Showing The Bank's Quick Ratio...................................................44

Table 5.3 Showing The Bank's cash position Ratio........................................46

Table 5.4 Showing The Bank's Net Profit Margin Ratio................................48

Table 5.5 Showing The Bank's Return on common stock equity...................50

Table 5.6 Showing The Bank's Return on Asset Ratio...................................52

Table 5.7 Showing The Bank's Current Asset Turnover Ratio......................54

Table 5.8 Showing The Bank's Fixed Asset Turnover Ratio.........................56

Table 5.9 Showing The Bank's Total Asset Turnover Ratio..........................58

Table 5.10 Showing The Bank's Debt Ratio...................................................60

Table 11 Shows Common Size Profit And Loss Account..............................62

Table 12 Shows Common Size Balance Sheet...............................................64

73
Figure No:1 the Bank Current Ratio...........................................43

Figure No:2 the Bank Quick Ratio..............................................45

Figure No:3 the Bank Cash Position Ratio.................................47

Figure No:4 bank's net profit margin..........................................49

Figure No:5 Bank's Return on common stock equity.................51

Figure No:6 Bank's Return On Asset .........................................53

Figure No:7 Bank's Current Asset Turnover...............................55

Figure No:8 The Bank's Fixed Asset Turnover Ratio.................57

Figure No:9 The Bank's Total Asset Turnover Ratio..................59

Figure No:10 Table 5.10 Showing The Bank's Debt Ratio..........61

74
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Financial annual report of the Banks of south Sudan

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 ACUIL DENG ADIANG ACUIL
THESIS
IN PARTIAL FOR MASTER DEGREE IN COMMERCE

(SPECIALIZATION IN ADVANCE ACCOUNTING AND TAXATION)

PUNE ,INDIA

MARCH 2019

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