A Study on

Cash Flow Statements

With Reference to Hdfc Bank, Visakhapatnam

A project report submitted to JNTU, Kakinada

In partial fulfillment of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

JAKKI NIKKI MALATHI

(PIN. NO: 21L61E0016)

UNDER THE GUIDANCE OF

Mrs. K. JYOTHSNA
MBA
Asst. Professor

DEPARTMENT OF BUSINESS AND MANAGEMENT STUDIES

CHAITANYA ENGINEERING COLLEGE
KOMMADI, VISAKHAPATNAM-530048

(2021-2023)
Mrs. M.PADMAJA Tel: Of office – 2793322
Head Fax: 0891 – 2793666
Department of Business and Chaitanya Engineering College
Management Studies Visakhapatnam – 530048

CERTIFICATE
This is to certify that the project report entitled ―A STUD ON CASH FLOW

STATEMENTS with Reference to “HDFC BANK, VISAKHAPATNAM” submitted in

partial fulfillment for the award of Master of Business Administration by JAKKI NIKKI

MALATHI, PIN No.21L61E0016during the academic year 2021-23 under my guidance and

supervision. This report has not been submitted previously for the award of any Degree,

Diploma, associate ship, Fellowship or similar title in this University or in any other

University.

K.JYOTHSNA Mrs. M. PADMAJA

Project Supervisor Head of the Department
 DECLARATION

I hereby declare that the exposition ―A STUDY ON CASH FLOW STATEMENTS

with Reference to “ HDFC BANK,VISAKHAPATNAM” submitted by me to JNTU
Kakinada in partial fulfillment for the Award of the Degree of Master`s in Business
administration is a original work carried out by me . I completed this work under the guidance
of Mrs. K.JYOTHSNA, Asst. Professor, Department of Business & management studies,
Chaitanya Engineering College, Visakhapatnam.

I also declare that this dissertation has not been previously formed the basis for the
award of any Degree, Diploma Associate ship, fellowship or similar title in this university or in
any other university.

PLACE: Visakhapatnam
DATE: JAKKI NIKKI MALATHI
 ACKNOWLEDGMENTS
I take this opportunity to express my sincere gratitude to the following eminent
personalities without whose help & guidance, the successful completion of my project work
would have remained a dream.

I extend my sincere thanks to Sri. K. SURESH, Principal of Chaitanya engineering

college giving this opportunity to this project.

I also thank to Mrs. M. PADMAJA for his advice and giving me opportunity to do this
project

I express my gratitude to my project work guide Mrs. M.PADMAJA for her valuable
guidance and input throughout the project work and for providing the relevant material needed
for the completion of my project.

I express my gratitude to Sri. N.APPA RAO, H.R.Manager and also I express

my gratitude to General Manager for continuous support and encouragement
throughout my project.

Place:
Date: JAKKI NIKKI MALATHI
 CONTENTS

Pg.No

1.CHAPTER-I 1-8

 INTRODUCTION

2.CHAPTER-II 9-34

 INDUSTRY PROFILE

3. CHAPTER-III 35-59

 COMPANY PROFILE

4. CHAPTER-IV 60 -81

 THEORITICAL FRAMEWORK OF THE STUDY

5. CHAPTER-V 82-88

 SUMMARY
CHAPTER-I

1
 INTRODUCTION
A cash flow statement is a financial statement used in financial accounting that
breaks down the analysis into operating, investing, and financing operations. It illustrates
how changes in balance sheet accounts and income effect cash and cash equivalents. The
cash inflow and outflow of the business are essentially the focus of the cash flow statement.
The statement includes the adjustments in the balance sheet that go along with the present
operating results. The statement of cash flows is a useful analytical tool for assessing a
company's short-term viability, particularly its capacity to pay its debts. The International
Accounting Standard that addresses cash flow statements is IAS 7, or International
Accounting Standard 7.

A cash flow statement is a financial statement used in financial accounting that breaks
down the analysis into operating, investing, and financing operations. It illustrates how
changes in balance sheet accounts and income effect cash and cash equivalents. The
primary current asset for business operations is cash. Cash is both the primary input
required to keep a business operating continuously and the final output anticipated to be
realised by selling the service or product produced by the company. The most liquid asset,
cash, is crucial to the company's day-to-day operations. However, only a very small
percentage of corporate assets—typically between 1 and 3 percent—are held in cash.

Considering its One of the crucial components of working capital management is cash
management. Since the other liquid assets are turned into cash, cash serves as the common
denominator to which current assets can be lowered. According to business analysts, poor
management is the primary cause of company failure. The most common problem for
startups is certainly poor cash management. You may better prepare for the unforeseen
circumstances that almost every organisation experiences by understanding the
fundamentals of cash flow.

2
In the bank or at the company, cash is available money. It is not inventory, accounts
receivable (what you owe), or a liquid asset, all of which may be converted into cash but
cannot be used to pay suppliers, rent, or staff. People and groups interested in cash flow
statements include:

 Accounting personnel, who need to know whether the organization will be able to
cover payroll and other immediate expenses
 Potential lenders or creditors, who want a clear picture of a company's ability to repay
 Potential investors, who need to judge whether the company is financially sound
 Potential employees or contractors, who need to know whether the company will be
able to afford compensation

Shareholders of the business.

The flow of money statement was the old name for the cash flow statement. The liquidity
of a company is shown in the cash flow statement. The income statement compiles a
company's financial activities over a period of time, while the balance sheet provides a
snapshot of a firm's financial assets and liabilities at a particular point in time. These two
financial statements show how businesses utilize accrual basis accounting to balance their
revenues with their related costs. Transactions that do not directly affect cash receipts and
payments are not included in the cash flow statement; rather, it solely contains inflows and
outflows of cash and cash equivalents. These noncash transactions include, among others,
credit losses, bad debt write-offs, and depreciation. The cash flow statement is a cash basis
report on three types of financial activities: operating activities, investing activities, and
financing activities. Noncash activities are usually reported in footnotes.

The cash flow statement is intended to provide information on a firm's liquidity and
solvency and its ability to change cash flows in future circumstances

1. provide additional information for evaluating changes in assets, liabilities and

equity
2. improve the comparability of different firms' operating performance by eliminating
the effects of different accounting methods

3
 NEED FOR THE STUDY

Because they mistakenly think that other financial reports and projections might
provide a reliable indication of their present financial situation, many business owners
underestimate the significance of cash flow statements. To accurately evaluate the
entering and exiting flow of cash and other resources in a business, a cash flow
statement is unfortunately required. A cash flow system will not only make a business
owner better aware of his or her financial situation, but it will also enable investors to
make informed judgments about potential future investments. Investors are more drawn
to a company with consistent and trustworthy cash flow statements because they
demonstrate more economic soundness.
A cash flow statement documents the incoming and outgoing cash in plain
terms. Future sales and sales made for credit (unless they have been paid off) are not
included in the cash flow statement, and most of the data will come from core
operations. Payables and receivables should be expressly defined, as should
depreciation of product value and inventory that has not yet been moved. This will
allow a business owner to compare past periods with the current financial standing and
determine whether your receivables have increased or decreased.
This can also help to track your investments next to your receivables and payables. Are
your investments increasing or decreasing in value? And has your inventory moved at a
steady pace? New or expanding businesses can expect to see a decrease in cash flow,
but this doesn‘t mean that the business is going under. More stables businesses should
see a steadily increase in cash flow over a period of several Months or years. There are
typically five different sections in a cash flow statement, though large businesses might
have more complex cash flow systems as required

OBJECTIVES OF THE STUDY

4
To know the flow of Cash in the organization HDFC BANK Visakhapatnam.
 To access the efficiency with Sources and Uses of cash were made by the co ordinance
the present year 2017-2018 to 2021-2022.
 To identify the changes in the elements of focus and uses of cash flow statement in
between above mentioned year .
 To present the conceptual framework relating to management of cash flow statement .
 To analyze and interpret the financial details with the help of cash flow statement
 Accounting personnel, who need to know whether the organization will be able to
cover payroll and other immediate expenses
 Potential lenders or creditors, who want a clear picture of a company's ability to repay
 Potential investors, who need to judge whether the company is financially sound
 Potential employees or contractors, who need to know whether the company will be
able to afford compensation

5
 METHODOLOGY OF THE STUDY

The following are the main sources of date used for this study which are
Collected and compiled from published and unpublished sources of the Company data. The
published sources are as follows.
1) Management information system published by HDFC BANK
2) Status Report on HDFC BANK
3) Journals, books and other published reports.

 Primary data.
 Secondary data.

Primary data:
In the primary method the information has gathered by interacting to the higher
officials and the employees of the company and the large amount of information is referred
from the renowned books and articles of most famous authors on internal marketing. And
few of the information has acquired from the companies books and presentations. The
information secured by interacting with all the departments.

Secondary data:
In the secondary method of finding information is by conducting survey for the employees
feedback and maintained a form of it in which has all the information on the employees
perception. The analysis of the data is done and gathered information. And in this method I
have taken little information from the internet and companies websites.

6
 SCOPE OF THE STUDY

Analysts can spot trends by comparing ratios across several time periods and statement types
using cash flow statement analysis. Analysts can gauge the company's liquidity, profitability,
overall efficiency, and cash flow using these figures. The balance sheet, income statement, and
cash flow statement are the three primary types of financial statements. The assets, liabilities,
and shareholders' equity of the corporation are shown on the balance sheet as a snapshot in time.

The balance sheet is used by analysts to examine trends in assets and liabilities. Sales are listed
first on the income statement, and net income is listed last. Additionally, it offers gross profit,
operational profit, and net profit to analysts. To calculate the gross profit margin, operational
profit margin, and net profit margin, each of these is divided by sales. The process of studying
and assessing a company's cash flow statements (such as the balance sheet or profit and loss
statement) allows for a better knowledge of the company's financial situation and more
informed decision-making.

7
 LIMITATIONS OF THE STUDY

The limitations of present study are as follows:

1. The study cover a period of FIVE years from 2017-2022.
2. The study does not consider as the flow the funds.
3. Changes in the accounting policies caused to decline in the profits
4. indicate the amount, timing and probability of future cash flows

8
CHAPTER-II

9
 INDUSTRY PROFILE
The economy is made up of many different segments called sectors. These sectors are
comprised of different businesses that provide goods and services to consumers. The
companies that are grouped together in a sector provide a similar product or service. For
instance, companies that offer agricultural services make up the agricultural sector.
Corporations that provide mobile or cellular telephone services are part of the
telecommunications sector. This article looks at the financial services sector, one of the most
important segments of the economy.

Financial Services Sector:

The financial services sector provides financial services to people and corporations. This
segment of the economy is made up of a variety of financial firms including banks,
investment houses, lenders, finance companies, real estate brokers, and insurance companies.
As noted above, the financial services industry is probably the most important sector of the
economy, leading the world in terms of earnings and equity market capitalization.
Large conglomerates dominate this sector, but it also includes a diverse range of smaller
companies.

According to the finance and development department of the International Monetary

Fund (IMF), financial services are the processes by which consumers or businesses acquire
financial goods.1 For example, a payment system provider offers a financial service when it
accepts and transfers funds between payers and recipients. This includes accounts settled
through credit and debit cards, checks, and electronic funds transfers.

Companies in the financial services industry manage money. For instance, a financial
advisor manages assets and offers advice on behalf of a client. The advisor does not directly
provide investments or any other product; rather, they facilitate the movement of funds
between savers and the issuers of securities and other instruments. This service is a temporary
task rather than a tangible asset.

Financial goods, on the other hand, are not tasks. They are things. A mortgage loan may seem
like a service, but it's actually a product that lasts beyond the initial provision. Stocks, bonds,
loans, commodity assets, real estate, and insurance policies are examples of financial goods.

10
The Importance of the Financial Services Sector:
The financial services sector is the primary driver of a nation's economy. It provides the free
flow of capital and liquidity in the marketplace. When the sector is strong, the economy
grows, and companies in this industry are better able to manage risk.

The strength of the financial services sector is also important to the prosperity of a country's
population. When the sector and economy are strong, consumers generally earn more. This
boosts their confidence and purchasing power. When they need access to credit for large
purchases, they turn to the financial services sector to borrow.

Banking Services:
The banking industry is the foundation of the financial services group. It is most concerned
with direct saving and lending, while the financial services sector incorporates investments,
insurance, the redistribution of risk, and other financial activities. Banking services are
provided by large commercial banks, community banks, credit unions, and other entities.

Banks earn revenue primarily on the difference in the interest rates charged for credit accounts
and the rates paid to depositors. Financial services like these primarily earn revenue through
fees, commissions, and other methods like the spread on interest rates between loans and
deposits.

Banking segments:
Banking is made up of several segments—retail banking, commercial banking, and
investment banking. Also known as consumer or personal banking, retail banking serves
consumers rather than corporations. These banks offer financial services tailored to
individuals, including checking and savings accounts, mortgages, loans, and credit cards, as
well as certain investment services.

Corporate, commercial, or business banking, on the other hand, deals with small businesses
and large corporations. Like retail banking, it provides account services and credit products
that are tailored to the specific needs of businesses.

An investment bank typically only works with deal makers and high-net-worth
individuals (HNWIs)—not the general public. These banks underwrite deals, secure access to
capital markets, offer wealth management and tax advice, advise companies on mergers and
11
acquisitions (M&A), and facilitate the buying and selling of stocks and bonds. Financial
advisors and discount brokerages also occupy this niche.

Investment Services:
Individuals may access financial markets like stocks and bonds through investment services.
Brokers—either human or self-directed online services—facilitate the buying and selling of
securities, taking a commission for their efforts. Financial advisors may charge an annual fee
based on assets under management (AUM) and direct several trades in the pursuit of
constructing and managing a well-diversified portfolio. Robo-advisors are the latest
incarnation of financial advice and portfolio management, with fully automated algorithmic
portfolio allocations and trade executions.

Hedge funds, mutual funds, and investment partnerships invest money in the financial markets
and collect management fees in the process. These organizations require custody services for
trading and servicing their portfolios, as well as legal, compliance, and marketing advice.
There are also software vendors that cater to the investment fund community by developing
software applications for portfolio management, client reporting, and other back-office
services.

Private equity funds, venture capital providers, and angel investors supply investment capital
to companies in exchange for ownership stakes or profit participation. Venture capital was
especially important to technology firms in the 1990s. Much of what goes on behind the
scenes in the making of big deals is attributed to this group.

Insurance Services:
Insurance is another important subsector of the financial services industry. Insurance services
are available for protection against death or injury (e.g. life insurance, disability income
insurance, health insurance), against property loss or damage (e.g. homeowners insurance, car
insurance), or against liability or lawsuit.

In the United States, an insurance agent differs from a broker. The former is a representative
of the insurance carrier, while the latter represents the insured and shops around for insurance
policies. This is also the realm of the underwriter, who assesses the risk of insuring clients and
also advises investment bankers on loan risk. Reinsurers are in the business of selling
insurance to the insurers themselves to help protect them from catastrophic losses.
12
Tax and Accounting Services:
The sector also includes accountants and tax filing services, currency exchange and wire
transfer services, and credit card machine services and networks. It also includes debt
resolution services and global payment providers such as Visa and Mastercard, as well as
exchanges that facilitate stock, derivatives, and commodity trades.

Accountants ensure all financial records and statements—the balance sheet, income and loss
statement, cash-flow statement, and tax return—are in line with federal laws and
regulations and generally accepted accounting principles (GAAP). Accountants also compile
the information needed to prepare entries to company accounts such as the general ledger, and
they document business financial transactions over time. This information is used to prepare
weekly, monthly, quarterly, or annual closing statements and cost accounting reports.
Accountants must also resolve any discrepancies or irregularities they find in records,
statements, or documented transactions. They typically observe established accounting control
procedures through an accounting system or software program.

Accountants are often assigned other finance-related tasks in addition to analyzing financial
records and statements. Ancillary job duties include monitoring the efficiency of accounting
control procedures or software programs to ensure they are up to date with federal and state
regulations. Accountants are also tasked with making recommendations to various
departments or C-suite staff regarding the efficient use of company resources and procedures.
These recommendations aim to provide solutions to potentially costly business financial
concerns or problems. In some instances, accountants may also prepare and
review invoices for customers and vendors to assist with timely payment on outstanding
balances. Reconciliation of payroll, verification of contracts and orders, construction of a
company budget, and the development of financial models or projections may also be part of
an accountant's regular responsibilities.

In addition to these duties, accountants prepare and file taxes for companies and individuals.
They analyze all company assets, income earned and paid, or anticipated expenses and
liabilities to reach a total tax obligation for the year. With both company and individual tax
preparation and filing, accountants are expected to provide a detailed analysis of tax
efficiency or inefficiency and make recommendations for how to reduce total tax liabilities in
the future.
13
Introduction:
As per the Reserve Bank of India (RBI), India‘s banking sector is sufficiently capitalised and
well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks
are generally resilient and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI‘s new measures may go a long way in helping the
restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with India‘s
Immediate Payment Service (IMPS) being the only system at level five in the Faster Payments
Innovation Index (FPII).*
Market Size:
The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46
foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural
cooperative banks in addition to cooperative credit institutions As of September 2021, the total
number of ATMs in India reached 213,145.
In FY18-FY21, bank assets across sectors increased. Total assets across the banking sector
(including public and private sector banks) increased to US$ 2.48 trillion in FY21.
In FY21, total assets in the public and private banking sectors were US$ 1,602.65 billion and
US$ 878.56 billion, respectively.
During FY16-FY21, bank credit increased at a CAGR of 0.29%. As of FY21, total credit
extended surged to US$ 1,487.60 billion. During FY16-FY21, deposits grew at a CAGR of
12.38% and reached US$ 2.06 trillion by FY21.
According to the RBI, bank credit stood at Rs. 110.46 trillion (US$ 1.47 trillion) and credit to
non-food industries stood at Rs. 109.82 trillion (US$ 1.46 trillion) as of September 24, 2021.
Investments/Developments:
Key investments and developments in India‘s banking industry include:

 As of November 03, 2021, the number of bank accounts—opened under the

government‘s flagship financial inclusion drive ‗Pradhan Mantri Jan Dhan Yojana
(PMJDY)‘—reached 43.81 crore and deposits in the Jan Dhan bank accounts totalled
>Rs. 1.48 trillion (US$ 19.89 billion).

14
  On November 09, 2021, RBI announced the launch of its first global hackathon
'HARBINGER 2021 – Innovation for Transformation' with the theme ‗Smarter Digital
Payments‘.
 In November 2021, Kotak Mahindra Bank announced that it has completed the
acquisition of a 9.98% stake in KFin Technologies for Rs. 310 crore (US$ 41.62
million).
 In July 2021, Google Pay for Business has enabled small merchants to access credit
through tie-up with the digital lending platform for MSMEs—FlexiLoans.
 In December 2020, in response to the RBI‘s cautionary message, the Digital Lenders‘
Association issued a revised code of conduct for digital lending.
 On November 6, 2020, WhatsApp started UPI payments service in India on receiving
the National Payments Corporation of India (NPCI) approval to ‗Go Live‘ on UPI in a
graded manner.
 In October 2020, HDFC Bank and Apollo Hospitals partnered to launch the
‗HealthyLife Programme‘, a holistic healthcare solution that makes healthy living
accessible and affordable on Apollo‘s digital platform.
 In 2019, banking and financial services witnessed 32 M&A (merger and acquisition)
activities worth US$ 1.72 billion.
 In March 2020, State Bank of India (SBI), India‘s largest lender, raised US$ 100
million in green bonds through private placement.
 In February 2020, the Cabinet Committee on Economic Affairs gave its approval for
continuation of the process of recapitalization of Regional Rural Banks (RRBs) by
providing minimum regulatory capital to RRBs for another year beyond 2019-20 - till
2020-21 to those RRBs which are unable to maintain minimum Capital to Risk
weighted Assets Ratio (CRAR) of 9% as per the regulatory norms prescribed by RBI.

Government Initiatives:

 In November 2021, RBI launched the ‗RBI Retail Direct Scheme‘ for retail investors to
increase retail participation in government securities.
 The RBI introduced new auto debit rules with a mandatory additional factor of
authentication (AFA), effective from October 01, 2021, to improve the safety and
security of card transactions, as part of its risk mitigation measures.

15
  In September 2021, Central Banks of India and Singapore announced to link their
digital payment systems by July 2022 to initiate instant and low-cost fund transfers.
 In August 2021, Prime Minister Mr. Narendra Modi launched e-RUPI, a person and
purpose-specific digital payment solution. e-RUPI is a QR code or SMS string-based e-
voucher that is sent to the beneficiary‘s cell phone. Users of this one-time payment
mechanism will be able to redeem the voucher at the service provider without the usage
of a card, digital payments app, or internet banking access.
 As per Union Budget 2021-22, the government will disinvest IDBI Bank and privatise
two public sector banks.
 Government smoothly carried out consolidation, reducing the number of Public Sector
Banks by eight.

Achievements
Following are the achievements of the Government:
 In October 2021, Unified Payments Interface (UPI) recorded 4.21 billion transactions
worth Rs. 7.71 trillion (US$ 103.9 billion).
 According to the RBI, India‘s foreign exchange reserves reached US$ 642.20 billion as
of October 29, 2021.
 To improve infrastructure in villages, 204,000 point of sale (PoS) terminals have been
sanctioned from the Financial Inclusion Fund by National Bank for Agriculture &
Rural Development (NABARD).
 The number of transactions through immediate payment service (IMPS) reached 430.67
million and amounted to Rs. 3.70 trillion (US$ 49.75 billion) in October 2021.
Road Ahead
Enhanced spending on infrastructure, speedy implementation of projects and continuation of
reforms are expected to provide further impetus to growth in the banking sector. All these
factors suggest that India‘s banking sector is poised for a robust growth as rapidly growing
businesses will turn to banks for their credit needs.
Also, the advancement in technology has brought mobile and internet banking services to the
fore. The banking sector is laying greater emphasis on providing improved services to their
clients and upgrading their technology infrastructure to enhance customer‘s overall experience
as well as give banks a competitive edge.

16
India‘s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1 trillion
by FY23 driven by the five-fold increase in the digital disbursements. By 2025, India's fintech
market is expected to reach Rs. 6.2 trillion (US$ 83.48 billion).

17
 COMPANY PROFILE

HDFC Bank Limited is an Indian banking and financial services company headquartered
in Mumbai. It is India's largest private sector bank by assets and world's 10th largest bank by
market capitalization as of April 2021 It is the third largest company by market capitalisation
of $122.50 billion on the Indian stock exchanges. It is also the fifteenth largest employer in
India with nearly 120,000 employees.

The Housing Development Finance Corporation Limited (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, as part of RBI‘s liberalization of the Indian Banking Industry in 1994. The bank
was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered
office in Mumbai, Maharashtra, India. Its first corporate office and a full-service branch at
Sandoz House, Worli were inaugurated by the then Union Finance Minister, Manmohan Singh.

HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

As of 30 June 2019, the bank's distribution network was at 5,500 branches across 2,764 cities.
It has installed 430,000 POS terminals and issued 23,570,000 debit cards and 12 million credit
cards in FY 2017. It has a base of 1,16,971 permanent employees as of 21 March 2020.

Mission:

HDFC Bank‘s mission is to be ―a World Class Indian Bank‖, benchmarking ourselves against
international and best practices in terms of product offerings, technology, service levels, risk
management and audit & compliance. The objective is to build sound customer franchises
across distinct businesses so as to be a preferred provider of banking services for target retail
and wholesale customer segments, and to achieve a healthy growth in profitability, consistent
with the Bank‘s risk appetite. We are committed to do this while ensuring the highest levels of
ethical standards, professional integrity, corporate governance and regulatory

18
Products & Services:
HDFC Bank provides a number of products and services including wholesale banking, retail
banking, treasury, auto loans, two-wheeler loans, personal loans, loans against property,
consumer durable loan, lifestyle loan and credit cards. Along with this various digital products
are Payzapp and Smart BUY.

Distribution Network:

HDFC Bank is headquartered in Mumbai. As of March 31, 2015, the Bank‘s distribution
network was at 4,014 branches in 2,464 cities. All branches are linked on an online real- time
basis. Customers across India are also serviced through multiple delivery channels such as
Phone Banking, Net Banking, Mobile Banking and SMS based banking. The Bank‘s expansion
plans take into account the need to have a presence in all major industrial and commercial
centers, where its corporate customers are located, as well as the need to build a strong retail
customer base for both deposits and loan products. Being a clearing / settlement bank to
various leading stock exchanges, the Bank has branches in centers where the NSE / BSE have a
strong and active member base .The Bank also has a network of 11,766 ATMs across India.
HDFC Bank‘s ATM network can be accessed by all domestic and international Visa /
MasterCard, Visa Electron / Maestro, Plus / Cirrus and American Express Credit / Charge
cardholders.

Management:

Mrs. Shyamala Gopinath holds a Master‘s Degree in Commerce and is a CAIIB. Mrs.
Gopinath has 39 years of experience in financial sector policy formulation in different
capacities at RBI. As Deputy Governor of RBI for seven years and member of the Board. Mrs.
Gopinath had been guiding and influencing the national policies in the diverse areas of
financial sector regulation and supervision, development and regulation of financial markets,
capital account management, management of government borrowings, forex reserves
management and payment and settlement systems. The Managing Director, Mr. Aditya Puri,
has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was
heading Citibank's operations in Malaysia.

19
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience
in public policy, administration, industry and commercial banking. Senior executives
representing HDFC are also on the Board. Senior banking professionals with substantial
experience in India and abroad head various businesses and functions and report to the
Managing Director. Given the professional expertise of the management team and the overall
focus on recruiting and retaining the best talent in the industry, the bank believes that its people
are a significant competitive strength.

Technology:

HDFC Bank operates in a highly automated environment in terms of information technology

and communication systems. All the bank‘s branches have online connectivity, which enables
the bank to offer speedy funds transfer facilities to its customers. Multi- branch access is also
provided to retail customers through the branch network and Automated Teller Machines
(ATMs).

The Bank has made substantial efforts and investments in acquiring the best technology
available internationally, to build the infrastructure for a world class bank. In terms of core
banking software, the Corporate Banking business is supported by Flexcube, while the Retail
Banking business by Finware, both from i-flex Solutions Ltd. The systems are open, scalable
and web-enabled.

The Bank has prioritized its engagement in technology and the internet as one of its key goals
and has already made significant progress in web-enabling its core businesses. In each of its
businesses, the Bank has succeeded in leveraging its market position, expertise and technology
to create a competitive advantage and build market share.

Business Focus:
HDFC Bank‘s mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank‘s risk appetite. The bank is committed to maintain the
highest level of ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank‘s business philosophy is based on five core values: Operational
Excellence, Customer Focus, Product Leadership, People and Sustainability.
20
Merges & Acquisition:

HDFC Bank merged with Times Bank in February 2000. This was the first merger of two
private banks in the New Generation private sector banks category. Times Bank was
established by Bennett, Coleman and Co. Ltd., commonly known as The Times Group, India's
largest media conglomerate.

In 2008, Centurion Bank of Punjab (CBoP) was acquired by HDFC Bank. HDFC Bank's board
approved the acquisition of CBoP for ₹95.1 billion in one of the largest mergers in the
financial sector in India.

In 2021, the bank acquired a 9.99% stake in FERBINE, an entity promoted by Tata Group, to
operate a Pan-India umbrella entity for retail payment systems, similar to National Payments
Corporation of India.

In September 2021, the bank partnered with Paytm to launch a range of credit cards powered
by the global card network Visa.

Investments:

In March 2020, Housing Development Finance Corporation, parent company of HDFC Bank,
made an investment of ₹1,000 crores in Yes Bank.[23] As per the scheme of reconstruction of
Yes Bank, 75% of the total investment by the corporation would be locked in for three years.
On 14 March, Yes Bank allotted 100 crore shares of the face value of ₹2 each for consideration
of ₹10 per share (including ₹8 premium) to the Corporation aggregating to 7.97 percent of the
post issue equity share capital of Yes bank.

Shareholders:

The equity shares of HDFC Bank are listed on the Bombay Stock Exchange and the National
Stock Exchange of India. Its American depositary receipts are listed on the NYSE issued
through JP Morgan Chase Bank.

Its global depository receipts (GDRs) was listed on the Luxembourg Stock Exchange but was
terminated by board of directors following its low trading volume.

21
Shareholders (as of 30 September 2021) Shareholding

Promoter group (HDFC) 25.88%

Foreign institutional investor(FII) 38.30%

Individual shareholders 13.25%

Qualified institutional buyer 4.74%

Insurance companies 2.94%

Unit Trust of India/mutual funds 14.57%

Financial institutions/banks 0.4%

Central government 0.6%

Cooperate Social Responsibility:

Parivartan is the umbrella term for all of the corporate social responsibility initiatives by
HDFC Bank. HDFC Bank's Parivartan initiative spent ₹535 crore in FY 2019–20. HDFC
Bank spent Rs 634.91 crore towards Parivartan,in FY 2020-21. Out of Rs 634.9 crore, over Rs
110 crore was allocated and utilised towards initiatives focused on Covid-19 relief. HDFC
Bank pledges to become carbon neutral by 2032.

Controversies:

On 2 December 2020, the Reserve Bank of India (RBI) ordered HDFC Bank to temporarily
halt the issuance of new credit cards and all planned activities under the bank's Digital 2.0
22
program citing incidents of outages in the bank's internet banking, mobile banking and
payment utility services.

On 29 January 2020, RBI imposed a monetary penalty on HDFC Bank for failure to undertake
on-going due diligence in case of 39 current accounts opened for bidding in the initial public
offer.

A HDFC bank manager was arrested on charges of fraud, involving a sum of ₹59.41 lakh, in
Odisha.

Altico Capital and Dubai's Mashreq Bank have approached RBI, accusing HDFC Bank of
violating regulatory provisions by debiting part of the funds the company had raised through
external commercial borrowing (ECB) and parked at the bank. They claimed that HDFC bank's
decision to transfer money from the account may be a violation of the RBI's end-use rule.

On 27 May 2021, RBI imposed a penalty of Rs 10 crore on HDFC Bank for deficiencies in
regulatory compliances with regard to its auto loan loan portfolio.The said penalty was
imposed in regards to the contraventions of certain provisions of the Banking Regulation Act,
1949.

Awards & Recogination:

2016:

 Best Banking Performer, India in 2016 by Global Brands Magazine Award.

 Best Performing Branch in Microfinance among private sector banks by NABARD,
2016, Award for Best Performance in Microfinance.
 KPMG study of India's Best Banks, Bank of the year & best digital banking initiative
award 2016.
 BrandZ Rankings, Most Valued brand in India for third successive year.
 FinanceAsia poll on Asia's Best Companies 2015, Best managed public company –
India.
 J. P. Morgan Quality Recognition Award, Best in class straight through processing
rates.

23
2018:

 Company of the year: The Economic Times Corporate Excellence Awards.

 Best Performing Private Bank in Total Aadhaar Generation & Update:
[[Aadhaar|Aadhaar Excellence Awards]].
 NCPI - National Payments Excellence Awards.

2019:

 Best Bank: New Private Sector – FE Best Bank awards.

 Winner in Innovation and Inclusiveness in Priority Sector Lending – 11th Inclusive
Finance India Awards (IFI) 2019.
 Ranked 1st in 2019 BrandZ Top 75 Most Valuable Indian Brands HDFC Bank was
featured for the 6th consecutive year.
 Among The Most Honored Company List, Institutional Investor All-Asia (ex-Japan)
Executive Team 2019 survey.
 India‘s Best Bank, Euromoney Awards for Excellence 2019.
 Bank of the Year and Best Large Bank, Business Today – Money Today Financial
Awards 2019.
 Best Bank in India 2019, by Global magazine FinanceAsia.
 Ranked 60th in 2019 BrandZ Top 100 Most Valuable Global Brands [50] HDFC Bank
was featured BrandZ Top 100 Most Valuable Global Brands 2019 for the 5th consecutive
year. The Bank's brand value has gone up from $20.87 billion in 2018 to $22.70 billion in
2019.
 Best Large Bank & Fastest Growing Large Bank in 2019, by Business World Magna
Awards.
 India's leading private sector bank: Dun & Bradstreet BFSI Awards.

2020:

 Best Bank in India: Euromoney Awards.

 Best Bank in India: FinanceAsia Country Awards.

2021:

 Best bank in india: FinanceAsia Country Awards.

24
 Best bank for SMEs: Asiamoney best bank awards.
 Best bank in india:[[Euromoney#The_Euromoney_Awards_for_Excellence|The
Euromoney Awards for Excellence.
 Ranks No. 1 in Mass Affluent category:Euromoney Private Banking and Wealth
Management Survey

25
CHAPTER-III

26
 THEORITICAL FRAMEWORK

To meet their needs in the economic environment, business concerns need

financing. Any type of commercial activity is financially dependent. As a result, it is
referred to as the organization's lifeblood. Regardless of how big or small their business
concerns are, they all require funding to carry out their daily operations. In the current
world, everything is focused on economic activity and is highly particular about making
money from any business or activity. Making money is directly tied to all company
activity. A business concern needs financing to meet all of the criteria (according to the
economics idea of components of production, rent paid to the landlord, wage paid to the
labor force, interest paid to the capital, and profit supplied to shareholders or proprietors).
Hence finance may be called as capital, investment, fund etc., but each term is
having different meanings and unique characters. Increasing the profit is the main aim of
any kind of economic activity.
MEANING OF FINANCE

The management of finances is referred to as finance. Financial services and financial

instruments are included. The provision of money at the appropriate time is referred to as
finance. The acquisition of funds and their efficient application in corporate problems is the
finance function.
Finance is a notion that encompasses capital, finances, money, and amount. However, each
term has a distinct meaning. Studying and comprehending financial concepts has become a
crucial component of corporate worry.

CASHFLOW STATEMENT:
Cash flow is calculated by making certain adjustments to net income by adding or
subtracting differences in revenue, expenses and credit transactions (appearing on the
balance sheet and income statement) resulting from transactions that occur from one period
to the next. These adjustments are made because non-cash items are calculated into net
income (income statement) and total assets and liabilities (balance sheet). So, because not

27
 all transactions involve actual cash items, many items have to be re-evaluated when
calculating cash flow from operations.
For example, depreciation is not really a cash expense; it is an amount that is deducted
from the total value of an asset that has previously been accounted for. That is why it is
added back into net sales for calculating cash flow. The only time income from an asset is
accounted for in CFS calculations is when the asset is sold. Changes in accounts receivable
on the balance sheet from one accounting period to the next must also be reflected in cash
flow. If accounts receivable decreases, this implies that more cash has entered the company
from customers paying off their credit accounts - the amount by which AR has decreased is
then added to net sales. If accounts receivable increase from one accounting period to the
next, the amount of the increase must be deducted from net sales because, although the
amounts represented in AR are revenue, they are not cash. An increase in inventory, on the
other hand, signals that a company has spent more money to purchase more raw materials.
If the inventory was paid with cash, the increase in the value of inventory is deducted from
net sales. A decrease in inventory would be added to net sales. If inventory was purchased
on credit, an increase in accounts payable would occur on the balance sheet, and the
amount of the increase from one year to the other would be added to net sales.
The same logic holds true for taxes payable, salaries payable and prepaid insurance.
If something has been paid off, then the difference in the value owed from one year to the
next has to be subtracted from net income. If there is an amount that is still owed, then any
differences will have to be added to net earnings. (For more insight, see Operating Cash
Flow: Better Than Net Income?)
Investing
Changes in equipment, assets or investments relate to cash from investing. Usually cash
changes from investing are a "cash out" item, because cash is used to buy new equipment,
buildings or short-term assets such as marketable securities. However, when a company
divests of an asset, the transaction is considered "cash in" for calculating cash from
investing.

28
Financing
Changes in debt, loans or dividends are accounted for in cash from financing. Changes in
cash from financing are "cash in" when capital is raised, and they're "cash out" when
dividends are paid. Thus, if a company issues a bond to the public, the company receives
cash financing; however, when interest is paid to bondholders, the company is reducing its
cash.

Statement of cash flow in a business's financials

The (total) net cash flow of a company over a period (typically a quarter or a full year) is
equal to the change in cash balance over this period: positive if the cash balance increases
(more cash becomes available), negative if the cash balance decreases. The total net cash
flow is the sum of cash flows that are classified in three areas: Cash receipts and payments
must be classified as operating, investing or financing activities. Frequently, cash flow
classification requires significant judgment. Reasonable conclusions about classifying cash
flows might differ depending on how one assesses the substance of a particular transaction.
Judgments are also often complicated by the fact that some transactions generate cash
flows with multiple cash flow statement classification requirements. For these reasons, the
following sections first excerpt the broad cash flow classification guidance from ASC 230
below for each of the major categories of cash flow classification — operating, investing
and financing.

1. Operational cash flows :

Operating activities include all transactions and other events that are not defined as
investing or financing activities. Operating activities generally involve producing and
delivering goods and providing services. Cash flows from operating activities are generally
the cash effects of transactions and other events that enter into the determination of net
income.

29
All of the following are cash inflows from operating activities:
 Cash receipts from sales of goods or services, including receipts from collection or sale
of accounts and both short- and long-term notes receivable from customers arising from
those sales. The term goods includes certain loans and other debt and equity
instruments of other entities that are acquired specifically for resale.
 Cash receipts from returns on loans, other debt instruments of other entities, and equity
securities—interest and dividends.
 All other cash receipts that do not stem from transactions defined as investing or
financing activities, such as amounts received to settle lawsuits; proceeds of insurance
settlements except for those that are directly related to investing or financing activities,
such as from destruction of a building; and refunds from suppliers.
All of the following are cash outflows for operating activities:
Cash payments to acquire materials for manufacture or goods for resale, including
principal payments on accounts and both short- and long-term notes payable to suppliers
for those materials or goods. The term goods includes certain loans and other debt and
equity instruments of other entities that are acquired specifically for resale.
 Cash payments to other suppliers and employees for other goods or services.
 Cash payments to governments for taxes, duties, fines, and other fees or penalties and
the cash that would have been paid for income taxes if increases in the value of equity
instruments issued under share-based payment arrangements that are not included in the
cost of goods or services recognizable for financial reporting purposes also had not
been deductible in determining taxable income.
 Cash payments to lenders and other creditors for interest.
 Cash payment made to settle an asset retirement obligation.

2.Investment cash flows:

Investing activities include making and collecting loans and acquiring and
disposing of debt or equity instruments and property, plant, and equipment and other
productive assets, that is, assets held for or used in the production of goods or services by
the entity (other than materials that are part of the entity's inventory). Investing activities

30
exclude acquiring and disposing of certain loans or other debt or equity instruments that are
acquired specifically for resale. Cash flows from purchases, sales, and maturities of
available-for-sale securities shall be classified as cash flows from investing activities and
reported gross in the statement of cash flows.
All of the following are cash inflows from investing activities:
 Receipts from collections or sales of loans made by the entity and of other entities' debt
instruments that were purchased by the entity.
 Receipts from sales of equity instruments of other entities and from returns of
investment in those instruments.
 Receipts from sales of property, plant, and equipment and other productive assets.
 Receipts from sales of loans that were not specifically acquired for resale. That is, if
loans were acquired as investments, cash receipts from sales of those loans shall be
classified as investing cash inflows regardless of a change in the purpose for holding
those loans.
All of the following are cash outflows for investing activities:
 Disbursements for loans made by the entity and payments to acquire debt instruments
of other entities.
 Payments to acquire equity instruments of other entities.
 Payments at the time of purchase or soon before or after purchase to acquire property,
plant, and equipment and other productive assets, including interest capitalized as part
of the cost of those assets. Generally, only advance payments, the down payment, or
other amounts paid at the time of purchase or soon before or after purchase of property,
plant, and equipment and other productive assets are investing cash outflows. However,
incurring directly related debt to the seller is a financing transaction and subsequent
payments of principal on that debt thus are financing cash outflows.
3.Financing cash flows:
Cash received from the issue of debt and equity, or paid out as dividends, share
repurchases or debt repayments. Financing activities include obtaining resources from
owners and providing them with a return on, and a return of, their investment; receiving
restricted resources that by donor stipulation must be used for long-term purposes;

31
 borrowing money and repaying amounts borrowed, or otherwise settling the
obligation; and obtaining and paying for other resources obtained from creditors on long-
term credit.
All of the following are cash inflows from financing,
 Receipts from contributions and investment income that by donor stipulation are
restricted for the purposes of acquiring, constructing, or improving property, plant,
equipment, or other long-lived assets or establishing or increasing a permanent
endowment or term endowment.
 Proceeds received from derivative instruments that include financing elements at
inception, whether the proceeds were received at inception or over the term of the
derivative instrument, other than a financing element inherently included in an at-the-
market derivative instrument with no prepayments.
 Cash retained as a result of the tax deductibility of increases in the value of equity
instruments issued under share-based payment arrangements that are not included in the
cost of goods or services that is recognizable for financial reporting purposes. For this
purpose, excess tax benefits shall be determined on an individual award basis.
All of the following are cash outflows for financing activities:
 Payments of dividends or other distributions to owners, including outlays to reacquire
the entity's equity instruments.
 Repayments of amounts borrowed.
 Other principal payments to creditors who have extended long-term credit. which
indicates that most principal payments on seller-financed debt directly related to a
purchase of property, plant, and equipment or other productive assets are financing cash
outflows.
 Distributions to counterparties of derivative instruments that include financing
elements at inception, other than a financing element inherently included in an at-the-
 market derivative instrument with no prepayments. The distributions may be either at
inception or over the term of the derivative instrument.
 Payments for debt issue costs.

Cash flow classification

32
 Insurance companies typically capture information about the cost of investments acquired
and the proceeds from sales, maturities and repayments of investments to prepare a
statement of cash flows for the Annual Statement they file with state regul atory
authorities. As a result, information about the gross cash receipts and payments from
these activities is readily available
Cash and cash equivalents :
Insurance companies generally present short-term investments, including those that meet
the definition of a cash equivalent, in the balance sheet with investments rather than with
cash. As the statement of cash flows must reconcile to similarly titled line items or
subtotals of cash or cash and cash equivalents in the balance sheet, most insurance
companies reconcile to cash rather than cash and cash equivalents in the statement of cash
flows.
Separate accounts :
Assets held in separate accounts that meet the conditions in ASC 944-80, Financial
Services-Insurance -Separate Accounts, should be measured at fair value and reported in
summary total with an equivalent summary total reported for related liabilities. The
related investment performance (including interest, dividends, realized gains and losses
and changes in unrealized gains and losses) and the corresponding amounts credited to the
separate account holder should be offset within the same statement of operations line item
netting to zero. As a result, an insurance entity does not present in its statement of cash
flows the cash flows of the separate accounts. The financial statements of the separate
account itself should present the cash flows related to its operating, investing and
financing transactions.

Presenting investing activities :

Insurance companies hold a variety of investments, including stocks, bonds, mortgage
loans and real estate. ASC 230 requires separate presentation of cash receipts and cash
payments related to investing activities, but it does not provide guidance on the level of
detail to be presented for the various types of investments. Although insurance
companies provide cash flow information by type of investment in the Annual Statement
filed with state regulatory authorities, and detailed information is available, we do not

33
 believe that this level of detail is required by ASC 230, and as such, companies should
use their judgment about the level of detail they provide.
Universal life insurance :
Universal life insurance (also known as flexible premium life insurance and interest
sensitive life insurance) is Financial Services-Insurance - Insurance Activities. A
universal life-type contract is characterized by Assessments by the insurer against the
policyholder account balance for mortality coverage and contract administration that are
not fixed and guaranteed by the contract
Interest credited to the policyholder account balance (not fixed or guaranteed) Universal
life-type contracts are similar to certain deposits of a financial institution so the
statement of cash flow presentation would show cash receipts from policyholders and
payments representing a return of policyholder balances as financing activities, similar
to the presentation by a financial institution of sales and maturities of certificates of
deposit. Interest credited to policyholder accounts would be treated as an operating cash
payment for statement of cash flow presentation. This presentation is consistent with the
way financial institutions present interest credited on certificates of deposit. Charges for
mortality, administration and similar items that are recognized as revenue in the
insurance company‘s income statement should be treated as operating cash inflows for
statement of cash flow presentation.
Policy acquisition costs :
Insurance companies defer policy acquisition costs and amortize these costs to expense
over the policy term. These costs should be presented as an operating cash flow.
Acquisition costs usually are inseparable from policy liability determinations, and the
change in policy liabilities is presented as a reconciling item in the reconciliation of net
income and net cash flow from operating activities.
Fund withheld coinsurance :
Reinsurance arrangements such as fund withheld coinsurance and similar arrangements
involving modified coinsurance, contain an embedded derivative that must be bifurcated
and accounted for separately To illustrate, assume that an insurance company and a
reinsurer enter into a coinsurance arrangement. Next, the reinsurer extends a hypothetical
collateralized loan of an underlying pool of assets supporting the reinsurance arrangement

34
 back to the insurance company. Finally, the companies enter into a derivative (in this
example, a total return swap) in which the return on the underlying pool of assets is paid
by the insurance company in satisfaction of the insurance company‘s obligation to pay off
the hypothetical collateralized loan from the reinsurer.
Difference Advantage Disadvantage and Uses of Cash Flow Statement &
Funds Flow Statement
A Cash Flow statement is a statement showing changes in cash position of the firm from
one period to another. It explains the inflows (receipts) and outflows (disbursements) of
cash over a period of time. A cash flow statement is different from a cash budget. A cash
flow statement shows the cash inflows and outflows which have already taken place during
a past time period. On the other hand a cash budget shows cash inflows and outflows which
are expected to take place during a future time period. In other words, a cash budget is a
projected cash flow statement.
A Funds Flow statements states the changes in the working capital of the business in
relation to the operations in one time period. For example, if the inventory of the business
increased from Rs 1, 40,000 to Rs 1, 60,000, then this increase of Rs 20,000 is the increase
in the working capital for the corresponding period and will be mentioned on the funds
flow statement.
Difference between Funds Flow Statement and Cash Flow Statement
Basis of Difference Funds Flow Statement Cash Flow Statement

1. Basis of Analysis Funds flow statement is based Cash flow statement is based on
on broader concept i.e. narrow concept i.e. cash, which is
working capital. only one of the elements of
working capital.

2. Source Funds flow statement tells Cash flow statement stars with the
about the various sources from opening balance of cash and
where the funds generated reaches to the closing balance of
with various uses to which cash by proceeding through
they are put. sources and uses.

35
3. Usage Funds flow statement is more Cash flow statement is useful in
useful in assessing the long- understanding the short-term
range financial strategy. phenomena affecting the liquidity
of the business.

4. Schedule of In funds flow statement In cash flow statement changes in

Changes in changes in current assets and current assets and current
Working Capital current liabilities are shown liabilities are shown in the cash
through the schedule of flow statement itself.
changes in working capital.

5. End Result Funds flow statement shows Cash flow statement shows the
the causes of changes in net causes the changes in cash.
working capital.

6. Principal of Funds flow statement is in In cash flow statement data

Accounting alignment with the accrual obtained on accrual basis are
basis of accounting. converted into cash basis.

Advantages of Cash Flow Statement:

1. It shows the actual cash position available with the company between the two
balance sheet dates which funds flow and profit and loss account are unable to show. So it
is important to make a cash flow report if one wants to know about the liquidity position of
the company.
2. It helps the company in accurately projecting the future liquidity position of
the company enabling it arrange for any shortfall in money by arranging finance in
advance and if there is excess than it can help the company in earning extra return by
deploying excess funds.
3. It acts like a filter and is used by many analyst and investors to judge whether
company has prepared the financial statements properly or not because if there is any
discrepancy in the cash position as shown by balance sheet and the cash flow statement, it
means that statements are incorrect.
36
Disadvantages of Cash Flow Statement:
1. Since it shows only cash position, it is not possible to deduce actual profit and
loss of the company by just looking at this statement.
2. In isolation this is of no use and it requires other financial statements like
balance sheet, profit and loss etc…, and therefore limiting its use.
Advantages of Fund Flow Statements:
A Funds flow statement is prepared to show changes in the assets, liabilities and equity
between two balance sheet dates, it is also called statement of sources and uses of funds.
The advantages of such a financial statement are many fold.
Some of these are:
1. Funds flow statement reveals the net result of Business operations done by the
company during the year.
2. In addition to the balance sheet, it serves as an additional reference for many
interested parties like analysts, creditors, suppliers, government to look into financial
position of the company.
3. The Fund Flow Statement shows how the funds were raised from various
sources and also how those funds were deployed by a company, therefore it is a great tool

for management when it wants to know about where and from what sources funds
were raised and also how those funds got utilized into the business.
4. It reveals the causes for the changes in liabilities and assets between the two
balance sheet dates therefore providing a detailed analysis of the balance sheet of the
company.
5. Funds flow statement helps the management in deciding its future course of
plans and also it acts as a control tool for the management.
6. Funds flow statement should not be looked alone rather it should be used
along with balance sheet in order judge the financial position of the company in a better
way.
Disadvantages of Fund Flow Statements:

37
 1. Funds flow statement has many advantages; however it has some
disadvantages or limitations also. Let‘s look at some of the limitations of funds flow
statement.
2. Funds Flow statement has to be used along with balance sheet and profit and
loss account for inference of financial strengths and weakness of a company it cannot be
used alone.
3. Fund Flow Statement does not reveal the cash position of the company, and
that is why company has to prepare cash flow statement in addition to funds flow
statement.
4. Funds flow statement only rearranges the data which is there in the books of
account and therefore it lacks originality. In simple words it presents the data in the
financial statements in systematic way and therefore many companies tend to avoid
preparing funds flow statements.
5. Funds flow statement is basically historic in nature, that is it indicates what
happened in the past and it does not communicate anything about the future, only estimates
can be made based on the past data and therefore it cannot be used the management for
taking decision related to future.
Difference between Cash Flow Statement and Income Statement
Cash Flow Statement Income Statement

1. The Statements narrates the item of

1. It is disclosing the reasons for change
cost and revenue to arrive at the figures
in working capital i.e., where from the
of profit and loss earned / incurred during
working capital cash has been applied.
a particular period of time.

2. Income Statement helps the

preparation of Cash Flow Statement in as
2. Cash Flow Statement doesn‘t help
much as one source of cash i.e., cash
preparation of income statement
from operation is found out from the
income statement

38
3. Cash raised are matched with cash 3. Expenses are matched with income in
used. No distinction is made between order to find out the result of operation.
capital and revenue items Only revenue items are considered

Difference between Cash Flow Statement and Position Statement

Cash Flow Statement Position Statement

1. It is a Statement changes in financial 1. It is statement of financial position

position.

2. It shows the amount of changes during the 2. It present the amount of assets and
particular period of time. liabilities at a particular point of time

3. It doesn‘t analyze the change in current 3. It shows all the accounting liabilities
asset and current liability. whether current or non-current

4. It is a analytical statement analyzing form 4. It is not a analytical statement hence not

where they have been used, hence more that much useful for decision making as the
useful. cash flow statement

Importance of cash flow statement:

The information which is provided by cash flow statement is neither available in the
balance sheet nor in the income statement and hence its important. The changes which
have taken place in between two accounting dates are highlighted by cash flow statement.
A lay man cannot grasp the underlying significance of achievements and progress of the
company simply by a personal of the balance sheet and income statement of different
years. The comparative and analytical study presented by the statement giving the details

39
of sources and uses of cash during a given period of immense help to the users of
information. It is very useful tool in analytical kit of the management also, besides the
outsiders, in order to have ‗at a glance‘ appraisal of the financial and operating
performance of a company. Since the statement shows the extent to which the working
capital has been effectively put to use, the management‘s task of taking policy decision
regarding investment, dividends etc, is great facilitated.
The projected cash flow statement can also be prepared and then budgetary control
and capital expenditure control can be exercised to the benefit of the entire organization.

Uses of Cash Flow Statement:

Cash flow statement of a company is of great value to management share holders,
creditors, bankers, money lending institutions etc.,
 Informative value:- The financial consequence of business operation are clearly
explained in details by a cash flow statement some of the problems which crop up in
the minds of investors are well solved by a simple perusal of this statement for e.g.,
1. Where have the profit gone.
2. Why does an imbalance exist between liquidity position and profitability position of
enterprise?
 Forecasting value:- A projected cash flow statement can be prepared and resources
can be properly allocated after an analysis of the present state of affairs. The optimal
utilization of available cash in necessary for the overall growth of the enterprise. The
cash flow statement prepared in advance given a clear direction to the management in
this raged.
 Testing value:- Whether the working capital has been effectively is used or not by
the management can well be tested by cash flow statement. Whether working capital
has been maintained at proper level, and whether it is adequate or inadequate can be
known by a study of the statement. The management is warned against the injudicious
uses of cash.
 Decision-making value:- Since over all credit worthiness of the enterprise is
known, creditors and money lenders can decide as to whether they have to provide loans
to company or not. The sources of raising cash and their application help the

40
 shareholders to decide whether the management of the business is an enlightened or not
regarding managing cash.

Cash Flow Management

By: Dr. William R. Osgood

Cash - the organization's most precious asset. Control your cash before it controls you.
Cash flow management is a problem for almost any firm, large or small. The worst
symptom of the problem: the business runs out of cash. Watching a business floundering,
running out of cash even as it makes great sales and profits is painful. Painful though it
may be, it is common and repeatedly the cause of business failure.

Small businesses are especially vulnerable to cash flow problems since they
frequently operate with inadequate cash reserves or none at all and, worse, tend to miss the
implications of a negative cash flow until it's too late. However, even in larger
organizations, the departmental or strategic business unit (SBU) budget is often as rigid -
exceed your spending budget and you are out of business as well.

For financing purposes, cash flow projections are generally the most crucial aspect of
the business plan. Bankers and other outside financing intermediaries will almost always
41
look for a cash flow analysis in preference to any other financial statement, because this
will show how the loan can be repaid. In larger companies, the cash budget for a new
project or expansion is critical to the overall decision to commit funds and move forward..

Why is cash flow so important? If the cash inflows exceed the cash outflows, the business
can continue operations. If the cash outflows exceed the inflows, the business RUNS OUT
OF CASH and grinds to a halt. Even if the imbalance is only for a short period, it can spell
disaster.

In its simplest form, cash flow refers to the flows of cash, literally, into and out of
the business. Think in terms of actual cash, dollar bills, flowing in and out of the business,
and then identify both their sources and uses. This is cash-flow analysis.

CASH FLOW

42
 Timing and cash flow are inseparable. Payments to suppliers are typically expected
often even before customers of the business pay their bills. As a result, the operation is very
likely to have a negative cash flow when it grows dramatically. Periods of change are
always reflected in an altered cash flow. If sales fall off, the cash flow slows down.
Interestingly enough even if sales increase, the cash flow may stop completely or even

become negative (more out than in). Think of the impact of credit sales on cash
flow, for example. One-time events such as population shifts or changes in competition
could trigger such consequences. More commonly, seasonal fluctuations of the business
may also pose cash flow problems where a build-up of inventories must precede the sales
cycle (such as a toy business prior to the Christmas holidays).

Whatever the cause, the underlying message is simple: Run out of cash and the
business is in trouble. Even if it is possible to raise more money from other sources, sooner
or later the timing of cash inflows must match the outflows if the business is to survive.

How to get cash flow under control? It's not easy. Some businesses never achieve
cash flow control. These businesses are always in trouble, chronically overdrawn, slow in
paying bills, and will eventually fold. They fold though, only after their owner/managers
have spent a great deal of time worrying and probably spent all of their personal assets
trying to cover the operating deficits. This kind of complication need not be an integral part
of business management. Instead it is essential to PLAN and SCHEDULE so that cash flow

for the business is positive

43
Cash flow management does not need to be mysterious or complex. Managing cash is all
about timing the inflows and outflows. Cash Flow Analysis starts the process. This can be
as simple as going to your check book or accounting system and analyzing your receipts
and disbursements over the past few months. A pattern is likely to emerge. What are the
revenue sources, and how consistent are they from month to month? As well, what are the
expenditures, and how repeatable are they from month to month? Next, look at the
incoming revenue stream (Accounts Receivable) or your sales forecast to confirm and
further predict cash inflows, and your Accounts Payables to build a pattern of required
future disbursements. Match the two. Is there a positive or negative cash flow?
If there is a negative cash flow, the deficit needs to be covered from somewhere. There
are two options. Spend less, or get more (increase revenues). Even it the cash flow is
positive, inspecting the individual elements may further improve operations. Are there cash
inflows or outflows that can be changed?

The balance sheet, income statement, and cash flow statement are the three generally
accepted financial statements used by most businesses for financial reporting. All three
statements are prepared from the same accounting data, but each statement serves its own
purpose. The purpose of the cash flow statement is to report the sources and uses of cash
during the reporting period.

Structure of the Cash Flow Statement

The most commonly used format for the cash flow statement is broken down into three
sections: cash flows from operating activities, cash flows from investing activities, and
cash flows from financing activities.

Cash flows from operating activities are related to your principal line of business and
include the following:

 Cash receipts from sales or for the performance of services

 Payroll and other payments to employees
 Payments to suppliers and contractors
 Rent payments
44
  Payments for utilities
 Tax payments

Investing activities include capital expenditures – disbursements that are not charged to
expense but rather are capitalized as assets on the balance sheet. Investing activities also
include investments (other than cash equivalents as indicated below) that are not part of
your normal line of business. These cash flows could include:

 Purchases of property, plant and equipment

 Proceeds from the sale of property, plant and equipment
 Purchases of stock or other securities (other than cash equivalents)
 Proceeds from the sale or redemption of investments

Financing activities include cash flows relating to the business‘s debt or equity financing:

 Proceeds from loans, notes, and other debt instruments

 Installment payments on loans or other repayment of debts
 Cash received from the issuance of stock or equity in the business.

Cash for purposes of the cash flow statement normally includes cash and cash
equivalents. Cash equivalents are short-term, temporary investments that can be readily
converted into cash, such as marketable securities, short-term certificates of deposit,
treasury bills, and commercial paper. The cash flow statement shows the opening balance
in cash and cash equivalents for the reporting period, the net cash provided by or used in
each one of the categories (operating, investing, and financing activities), the net increase
or decrease in cash and cash equivalents for the period, and the ending balance.

There are two methods for preparing the cash flow statement – the direct method and
the indirect method. Both methods yield the same result, but different procedures are used
to arrive at the cash flows.

45
Direct Method

Under the direct method, you are basically analyzing your cash and bank accounts
to identify cash flows during the period. You could use a detailed general ledger report
showing all the entries to the cash and bank accounts, or you could use the cash receipts
and disbursements journals. You would then determine the offsetting entry for each cash
entry in order to determine where each cash movement should be reported on the cash flow
statement.

Another way to determine cash flows under the direct method is to prepare a
worksheet for each major line item, and eliminate the effects of accrual basis accounting in
order to arrive at the net cash effect for that particular line item for the period. Some
examples for the operating activities section include:

Cash receipts from customers:

 Net sales per the income statement

 Minus ending balance in accounts receivable
 Equals cash receipts from customers

Cash payments for inventory:

 Ending inventory
 Minus beginning inventory
 Plus beginning balance in accounts payable to vendors
 Minus ending balance in accounts payable to vendors
 Equals cash payments for inventory

Cash paid to employees:

 Salaries and wages per the income statement

 Plus beginning balance in salaries and wages payable
 Minus ending balance in salaries and wages payable
 Equals cash paid to employees
46
Cash paid for operating expenses:

 Operating expenses per the income statement

 Minus depreciation expenses
 Plus increase or minus decrease in prepaid expenses
 Plus decrease or minus increase in accrued expenses
 Equals cash paid for operating expenses

Taxes paid:

 Tax expense per the income statement

 Plus beginning balance in taxes payable
 Minus ending balance in taxes payable
 Equals taxes paid

Interest paid:

 Interest expense per the income statement

 Plus beginning balance in interest payable
 Minus ending balance in interest payable
 Equals interest paid

Under the direct method, for this example, you would then report the following in the cash
flows from operating activities section of the cash flow statement:

 Cash receipts from customers

 Cash payments for inventory
 Cash paid to employees
 Cash paid for operating expenses
 Taxes paid
 Interest paid
 Equals net cash provided by (used in) operating activities

47
CHAPTER-IV

48
 DATA ANALYSIS & INTERPRETATION
Cashyear 2017 and 2018

Mar '17 Mar '18

12 mths 12 mths

Net Profit Before Tax 80.93 341.78

Net Cash From Operating

110.42 198.37
Activities

Net Cash (used in)/from

-172.80 -366.50
Investing Activities

Net Cash (used in)/from

67.43 170.54
Financing Activities

Net (decrease)/increase In
5.04 2.41
Cash and Cash Equivalents

Opening Cash & Cash

19.79 24.83
Equivalents
Closing Cash & Cash
24.83 27.24
Equivalents

49
INTERPRETATION
 Observed the above table that the net profit before tax is 80.93 in the year 2018.It is
increased to 341.78 in the year 2018.
 Net cash from financing Activities is 110.42 in the year 2017 it increased to 198.37
 Net decrease/increase in cash and cash Equivalents is 5.04 in the year 2017. It
decreases to 2.41.
 Opening cash is increases compares to 2017. Is 24.83.
 Closing cash is 27.24 in the year ended 2018.

50
CASH FLOW STATEMENT as an year ended 31st March, 2018 and 2019

Cash Flow ------------------- in Rs. Cr. -------------------

Mar '18 Mar '19

12 mths 12 mths

Net Profit Before Tax 341.78 552.53

Net Cash From Operating

198.37 448.86
Activities

Net Cash (used in)/from

-366.50 -703.95
Investing Activities

Net Cash (used in)/from

170.54 268.39
Financing Activities

Net (decrease)/increase In Cash

2.41 13.30
and Cash Equivalents

Opening Cash & Cash

24.83 27.24
Equivalents

Closing Cash & Cash Equivalents 27.24 40.54

51
 ANALYSIS

 Net profit before tax is 341.78 in the year 2018. It is increases to 552.53 in the year
2019.
 Net cash from financing Activities is 198.37 in the year 2017 it increased to 448.86.
 Net decrease/increase in cash and cash Equivalents is 2.41 in the year 2017. It
increases to 13.30 in the year 2019.
 Opening cash is increases compares to 2018 Is 27.24.
 Closing cash is 40.54 in the year ended 2019.

52
CASH FLOW STATEMENT as an year ended 31st March, 2019 and 2020

Cash Flow ------------------- in Rs. Cr. -------------------

Mar '19 Mar '20
12 moths 12 moths
Net Profit Before Tax 552.53 409.11

Net Cash From Operating

448.86 370.26
Activities
Net Cash (used in)/from
-703.95 -1034.71
Investing Activities
Net Cash (used in)/from
268.39 680.76
Financing Activities
Net (decrease)/increase In
13.30 16.31
Cash and Cash Equivalents
Opening Cash & Cash
27.24 40.54
Equivalents
Closing Cash & Cash
40.54 56.86
Equivalents

53
 ANALYSIS

 Net profit before tax is 552.53 in the year 2019. It is decreases to 409.11 in the year
2020…
 Net cash from financing Activities is 268.39 in the year 2017 it increased to 680.76
in the year 2019.
 Net decrease/increase in cash and cash Equivalents is 13.30 in the year 2019. It
increases to 16.31 in the year 2020.
 Opening cash is increases compares to 2019.Is 40.54 in the year 2020.
 Closing cash is 56.86 in the year ended 2020.

54
CASH FLOW STATEMENT as an year ended 31st March, 2020and 2021

Cash Flow ------------ in Rs. Cr. --------------

Mar '20 Mar '20

12 mths 12 mths

Net Profit Before Tax 409.11 475.49

Net Cash From Operating

370.26 256.55
Activities

Net Cash (used in)/from

-1034.71 -1252.34
Investing Activities

Net Cash (used in)/from

680.76 1019.38
Financing Activities

Net (decrease)/increase In
16.31 23.59
Cash and Cash Equivalents

Opening Cash & Cash

40.54 56.86
Equivalents
Closing Cash & Cash
56.86 80.45
Equivalents

55
 ANALYSIS

 Net profit before tax is 409.11 in the year 2020. It is increases to 475.49 in the year
2021.
 Net cash from financing Activities is 680.76 in the year 2019 it increased to 1019.38
in the year 2020.
 Net decrease/increase in cash and cash Equivalents is 16.31 in the year 2019. It
increase to 56.86 in the year 2020…
 Opening cash is increases compares to 2020. Are 80.45 in the year 2021?
 Closing cash is 80.45 in the year ended 2021.

56
 CASH FLOW STATEMENT as an year ended 31st March,2021 and 2022.

Mar '21 Mar '22

12 mths 12 mths

Net Profit Before Tax 80.93 341.78

Net Cash From Operating

110.42 198.37
Activities

Net Cash (used in)/from

-172.80 -366.50
Investing Activities

Net Cash (used in)/from

67.43 170.54
Financing Activities

Net (decrease)/increase In
5.04 2.41
Cash and Cash Equivalents

Opening Cash & Cash

19.79 24.83
Equivalents
Closing Cash & Cash
24.83 27.24
Equivalents

57
 ANALYSIS

 Observed the above table that the net profit before tax is 80.93 in the year 2021.It is
increased to 341.78 in the year 2022.
 Net cash from financing Activities is 110.42 in the year 2021 it increased to 198.37
 Net decrease/increase in cash and cash Equivalents is 5.04 in the year 2021. It
decreases to 2.41.
 Opening cash is increases compares to 2021. Is 24.83.Closing cash is 27.24 in the year
ended 2022.

58
CURRENT RATIO OF HDFC BANK, FOR THE LAST 5 YEARS 2017-2022

Current ratio= current assets / current liabilities

Year Current Assets Current liabilities Ratio

2017-2018 52813.79 26770.52 1.97

2018-2019 46605.05 23682.03 1.97

2019-2020 74972.82 27272.11 2.75
2020-2021 83931.21 28076.57 2.99
2021-2022 162776.91 83561.79 1.95

Analysis:

This Ratio explains the relationship between current assets to current liabilities. Even through
current ratio levels are increasing they are not up to the standard ratio of 2:1.Where companies
our ratios with these industrial standards. But during 2017-2018 its current ratio levels crossed
the standard ratio which indicates that the companies‘ financial position is very good.

59
 QUICK RATIO OF HDFC BANK, FOR THE LAST 5 YEARS

Quick Assets

Quick Ratio = --------------------------

Quick liabilities

Year Quick Assets Quick liabilities Ratio

2017-2018 32362.47 26770.52 1.21

2018-2019 35018.35 23682.03 1.48

2019-2020 55475.54 27272.11 2.03

2020-2021 62168.81 28076.57 2.21

2021-2022 76290.08 83561.79 0.91

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BAR DIAGRAM SHOWING QUICK RATIO OF HDFC BANK FOR THE
LAST 5 YEARS 2017-2022

Analysis:

This Ratio demonstrates how quick assets and current liabilities are related. Liquidity Ratio is
another name for this ratio. Quick assets in this context refer to all current assets, excluding
shares and prepayments.

The foregoing workings demonstrate that the hdfc bank adheres to the industrial standard of
this ratio of 1:1. This criteria has been met for the previous years under the Quick Assets
policy.

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DEBTORS TURNOVER RATIO OF HDFC BANK, FOR THE LAST 5
YEARS 2017-2022

Sales

Debtors Turnover Ratio = -------------------

Debtors

Year Sales Debtors Ratio

2017-2018 65418.16 17220.52 3.80

2018-2019 78063.25 12011.71 6.50

2019-2020 90587.42 12772.64 7.09

2020-2021 101618.78 12557.52 8.09

2021-2022 216845.35 10258.95 21.13

62
BAR DIAGRAM SHOWING DEBTORS TURNOVER RATIO OF HDFC
BANK FORTHE LAST 5 YEARS 2017-2022

Analysis:

This Ratio shows the participation of Debtors in Total sales. The more of this ratio is a
sign of good credit policy. According to the above table it is true that the Debtors Turnover
Ratio is satisfactory level.

In 2018-2019 and it is continuously increased. We can find a slight increased in 2019-

2020 at 7.09 and in 2020-2021 at 8.09 and in 2021-2022 at 21.13.It is in very good condition.

63
INVENTORY TO WORKING CAPITAL OF HDFC BANK, FOR THE
LAST 5 YEARS 2017-2022

Inventory

Inventory to Working capital Ratio = -------------------

Working capital

Year Inventory Working capital Ratio

2017-2018 20451.32 26043.27 0.79

2018-2019 11586.70 22923.02 0.50

2019-2020 19497.28 47700.91 0.40

2020-2021 21762.40 55854.64 0.39

2021-2022 86486.83 79215.12 1.09

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 1.BAR DIAGRAM SHOWING INVENTORY TO WORKING
CAPITAL RATIO OF HDFC BANKFOR THE LAST 5 YEARS 2017-
2022

Analysis:

In order to assertions that there is no over stocking the ratio of inventory to working capital
should be calculated. Increase in volume of sales required increase in size of inventory. But a
sound financial point of view, inventory should not exceed amount of working capital. The
desirable ratio is 1:1.

65
CASH RATIO OF HDFC BANK, FOR THE LAST 5 YEARS 2017-2022

Cash

Cash Ratio = -------------------

Current liabilities

Year Cash Current Liabilities Ratio

2017-2018 839.88 26770.52 0.03

2018-2019 489.55 23682.03 0.02

2019-2020 542.11 27272.11 0.02

2020-2021 344.35 28076.57 0.01

2021-2022 6631.64 83561.79 0.08

66
 BAR DIAGRAM SHOWING CASH RATIO OF HDFC BANK FOR THE
LAST 5 YEARS 2017-2022

Analysis:

The ratio is also called absolute liquidity ratio. How the company is maintaining cash
reserves to meet their day today obligations, revealed by this ratio. Here cash means, cash in
hand and cash at bank.

The industrial standard of this ratio is 0.5:1, where as in hdfc bank the situation is quite
different it did not reach the industrial standard any time for the past 5 years to utilize some
additional benefited like cash discounts etc, the company is needed to maintain some more
cash reserves.

67
WORKING CAPITAL TURNOVER RATIO HDFC BANK, FOR THE
LAST 5 YEARS 2017-2022

Sales

Working Capital Turnover Ratio = ---------------------------

Networking capital

Year Sales Networking capital Ratio

2017-2018 65418.16 26043.27 2.51

2018-2019 78063.25 22923.02 3.41

2019-2020 90587.42 47700.91 1.90

2020-2021 101618.78 55854.64 1.82

2021-2022 216845.35 79215.12 2.74

68
 BAR DIAGRAM SHOWING WORKING CAPITAL TURNOVER
RATIO OF HDFC BANKFORTHE LAST 5 YEARS 2017-2022

Analysis:

The participation of working capital in total sales is revealed by this ratio. The ratio
explains the relationship between working capital to total sales.

The actual situation of HDFC bank is very low from last 4 years. In the year 2017-18 it
is 2.51, later it increase 3.41 in 2018-2018, later it decreased 1.90 in 2018-2019, 1.82 in 2019-
2020 and 2.74 in 2021-2022 which is low among all 5 years.

69
CHAPTER-V

70
 SUMMARY
A comprehensive set of financial statements must include the presentation of a
cash flow statement. The cash flow statement essentially reveals how a business obtained
the funds needed to support its operations and how the funds were used throughout the
period.
The cash flow statement shows the changes between the opening and closing balances of
cash and cash equivalents for a given period and indicates whether or not operating,
investing, or financing activities were the source of cash inflows or outflows.
To determine the period's cash inflows and outflows, the amounts shown in the
financial statements must be modified to account for any non-cash transactions.
Depreciation, impairment losses, fair value adjustments, and unrealized gains and losses on
foreign currency are a few examples of non-cash transactions.
Cash on hand and demand deposits are considered to be cash. Cash equivalents are short-
term, highly liquid assets that can be quickly converted into known sums of cash and are
only slightly at risk of value changes. The cash flow statement has to list the main
categories of gross receipts and payments from financing, investing, and operating
operations. The term "financing activities" refers to actions that alter the amount and make
up of the entity's contributed capital and borrowings. The buying and selling of long-term
assets and other investments that are not cash equivalents are referred to as investing
activities. Included in investing activities are the aggregate cash flows arising from
acquisitions and disposals of controlled entities, associates and joint ventures. Operating
activities represent the revenue producing activities of the entity, and are all activities that
are not investing or financing activities.

In financial accounting, a cash flow statement is a financial statement that shows

how changes in balance sheet accounts and income affect cash and cash equivalents, and
breaks the analysis down to operating, investing, and financing activities. Essentially, the
cash flow statement is concerned with the flow of cash in and cash out of the business. The
statement captures both the current operating results and the accompanying changes in the

71
 sheet As an analytical tool, the statement of cash flows is useful in determining the
short-term viability of a company, particularly its ability to pay bills. International
Accounting Standard 7 (IAS 7) is the International Accounting Standard that deals with
cash flow statements.

72
 FINDINGS

1. The HDFC BANK Net Profit is showing negative profit in the year 2017-18. These
event is an expected one because since from the previous two years it is showing the
decline stage in Net Profit.
2. Profit Margin of HDFC BANK is decreasing and showing negative profit because
there is increase in the competition and lower margins.
3. The HDFC BANK Net Working Capital Ratio is satisfactory.
4. The HDFC BANK return on Total Assets shows a negative sign in the year 2017-
18.
5. The Operating Ratio of HDFC BANK increase in the year 2017-2018, in the year
2019-20 and reached in the year 2021-22 so the company has to reduce its operating
costs.
6. The Operating cash of HDFC BANK satisfactory. Due to increase in cost of
production, this ratio is decreasing. So the has to reduce its office administration
expenses

73
 SUGGESTIONS

 There is a slight increase in company‘s debt funds hence it is advised to the company
to reduce the debt funds.

 The company should take necessary steps for minimizing its operating expenses.

 The company should take necessary steps for maintaining proper liquidity as the cash flow
statement of company is fluctuating.

 The company should take necessary steps for expanding the sales through expanding their
branches.

74
 CONCLUSIONS

Every firm has a predetermined set of objectives and goals, but only planning and cost-
effective execution can achieve these goals. The HDFC BANK's goals include organizing,
planning, and promoting a single company's integrated development. For a business to be
successful, the management must be composed of competent individuals. The management
creates strategies and then implements these plans using a cash flow statement.
One of the crucial facets of managing working capital is cash management. Since all
liquid assets may be converted into cash, cash is the only thing that can be used to diminish
a current asset. Poor management, according to business analysts, is the primary cause of
company failure. Probably the most prevalent roadblock is poor cash management.

75
 BIBILIOGRAPHY

BOOKS AUTHOR
1) FINANCIAL MANAGEMENT IM PANDEY

2)FINANCIAL MANAGEMENT Dr.S.K.R.PAUL

3)FINANCIAL MANAGEMENT MY KHAN, PK JAIN

4)MANAGEMENT ACCOUNTING Dr.S.P.GUPA

5)ADVANCED ACCOUNTANCY S.P. JAIN,NARANG

6)ADVANCED FINANCIAL ACCOUNTING S.N.MAHESWARI

WEB SITES:
www.hdfc bank.com.

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