For all

1. This study has been carried out to evaluate the financial performance of
HDFC Bank HDFC was amongst the first to receive an 'in principle'
approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector
HDFC Bank Ltd. was incorporated in the year 1994. Its today's share
price is 1307.75.Its currentmarket capitalization stands atRs 719948.29
Cr. In the latest quarter, company has reported Gross Sales of Rs.
1221892.92 Cr and Total Income of Rs.1470682.66 Cr. The company's
managementincludes SashidharJagdishan,Kaizad Bharucha,Srikanth
Nadhamuni, Renu Karnad, Umesh Chandra Sarangi, Sanjiv Sachar,
Sandeep Parekh, MD Ranganath, Malay Patel, and Shyamalan
Gopinath.
It is listed on the BSE with a BSE Code of 500180 , NSE with an NSE
Symbol ofHDFCBANK and ISINofINE040A01034.It's Registered office
is at H D F C Bank House, Senapati Bapat Marg,Lower ParelMumbai-
400013, Maharashtra. Their Registrars are ACC Ltd. It's auditors are
BSR & Co, BSR & Co LLP, Deloite Haskins & Sells, Deloitte Haskins &
Sells, Haribhakti & Co, MSKA & Associates, PC Hansotia & Co, SB
Billimoria & Co, SR Batliboi & Co LLP
INTRODUCTION
Financial performance is the process of measuring how effectively a
company utilizes its assets from primary mode of business to raise
incomes it also measures organizations whole financial health over a
particularperiod oftime.Financial performanceofthe organizationdeals
with the financial strength and weaknesses of bank accurately
establishing a relationship between the balance sheet and income
statement. This process used to clearly understand the growth of long-
term and short-term of bank. There are several ways to analyze data
the researcher used ratio analysis in this research. This analysis also
helpful determines the credit worthiness of the bank to evaluate the
market position among the competitors

2. RESEARCH DESIGN
Methodology
This study is quantitative nature meaning it primarily deals with
financial statement of HDFC Bank. This study is based on secondary
data which is taken from banks website and the annual report.The data
is analyzed by the ratio analysis and the performance of the bank is
clearly explained for the study period.
Objectives of the study
To evaluate the financial performance of HDFC Bank.
To analyze the liquidity and solvency position of the bank.
To find the changes in the trends of the bank using trend analysis.
Limitations of the study.
The study is restricted only for the current financial year
The study completely based on secondary data and the accuracy of the
analysis depends on data provided
Data analysis some of the major ratios have been evaluated and
interpreted for the purpose of understanding the financial performance
of the bank.
Key financial ratios:
There are five categories of ratios used in financial statement analysis.
These are:
(1) Liquidityratios,which measure a firm’s abilityto meetcash needs as
they arise.
(2) Profitability ratio, which measure the overall performance of a firm
and its efficiency in managing assets, liabilities, and equity.
(3) Activity ratios or turnover ratio, which measures the liquidity of
specific assets and the efficiency of managing assets.
(4) Assets turnover or management, which evaluates how well a
company, is utilizing its assets to produce revenue.
(5) Longterm debtofleverage ratios,which measurethe extentofa firm’s
financingwith debtrelative to equityand its abilityto cover interestand
other fixed charges and
(6) Market value ratios bring to the stock price and give an idea of what
investors think about the firm and its future prospects

3. LIQUIDITY RATIO
Current ratio
Liquidity ratios, that measures a company's ability to pay short-term
obligations. If the current assets of a
Company are more than twice the current liabilities,then that company
is generally considered to have
Good short term financial strength and vice versa. The current ratio
formula is:
Current Ratio = Current assets / Current liabilities =0.06
Also known as "liquidity ratio", "cash asset ratio" and "cash ratio". The
ideal ratio is
Quick ratio or acid test ratio
Quick ratio is an indicator of a company’s short-term liquidity.The quick
ratio measures a company’s ability to meet its short-term obligations
with its mostliquid assets.Forthis reason,the ratio excludes inventories
from current assets; the ideal ratio is 1:1 and is calculated as follows:
Quick ratio = current assets – (cash and equivalents + marketable
securities + accounts receivable) / current liabilities =16.30
PROFITABILITY RATIO
Profit margin
A ratio of profitability calculated as profit after tax by net sales. Profit
margin is very useful when comparing companies in similar industries.
A higher profit margin indicates a more profitable company that has
better control over its costs compared to its competitors. It is calculated
as:
Profit Margin = Profit after tax / Net sales =-23.45
Net profit margin
A ratio of profitability calculated as net income divided by revenues, or
net profits divided by sales. It measures how much out of every rupee of
sales a company actually keeps in earnings.Profit margin is very useful

4. when comparingcompanies in similar industries.A higherprofit margin
indicates a more profitable companythathas bettercontrol over its costs
compared to its competitors. It is calculated as:
Net Income or Net Profit / Net Sales =21.61
Return on shareholder’s equity (RONW)
Net income is for the full fiscal year (before dividends paid to common
stock holders butafterdividendsto preferred stock.)Shareholder's equity
does not include preferred shares. It is also known as "return on net
worth"(RONW).
RONW = Net Income / Shareholder’s Equity =16.54%
Return on assets
An indicator of how profitable a company is relative to its total assets.
ROA gives an idea as to how efficient managementis at using its assets
to generate earnings. The formula for return on assets is:
Net Income / Avg. total assets=1.90%
MARKET BASED RATIOS
Earnings per share
The portion of a company's profit allocated to each outstanding share of
common stock. Earnings per share serve as an indicator of a company's
profitability. It is calculated as:
EPS = Earning available / No. of share issued to shareholders=49.70
Price earnings ratio
A valuation ratio of a company's current share price compared to its per-
share earnings. It is calculated as:
P/E Ratio = Market price per share/ EPS=2.50
SOLVENCY RATIO
Inventory turnover ratio
A ratio showing how many times a company's inventory is sold and
replaced over a period.The days in the period can then be divided by the
inventory turnover formula to calculate the days it takes to sell the
inventory on hand or "inventory turnover days. It is calculated as:
Inventory turnover ratio = Cost of goods sold / Average inventory=

5. Debtor turnover ratio
An activity or turnover ratio is calculated as credit sales by average
debtors. A high debtor turnover ratio is not good for a company. It is
calculated as:
Debtor turnover ratio = Credit sales / Average debtors
Working capital turnover
A measurement comparing the depletion of working capital to the
generation of sales over a given period is known as working capital
turnover. This provides some useful information as to how effectively a
companyis usingits workingcapital to generate sales.Itis calculated as:
Working capital turnover = Sales / Working capital
Total asset turnover
It can be calculate as net sales divided by total assets.This is a measure
of how well assets are being used to produce revenue. A high total asset
turnover is beneficial for a company. It is calculated as:
Total asset turnover = Net sales / Total assets
LEVERAGE RATIOS
Debt to equity
A measure of a company's financial leverage is calculated by dividing its
total liabilities by stockholders' equity.
It indicates what proportion of equity and debt the company is using to
finance its assets. It is calculated as:
Debt to equity = Long term debt or liabilities / Total equity
Interest coverage ratio
A ratio used to determine how easily a company can pay interest on
outstanding debt. The interest coverage ratio is calculated by dividing a
company's earningsbefore interestand taxes (EBIT) of one period by the
company's interest expenses of the same period: It is calculated as:
Interest coverage ratio = EBIT / Interest expenses

6. DUPONT ANALYSIS
A method of performance measurement has started by the DuPont
Corporation in the 1920s.With this method, assets are measured attheir
gross book value rather than at net book value in order to produce a
higher return on equity (ROE). Higher is the result, higher is the return
on the equity.
The DuPont system helps the analyst see how the firm’s decisions and
activities over the course of an accounting period interact to produce an
overall return to firm’s shareholders, the return on equity (Fraser
&Ormiston, 2004).Moreover,according to Brigham and Houston (2009),
it is a formula that shows that the rate of return on equity can be found
as the product of profit margin, total assets turnover, and the equity
multiplier. It shows the relationships among activity, leverage, and
profitability ratios. It is calculated as:
DuPont analysis = Profit after tax / Total assets