Internship Report in Janata Bank Limited
Liqidity Ratio
The liquidity ratios measure the ability of a firm to satisfy its short-term obligations as they become due for payment. In fact, liquidity is a pre-requisite for the very survival of a firm. The short – term creditors of the firm are interested in the short- term solvency or liquidity of a firm. But liquidity implies, from the view point of utilization of the funds of the firm that funds are idle or they earn very little. A proper balance between the two contradictory requirements, that is, liquidity and profitability, is required for efficient financial management. The liquidity ratios measure the ability of a firm to meet its short- term obligations and reflect the short – term financial strength / solvency of a firm. The ratios which indicate the liquidity of a firm are current ratios, quick ratios, cash ratio and net working capital to total assets ratio.
Current Ratio The current ratio is the ratio of total current assets to total current liabilities. It is calculated by dividing the current assets by current liabilities. The current ratio of a firm measures its short -term solvency, that is, its ability to meet short - term obligations. The higher the current ratio, the more is the firm’s ability to meet current obligations and greater is the safety of funds of short – term creditors. | 2005 | 2006 | 2007 | 2008 | 2009 | Janata Bank Ltd. | 1.00 : 1 | 1.00: 1 | 1.00: 1 | 1.00: 1 | 1.01: 1 |
Interpretation
The graph shows that from 2005 to 2008, current ratio of Janata Bank Limited is constant. In the year 2009, current ratio becomes a little bit higher than the preceding years. Although it increases liabilities, but it is relatively lower than the increase in current assets.
Comment
Since, the current ratio of Janata Bank Limited is higher in 2009 it indicates the bank is able to meet its current obligations from its current assets. Therefore, it can be said that the financial position of the bank is satisfactory.
Quick
The liquidity ratios measure the ability of a firm to satisfy its short-term obligations as they become due for payment. In fact, liquidity is a pre-requisite for the very survival of a firm. The short – term creditors of the firm are interested in the short- term solvency or liquidity of a firm. But liquidity implies, from the view point of utilization of the funds of the firm that funds are idle or they earn very little. A proper balance between the two contradictory requirements, that is, liquidity and profitability, is required for efficient financial management. The liquidity ratios measure the ability of a firm to meet its short- term obligations and reflect the short – term financial strength / solvency of a firm. The ratios which indicate the liquidity of a firm are current ratios, quick ratios, cash ratio and net working capital to total assets ratio.
Current Ratio The current ratio is the ratio of total current assets to total current liabilities. It is calculated by dividing the current assets by current liabilities. The current ratio of a firm measures its short -term solvency, that is, its ability to meet short - term obligations. The higher the current ratio, the more is the firm’s ability to meet current obligations and greater is the safety of funds of short – term creditors. | 2005 | 2006 | 2007 | 2008 | 2009 | Janata Bank Ltd. | 1.00 : 1 | 1.00: 1 | 1.00: 1 | 1.00: 1 | 1.01: 1 |
Interpretation
The graph shows that from 2005 to 2008, current ratio of Janata Bank Limited is constant. In the year 2009, current ratio becomes a little bit higher than the preceding years. Although it increases liabilities, but it is relatively lower than the increase in current assets.
Comment
Since, the current ratio of Janata Bank Limited is higher in 2009 it indicates the bank is able to meet its current obligations from its current assets. Therefore, it can be said that the financial position of the bank is satisfactory.
Quick