CHAPTER 1

INTRODUCTION
The birth place of co-operative movement in the world is England. The industrial
revolution and its result have a direct bearing on the origin of the co-operative movement in
Britain. It is a product of the economics and conditions created by the industrial revolution.
Germany was the first country in the world to apply the principle co-operation in the field of
credit. The co-operative credit movement was started in Germany in the middle of the 19
th

century. At that time the economic condition of Germany was extremely deplorable and the
peasantry and artisans felt crashed under the heavy weight of indebtedness. Famines were a
common phenomenon. The Jews wild over the market and they were not only baggers sellers but
money lenders as well. Henry W. Wolf narrated the poor condition of the peasantry the distress
was great. Every little cottage and tam bled down house was mortgaged most of the peasants
cattle belonged to the Jews.
CO-OPERATIVE MOVEMENT IN INDIA
In India co-operative movement was started as an outcome of Government policy and not
spontaneous democratic movement as in western countries. Co-operative in the early form was
started in India by the government to save the Indian fanners from the clutches of money lenders.
In 1892 the Madras provincial govt. deputed Sir. Federic Nicholson to Europe to find out
measures to put an end to rural indebtedness. Nicholson submitted his report in the year 1895
recommending to organize the Raiffesen model co-operative society in India. This report can be
summed up as Find Raiffesen in the year 1904 the framing commission also accommodations
that govt. of India appointed a committee under the chairmanship of Sir. Edward Low. Under the
recommendation committee, the Indian parliament passed the co-operative credit societies Act of
1904. The main object of the legislation was to encourage thrift self-help and co-operation
among agriculturist artisans and other persons of limited means.
In order to avoid the drawbacks of the 1904, another act was passed in the year 1912, which
provided for establishment of co-operative central bank by a union of primary credit societies
and individuals.
The chief functions of the bank are:
1. Attracting deposits from non agriculturist
2. Using excess fund of some societies temporarily in make up for shortage is other and,
3. To supervise of guide the affiliated societies.

In order to ensure that the progress of the movement was on sound lines, the govt. of India
appointed the imperial committee in the year 1914. The made for reaching proposals for the
future development of the movement. The committee to create co-operators and then create co-
operatives. The committee stressed the need for a pyramid structure of co-operative credit with
PACS at grass root level and apex bank at top level.
Co-operative banking is federal in its structure. At the lower rang, there are primary credit
societies then there are the central unions of central co-operative banks and at the top there are
the provincial co-operative banks or state co-operative banks, otherwise known as apex banks.
The primary societies may be compared with joint banks. There much function is that of lending
money to villagers on easier terms. They have their own fond supplemented by funds drawn
from the central co-operative banks through the banking union where such union exists. The
banking union is federation of primary societies and they act as either co-ordinating unions or
Supervisory union between primary societies and central co-operative bank. The central co-
operative bank obtains the funds from share capital, deposits. Loans from apex bank and while
apex bank do not exists from RBI and commercial bank. The apex banks if state co-operative
bank obtain their funds from share capital deposit, loan from commercial bank, the RBI and the
Govt.

CO-OPERATIVE MOVEMENT IN KERALA
Co-operative movement has successful in many fields in Kerala especially in credit sector.
In the credit movement Kerala has achieved the highest position. Kerala has also got notable
growth in other sector like processing marketing consumers, employees, co-operative hospital,
co-operative canteen societies etc. 60% of total deposit of credit societies in India is collected by
the primary credit societies in Kerala.
Before the organization of Kerala state there was a province, namely Cochin State and
Travancore State. They had separate Act namely Cochin co-operative Act of 1913 and
Travancore co-operative societies Act of 1914. When Cochin and Travancore state merged, they
acts were merged into Travancore-Cochin co-operative societies Act of 1951 prior to
reorganization of Kerala state, the present Malabar area was a part of Madras state of under the
Madras co-operative societies Act 1932. When Kerala state come into existence the two acts
were merged into Kerala co-operative society act of 1969 with the area of operation of them
whole state.
GENESIS OF URBAN SOCIETY
As stated earlier the urban co-operative movement had found their path from the
experience of German urban credit movement that was developed by Schulz. He was a judge
Delitzsch. He had seen the miserable condition of the people, especially of with low means. In
1849, the organized a friendly society for relief in sickness and later established an association of
shoe markers for the purchase of raw materials in well-off and who did not require any financial
help. Two years later in 1852, Schulz founded a society at Delitzsch which was based on co-
operative principle. He obtained the required capital through the sale of shares. He published a
book in 1856, which contained the principle of co-operative banking as formulated by him
increased rapidly and in 1859. He organized a congress of these banks which in turn leads to the
settings up of The General Union of German Industrial Societies. He was also responsible for
securing from Prussia, the first co-operative law in 1867, which later on was made applicable to
the entire country in 1889.

THE URBAN SOCIETY IN INDIA
Like Germany, the urban credit movement in India started for catering to the banking and
credit of the urban middle class, i.e., the traders and the business man, artisans and factory
cooked and salaried people with fixed income in urban and semi-urban areas. If also provides
opportunities for investment and thus help the people of low means to cover up the period of
difficulties.
The seed of urban co-operative movement was by the Maclayan committee (1915). The
committee said, the credit societies might serve useful purpose in training the upper and middle
class to understand ordinary banking principle. Although, the first non-agricultural credit society
was organized at Baroda in and the first co-operative credit societies, but practically, no progress
was made till 1915. In 1913 the Central Banking Enquiry co-operative societies, generally
known as urban bank, should be established where ever necessary facilities and conditions exist,
for the benefit of these classes of the population.
The co-operative planning committee (1946) recommended that in view of the usefulness
of the urban banks to people of small means, these should be organized in all towns. The RBI in
it review on co-operative movement during 1939-40 asserted the importance of urban credit
societies and banks are the most important feature of the urban co-operative movement in India
and make up to some extent for the absence of joint stock banking facilities in smallest towns.
STATEMENT OF THE PROBLEM
Deposits are the main source of fund, savings habit, growth of deposits, and classification
of deposits are the main streams to be considered whether the growth of deposits is achieved or
not, is analyzed through this study. Attitude of public towards loans and advances which are
granted to different groups of society, interest rates to various loans etc. are going to understood
through this study. More over the savings habit of the public are also can understand through this
study. Hence the performance and the financial activities of the Mananthavady urban co-
operative society as a problem to be studied upon.


IMPORTANCE OF THE STUDY
The urban co-operative societies are formed mainly for the purpose of providing cheap
credit to the people residing in urban and semi-urban areas. Among the non-agricultural credit
societies co-operative urban society occupy a prominent place. Actually they are primary credit
societies working in the urban areas. The members of urban co-operative are mostly small trends,
merchants and salary earned. An urban society provides short term, medium term and long term
loans to its members for non-agricultural purpose. It also extends various kinds of banking
facilities to its members and customers.
The urban societies have become a great importance in recent years Among the co-
operative society in Wayanad District. In this context, I think it is necessary to make a study on
the working of urban co-operative society. For this purpose I select the Mananthavady co-
operative urban society Ltd. No. W. 221.
OBJECTIVES OF THE STUDY
The main purpose of the study is to understand the loans and deposit Ltd. No. 221. The
main objectives of the study are given below:
1. To know about the different types of deposit and loans.
2. Profitability of the bank.
3. To increase the practical knowledge of the financial statements.
4. To know the profile of the Mananthavady co-operative urban society.
5. Making sent able suggestions based on the findings of the study.
SCOPE OF THE STUDY
The inducement behind the selection of this study is to know the financial performance of the co-
operative urban society Mananthavady. There are large number of co-operative urban society are
situated in Wayanad District. But this study is limited to Mananthavady Panjayath.

METHODOLOGY
The present study, a study on urban co-operative society Ltd. No. W 221 is designed as a
case study. The books of account maintained by the society have been the major source of
information, necessary data for the purpose of analysis taken these books. Both primary and
secondary data has been used for this purpose.
Source of Primary Data
The primary data, necessary for the study has been collected from the general manager,
senior accountant, office staff and from other related person of the bank.
Source of Secondary Data
The study was mainly based on the secondary data. These are collected from the financial
statements, Annual reports, and other relevant reports of the society.
1. Annual report of the bank
2. The Kerala journals of co-operation
3. Various books, circular etc.
TOOLS OF ANALYSIS
1. Ratio Analysis
2. Comparative Balance Sheet
LIMITATION OF THE STUDY
In the process of collection and analysis of primary and secondary data, proper and
possible care has been taken. The shortage of time is a major limiting factor of the preparation of
this report. However, maximum effort is used to write this report with minimum resources.
PRESENTATION OF THE STUDY / CHAPTERIZATION
Chapter I Introduction
Chapter II An overview of Mananthavady co-operative urban society Ltd. No. W 221
Chapter III Functions of Mananthavady co-operative urban society Ltd.
Chapter IV Financial analysis
Chapter V Findings, suggestions and conclusions














CHAPTER II
AN OVER VIEW OF MANANTHAVADY CO-OPERATIVE
URBAN SOCIETY-LTD. No.W.221

The Mananthavady co-operative urban society ltd. No.w.221 was registered on 10th July
1997 under the Kerala State Co-operative Society Act. 1969.The bank started its business on
24th September 1997 with a membership of 74 and paid up share capital of Rs.64,000/-.
To meet the non agricultural credit needs of people belong to urban area especially of
Mananthavady town and nearby semi cubs, it has found necessary to form a co-operative of their
own, and hence a meeting was convinced on 11-08-1996 at co-operative college Mananthavady
and promoting committee consist of 11 members were selected under the chairmanship of Sri.
K.V. Mohanan. The promoting committee was entrusted with the task of organizing the co-
operative and the society was registered on 10th July 1997.The first general body was convinced
of 15-07-1997 and the promoting committee was elected as the first managing committee for the
next three months, with the active participation of the people of mananthavady town, on a hind
building. The entered into the banking field with the effect from 24th September 1997 and the
society was inaugurated by the then Honorable Finance Minister Sri. T. Sivadasa Menon.
NAME AND ADDRESS.
The society is named after Mananthavady Co-operative Urban Society Ltd.No.w.221.
Registered address of the society is, the Mananthavady Co-operative Urban Society
Ltd.No.w.221, Mananthavady P.O, Wayanad, 670645.
REGISTERED OFFICE.
The Registered office of the society shall be situated as Mananthavady in the Mananthavady
amsom of Mananthavady Thaluk, Wayanad District.
AREA OF OPERATION
The area of operation of the society was confirmed to the entire Mananthavady, Thavinhal,
Thondernadu, Edavaka, Thirunelly, Vellamunda and Panamaram Panjayath.
OBJECTIVES OF THE SOCIETY
The main objective of the society is to help members of the society belong to weaker sections
residing urban area such as traders, artisans and small entrepreneurs by providing required
Credit services and other helps on-line with these main objectives the society functions with the
following objectives.
a) To promote and develop thrift self help and co-operation among its members.
b) To accept deposits from members.
c) To raise funds through borrowing.
d) To provide with loans and advances to members against collateral securities.
e) To arrange with the safe and locker facility.
f) To open branches and offices within the jurisdiction with the prior permission of
the registrar of co-operative societies.
g) To provide technical support and financial help to new enterpreneurs.

ACTIVITIES
The society issued short term and medium term non agriculture credit to its members. The
society also accepts deposits from its members. In addition to these activities the society operates
partners monthly deposit schemes (chitties) with the permission of the registrar.
RESOURCES
The resources of the society for its working constitute the following components.
a) Share capital received from the number.
b) Deposit accepted from the member.
c) Reserves of the society including statutory and other funds.
d) Borrowing of the society from the control financing agency and other
financial institutions.
e) Subscription and entrance fees received from its members.
f) Grants and subsides.
SHARE CAPITAL
a) AUTHORISED CAPITAL
The authorized share capital of the society was Rs. 1,01,00,000 made up of following
types
1. 5000 A class share of Rs. 1000 each.
2. 5000 B class share of Rs. 1000 each.
3. 10000 C class share of Rs. 10 each.

The A class shares are available to those who are residing and/or employed with in
the area of its operation and who are satisfied the eligibility criteria put forward by the
Act and Rule.
The B class shares are extended to Govt. and financing bank. The c class shares
holders are nominal members.

Fig.no.2.1

PAID UP CAPITAL
The paid up capital of the society during the year 2007-08, 2008-09, 2009-10, 2010-11,
2011-12 was Rs. 1401390, 1436460, 1502730, 1580910, and 1656550 respectively.
MAXIMUM BORROWING POWER
The maximum borrowing power of the society shall not exceed 150 times the paid up share
capital and reserve minus bad debt and accumulated losses.

LIABILITY OF MEMBERS
The liability of members of the members is limited according to fall value of the share held by
them.


5000
5000
10000
No. of shares
A
B
C
ORGANISATION AND MANAGEMENT
The supreme authority of the society is general body. This is expected to meet at least once in
a year. The quorum of the general body meeting is 50 or 1/5 of the total member whichever is
less.
The day to day affairs are managed by the board of directors consisting of 11 members of
which one members each should belong to ST(Scheduled Tribe) and women. The administration
of the society wasted with the executives of the society who have to work in line with the
directions issued from time to time by the board of directors. The administrative head is the
secretary who is the chief executive of the society. The secretary in the day to day affairs assisted
to staff.
GENERAL BODY
The supreme authority of society is general body. This is expected to meet at least once in a
year. The general body meeting shall be of two kinds, Annual general body meeting and special
general body meeting. The annual general body meeting shall be called once before the
completion of 15 days after the commencement of the accounting year with in such period as
many extended by Registrar.
The special general body meeting may called at any time by the board of directors. It shall also
be called on a written requisition made to the president of the board of directors by one fifth of
the share holders or on a requisition from the Registrar of co-operative society.
The annual general body meeting of the members of the bank shall be held on every year by a
notification through post among its members the quorum of the meeting must be 1/5
th
of the total
members or members whichever is less.
POWER OF THE GENERAL BODY
1. To elect the board of directors.
2. To pass the annual budget and annual report of the bank.
3. To consider the annual a/c balance sheet and audit report.
4. To remote any members of the acted against the interest of the society.
5. To recommended the board of directors to distribute profit.


QUORUM
So members or 1/5
th
of the total number of share holder members which even is less shall
constituted the quorum for a general meeting. No business shall be transacted at any meeting
unless quorum of members is presented.

VOTING RIGHTS
Each share holder/member shall have one vote irrespective of the number of shares he/she
holds. The chairman presiding over the meeting shall have a casting vote in case is equality of
vote for and against any resolution but in the case equality of vote at an election the decision
shall be taken on the drawing of lots.
BOARD OF DIRECTORS
The board of directors shall consist of 11 members who shall be elected from among the
individual members under rule 35 of the KCS rules of this one seat shall be reserved for a
Scheduled case, Scheduled Tribe members and one seat to a women member. The member of the
board of directors shall be elected by the general body for a period of 3 years from among the
members.
POWER OF THE BOARD OF DIRECTORS
1) To consider the applications for membership, Allotment, Transfer of shares and
registration.
2) Power to call general body meeting and to submit annual report, balance sheet, P&L
in the general meeting.
3) Power to borrow funds.
4) Power to grant, loans and advances to members.
5) Power to do any act that is beneficial to the bank.
6) To consider proposals for opening branches.
7) To fix the rate of interest.
8) To approve appointment of brokers and agents and fix their remuneration.
OFFICE STAFF
The Mananthavady Urban Co-operative bank has four office staffs including secretary and
three collection agents.














ORGANIZATION CHART


















GENERAL BODY
BOARD OF DIRECTORS
PRESIDENT
SECRETARY
STAFF
CHAPTER-3
FUNCTIONS OF MANANDAVADY CO-OPERATIVE SOCIETY
The Mananthavady co-operative urban society plays a very important role in
urban credit structure of Manandavady Taluk. The main objective of the society is to provide its
members non-agricultural credit, which is not met by the agricultural credit co-operatives and
other institutional credit agencies text incoming in the area of its operation. The society was
started during the year 1997 and after 13 completed years of its inception. The society has gained
confidence among its members and general public. The society is working satisfactory in line
with its objectives of providing short and medium term loans to its members.
The main function of the bank at present is accepting various kinds of
deposits and lending various non agricultural loans. The bank helps the members to improve
their economic conditions by rendering various services. The entire operation of Mananthavady
co-operative urban society in to following heads.
1. Accepting various deposits.
2. Borrowing of the bank.
3. Lending activities.
4. Other activities
DEPOSITS OF THE SOCIETY
One of the fundamental functions of the society is to receive deposit. The Mananthavady
urban co-operative society receives; deposits contribute major portions of the working capital of
the society.


TYPES OF DEPOSITS
1. Fixed deposit
2. Saving bank deposit
3. Daily deposits

FIXED DEPOSITS
A fixed deposit is the deposits of a fixed amount of money for a fixed period of the
time. The deposit shall not be open for a less than 15 day small investors who wished to deposit
their money in bank and earn good and steady income.Introdution is necessary by person for
opening the amount.
The following table shows the details of fixed deposits of the society for the 5
years.
TABLE.NO.3:1
TABLE SHOWING THE TREND ANALYSYS OF FIXED DEOSIT
YEAR AMOUNT INCREASING/DECREASING INDEX BASE
YEAR(2007-
08)
2007-08 6033232 - -
2008-09 9285127 3251895 153.89
2009-10 16430700 7145573 272.34
2010-11 21872874 5442174 362.54
2011-12 31385035 9512161 520.20

From the above table it is clear that mobilization of fixed deposit of the society
improve by 350.08% from 2007-08 to 2011-12









INTEREST RATE OF FIXED DEPOSIT
The rate of interest on fixed deposits varies according to the period of deposit as
shown bellow.




TABLE NO.3.2
PERIOD INTEREST

15-45 DAYS 7.50%
46-90 DAYS 8%
91-179 DAYS 8.75%
180-365 DAYS 9.25%
1 YEAR-2 YEAR 10%
3 YEAR AND ABOVE ,,
1/2 % Extra for senior citizen.

SAVINGS BANK DEPOSITS
Any person can starts savings on deposit with the bank by giving an application in
the prescribed form. Savings bank account is meant for middle and low income groups and earns
a free interest on their deposits.
The minimum amount that a person shall keep in the amount is RS
100. The depositor can with draw the amount at any time by keeping the minimum balance.
Current interest rate of savings deposit amount is 5%.Apass book will be given to
the saving bank account holder. It shows entire regarding the deposit and withdrawal of money.
The following tables show the savings bank deposit for the last 5 years.








TABLE SHOWING TREND ANALYSES OF SAVING BANK DEPOSIT
TABLE NO.3.3

DAILY DEPOSITS
In the daily deposits scheme the depositor deposits an amount
daily with the banks. The collection agents collect the amount from the depositor. The bank
gives 3%commission is given to the collection agents as their remunerations. The board of
directors will determine the period of deposits.
The following table shows the daily deposits during the last five years

TABLE SHOWING THE TRENT ANALYSYS OF DAILY DEPOSITS
TABLE NO:3.4
YEAR AMOUNT INCREASE OR
DECREASE
INDEX ( BASE
YEAR-2007-08)
2007-08 4352532 - 100
2008-09 4555035 202503 104.65
Year

Amount
Increase Decrease
Index(base year-2007-
08)
2007-08 11022494 - 100
2008-09 12596931.18 1574437 114.28
2009-10 1733702 -10863229 15.72
2010-11 23090083 2135638 209.48
2011-12 15810605.96 -7279478 143.44

2009-10 5018480 463445 115.30
2010-11 7206066 2187586 165.56
2011-12 9397524 2191458 215.90




ANALYSYS OF TOTAL DEPOSITS
Analysis of the total deposit mobilization of the bank is
apparent from the table given bellow;
THE TOTAL DEPOSIT FOR THE LAST FIVE YEAR
TABLE 3.5
YEAR AMOUNT INCREASE OR
DECREASE
INDEX(BASE
YEAR)
2007-08
2007-08 21408250 - -
2008-09 26437093.18 5028843 123.49
2009-10 23193882 -3243211 108.34
2010-11 56285032 33091150 262.91
2011-12 57154564.96 869532 266.97

Table 3.5 shows the index of the total deposit for the last five years of the society.
The deposit position of the society shows the increasing tendency but in 2009-10 .The deposit
position of the society shows a decreasing tendency.


II BORROWINGS
The bye law of the society cleanly provided that the society could borrow funds
towards its working capital to the extent of 35 times of its own fund. The society regularly
borrows from District co-operative bank.
The bank mainly borrows funds from District co-operative bank. The maximum
amount of borrowing is limited to 35 times of paid up., plus reserve.




III. LENDING ACTIVITIES
Another important function of mananthavady urban society is lending
various non-agricultural loans to its members. Application for loans are submitted in the
prescribed form before the meeting of board of directors fixes the minimum amount of loan shall
be given only for productive purpose.
Different types of loan issued by the mananthavady urban co-
operative society are given bellow.
1. Short term loans.
2. Medium term loans.
3. Gold loan.
1. SHORT TERM LAONS
These loans are provided only for the non-agricultural purpose. These types of loan
are available to the farmers against the security of the loans and personal bailment with regards
to loans and advances the growth rate is tremendous. The repayment period of short term loan is
restricted to be one year.
2. MEDIUM TERM LOANS.
Medium term loan is also provided by the urban co-operative society. Time
duration of medium term loan is 3 year.
3. GOLD LOAN.
Gold loan is a short term loan. Duration of gold loan is 6 months. Interest of
gold loan is

LENDING POLICIES.
Firstly filled the lending application form and submitted to the secretary. The
loan depending up on the property, then the properly documents, tone receipts etc submitted to
the secretary.Satisfyed by the verified documents. He follows the legal procedures and sight
inspection by the directors, final board lending the loans.




PROCEDURE FOLLOWED BY THE DEVISION OF NET PROFITS.
TABLE NO.3.6
Reserve Fund 25%
Education Fund 5%
Dividend 20%
Bad debt Reserve 10%
Building Fund 20%
Donation 10%
Common Good fund 10%

PROCEDURE FOR THE RECOVERY OF LOANS
All types of loans are recovered on the due date. If any person makes default, the
bank will sent several notice. Firstly, the bank sends a demand notice and if the person did not
repay notice with acknowledgement due to the borrower and sureties. Then the matter will take
place before committee meeting. If the borrower again fails to repay the loan, the secretary will
take steps to recover the loan amount by way of suit. Against the borrower in consultation with
the committee.




CHAPTER IV
FINANCIAL ANALYSIS
Accounting process involves recording, classifying and summarizing various
business transactions financial statements are the outcome of the summarizing process of the
accounting. Financial statements are interim reports, presented annually and reflect a division of
the life of an enterprise in to more or less arbitrary accounting period. Its purpose in to convey an
understanding of some financial aspect of a balance sheet, or May revel a serious of activities on
given period of time as in the case of income statements.
According to John N Mayer The financial statements provide a summary of the
accounts of a business enterprise, the balance sheet reflecting the assets, liabilities and capital
as on a certain data and income statement showing the result of operations during a certain
period. Smith and Ashburn define financial statements as the end of process of financial
accounting a set of financial statement prepared by an accounting of a business enterprise, that
purpose to revel the financial activities and an analysis of what has been done with earnings.
According to this definition financial statement reveal financial position and profitability of a
concern and the utilization of retained earnings
TYPES OF FINANCIAL STATEMENTS
There are different types of financial statements.
1. Income statement of profit and loss account

This is considered to be the most use of all financial statement. It is a statement
of revenue earned and the incurred earning that revenue. If there is excess of revenues
over expenditure it will show a profit and if the expenditure are more than the income,
then there will be loss. The income statements are prepared for a particular period,
generally a year. The income statements prepared in the form of a manufacturing account
to find out the cost of production and trading account is prepared to determine the net
profit or net loss.

2. Balance Sheet

It is an agreement of financial position of business at a specific moment of time. It
represent all asset owned by the business at a particular moment of time and the claim of
the owner and they consider against those assets at that time the balance sheet is prepared
on a particular date. The right shows properties and assets and left hand side shows
liabilities.
3. Statements of retained earnings

Statement of retained earnings is also known as profit and loss appropriation
account. If show appropriation of earnings. The balance shown by the income statements
is transferred to the balance sheet through this statement. The previous years balance is
first brought forward. The net profit during the current year is added to this balance on
the debt side appropriation like interim dividend paid proposed, dividend on preference
and equity share and shown. It is connecting link between balance sheet and the income
statements.

4. Funds flow statements

This statement is used to analysis the changes in financial position of a business
enterprise between two accounting proceeds. The statement show the sources from which
the funds are received and its application. This helps to get an idea about the source of
fund and their uses of a various purpose.
5 Cash Flow statements
The statement of changes in the financial position of a bank on cash basis is
called cash flow statement. It summaries the causes of change in cash position of a
business enterprise between data of two balance sheet. Cash Flow Statement describes
the source of cash and its uses.
6 Schedules are used as part of financial statements.
If number of schedules are prepared to supplements final assets etc. account
prepared to give details about these transactions.



MEANING ANALYSIS AND INTERPRETION
The analysis and interpretations is essential to bring out of the mystery behind the figures
of financial statements. The analysis and interpretations if financial statements are an
attempt to determine the significance and meaning of financial statement data so that
forecast may be made of the future earnings, ability to pay entrust and debt maturities ,
and profitability of a sound demand policy.
Analysis means methodical classification of the data in the
financial statements. The term interpretations means explain signature of the
simplified data.

An object of financial analysis
Financial statement are the souse of information of the basis of which conclusions are drawn
about the profitability and financial position of a concern. The primary objectives of financial
analysis are to assist in decision making.
The following are the objective of financial analysis.
1) To estimate the earning capacity of the business.
2) To access the financial position and financial performance of the business.
3) To help in economic decision making
4) To ascertain the operating performance of the business
5) To determine the solvency and liquidity of the business
6) To determine the debt paying capacity of the firm
7) To make inter firm comparisons
8) To provide resalable financial information about the economic recourses and obligation
of business firm.
9) To provide other needed information about changes in such economic resources and
obligations.
10) To provide financial information that assist in estimating the earning potentials of
business.
11) The operational efficiency of the concern as whole of the various parts or departments.
12) The possibility of development in the future by making forecast and preparing budgets.



Types of financial analysis
There are four types of financial analysis.




External analysiThis type of analysis is done by those who are outside of the business
ie, the investors credit agencies , government agencies etc. The persons mainly depend
up on the published financial statement.
Internal analysis
The internal analysis is done by person who are accesses to the internal record of the company,
such as executives, employs of the organization; affairs appointed for the purpose by the
government or court etc.
Horizontal analysis
This analysis is based on the financial statement for a number of years. The analysis
settlement contain for two or more years and changes are shown regarding each item from the
base year. Usually in the form of percentage. This helps to get considerable insight in to level
and areas of strength and weakness.
Vertical Analysis
In this type of analysis a study is made of the quantitative relationship of the various
items on the financial statements on a particular data. Single their analysis depends on the data
for one period, this is not very conductive to a proper analysis of the banks financial position. It
is also called static analysis because it is used for referring to ratio developed on one data for one
accounting period.
Tool or techniques of Analysis
There are various tools for analysis of financial statements. The following techniques can be
used in connection with analysis and interpretation of financial statements.
1. Comparative Financial Statements
Here the element of financial position are shown in a comparative form, so to give as an idea of
financial position of two or more periods. The analysis is able to draw useful conclusion when
figures are given in a comparative position the two comparative statements are;
a) Comparative balance sheet

Comparative balance sheet as on two or more different datas can be used for
comparing assets and liabilities and finding out any degrease or increase in thes
items. Such balance sheet is very useful in studying the trends of an enterprise.
b) Comparative income statement
The comparative income statements gives an idea of the progress of a business ones
a period of time. It shows the absolute figures for two or more periods, the absolute
change from one period to another, and if described the changes in terms of
percentages.
2. Trend Analysis
This method determines the direction upwards or down ward and involve the
competition of the percentage relationship that each statements item leer to the same item in the
base year. Here any year may be taken as the base year. Each item of base year is taken as 100
and on that basis the percentage for each of the item of the year calculated.
3. Ratio Analysis
This is the most important tool available to financial analysis in accounting ratio
show the relationship in mathematical terms between inter related accounting figures. The
figures must have an enter relation. There are various type of accounting ratio for deferent
purpose.

















RATIO ANALYSIS
Ratio analysis is a powerful technique in hands of management for financial analysis. It is
used as device to analysis and interprets the financial strength of the enterprises. Profitability is
an mitigation of the efficient with which the operations of the business are carried on banks,
financial institutions and other creditors look at the profitability ratios and indicator whether or
not the firm earned substantially more than it pays interest for the use of borrowed fund.

1. Fixed asset ratio

F. A. K = Fixed asset (after depreciation) /
Long term fund
Long term fund can be computed in two way;
1. Share capital (equity and preference) + reserves and surplus + long term liability or ;
2. Fixed asset + investment + CA-CL

Table 4.1
Table showing fixed asset ratio
Year Fixed asset Long term fund F. A. R
2007-08 659701 1733432 0.38
2008-09 1223001 1791733 0.68
2009-10 1459176 2503168 0.58
2010-11 1511471 2662783 0.56
2011-12 1557606 1942697.6 0.80







Interpretation
The objectives of this ratio is that to as ascertain the proportion of long term funds invested in
fixed assets. In 2008-09 and 2011-12, the financial position of the society is not sound and in
2007-08, 2009-10 and 2010-11, the ratio integrates better financial position and its considered as
satisfactory. This standard fixed assets ratio should not accede 1:1 or 100 %.





0
500000
1000000
1500000
2000000
2500000
3000000
2007-08 2008-09 2009-10 2010-11
Fixed Asset Ratio
Fixed asset
Long term fund
F. A. R
2 Equity Ratio / proprietary ratio/ net worth ratio
This ratio establishes the relationship between share holders fund and total assets. This
ratio shows how much funds have been contributed by the share holders in the total assets of the
firm.





Table No:4.2
Year Share holders fund Total assets Equity ratio
2007-08 1401390 1813286 0.77
2008-09 1436460 2065729 0.69
2009-10 1502730 2669749 0.56
2010-11 1580910 2655745 0.59
2011-12 1656550 2584814 0.64


Equity Ratio = share holders fund / total
asset.



Interpretation
This table integrates the proportion of total assets financial by share holders. The
relationship between shareholders fund and total assets shows the increasing tendency. Generally
a ratio of 5:1 or above 50 % is considered as ideal ratio.









0
500000
1000000
1500000
2000000
2500000
3000000
2007-08 2008-09 2009-10 2010-11 2011-12
3.Operational Ratio


Table 4.3
Year Interest earned Interest paid Ratio
2007-08 2264105 1612515 140
2008-09 3543311 1852948 161.2
2009-10 3789465 2462554 153.88
2010-11 5865520 3217808 18228
2011-12 8345794 5320200 156.86
Graph



Interpretation
This ratio shows the interest earned and interest paid of the firm. It shows increasing and
decreasing trend. In 2008-09, 2010-11 it shown increasing trend, but in 2008-09, 2011-12 and
2009-10 it may decreasing.

0
1000000
2000000
3000000
4000000
5000000
6000000
2007-08
2008-09
2009-10
2010-11
Interest earned
Ratio
Interest paid
Interest earned to interest paid = interest earned / interest paid *
100
4.Ratio of total asset to total debt or solvency ratio
This ratio expresses the relationship between total assets and total liabilities of a
business. It measures the solvency of the business that is why this ratio is called solvency ratio.


Table Showing Solvency ratio
Table 4.4
Year Total assets Total debt Ratio
2007-08 1813286 29964426 .06
2008-09 2065729 75734918 0.2
2009-10 2669749 2519277 1.0
2010-11 2655745 9675966 0.27
2011-12 2584814 75734918 0.03













Solvency ratio = total assets / total debt





INTERPRETATION
In 2009-10 ,the society is solvent because assets are sufficient to pay
off the liabilities .But in 2007-09,2010-11 and 2011-12 the solvency and the financial position of
the society are weak
2. Trend percentages analysis
It means analyzing general tentences in each item of the financial
statements on the basis of the data of the base year. This analysis is an important tool of
horizontal financial analysis. This methord is helpful in making a comparative study of the
financial statements of several views.



Table showing the trend analysis FD and SB
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
2007-08
2008-09
2009-10
2010-11
Total assets
Total debt
Ratio

Table 5.6

Year FD Trend% SB Trend%
2007-08 6033232 100.00 110224944 100.00
2008-09 9285127 15389 12596931 114.28
2009-10 16430700 272.33 1733702 15.73
2010-11 21872874 362.53 23090083 209.48
2011-12 31385035 520.20 1581060596 143.44




Interpretation
Fixed deposits shows increasing trend in all years, but savings
deposits shows decreasing trend in 2009-10 and increasing trend in 2008-09, 2010-11 and 2011-
12.

0
20000000
40000000
60000000
80000000
100000000
120000000
2007-08 2008-09 2009-10 2010-11
FD
Trend%
SB









3.Comparative balance sheet
A comparative B/s shows the assets, liabilities and owners equity of
business enterprise at the beginning and at the end accounting period with increases and
decreases the absolute data in firms of rupees in percentage.


Comparative Balance sheet as on 31-03-2011 and 31-03-2012

particulars 2011 2012 Amount of
increase or
decrease
% of increase
or decrease
Assets
Fixed asset
Savings bank deposits
Fixed deposits
Loans and advances
Investment
Suspense account
Group deposit scheme
Cash in hand

Total asset

151471
2691653.2
025555
57892741
157700
123309
95530
986574

74484533.62

1557606
1594986.55
13318012.05
66073494
158200
149798
87030
719210

83658336.55

46135
-1096666.7
2292457
8180753
500
26489
-8500
-267364

9173803

3.05
-40.74
20.78
14.13
.32
21.48
-8.89
-27.10

12.32

Capital and liabilities
Share capital
Reserve funds
Deposits
Borrowings
Security deposits
Group deposit scheme
Mis- suspense
liabilities

Total capital and
liabilities




1580910
974231.04
56285032
12195966
231620

24000
418047



74484533.62




1656550
1489204
57154564
18580354
265770

100000
642116.39



83658336.55




75640
514973
869536
6384388
34150

76000
224069.39



9373803



4.78
52.85
1.54
52.35
1474

31674
53.59



12.32

Commends
Fixed deposits have increased by 20.7 % generally there is an overall
increase in total assets in 2012 over 2011 only by 12.32 % savings bank deposits, group
deposits scheme and cash in hand have decreased in 2012 when compared to 2010. Among the
current assets cash alone as declined by 27.10 % and savings bank it has decreased by 40.74 %
in 2012 it should be noted that the capital and liabilities of the company is increased in 2012 as
composed with 2011. The share capital of the company has increased in 2012 by 4.78 % when
composed to 2011 among the liability the group deposit scheme has increased by 316.67 % and
brow wings and reserve funds have increased by 52.35 % and 52.85 % share capital has been
increased 75640.

Income statement Mananthavady co-operative Urban Society Ltd no W221 for
the year ending 31
st
march 2007, 2012 (comparison)
Particulars 2007 2008 2009 2010 2011 2012
Income
Interest received
miscellaneous income

Total

Expenditure
Interest paid

2026543
234358

2960901


1497018

2264105
247006

2511111


1612515

35433311
338135

3881446


1852948

3788665
716195

4504860


2462554

5865520
730053

6595573


3217808

8345794
868926

9214720


5320200
Printing stationary
Salary
Rent telephone
charges
Agent commission
Wages
Postage
Travelling allowance
Sitting fee
Medical allowance
GB expense
Audit fee
Audit low cost LS
&PC
Bonus to staff
Insurance
Affiliation
Advertisement
Honorarium
EWF person fund
Donation
Level fee
Cost of sales officer
Electricity charges
EWF collection agent
Earned leave
Computer and
stationary
Subscription and
periodicals
AMC changes
Miscellaneous
expenses
IKSL purchase
KISK fund
Bonus to Agents
Repairs And
maintains
Rates and Tax

24455
281114
60000
3910
309144
6600
11915
1820
7800
4050
795
40571
11789
17753
21022
17870
24000
1800
18636
1000


852
8040
19549
















24735
353238
60000
4718
333437
-
22024
1570
9130
5400
1065
63759
13075
8750
15922
1600
29849
22000
1800
29318
7750
2000
-
-
1800
20996
13118
1290
-
-
-
-
-
-
-
-
-



20219
324083
60000
3786
389844
-
24038
4750
8470
5400
11408
20911
3089
19250
15783
800
42849
24000
3100
31181
2000
13000
-
-
1800
24384
6975
1783
32535
70143
-
-
-
-
-
-
-



14780
449353
120000
4511
474695
-
20998
6730
10780
5400
1530
-
2297
26600
32843
800
32400
22000
2560
58919
9500
-
-
24994
1890
27974
19559
1330
24694
109687
161118
36159
3750
1142
1250
-
-
-


42580
577156
120000
8240
586121
17544
8627
9130
5400
2750
62180
9040
33600
37336
800
73945
24000
2160
52002
3500
20500
-
23990
2880
-
16032
1330
32442
97087
-
1708
6750
7115
1520







20642
869489
120000
6453
693287
16750
3410
17070
7400
-
80406
9264
7500
78010
800
56845
33000
2880
73033
4500
6000
24153
2160
-
14020
1330
41088
87804
-
-
1708
3360
2350
17005
719
-
-
-


TOTAL

Profit/Loss

2391603

-130702
2660859

-149748
3018529

862917
4172797

332063

5105273

1490300
7652876

1561844



CHAPTER 5
FINDINGS, SUGGESTIONS AND CONCLUSIONS
Mananthavady Urban co-operative society started its functions in 1997 with several
objectives. It has been assisting in the economic development of the small scale industries, small
traders, etc.. of the Mananthavady from the study of deposits activities of the society shows an
increasing tendency in year. This chapter summarized by mentioning the findings, conclusions
and suggests suitable measures for improvement.
FINDINGS
1. The employees of the society are co-operative.
2. The society does not take necessary steps to check whether the borrowers are utilized the
-400000
-200000
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2007 2008 2009 2010 2011 2012
funds for the purpose for which it granted.
3. 2010-2011,2011-2012 the profit of the society shows an increasing tendency.
4. If the members do not repay the loan orderly the society can not working smoothly.
5. The share capital of the society shows an increasing tendency.
SUGGESTION
Based on the above findings the following suggestions are recommended in order to improve the
performance of the Mananthavady co-operative urban society Ltd.,No. W 221.
1. More incentive efforts should be made to attractive deposit.
2. Branches of officer of the society should be opened in other to cons also within it justification
which in turn will help the society to attain maximum membership and share capital.
3. Efforts should be made to enlarge the membership of society to its maximum compared to the
urban. The present membership is very low . Adding more members to the society will certainly
string then the share capital base which in term will help the society to obtained the required
license from the RBI.
4. The management should necessarily make efforts to shifts the head office to a suitable place
for attracting customers and provide better service.
5. The society must check whether the borrowers utilizing the amount for the purpose for which
it is granted.
6. The society should maintain its profitability
CONCLUSION
Mananthavady co-operative urban society was established 1997 with several objectives. In
the 14 years the society could go a long ways in helping its members as well as non members in
many ways. Its may be mentioned that non agricultural credits co-operatives especially urban
co-operative can make considerable contribution their members, to co-operative structure and to
general economic development. In so for and urban co-operative societies are concerned they can
organize and bring together middle and working classes in urban areas; small traders and weaker
section need the collective support and encouragement from the government and co-operative
sector. Therefore the existence of the society is more important than earning huge profit.

BIBILIOGRAPHY
1. Financial statement of the society.
2. Annual Report of the society.
3. Bylow of the society.
4. Budget Report .
5. Advanced Accounting- Jain and Narang.
6. Management Accounting Principles and practice - R.K Sharma , Sasi K Guptha.