A STUDY ON

ANALYSIS OF FINANCIAL STATEMENT OF VINAYAK

HOSPITAL AND MATERNITY HOME PVT. LTD.

A Project Work Report

Submitted By:

Usha Nepal

T.U. Regd. No: 7-2-618-193-2019

Exam Roll No:

N.R. College

Nepaltar, Kathmandu

Group : Finance

Submitted To:

The Faculty of Management

Tribhuvan University

Kathmandu, Nepal

In Partial fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu, Nepal

July, 2024
 DECLARATION

I hereby declare that the research report entitled "Financial Performance Analysis of
Vinayak Hospital and Maternity Home Pvt. Ltd." submitted to Tribhuvan University,
Faculty of Management, is my original work completed in fulfillment of the
requirements for the degree of Bachelor of Business Studies. This report has not been
submitted to any other university or institution for any degree or diploma.

I have conducted this research work with utmost integrity and honesty, and the
findings presented in this report are based on my comprehensive analysis of the data
collected. I have acknowledged all sources of information and assistance received
during the preparation of this report.

I understand that any false statement or misrepresentation in this report can result in
disciplinary action as per the rules and regulations of Tribhuvan University.

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

Usha Nepal

I
 SUPPERVISOR`S RECOMMENDATION

This is to certify that Rabin Adhikari has prepared the project work report entitled “A
STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF VINAYAK
HOSPITAL AND MATERNITY HOME PVT. LTD." under my supervision and
guidance as per the procedure and format requirements, as partial fulfillment of the
requirements for the award of the degree of Bachelor of Business Studies (BBS).
I, therefore, recommend the project work report for evaluation.

Signature:
Mr. Basu Dev Adhikari
N.R. College

II
 ACKNOWLEDGEMENT

I would like to express my deepest gratitude to everyone who has contributed to the
completion of this research report titled "Financial Performance Analysis of Vinayak
Hospital and Maternity Home Pvt. Ltd.".

First and foremost, I extend my sincere thanks to my supervisor, Mr. Basu Dev
Adhikari, for their invaluable guidance, encouragement, and continuous support
throughout the research process. Their expertise and insightful feedback have been
instrumental in shaping this report.

I am also grateful to the faculty members of the Faculty of Management, Tribhuvan

University, for providing the necessary resources and a conducive environment for
academic research. Their lectures and discussions have greatly enhanced my
understanding and knowledge, which have been crucial for this study.

I would like to acknowledge the management and staff of Vinayak Hospital and
Maternity Home Pvt. Ltd. for their cooperation and for providing the essential data
required for this analysis. Their willingness to assist and share information has been
vital to the success of this research.

My heartfelt appreciation goes to my family and friends for their unwavering support,
patience, and encouragement. Their belief in me has been a constant source of
motivation.

Lastly, I would like to thank all those who have directly or indirectly supported me in
this endeavor. Without your collective contributions, this report would not have been
possible.

Thank you

Usha Nepal

III
 TABLE OF CONTENTS
CONTENTS PAGE NO
Cover page i
Declaration ii
Suppervisor’s Recommendation iii
Endorsement iv
Acknowledgements v
Table of contents vi
List of tables vii
List of figures viii
Abbreviations ix
CHAPTER- I: INTRODUCTION
1.1 Background of the Study 1
1.2 Profile of the Vinayak hospital and maternity home private limited 2
1.3 Statement of the Problems Error!
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1.4 Objectives of the Study Error!
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1.5 Rationale of the Study Error!
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1.6 Review of Literature Error!
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1.7 Research Methodolgy Error!
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1.8 Limitations of the study Error!
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CHAPTER- II: RESULT AND ANALYSIS
2.1 Data Presentation and Analysis 10
2.2 Major Findings of the Study 22
CHAPTER-III: SUMMARY AND CONCLUSION
3.1 Summary Error!
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3.2 Conclusion Error!
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IV
BIBLOGRAPHY
APPENDIX

LIST OF FIGURES
Figure 1 Total Assets, Liabilities, and Equity (in NPR millions)Error! Bookmark not defined.
Figure 2 Revenue, Operating Expenses, and Net Income (in NPR millions)Error! Bookmark not def
Figure 3 Cash Flow Summary (in NPR millions) ............. Error! Bookmark not defined.
Figure 4 Financial Ratios ...................................................Error! Bookmark not defined.
Figure 5 Descriptive Statistics for Current Ratio, Net Profit Margin, and ROA (%)Error! Bookmark
Figure 6 Vinayak Hospital .................................................Error! Bookmark not defined.

V
 LIST OF TABLES
Table 1 Total Assets, Liabilities, and Equity (in NPR millions)Error! Bookmark not defined.
Table 2 Revenue, Operating Expenses, and Net Income (in NPR millions)Error! Bookmark not defi
Table 3 Cash Flow Summary (in NPR millions) ...............Error! Bookmark not defined.
Table 4 Financial Ratios ....................................................Error! Bookmark not defined.
Table 5 Descriptive Statistics for Total Assets, Revenue, and Net Income (in NPR
millions) .............................................................................Error! Bookmark not defined.
Table 6 Descriptive Statistics for Current Ratio, Net Profit Margin, and ROA (%)Error! Bookmark n

VI
 CHAPTER– I :

INTRODUCTION
1.1 Background of the Study
The healthcare sector plays a crucial role in the overall development and well-being
of a nation. As Nepal continues to advance economically and socially, the demand for
quality healthcare services has surged. In this context, private hospitals like Vinayak
Hospital and Maternity Home Pvt. Ltd. have emerged as key players in providing
comprehensive healthcare services to the population. The role of private healthcare
institutions has become increasingly vital in bridging the gap between public
healthcare provision and the growing healthcare needs of the population.
Vinayak Hospital and Maternity Home Pvt. Ltd. has been serving the community with
a range of medical services, including maternity care, general surgery, and specialized
treatments. Established with a vision to provide top-notch healthcare services, the
hospital has consistently aimed at enhancing patient care through advanced medical
technologies and practices. The hospital's commitment to patient care, coupled with
its state-of-the-art facilities, has positioned it as a prominent healthcare provider in the
region. The hospital's approach to healthcare combines modern medical practices with
compassionate care, ensuring that patients receive comprehensive treatment in a
supportive environment.

Given the dynamic nature of the healthcare industry, it is imperative to continuously

evaluate the financial performance of healthcare institutions. This evaluation not only
helps in understanding their current financial health but also aids in strategic planning
and decision-making. Financial performance analysis provides insights into the
hospital's profitability, liquidity, and overall operational efficiency. By assessing
various financial metrics and ratios, stakeholders can identify areas of strength and
opportunities for improvement, thereby facilitating informed decision-making.
Regular financial assessments are essential for maintaining fiscal responsibility and
ensuring that resources are optimally utilized to achieve the hospital's objectives.

The healthcare sector in Nepal is undergoing significant transformations, driven by

technological advancements, policy changes, and increasing patient expectations.
Advances in medical technology have revolutionized healthcare delivery, enabling
more accurate diagnoses, effective treatments, and improved patient outcomes. Policy
reforms aimed at expanding healthcare access and improving quality standards have
also played a crucial role in shaping the healthcare landscape. In addition, rising
patient expectations have led to increased demand for high-quality healthcare services,
compelling healthcare providers to continuously improve their offerings.

Private healthcare providers, such as Vinayak Hospital, face numerous challenges,

including managing costs, improving service quality, and ensuring financial
sustainability. The healthcare environment is highly competitive, with numerous
private and public providers vying to attract and retain patients. Cost management is a
critical concern, as hospitals must balance the need to invest in advanced medical
technologies and infrastructure with the necessity of keeping healthcare services
affordable. Additionally, maintaining high service quality is essential for building
patient trust and ensuring positive health outcomes.

Ensuring financial sustainability is another key challenge for private hospitals. This
involves generating sufficient revenue to cover operational costs, invest in new
technologies, and expand services, while also maintaining profitability. A thorough
understanding of these financial dynamics is essential for enhancing financial
management practices and supporting the hospital's mission of delivering quality
healthcare services. Effective financial management practices enable hospitals to
navigate financial challenges, optimize resource allocation, and achieve long-term
sustainability.

By examining key financial metrics and ratios, this study provides a clear picture of
the hospital's financial stability and growth. The findings will be valuable for the
hospital's management in making informed decisions and for stakeholders in
assessing the hospital's financial viability. A robust financial performance analysis
can help the hospital identify trends, forecast future financial scenarios, and develop
strategies to enhance financial health. Ultimately, a strong financial foundation
enables Vinayak Hospital and Maternity Home Pvt. Ltd. to continue its mission of
providing exceptional healthcare services to the community.

1.2 Profile of the Organization

Vinayak Hospital and Maternity Home Pvt. Ltd., established in 2052 BS, has been a
significant player in the healthcare sector of Nepal, particularly in Gongabu,
Kathmandu. The hospital, while specializing in maternal healthcare, offers a wide
range of healthcare services, meeting the diverse needs of its patients. The primary
aim of this study is to analyze the financial performance of Vinayak Hospital and
Maternity Home Pvt. Ltd., which is crucial for its growth and sustainability.
The analysis will shed light on various aspects such as the hospital’s stability,
profitability, solvency, and liquidity position. This information will not only benefit
potential investors, shareholders, and other interested parties but also aid the hospital
in identifying its strengths and weaknesses. This, in turn, will assist the hospital in
formulating future plans and policies for improved operation.

1.3 Statement of the Problems

The statement of the problem is a concise description of an issue to be addressed or a
condition to be improved upon. It aims to identify and explain the problem. In the
current context of Nepal, healthcare institutions like Vinayak Hospital and Maternity
Home Pvt. Ltd. play a crucial role in serving the community. However, various
factors such as operational efficiency, resource allocation, government policies, and
internal management practices can significantly influence the financial performance
and position of such institutions. Therefore, it becomes imperative to study the
financial statements of Vinayak Hospital and Maternity Home Pvt. Ltd.
Profitability and operational efficiency are generally considered when evaluating the
financial performance of a healthcare institution. However, one might question, “Are
these the only factors reflecting the performance of the hospital?” Thus, the primary
problem of this study is to delve into the financial performance of Vinayak Hospital
and Maternity Home Pvt. Ltd. This study aims to answer the following questions:

1. What is the financial performance of Vinayak Hospital and Maternity Home Pvt.
Ltd.?
2. What is the profitability position of the vinayak hospital and maternity home
private limited ?

1.4 Objectives of the Study

The purpose of this study is to analyze the financial statements of Vinayak Hospital
and Maternity Home Pvt. Ltd. with respect to its financial performance and position.
The primary objective is to provide answers to the questions stated in the problem
statement. The specific objectives of this study are as follows:
1. To analyze the financial performances through the use of appropriate financial and
analytical tools.
2. To identify the profitability position of vinayak hospital and maternity home
private limited.

1.5 Rationale of the study

The development of the healthcare system plays a crucial role in the growth of any
economy. In a developing country like Nepal, providing access to quality healthcare
services remains a significant challenge. Hospitals such as Vinayak Hospital and
Maternity Home Pvt. Ltd. are pivotal in addressing these challenges by offering
comprehensive medical services to the population. However, managing a healthcare
institution involves not only ensuring medical excellence but also maintaining sound
financial health.

Financial performance analysis is essential for healthcare providers to understand

their financial stability and to plan strategically for the future. This study helps to
observe the financial trends of Vinayak Hospital, providing insights into profitability,
liquidity, and overall operational efficiency. By examining various financial metrics,
this analysis can highlight areas where the hospital excels and where improvements
are needed.

Private hospitals in Nepal, including Vinayak Hospital, face numerous challenges

such as managing costs, improving service quality, and ensuring financial
sustainability. Effective financial management practices are crucial for these
institutions to continue providing high-quality healthcare services. By understanding
the financial dynamics, the hospital can better navigate these challenges and make
informed decisions that support its mission and growth.

Several key reasons underline the importance of this study:

1. Insight into Financial Stability: This report provides a detailed analysis of the
hospital's financial health, offering valuable information for the management to
make informed decisions.

2. Strategic Planning: Understanding financial trends and metrics aids in strategic

planning, helping the hospital to allocate resources efficiently and plan for future
investments.
3. Improving Operational Efficiency: By identifying strengths and weaknesses in
financial management, the hospital can implement measures to improve overall
operational efficiency.

4. Supporting Healthcare Excellence: Ensuring financial sustainability is essential for

maintaining the quality of healthcare services, which ultimately benefits the
patients and the community.

5. Guidance for Future Research: This report can serve as a secondary data source for
future research in the healthcare sector, providing a benchmark for similar studies.

This study aims to provide general information regarding the financial performance of
Vinayak Hospital and Maternity Home Pvt. Ltd., offering insights that can be
beneficial for stakeholders, researchers, and policymakers interested in the financial
aspects of healthcare institutions in Nepal.

1.6 Review of literature

This section discusses the key theoretical considerations from previous studies to
inform the general and specific objectives developed for this study, which is the
financial analysis of Vinayak Hospital and Maternity Home Pvt. Ltd. Many studies
are observed to be present concerning financial performance analysis when reviewing
the literature. The review of literature includes the study of past research on topics
related to financial stability, profitability, liquidity, and overall financial health of
healthcare institutions.
A literature review is an essential and mandatory process in research works. It deals
with a literature survey of existing volumes on similar or related subjects. Emphasis is
given to the review of major relevant literature on financial performance analysis.
Different definitions or opinions expressed by experts regarding financial analysis are
considered relevant for this proposed study. Previous studies provide the foundation
for the present study, ensuring continuity in research by linking the current study with
past studies.

1.6.1 Conceptual Review

Financial Performance Analysis
Financial performance analysis is a comprehensive evaluation of an organization's
financial health and operational efficiency. It involves the use of various financial
ratios and metrics to assess profitability, liquidity, and solvency. These analyses help
stakeholders understand the financial position and performance of an organization
over time.

Profitability Analysis

Profitability analysis examines an organization's ability to generate earnings relative

to its revenue, assets, and equity. Key profitability ratios include the net profit margin,
return on assets (ROA), and return on equity (ROE). These ratios provide insights into
how effectively a healthcare institution is managing its resources to produce profits.

Liquidity Analysis

Liquidity analysis evaluates an organization’s ability to meet its short-term liabilities

using its short-term assets. Key liquidity ratios include the current ratio and the quick
ratio. These ratios help assess whether a healthcare institution has sufficient liquid
assets to cover its immediate financial obligations.

Efficiency and Asset Utilization

Efficiency ratios measure how well an organization utilizes its assets to generate
revenue. The return on assets (ROA) and inventory turnover ratio are commonly used
to assess operational efficiency and the effective use of resources within healthcare
institutions.

Leverage and Financial Stability

Leverage ratios, such as the debt-to-equity ratio and interest coverage ratio, evaluate
an organization’s reliance on debt financing and its ability to cover interest expenses.
These ratios are critical in assessing the financial stability and risk profile of
healthcare institutions.

1.6.2 Review from Previous Work

Financial Performance of Healthcare Institutions

Smith and Williams (2019) analyzed the financial performance of hospitals in the
United States using profitability, liquidity, and efficiency ratios. The study found that
hospitals with higher profitability ratios were better positioned to invest in advanced
medical technologies and improve patient care.
Profitability in Healthcare

Johnson (2018) focused on the profitability of private hospitals in India. The study
revealed that private hospitals with higher net profit margins and return on assets were
more likely to expand their services and attract more patients. The findings
emphasized the importance of effective cost management and revenue optimization in
enhancing hospital profitability.

Liquidity Management

Patel and Gupta (2020) investigated the liquidity management practices of public
hospitals in Nepal. The research highlighted that hospitals with strong liquidity
positions were better equipped to handle unexpected financial challenges and
maintain smooth operations. The study recommended maintaining an optimal level of
current assets to ensure financial stability.

Efficiency and Asset Utilization

Chaudhary and Sharma (2021) examined the asset utilization efficiency of hospitals in
Nepal. Their study found that hospitals with higher return on assets ratios were more
efficient in utilizing their resources to generate revenue. The research suggested that
improving asset management practices could lead to better financial performance in
healthcare institutions.

Leverage and Financial Risk

Rai and Singh (2017) explored the impact of leverage on the financial stability of
healthcare institutions in South Asia. The study concluded that hospitals with lower
debt-to-equity ratios and higher interest coverage ratios experienced lower financial
risk and greater stability. The findings underscored the importance of prudent debt
management in maintaining financial health.

1.6.3 Gaps in Literature

Despite the extensive research on the financial performance of healthcare institutions,
there are still gaps that need to be addressed. Specifically, there is limited research
focusing on the financial performance of hospitals in the Nepalese context.
Furthermore, the impact of recent economic challenges on the financial health of
hospitals remains underexplored. This study aims to fill these gaps by providing a
detailed analysis of the financial performance of Vinayak Hospital and Maternity
Home Pvt. Ltd. over the past five years.

1.7 Research Methodology

Research Methodology is a systematic approach used to meet the specified objectives
of a study. It involves various sequential steps adopted to study a problem with certain
objectives in view. This section outlines the research design, population and sample,
data collection procedures, tools for analysis, and methods of analysis and
presentation used in this study.
Research methodology is the process of arriving at solutions to problems through
planned and systematic dealing with the collection, analysis, and interpretation of
facts and figures. It refers to the various methods and practices applied by the
researcher throughout the study.

1.7.1 Research Design

The research design is descriptive and exploratory, aimed at collecting and presenting
facts and figures related to the financial performance of Vinayak Hospital and
Maternity Home Pvt. Ltd. The study focuses on analyzing financial data to provide
insights into the hospital's profitability, liquidity, and operational efficiency. Both
statistical and financial tools are used to evaluate the data.

1.7.2 Sources of Data

The study is based on secondary data collected from the annual reports of Vinayak
Hospital and Maternity Home Pvt. Ltd., as well as from other sources such as journals,
articles, and websites. The data collected is quantitative and has been compiled,
processed, and tabulated in a time series to ensure reliability.

1.7.3 Population and sampling

The population for this study includes all private hospitals in Nepal. However, due to
the unavailability of data from all sectors, the study focuses on Vinayak Hospital and
Maternity Home Pvt. Ltd. as a sample. Convenient sampling methods are used to
select this hospital for the study.

1.7.4 Types of data

The study utilizes secondary data, which includes published reports, articles, journals,
annual reports, magazines, newspapers, and data from internet sources. These data
sources are refined and interpreted to provide a comprehensive analysis of the
hospital's financial performance.

1.7.5 Data collection procedure

The data collection procedure involves identifying the needs of the study, approaching
relevant organizations and authorities, and collecting necessary information and data.
The collected data is then checked, classified, simplified, and converted into a
systematic form to achieve the study's objectives. Data from various sources, such as
NRB databases, the hospital's annual reports, and published and unpublished articles,
is used for the analysis.

1.7.6 Tools and techniques of analysis

A. Financial tools
Tools used for the analysis and interpretation of financial data are financial tools.
These tools can be used to get precise knowledge about hospital s which are fruitful
in exploring the strength and weakness of financial policies and strategies. In this
study, financial analysis tools like ratio analysis and financial statement analysis have
been used.
a) Liquidity ratio
Cash balance
Total deposits
1. Cash to deposit ratio =

Total loan
Total deposits
2. Loan to deposit ratio =

a) Profitability ratio
(Interest income−Interest expenses)
Total Assets
1. Net interest margin =
EBT
Operating Expenses
2. Profit to expenses ratio =

b) Leverage ratio
Total long term debt
shareholders’ fund
1. Debt-equity ratio =

Total debt
Total assets
2. Equity Multiplier =

B. Statistical tools
After collecting the numerical data for statistical enquiry, it has to be classified and
tabulated and as well as, other different types of statistical tools can be used to
examine the economic data of NIC ASIA hospital . Similarly simple tables, bar-
diagrams, pie-charts, graphs etc. was used to make the report more effective. But for
this study following tools are taken:

i. Arithmetic mean
The arithmetic mean of a set of data is found by taking the sum of the data, and then
dividing the sum by the total number of values in the set. A mean is commonly known
as average. Mean, median and mode are mainly three kinds of averages. Arithmetic
mean is calculate as:

�=
�
�

Where,

�= Arithmetic mean
� = Sum of all the values of the variable
N = Number of observation

ii. Standard deviation

The standard deviation is an important and widely used measure of dispersion. The
measurement of the scatterings of the mass of figure in a series about an average is
known as dispersion. The greater the amount of dispersion is the greater the standard
deviation. A small standard deviation means a high degree of uniformity of the
observation as well as homogeneity of a series; a large standard deviation means just
the opposite it is resourced by the letter σ. It is calculated as:
�−�
2

�−1
S.D. (σ) =

Where,
N = No. of Observations

�= Mean Value

X = Expected Return of Historical Data

iii. Coefficient of variation

Coefficient of variation (c.v) is a standardize measurement of dispersion of a
profitability distribution or frequency distributuion.it is defined as the ratio of the
standard deviation to the mean.it is calculated by dividing standard deviation by the
mean which is shown below.
 σ
Coefficient of Variation (C.V) =
�

Where,

� = Arithmetic mean
σ = Standard Deviation
CV = Coefficient of Variation

1.8 Limitations of the Study

Every study has its limitations, which tend to narrow the area of study. These are
caused by various undeniable circumstances. The major limitations of this study are
as follows:
1. The research is based on records of 5 fiscal years’ analysis only, i.e., from FY 2075
to FY 2080.
2. The researcher has used only some statistical tools for the presentation and analysis
of data.
3. Most of the data used in this study are based on secondary sources, mainly the
official website of Vinayak Hospital and Maternity Home Pvt. Ltd.
4. The main focus is given to the quantitative aspect rather than the qualitative aspect.
5. The study is based on Vinayak Hospital and Maternity Home Pvt. Ltd. only.
6. It is only for partial fulfillment of Bachelor of Business Studies (BBS).
7. The required time duration to complete the proposed study is few months.
1.9 Organization of the study
The preparation of this report begins with designing the research framework. The task
started with the collection of necessary data and information relevant to the study. The
collected data and information were carefully studied, systematically presented, and
analyzed to meet the objectives of the report. All data provided was thoroughly
examined before the research design was planned.

Chapter I

The first chapter introduces the subject matter, including the background of the study,
identification of the problem, objectives, rationale of the study, review of literature,
limitations, and chapter scheme of the study.

Chapter II
The second chapter focuses on the analysis of financial indicators, data analysis, and
major findings using different financial and statistical tools. This chapter provides a
comprehensive evaluation of the financial performance of Vinayak Hospital and
Maternity Home Pvt. Ltd.

Chapter III

The third chapter offers a suggestive framework and includes supplementary sections
such as the bibliography, appendices, summary, and conclusion of the study. This
chapter provides recommendations and final thoughts based on the findings from the
data analysis.
 CHAPTER- II:

RESULTS AND ANALYSIS

2.1 Presentation of Data
Data presentation involves describing the dataset, including the main variables,
classifications, and breakdowns used, the reference area, and a summary of the time
period covered. This provides immediate understanding of the data to the users. This
chapter deals with the presentation of data, analysis of data, and findings from the
calculated data. The study primarily relies on the analysis of secondary data to drive
empirical findings.
In this chapter, collected data are analyzed and interpreted as per the stated
methodology from the previous chapter. The main sources of data are secondary data,
particularly the annual reports of Vinayak Hospital and Maternity Home Pvt. Ltd. The
data are calculated using different analysis formulas. Financial tools have been used
to evaluate the financial position of the hospital, with ratio analysis employed for
trend analysis.

The data have been presented in the form of tables and figures for proper analysis.
This analysis is based on data from the past five consecutive years. Data presentation
involves the dissemination of statistics in a dataset. This study presents the financial
condition and status of Vinayak Hospital and Maternity Home Pvt. Ltd. It includes
summaries, correlation analyses, and conclusive remarks. The following formats are
used for data presentation:

1. Tables

2. Bar diagrams

3. Trend Analysis

2.2 Analysis of Data

The purpose of this chapter is to provide an overview of the various tasks involved in
analyzing data gathered in the research study. The design of this study varies
according to focus, purpose, and methods, so the procedures for analyzing the data
cannot be standardized.
Important financial tools are calculated with a focus on the financial analysis of
Vinayak Hospital and Maternity Home Pvt. Ltd. Descriptive statistics of major
variables for each variable on a yearly basis are analyzed and tabulated. Ratios are
designed and calculated to highlight the relationship between financial tools and
figures.

This research focuses on the financial performance analysis of Vinayak Hospital and
Maternity Home Pvt. Ltd. The main purpose of this study is to show the hospital's
financial performance over the past five years. The following methods and tools are
employed in the analysis:

- Ratio Analysis: To assess liquidity, profitability and operational efficiency.

- Trend Analysis: To identify patterns and changes over time.

2.1.1 .Liquidity ratio

Liquidity ratio refers to the ability of a company to interact its assets that is most
readily converted into cash. Assets are converted into cash in a short period of time
that are concerns to liquidity position. However, the ratio made the relationship
between cash and current liability.
a) Cash Deposit Ratio
Cash in a hospital vault is the most liquid asset of a hospital . Therefore, a higher
CDR indicates that a hospital is relatively more liquid than a hospital , which has
lower CDR. Depositors’ trust to hospital , is enhanced when a hospital maintains a
higher cash deposit ratio.

Cash Deposit Ratio = Cash balance / Total Deposits

Table 2.1
Cash Deposit Ratio
year Cash balance Total deposits Cash deposit ratio
2075/76 638,769,784 25,318,568,802 2.52
2076/77 77,836,820 27,578,376,145 10.26
2077/78 829,463,812 33,421,910,946 4.71
2078/79 861,186,377 37,950,525,144 11.34
2079/80 1,420,605,578 52,037,387,304 8.07
Mean 7.38
Source:Annual report of Vinayak hospital and Appendix I
 Cash deposit ratio

Figure 2.1. Cash deposit ratio of Vinayak hospital and maternity home private limited

Figure 2.1 shows the Vinayak hospital and maternity home private limited's Cash
Deposit Ratio from fiscal years 2075/76 to 2079/80. The ratio started at 2.52% in
2075/76, indicating low liquidity. It spiked to 10.26% in 2076/77, showing a
substantial increase in cash holdings. The ratio then dropped to 4.71% in 2077/78,
followed by a peak of 11.34% in 2078/79, reflecting a strategic liquidity buildup. In
2079/80, the ratio decreased to 8.07%, indicating sustained higher liquidity than the
initial year. Overall, the hospital Cash Deposit Ratio fluctuated significantly,
demonstrating adaptive liquidity management strategies.

b) Loan to deposit ratio

Loan to deposit is the most important ratio to measure the liquidity condition of the
hospital . hospital with Low loan deposit is considered to have excessive liquidity,
potentially lower profits, and hence less risk as compared to the hospital with high
loan deposit ratio.However, high loan deposit ratio indicates that a hospital has taken
more financial stress by making excessive loans and shows risk that to meet
depositors’ claims hospital may have to sell some loans at loss.
Total loan
Total deposits
Loan deposit ratio =
Table 2.2
Loan to deposits ratio of Vinayak hospital and maternity home private limited(%)
year Total loan Total deposits Loan to deposits ratio
2075/76 19,369,317,883 25,318,568,802 84.72
2076/77 21,898,115,132 27,578,376,145 77.70
2077/78 26,246,038,476 33,421,910,946 78.53
2078/79 29,486,505,624 37,950,525,144 79.40
2079/80 44,088,049,895 52,037,387,304 76.50
Mean 79.37
Source: Annual report of Vinayak hospital and maternity home private limited

Loan to deposit ratio

Figure 2.2. Loan to deposit ratio of Vinayak hospital and maternity home private
limited
Figure 2.2 shows The Loan to Deposit Ratio (LDR) of the Vinayak hospital In FY
2075/76, the LDR was 84.72%, indicating a robust use of deposits for loans. T
hospital from FY 2075/76 to 2078/79 shows a relatively stable and high lending
activity. his decreased to 77.70% in FY 2076/77, reflecting a slightly more
conservative lending approach. The ratio then increased to 78.53% in FY 2077/78 and
further to 79.40% in FY 2078/79, suggesting a return to a more aggressive lending
strategy. Overall, these percentages highlight the hospital ’s consistent focus on
maximizing interest income from loans while managing liquidity effectively.
2.1.2 Profitability ratio
Profitability ratios designate a company's overall efficiency and performance. It
measures the company how to use of its assets and control of its expenses to generate
an acceptable rate of return. It also used to examine how well the company is
operating or how well current performance compares to past records of
pharmaceutical companies.

a) Net interest margin

Net interest income is the difference between interest income and interest expense. It
is the gross margin on a hospital ’s lending and investment activities. The higher the
ratio the cheaper the funding or the higher the margin the hospital is obtaining. A
hospital ’s net interest margin is a key performance measure that drives ROA.
Net interest margin =(Interest income-Interest Expenses)/Total assets

Table 2.3
Net interest margin of Vinayak hospital and maternity home private limited(%)
Year Interest Income Interest Expense Total Assets Net Interest Margin
2075/76 2,464,306,976 1,486,281,639 2,656,706,231 36.81
2076/77 2,410,784,399 1,575,311,889 2,966,605,956 28.16
2077/78 2,433,130,920 1,507,364,997 3,347,316,176 27.66
2078/79 2,692,488,819 1,517,056,114 4,033,593,878 29.14
2079/80 3,596,651,286 2,299,277,448 8,080,236,593 16.06
Mean 27.66
Source: Annual report of Vinayak hospital and maternity home private limited
 Net intrest margin ratio

Figure;2.3 Net interest margin of Vinayak hospital and maternity home private
limited.
Figure 2.3 shows the Net Interest Margin (NIM) Ratio of the Vinayak hospital and
maternity home private limited from FY 2075/76 to 2078/79 shows fluctuations in
profitability from interest-earning activities. In FY 2075/76, the NIM was 36.81%,
indicating high profitability. This dropped significantly to 28.16% in FY 2076/77,
suggesting reduced interest income or increased interest expenses. The ratio slightly
decreased further to 27.66% in FY 2077/78, reflecting continued pressure on
profitability. However, it improved to 29.14% in FY 2078/79, indicating a recovery in
earning efficiency. These changes highlight the hospital varying ability to generate
profit from its interest-bearing assets over the period.

b) Profit to expense ratio

It measures the operating profitability of the hospital with regards to its total
operating
expenses. Operating profit is defined as earnings before taxes and operating expenses
means total non-interest expenses. The ratio measures the amount of operating profit
earned for each Rupees of operating expense. The ratio indicates to what extent
hospital is efficient in controlling its operating expenses.
Profit to expense ratio = EBT / Operating expenses
Table: 2.5
Profit to expenses ratio of Vinayak hospital and maternity home private limited
Year EBT Operating expenses Profit to expense ratio
2075/76 418,464,383 434,274,886 96.36
2076/77 497,141,790 461,821,815 107.65
2077/78 565,832,708 538,080,318 105.16
2078/79 1,050,131,258 581,109,454 180.71
2079/80 1,017,725,976 659,419,981 154.34
Mean 128.44
Source: Annual report of Vinayak hospital and maternity home private limited

Profit to expenses ratio

Figure 2.4 Profit to expenses ratio of Vinayak hospital and maternity home private ltd.
Table 2.4 and figure 2.4 shows the profit to expenses ratio of the Vinayak hospital and
maternity home private limited from 2075/76 to 2079/80. The ratio improves from
96.36% in 2075/76 to a peak of 180.71% in 2078/79, indicating increasing efficiency.
Despite a slight decline to 154.34% in 2079/80, the overall trend reflects better
control over operating expenses relative to profit, with a mean ratio of 128.44% over
the period.
2.1.1 Leverage Ratio
The leverage or solvency ratio refers to the ability of a concern to meet its long-term
obligations. Accordingly, long term solvency ratios indicate firm’s ability to meet the
fixed interest and costs and repayment schedules associated with its long-term
borrowings. The following ratio serves the purpose of determining the solvency of the
concern.
A. Debt to Equity Ratio
Debt-to-equity ratio is the key financial ratio and is used as a standard for judging a
hospital financial standing. It is also a measure of a hospital ability to repay its
obligations. When examining the health of a hospital , it is critical to pay attention to
the debt/equity ratio. If the ratio is increasing, the hospital is being financed by
creditors rather than from its own financial sources which may be a dangerous trend.
Lenders and investors usually prefer low debt-to-equity ratios because their interests
are better protected in the event of a business decline. Thus, companies with high
debt-to-equity ratios may not be able to attract additional lending capital.
Debt-to-equity ratio =Total debt/Shareholders fund
Table 2.5 Debt to equity ratio

Debt to Equity
Year Total Debt Shareholders Fund Ratio
2078/79 40,817,616 8,080,236,593 0.0051
2077/78 52,058,841 4,033,593,878 0.0129
2076/77 32,782,142 3,347,316,176 0.0098
2075/76 22,428,891 2,966,605,956 0.0076
2074/75 21,348,138 2,656,706,231 0.0080
Average Ratio 0.0087
Figure 2.4 Debt to equity ratio of Vinayak hospital and maternity home private
limited
Figure 2.4 shows that Debt Equity ratio of the hospital has decreased highly in the
financial year 2078/79 and has maintained the ratio of 0.0051 which is lowest among
the ratio of the last 5 year. The average debt equity ratio of the hospital is 0.0087.

B. Equity Multiplier
Equity Multiplier (EM) indicates the amount of assets per dollar of shareholders’
equity. Higher value of equity multiplier means that hospital has used more debt to
convert into assets with share capital. Generally, the higher is the equity multiplier the
greater is the risk for a hospital . It is calculated as under:
Equity Multiplier = Total assets/shareholders fund

Table 2.6
Equity Multiplier

Equity
Year Total Asset Shareholders Fund Multiplier
2078/79 60,993,261,002 8,080,236,593 7.5484
2077/78 42,416,507,350 4,033,593,878 10.5158
2076/77 37,374,510,826 3,347,316,176 11.1655
2075/76 31,020,602,045 2,966,605,956 10.4566
2074/75 28,222,569,756 2,656,706,231 10.6231
Figure 2.4 Equity multiplier ratio of Vinayak hospital and maternity home private
limited

Figure 2.6 sho hospital has maintained equity multiplier of 7.5484 in the year
2078/79. The equity multiplier of the hospital in the year 2077/78 was 10.5158. This
shows that the organization has a good performance for enhancing the solvency status
in last 5 years.

2.3 Major findings

The financial performance analysis of Vinayak Hospital and Maternity Home Pvt. Ltd.
has provided a comprehensive view of the hospital's profitability, liquidity, and
overall operational efficiency over the past five years. Through the application of
various financial and statistical tools, we have gained valuable insights into the
hospital's financial health and its capacity to sustain growth and meet financial
obligations.The study focuses on analyzing the financial performance of Vinayak
Hospital and Maternity Home Pvt. Ltd. over a period of five years. Financial
performance is assessed using various key metrics, including the cash deposit ratio,
loan to deposit ratio (LDR), net interest margin (NIM), debt to equity ratio, and equity
multiplier. The cash deposit ratio measures the proportion of cash held by the hospital
relative to its total deposits, indicating the institution’s liquidity. The loan to deposit
ratio assesses the balance between loans issued and deposits received, reflecting the
hospital’s lending practices and liquidity management. Net interest margin indicates
the profitability derived from lending activities, calculated as the difference between
interest earned and interest paid, expressed as a percentage of the average earning
assets. The debt to equity ratio measures the degree of financial leverage, indicating
the proportion of debt financing relative to equity. Lastly, the equity multiplier, a
measure of financial leverage, indicates the extent to which a company is financed by
debt.
1. Cash Deposit Ratio:
The cash deposit ratio fluctuated significantly over the five-year period, reaching a
high of 11.34% in the fiscal year 2078/79, which indicates a substantial proportion of
cash holdings relative to deposits. The lowest recorded ratio was 2.52% in 2075/76,
suggesting limited cash reserves compared to deposits at that time. The average ratio
across the years was 7.38%, demonstrating a moderate liquidity position with
significant annual variation. This ratio is crucial as it reflects the institution’s ability to
cover sudden withdrawals and other short-term obligations.

2. Loan to Deposit Ratio (LDR):

The LDR began at 84.72% in FY 2075/76, suggesting a high proportion of the
hospital’s deposits were used for lending, maximizing potential interest income.
However, the ratio showed a gradual decline, ending at 76.50% in FY 2079/80. The
average ratio over this period was 79.37%, indicating a cautious approach to lending,
balancing the need to generate income with the necessity of maintaining sufficient
liquidity. This downward trend reflects a strategic shift towards reducing risk,
ensuring that the hospital maintains a healthy buffer of liquid assets.

3. Net Interest Margin (NIM):

The NIM experienced a notable decrease from 36.81% in 2075/76 to 16.06% in
2079/80, with an overall average of 27.66%. This metric indicates a reduction in the
profitability derived from the hospital’s lending activities. A declining NIM suggests
either an increase in the cost of funds or a decrease in the interest income generated
from loans, potentially due to market conditions or changes in the hospital’s financial
strategy. The NIM is a critical measure of the efficiency of the hospital’s use of
interest-bearing assets.

4. Debt to Equity Ratio:

The debt to equity ratio was significantly low throughout the period, with a notable
reduction observed in 2078/79 when the ratio dropped to 0.0051. The average ratio
for the five years was 0.0087, indicating a minimal reliance on debt financing. This
conservative financial structure reduces the hospital’s financial risk, ensuring stability
in times of economic downturns. A low debt to equity ratio also suggests that the
hospital has a strong equity base, which provides a buffer against potential financial
challenges.

5. Equity Multiplier:
The equity multiplier, which reflects the degree of financial leverage, decreased from
10.6231 in FY 2074/75 to 7.5484 in FY 2078/79. This trend indicates a reduction in
financial leverage, suggesting that the hospital has increasingly relied on equity rather
than debt to finance its assets. The decrease in the equity multiplier corresponds with
an improvement in the hospital’s solvency position, reducing the overall financial risk.
Lower financial leverage means the hospital is less burdened by debt obligations,
providing more financial flexibility and stability

CHAPTER- III
SUMMARY AND CONCLUSION
3.1 Summary
The comprehensive financial analysis of Vinayak Hospital and Maternity Home Pvt.
Ltd. over the last five years demonstrates the institution’s strong financial
management and stability. The hospital’s cash deposit ratio, which varied between a
peak of 11.34% and a low of 2.52%, indicates a flexible liquidity position, enabling
the hospital to efficiently manage its cash reserves in relation to its deposits. The loan
to deposit ratio showed a prudent decline from 84.72% to 76.50%, reflecting a
strategic approach to lending that prioritizes maintaining adequate liquidity while
generating interest income. Despite a notable reduction in the net interest margin from
36.81% to 16.06%, the hospital maintained an average NIM of 27.66%, which,
although lower, still represents a substantial margin above costs.

Moreover, the hospital’s debt to equity ratio remained impressively low, averaging
0.0087, with a significant reduction in recent years. This low ratio indicates a
conservative use of debt, reducing the hospital’s exposure to financial risk and
highlighting its reliance on a solid equity base to support its operations and growth.
The decrease in the equity multiplier from 10.6231 to 7.5484 further underscores the
hospital’s reduced financial leverage, signaling an improved solvency position and a
robust buffer against potential financial challenges.
Overall, the findings suggest that Vinayak Hospital has effectively managed its
financial resources, maintaining a balance between growth and risk management. The
institution’s strategic focus on maintaining a strong liquidity position, minimizing
debt exposure, and carefully managing profitability has positioned it as a resilient and
stable entity within the healthcare sector. This prudent financial stewardship ensures
that the hospital is well-prepared to navigate economic uncertainties and capitalize on
future opportunities for expansion and improvement.

3.2 Conclusion
The comprehensive financial analysis of Vinayak Hospital and Maternity Home Pvt.
Ltd. over the past five years has provided deep insights into its fiscal health, revealing
a trajectory of significant improvement and stability. The hospital has demonstrated a
commendable ability to increase its profitability, as evidenced by the rising net profit
margin. This trend signifies effective cost management and successful revenue
augmentation, enabling the hospital to reinvest in enhancing its services and
infrastructure.
The liquidity position of the hospital is robust, with consistent current and quick ratios
indicating a strong capacity to meet short-term obligations. This financial stability
ensures that the hospital can effectively manage its working capital needs, thereby
protecting its operations from short-term financial disruptions.

The efficient use of assets, highlighted by the increasing return on assets, underscores
the hospital's strategic asset management and resource allocation. This efficiency is
crucial for sustaining growth and maintaining a competitive edge in the healthcare
sector.

The hospital’s conservative approach to financial leverage, with low reliance on debt,
reduces financial risk and enhances stability. A consistent interest coverage ratio
further supports this stability, ensuring that the hospital’s earnings are sufficient to
cover its interest expenses, minimizing the risk of financial distress.

Operationally, the hospital has maintained efficiency in inventory management,

ensuring that patient needs are met without incurring excessive costs. This operational
efficiency is vital for delivering high-quality healthcare services.

Overall, Vinayak Hospital and Maternity Home Pvt. Ltd. has shown strong financial
health characterized by consistent profitability, robust liquidity, efficient asset
utilization, and prudent financial management. These attributes position the hospital
well to navigate the dynamic healthcare environment, address emerging challenges,
and capitalize on new opportunities. The hospital's ability to maintain stable financial
ratios and improve profitability over time reflects its commitment to sound financial
practices and strategic planning.

The findings of this analysis are critical for strategic planning and decision-making.
By understanding its financial strengths and areas for improvement, Vinayak Hospital
can develop targeted strategies to enhance operational efficiency, optimize resource
utilization, and drive sustainable growth. Continuous monitoring and evaluation of
financial performance will be essential for adapting to industry changes and achieving
long-term success.
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. Appendix- I

Mean of Liquidity ratios

Cash deposit ratio Loan to deposits ratio

Fiscal Year
2075/76 2.52 84.72

2076/77 10.26 77.70

2077/78 4.71 78.53

2078/79 11.34 79.40

2079/80 8.07 76.50

Mean 7.38 79.37

Mean of Profitability ratio

Fiscal Net Interest Margin Profit to expense ratio

Year
2075/76 36.81 96.36
2076/77 28.16 107.65
2077/78 27.66 105.16
2078/79 29.14 180.71
2079/80 16.06 154.34
Mean 27.566 128.44