CASHFLOW ANALYSIS OF

SIDDHARTHA BANK
LIMITED

A Project Work Report

By
Prasamsha Shrestha

Exam Roll No: 20030154

T.U. Reg. No: 7-2-364-99-2019
K&K International College
Group: Finance

Submitted to

The Faculty of Management

Tribhuvan University
Kathmandu

In Partial Fulfilment of the Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Faculty of Management, K&K International

College ,New Baneshwor , Kathmandu, Nepal

JULY, 2024
 DECLARATION

I hereby declare that the project work entitled “CASHFLOW ANALYSIS OF

SIDDHARTHA BANK LIMITED” submitted to the Faculty of Management,
Tribhuvan University, Kathmandu is an original piece of work under the supervision of
Mr. Keshav Khadka ,faculty member, K&K International College ,New
Baneshwor ,Kathmandu, and is submitted in partial fulfilment of the requirements for the
Degree of Business Studies (BBS). This project work report has not been submitted to
any other university or institution for the award of any degree or diploma.

…………………..

Prasamsha Shrestha
K&K International College
New Baneshwor , Kathmandu
July , 2024

ii
 SUPERVISOR’S RECOMMENDATION
(Print In College Letter Head)

The project work report entitled “CASHFLOW ANALYSIS OF SIDDHARTHA

BANK LIMITED” submitted by Prasamsha Shrestha of K&K International College,
New Baneshwor, Kathmandu, K&K International College, New Baneshwor, Kathmandu,
is prepared under my supervision as per the procedure and format requirements laid by
the Faculty of Management, Tribhuvan University, as partial fulfillment of the
requirements for the degree of Bachelor of Business Studies (BBS). I, therefore,
recommend the project work report for evaluation.

…………………….
Keshav Khadka

Date:

iii
 ENDORSEMENT

We hereby endorse the project work report entitled “CASHFLOW ANALYSIS OF

SIDDHARTHA BANK LIMITED” submitted by Prasamsha Shrestha of K&K
International College, New Baneshwor , Kathmandu in partial fulfillment of the
requirements for the degree of the Bachelor of Business Studies (BBS) for external
evaluation.

……………………... ………………………….

Chairman, Research Committee Campus Chief

Date: Date:

iv
 ACKNOWLEDGEMENTS

This is an attempt to present project entitled “CASHFLOW ANALYSIS OF

SIDDHARTHA BANK LIMITED” prepared for the partial fulfillment of the
requirement for the Degree of Bachelor of Business Studies (BBS) is an outcome of
continuous and immeasurable co-operation and support of several hands. I would like to
express my heartfelt Gratitude to all for their support.

I would like to extend my sincere thanks to all of them who provided me with
information, which is important to make this report. I would like to extend my gratitude
and thanks to Tribhuvan University for giving me an opportunity to prepare this report,
which helped me to acquire a lot of knowledge on the particular topic.

I extend my deep sense of indebtedness to my academic Supervisor, Mr. Keshav Khadka

for his precious guideline and suggestion thoroughly during the period of this research. I
acknowledge my profound gratitude to the personnel of industry from which I have been
able to receive the data for the cooperation shown and providing necessary data.

Lastly, I would like to thank all those who were involved directly or indirectly, who
helped me in bringing up the project.

……………………………

Prasamsha Shrestha
July , 2024

v
 TABLE OF CONTENTS

TITLE....................................................................................................................................i
DECLARATION...................................................................................................................ii
SUPERVISOR’S RECOMMENDATION............................................................................iii
ENDORSEMENT................................................................................................................iv
ACKNOWLEDGEMENTS...................................................................................................v
TABLE OF CONTENTS.......................................................................................................v
LIST OF TABLES..............................................................................................................vii
LIST OF FIGURES...........................................................................................................viii
ABBREVIATIONS...............................................................................................................ix

CHAPTER – I : INTRODUCTION.................................................................................1
1.1 Background of the Study............................................................................................1
1.2 Statement of the problem.........................................................................................20
1.3 Objectives of the study.............................................................................................20
1.4 Rationale..................................................................................................................21
1.5 Review of Literature................................................................................................21
1.6 Methods....................................................................................................................25
1.7 Limitation of the Study............................................................................................26

CHAPTER -II : RESULTS AND ANALYSIS..............................................................28

2.1 Data Presentation.....................................................................................................28
2.2 Analysis of Results..................................................................................................36
2.3 Major Findings.........................................................................................................37

CHAPTER-III : SUMMARY AND CONCLUSION....................................................39

3.1 Summary..................................................................................................................39
3.2 Conclusions..............................................................................................................40

BIBLIOGRAPHY............................................................................................................41
APPENDICES..................................................................................................................42
vi
 LIST OF TABLES

Table No. Page No.

Table 1 Classification of Financial Institutions.................................................................2
Table 2 Major Financial Indicators Q4 Report, FY 2079/80(Unaudited)........................6
Table 3 Format of Cash Flow Statement under Indirect Method....................................13
Table 4 Format of Cash Flow Statement under Direct Method......................................16
Table 5 Cash Flow Statement for Financial Institution...................................................18
Table 6 Format of cashflow statement under N.R.B. Directives.....................................19
Table 7 Cash flow from operating activities....................................................................29
Table 8 Cash flow from investing activities.....................................................................31
Table 9 Cash flow from financing activities....................................................................33
Table 10 Closing cash balance.........................................................................................35

vii
 LIST OF FIGURES

Figure No. Page No.

Figure 1 Organizational Structure of SBL..........................................................................8
Figure 2 Components of cashflows.....................................................................................9
Figure 3 Cash flow from operating activities...................................................................30
Figure 4 Cash flow from investing activities....................................................................32
Figure 5 Cash flow from financing activities...................................................................34
Figure 6 Closing cash balance.........................................................................................36

viii
 ABBREVIATIONS

A.D. : ANNE DOMINO

ABBS : ANYWHERE BRANCH BANKING SYSTEM
A.T.M. : AUTOMATED TELLER MACHINE
B.A.F.I.A. : BANKS AND FINANCIAL INSITUTION ACT
B.B.S. : BACHELOR OF BUSINESS STUDIES
B.S. : BIKRAM SAMBAT
B/S : BALANCE SHEET
CFOA : CASHFLOW FROM OPERATING ACTIVITIES
CFFA : CASHFLOW FROM FINANCING ACTIVITIES
CFIA : CASHFLOW FROM INVESTING ACTIVITIES
EBL : EVEREST BANK LIMITED
FASB : FINANCIAL ACCOUNTING STANDARD BOARD
F.Y. : FISCAL YEAR
GOVT. : GOVERNMENT
i.e. : THAT IS
LTD. : LIMITED
SBL : SIDDHARTHA BANK LIMITED
NRB : NEPAL RASTRA BANK
NRS : NEPALESE RUPEES
P/L A/C : PROFIT OR LOSS ACCOUNT
SCBNL : STANDARD CHARTERED BANK NEPAL LIMITED
SWOT : STRENGTH WEAKNESS OPPORTUNITIES AND THREATS
T.U. : TRIBHUWAN UNIVERSITY
& : AND
% : PERCENTAGE

ix
 1

CHAPTER – I
INTRODUCTION

1.1 Background of the Study

A financial institution is a company engaged in the business of dealing with monetary
transactions, such as deposits, loans, investments, and currency exchange. A bank is a
financial institution licensed to receive deposits and make loans. In this way, a bank is a
sensitive sector of the industry because it plays with public money. A bank performs
highly appreciable functions in the economy by offering relatively safe, convenient,
liquid and accessible securities and at the same time by accepting relatively risky, illiquid
inconvenient long time and large denomination securities offered by the borrower. Such
an intermediation encourages savings and entrepreneurship in the society by bringing
together and resolving fundamentally variant financing requirement of household,
business and governments (Shrestha, 2006).
From the definition, it can be concluded that bank is the financial institution that serves as
a financial intermediary, who bridges gap between the savers of the fund and users of the
fund. The benefit that the surplus unit gets by depositing their access fund in the bank and
the charge that the deficit unit pays for using the fund of the bank are both expressed in
percentage which is known as the interest rate.

1.1.1 Origin of bank

The word "bank" is derived from then Italian word "banco", Latin word "bancus" and
French word "banque" which means bench on which the bankers would keep money and
records.
Banks were first introduced in Rome with its vast trade networks that extended
throughout the Europe, Asia and much of Africa. "BANK OF VENICE" was the first
bank established in Italy in 1157 A.D. Modern banking began to develop in Italy between
1200's and 1600's. In between this period many banks were established such as Bank of
Barcelona (1401), Bank of Genoa (1407), Bank of England (1594) and Bank of
Amsterdam (1609). Likewise, India established its first bank, "Bank of Hindustan" in
1770.
 2

1.1.2 Current Banking Scenario of Nepal

Banks are gradually shifting towards IT-based solution to enhance service delivery in
order to address customer concerns. Banks have launched various products like E-
banking, ATM, mobile banking which facilities several account query tools, including
account balances, thereby minimizing the need for customers to visit banks. Banks are,
therefore, looking to develop innovative products and services to maintain superior
customer services levels while at the same time remaining profitable.
To regulate and govern the financial institutions, an umbrella act "Banking and Financial
Institutions Act (BAFIA) 2006" was introduced. The BAFIA act 2017 has categorized
banks as A, B, C and D according to their paid-up capital and the function they perform.
The BAFIA act 2017 has introduced the concept of infrastructure development bank
which is separate and not included in the above category. The different category of banks
according to BAFIA, 2017 along with their minimum paid up capital requirement as per
circular of NRB in 2015 and number of banks as per mid- July 2023 are as follows:

Table 1 :

Classification of Financial Institutions

Class Types of financial Minimum Paid- Total Number

institutions up capital
requirement

A Commercial Banks 8 Arba 20

B Development Banks 1.2-2.5 Arba 17

C Finance Companies 50-80 Crore 17

D Micro finance and co- 2-10 Crore 64

operatives

(Nepal Rastra Bank, 2015)

 3
Commercial banks are those with the minimum paid-up capital of eight billion within mid
July 2017 and functions as the institution for collecting deposits and granting loans.
Development banks are established to provide capital and technological assistance for the
development of infrastructure of the country with the capital of 2.5 billion at national
level, Finance companies provide loans to the risky customers whom commercial banks
find too risky to provide loan. They have minimum capital requirements of eight hundred
million. Micro-finance companies are a source of financial services for entrepreneurs and
small businesses lacking access to banking and related services.

1.1.3 Concept of commercial Bank

The commercial bank is the oldest form of the bank. In general, bank means the
commercial bank. The bank, which performs all kinds of banking business and generally
finances trades and commerce, is called commercial bank. Commercial bank is a type of
financial institution that accepts deposits, offers current account services, and makes
business, personal and mortgage loans, and offers basic financial products like certificates
of deposit and savings accounts to individuals and small businesses. At present, there are
20 Commercial Bank in Nepal. There is a mandatory requirement of NRB for the
commercial banks of Nepal to keep a certain proportion of their reserves with NRB. In
present context, the Cash Reserve Ratio (CRR) is set at 4 percent, requiring banks to hold
that portion of their total deposits as cash reserves with the NRB. The statutory liquidity
ratio (SLR) is set at 12 percent.

1.1.4 Functions of Commercial Bank

The primary function of every bank is accepting deposit from people and lending loans to
necessary people. But the functions of commercial banks are in broader scope, size and
magnitudes. Commercials banks are one of the major financial intermediaries whose
primary function is the transfer of monetary resources from the savers to users. The
functions of commercial banks can be classified as primary and secondary function and
utility function.
 4

Primary Functions
 To accept various types of deposit like fixed deposit, saving deposit, call deposit and
current deposit
 To provide loans and advances in different forms like cash, money at call, overdraft,
discounting bills of exchange, term loan etc.
Agency Functions
 To collect and clear cheque dividends and interest warrant
 To make payment of rent, insurance premium etc.
 To deal in foreign exchange transactions

General Utility Functions

 To provide safety locker facility to customers
 To provide money transfer facility
 To issue travelers cheque

Importance of commercial bank

 Encourage saving
 Facilitate remittance collection
 Representative of collection.
 Loan facility
 Safety of fund

1.1.5 Profile of Siddhartha Bank Limited

Siddhartha Bank Limited (SBL) came into operation 10 years back in 2002, promoted by
prominent personalities of Nepal with the objective of providing excellent and
professional banking services within a short span of time. The bank's focus on business
growth, creating infrastructure, development of human resource and expansion in bank's
outreach has helped the Bank register quantum growth every year. The Bank is
confident and hopeful
 5

that it will be able to retain this trust and move even further towards its mission of
becoming one of the leading banks of the industry.
Siddhartha Bank has been posting growth in its portfolio size and profitability
consistently since the beginning of its operations. SBL has been able to gain the
significant trust of the customers with a wide range of products and services. SBL has
been able to operate its branches in all of the five development regions of Nepal. Today it
has 197 branches and 226 ATM network established at various location all over Nepal.

Vision
"Siddhartha Bank runs with a vision to be financially sound, operationally efficient and
keep abreast with technological developments."

Mission
The Bank desires to be one of the leading banks of the industry by fulfilling the interest
of the stakeholders and also aims to provide total customer satisfaction by way of
offering innovative products and developing and retaining highly motivated and
committed human resource.
The following mission statements guide SBL functioning to meet the vision of the Bank:
 SBL aims to be one of the leading banks of the industry in terms of profitability,
productivity and innovation.
 SBL aims at total customer satisfaction by rendering efficient and diversified financial
services through improved technology.

Core Values of Bank

 Transparency
 Innovation
 Sustained Growth
 Integrity & Customer Centricity
 6

1.1.6 Nature of the organization

SBL endured many stressful years of business and faced existential questions at some
point of time in the past. But learning the lessons from the events and craving towards the
brighter future, the Bank successfully implemented a restructuring plan, and now it stands
as one of the most preferred banks with the high number of customers all 77 districts and
7 provinces of the country. The Bank has been able to imprint its presence in national
economy through efficient allocation of resources in all sectors of economy thereby
enhancing production and generating employment opportunities within the country. The
nature of the organization is given below:
 Sub-division of main work into small groups.
 Determination of positions at different levels.
 Selection of suitable personnel and allocation of jobs according to suitability.

1.1.7 Business volume

Siddhartha Bank Limited (SBL) has reported a rise in net profit due to an increase in the
core business of the bank. In the fiscal year 2080/81, Siddhartha Bank has disclosed a
9.86 percent and 10 percent surge in operating profit and net profit respectively as
compared to the corresponding period of the previous fiscal year. Similarly, the deposits
and loans have grown by 16.76 percent and 3.06 percent respectively during this period.
The non- performing loans (NPL) as well as the base rate have increased.
The major financial indicators of the bank are presented as:

Table 2 :

Major Financial Indicators Q4 Report, FY 2079/80(Unaudited)

 7

Financial Indicators FY 2077/78 FY 2078/79 FY 2079/80

Paid Up Capital (Rs.`Arba`) 10.96 12.52 14.08

Reserve and Surplus (Rs.`Arba`) 9.43 9.07 11.37

Deposits From Customers 180.92 191.55 223.65

(Rs.`Arba`)

Loans &Advances to Customers 158.57 178.58 184.04

(Rs.`Arba`)

Net Interest Income (Rs.`Arba`) 3.93 6.59 8.17

Operating Profit (Rs.`Arba`) 2.98 4.26 4.68

Net Profit (Rs.`Arba`) 2.06 2.9 3.19

Distributable Profit (Rs.`Arba`) -- -- 0.58

Non-Performing Loans, NPL(%) 0.88 1.07 2.01

Base Rate(%) 6.99 9.45 9.91

Earnings Per Share, EPS(Rs.) -- -- 22.64

Net worth Per Share (Rs.) -- -- 180.73

Market Price Per -- -- 253

Share(Rs.)[Ashadh end,2080 BS]
Price Earnings Ratio (P/E Ratio) -- -- 11.17

(Investopaper, 2080)
 8

1.1.8 Organizational Structure

The organizational structure is the formal arrangement of jobs within an organization.

Head Internal Audit

Chief Operating Officer
ChiefOperating Officer
Audit Committee

ChiefOperating Officer
Employee Service &
Company Secretary
Facility Committe Chief Business Officer

Chief Officer
Operating

Chief Executive Head Central Credit Administr

Officer ChiefOperating Officer
BOARD OF DIRECTORS

ation& Control
Risk Committee Head Integrated Risk ChiefOperating Officer

ChiefOperating Officer
Head Marketing

Head AML/CFT
ChiefOperating Officer
AML/CFT
Committee Head Legal

Figure 1:Organizational Structure of SBL

1.1.9 Cashflow Statement

Cash flow statement is a summary of the actual or anticipated inflow and outflow of cash
through different activities in a firm over an accounting period (month, quarter, years).
Cash -flow is the difference between the amount of cash in the beginning of the fiscal
year and the amount cash in the end of the year and the balance is known to be cash
balance at
 9

the end (closing balance). The increase in cash flow is caused by more sales of products
and goods, collection from debtors, selling of assets, reduction in cost, taking loan and
many more.
A cash flow statement typically breaks out a company's cash sources and usages for the
period into three categories: cash flow from operating activities, cash flow from investing
activities and cash flow from financing activities. Cash usually is collected from three
different activities which are Operating, investing and financing although some may
occur due to donations and gifts in case of personal finance.
Similarly, cash outflows are for the purpose of expenses or investments for both business
and personal finance. The compilation of such inflows and outflows of the cash in a
systematic statement is known to be cash flow statement. It is calculated by adding
noncash charges (like depreciation) to net income after taxes.
Cash flow can be used for different purposes like:
 It is very useful in the evaluation of cash position of firm.
 To maintain the liquidity in the organization so that there will be less chances of shortage
of money.

Business Activities

Operating Activities Investing Activities Financing Activities

Working Capital & Sales Fixed Assets & Long term loan & Share
Expenses Investment Capital

Equivalent of cash
Source: (Wagle & Dahal, 2064: 11.2)

Figure 2:Components of cashflows

 10

1.1.10 Distinction between Funds Flow and Cash Flow Statement

 Concept: Funds flow is based on working capital and Cash flow is based on cash.
 Accounting: Funds flow statement is based on Accrual basis of accounting and
Cash flow statement is based on cash basis of accounting.
 Purpose: Funds flow statement shows the causes changes in working capital
position of a firms between two balance sheets dates whereas cash flow statement shows
the causes of changes in cash position of a firm between two balance dates.
 Schedule of changes in working capital: To get information about current
assets and liabilities it is necessary to prepare the schedule of changes in working capital
before preparing funds flow statement whereas in cash flow statement it is not necessary
to prepare the schedule of changes in working capital.

1.1.11 Preparation of Cash Flow Statement

The cash flow statement is prepared on the basis of cash basis of accounting. While
calculating operating profits for cash flow statement, adjustment for prepaid and
outstanding expenses and incomes are made to convert the data from accrual basis to cash
basis. The statement is prepaid by taking the opening balance cash, adding to this all the
inflows of cash and deducting all outflows of cash from the total. The statement is more
useful for short-term analysis and cash planning of the business. Cash flow statement
shows the sources and application of cash. Sources are the inflows of the cash and uses
are the outflows of the cash.

Cash Flows:
Cash flow simply refers to the flow of a cash into or out of a business over a period of
time. Watching the cash inflows and out flows is one of the major management tasks.

Sources of Cash:
If the cash is coming into the business through by different activities, this is called cash
inflows. The following are the cash inflows:
 11

 Opening cash & cash equivalents

 Cash from operation
 Cash from issue of shares
 Cash from sales of fixed assets
 Cash from sales of investment.

Uses of Cash:
If the cash is going out from the business for different purpose, this is called cash
outflows. The following are the cash outflows:
 Cash depleted from operation
 Cash purchase of fixed assets
 Cash purchase of investment
 Redemption of debenture
 Repayment of long-term loan
 Dividend paid
 Income tax paid
 Closing cash & cash equivalent (Munankarmi, 2003: 13.05)

As per the FASB's statement no. 9 the cash flows statement, should be presented under
informative approach in activity format. Under informative approach the cash flow
statement may be presented using:
 Indirect Method
 Direct Method

1. Indirect Method to Cash Flow Statement

Under this method, the cash from operating activities could be derived by preparing funds
from operation, as have been done in case of fund flow analysis. This from operation
could be converted in to cash from operation by adjusting change in short term assets and
liabilities excluding cash. Cash from investing activities are generated internally from
non- operating activities like fixed assets and long-term investment. Similarly, cash
from
 12

financing activities are the presentation of cash from or to lenders, investors and
shareholders that affect cash.

Operating Activities:
The amount of cash flows arising from operating activities is a key indicator of the extent
to which the operations of the enterprise have generated sufficient cash flows to repay
loans, maintain the operating capability of the enterprise, paying dividends and make new
investments without resources to external sources of financing. It relates to a company's
primary revenue generating activities. Cash flow from operating activities is generally the
cash effects of transactions and economic events included in the determination of income.
Under this method, the net cash flow from operating activities is determined by adjusting
net profit or loss for the effect of:
 Changes during the period in inventories and operating receivables and payables.
 Non- cash items such as depreciation, provision, deferred taxes and unrealized
gains or losses.
 All other items for which the cash effects are investing or financing cash flows.
 Cash receipts and payments from contracts help for dealing or trading purpose.
Alternatively, the net cash flows from operating activities under indirect method may be
present showing operating revenues and expenses, excluding non-cash items disclosed in
the statement of profit and loss and the changes in inventories and operating receivables
and payables during the period. Example of operating activities:
 Non-cash and non- operating gains/losses/expenses.
 Depreciation/loss on sales of assets provision for taxes.
 Gain on sales of fixed assets.
 Operating profit before working capital changes.
 Increase/ decrease in current assets and current liabilities.

Investing Activities:
All the cash flows (either outflows or inflows) from investing activities can be
determined by the long- term assets and investment of two accounting periods. Any
increase in assets shall be considered as having purchased and cash paid for it
unless any information
 13

contrary to the same is provided. At the same time, decrease in assets accounts represents
the sale of those assets and cash inflows unless information opposing to that is provided.
The gain or loss on sale need to be adjusted to calculate the exact amount cash received.
Investing activities are:
 Cash payment to acquire the fixed assets.
 Cash receipts from disposal of fixed assets.
 Cash payments to acquire shares, warrants or debt instrument of other companies.
 Cash advances and loan made to other parties.
 Cash receipts from the repayment of advances and loans made to third parties.

Financing Activities:
Cash flows from financing activities are calculated by analyzing the liabilities side of the
balance sheet. The amounts of secured loans, unsecured loans, the amount of share
capital and retained earnings accounts are analyzed to calculate the inflows and outflows
from financing activities. Dividend may be in the form of cash dividend or stock
dividends do not use any cash. Hence, they should not be considered for cash flow
statement. The separate discloser of cash flows arising from financing activities is
important because it is useful in predicting claims on future cash flows by providers of
capital to the enterprise. Examples of cash flows arising from financing activities are:
 Cash proceeds from issuing shares or others equity instruments.
 Cash payments to owners to acquired or redeemed the enterprises shares.
 Cash proceeds from issuing debentures, loans, notes, bonds and mortgages and
other short or long-term borrowings.
 Cash repayments of amounts borrowed.
 Cash payment by a lessee for the reduction of the outstanding liability relating to
a finance lease. [International accounting standard 7 (Revised 1992)]

Table 3 :

Format of Cash Flow Statement under Indirect Method

 14

A. Cash from Operating Activities (CFOA)

Provision for dividend of this year (dividend payable)
Interim dividend
Profit transfer to Balance Sheet (This year -Last year)
 Profit and loss a/c
 General reserve
 Retained Earnings
 Funds etc.
Net Profit after tax / Profit for the year
Add: Non -Cash and non- operating items
Depreciation of tangible assets
Amortization of intangible fixed assets
(i.e. goodwill, patent, copyright, trademark etc.)
Amortization of fictitious assets
(i.e. preliminary expenses, P&L Dr. Balance, discount on share/
debenture)
Loss on revaluation or sales of fixed assets or investment
Premium on redemption of preference shares or debentures
Discount on issue of shares or debentures

Less: Non- Operating incomes of Gains

Gain on revaluation or sales of fixed assets or investment
Discount on redemption of preference share and debenture
Premium on issue of Preference share and debenture
Tax refund
Interest/ dividend received on other investment
Extra income (If any)
Funds From Operation (FFO)
Add: Decrease in Working Capital except cash (item wise)
(i.e. decrease in current assets and increase in current liabilities)
Less: Increase in Working Capital except cash (item wise)
(i.e. increase in current assets and decrease in current liabilities)
Cash from Operating Activities (CFOA)
B. Cash from Investing Activities (CFIA)
Purchase of fixed assets (Individual as per ledger)
Purchase of Investment (as per ledger if any)
Sales of fixed assets (individually)
Dividend or interest received from other investment if any
Cash from Investing Activities (CFIA)
C. Cash from Financing Activities (CFFA)
Issue of share/debenture with premium or discount
Redemption of Preference Share/debenture at premium or discount
 15

Payment of dividend (Provision of dividend last year)

Interim dividend (if any)
Cash from Financing Activities (CFFA)
Net cash increase/decrease (A+B+C)
(+) Opening Cash/Bank Balance
Closing Cash/Bank Balance

2. Direct Method to cash flow statement

International accounting standard committee (IAS) has encouraged preparing cash flow
statement only on direct method. Therefore, as far as possible we need to follow direct
method. When the direct method is used the cash flow statement does not begin with net
income, rather, it shows cash collected from customer and deducted cash used for various
expenses. That is, major of class of gross cash receipt and gross cash payments are
disclosed. (Munankarmi, 2003: 13.12)

Operating Activities
Operating activity only include transaction that return to the calculation of net income. It
involves the purchase and the sales of goods and services to customers. The cash flow
from operating activities is primarily derived from the principal revenue producing
activity of the enterprise. Examples of cash flow from operating activities are:
 Cash receipts from the sales of goods and services.
 Cash receipts from royalties -fees, commission and other revenue.
 Cash payment to suppliers of goods and services.
 Cash payments to and on behalf of employees.
 Cash receipts and cash payments of an insurance company for premium and
claims, and other policy benefits.
 Cash payments refund of income taxes.

Investing Activities
Determinations of cash flows from investing activities require analyzing the non-
operating incomes and expenses in income statement relating to:
 16

 Productive assets.
 Investment in share and debentures.
 Intangible assets.
 Short term investment other than cash equivalents. (Munankarmi,2003:13.16)

Financing Activities
A company's transaction with its owners and long-term creditors are typically called
financing activities also it includes borrowing of cash on short term basis for
determination of cash flow from financing activities items relating to:
 Share capital (Equity)
 Share premium
 Debenture
 Dividend proposed Comparative balance sheets should be analyzed by preparing
necessary accounts.
Table 4:

Format of Cash Flow Statement under Direct Method

A. Cash from Operating Activities (CFOA)

a. Cash Sales and collection from
customers: Total Net Sales (less sales
return)
(+) Decrease in debtors (sundry debtors, A/R and B/R)
(-) Increase in debtors (sundry debtors, A/R and B/R)
(+) Decrease in bad debt provision (Bad debt recover)
(-) Increase in bad debt provision
(-) Bad debt written off
b. Cash Purchase and payment to creditors:
Total cost of goods sold (COGS)
(+) Increase in Inventory
(-) Decrease in Inventory
(+) Decrease in creditors (sundry creditors, A/P and B/P)
(-) Increase in creditors (sundry creditors, A/P and B/P)
c. Cash operating expenses and other warranty services:
Total cash operating expenses (selling, distribution, Adm.,etc)
(+) Decrease in outstanding expenses
 17

(-) Increase in outstanding expenses

(+) Increase in prepaid expenses
(-) Decrease in prepaid expenses
d. Interest expenses:
Interest expenses
(+) Decrease in interest payable
(-) Increase in interest payable
(+) Increase in prepaid interest
(-) Decrease in prepaid interest
e. Income tax payments:
Tax paid (or, provision for taxation as per P&L a/c)
(+) Decrease in provision for tax or tax payable
(-) Increase in provision for tax or tax payable
(+) Increase in prepaid tax
(-) Decrease in prepaid tax
Cash from Operating Activities before extra- ordinary items (a-b c-d-e)
Extra ordinary items:
(+) Increase in bank overdraft
(-) Decrease in bank overdraft
(+) Decrease in marketable securities
(-) Increase in marketable securities
Cash From Operating Activities (CFOA)

B. Cash from Investing Activities (CFIA)

Purchase of fixed assets (Individual as per ledger)
Purchase of Investment (as per ledger if any)
Sales of fixed assets (individually)
Dividend or interest received from other investment if any
Cash from Investing Activities (CFIA)
C. Cash from Financing Activities (CFFA)
Issue of share/debenture with premium or discount
Redemption of Preference Share/debenture at premium or discount Payment
of dividend (Provision of dividend last year)
Interim dividend (if any)
Cash from Financing Activities (CFFA)
Net cash increase/decrease (A+B+C)
(+) Opening Cash/Bank Balance
Closing Cash/Bank Balance

1.1.12 Cash flow Statement for Financial Institution:

 18

Financial enterprises like banks, finance companies, co-operatives etc. represents the
institution that deals on financial transaction. Such enterprise also needs to prepare
financial statement including cash flows statement. The cash flows statement of financial
enterprise under method is prepaid in following format:
Table 5 :

Cash Flow Statement for Financial Institution

A. Cash Flow from Operating Activities:

Interest and commission receipts
Interest payments
Recoveries on loans previously
Cash payment to employees and
suppliers Short term fund-increase
Deposits held for regulatory or monetary control purpose
Funds advanced to customers
Net increase in credit card
receivable Increase other short- term
securities Deposits from customers
Certificate of deposits
Net cash from operating activities before income tax
Income tax paid
Net cash from Operating Activities

B. Cash flow from Investing Activities:

Dividend received
Interest received
Purchase of permanent investment
Purchase of fixed assets
Net Cash from Investing Activities
C. Cash flow from Financing Activities:
Issue of shares
Share premium
Repayment of long -term borrowing
Net decreased in other borrowing
Dividend paid
Net Cash from Financing Activities
Net increase/decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
 19

Cash and cash equivalent at the end of the period

1.1.13 Cash Flow Statement under N.R.B. Directives:

Following is the cash flow statement for the Financial Institution, the specimen provided
by the N.R.B. directives in accordance with which the cash flow statement of the finance
institutions have been prepared for the study of the cash flow analysis. (Report of the
C.A, Of the Office of Auditor General)
Table 6:
Format of cashflow statement under N.R.B. Directives

…………………………………………Company
Cash Flow Statement for the F/Y…………
Particulars Amount Current Year
(in Rs.) (in Rs.)
(A) Cashflow From Operations ……………
1. Cash receipt ……………
1.1 Interest Incomes …………
1.2 Commission and discount income ………...
1.3 Exchange gain …………
1.4 Non-operating income …………
1.5 Other income …………
2. Cash payment ………………
2.1 Interest expenses …………
2.2 Staff expenses …………
2.3 Office operating expenses …………
2.4 Exchange loss …………
2.5 Non-operating expenses …………
2.6 Other expenses …………
(B) Cashflow From Investing Activities …………
1 Change in balance with bank …………
2 Change in money at call and short notice …………
3 Change in Investments …………
4 Change in loans advance and bill purchased …………
5 Change in fixed assets …………
6Change in other assets ……………...
(C) Cashflow From Financing Activities …………
1 Change in borrowing …………
2 Change in deposits …………
3 Change in bills payable …………
 20

4 Change in other liabilities

(D) Net Cash Flow for the year ……………...
(E) Opening Cash Balance ……………...
(F) Closing Cash Balance ……………...

1.2 Statement of the problem

Commercial banks and their services remained accumulated only towards the urban
region. The main objective of bank is to collect deposit as much as possible and make
available and mobilize the most preferable and profitable sector. The present study
basically focused on the financial performance of Siddhartha Bank Limited (SBL).
Therefore, it is necessary to analyze the financial performance of SBL with the help of
following questions:
 What does their cash flow indicate?
 What is the condition of cash flow with the highest amount of annual operating
profit?
 What is the position of cash and cash-equivalents of the bank?
 What is the effect of cashflow on financial position?

1.3 Objectives of the study

The main objective of this study is to know about the cash flow analysis and its
management in commercial bank of Nepal. This dissertation helps to evaluate and
compare cash flow statement of the selected financial institution. Cash flow statement
provides information that enables users to evaluate the change in net assets of an
institution, its financial structure, its ability to affect the amount of timing of cashflow.
This research has the following objectives:
• Evaluation of cash position of firm.
• To maintain the liquidity in the organization so that there will be less chances of
shortage of money.
• To provide the information about operating, investing and financial activities.
 21

1.4 Rationale

Generally, the studies give emphasis on the welfare of students while preparing
fieldwork report; they gain knowledge through their own experience enabling them to
deal with problems relating to their studies. The studies also intend to let students know
about required information by them.
Cash flow statement is important to provide information about inflows and outflows of
cash and cash equivalents. It provides useful information to the users of the statement in
the following ways.
 It helps to evaluate financial polices & cash positions
 It helps to inform about the availability of cash. So that management can
determine policies regarding financial management i.e. raising utilities of funds.
 Assess a company's ability to generate positive future cash flows.
 Assess a company's ability to meet its obligation, its ability to pay dividends and
its need for external financing.
 Assess the reason for difference between income and associated cash receipts and
payments.

1.5 Review of Literature

Literature review is a “stock taking” of available literature in one’s field of research. It is
the act of looking into all related literature in order to draw out basic information about
the new research activity. Review of literature is an important part of any research work.
It provides boundary line for any research. Previous studies provide the foundation for
present study.
The review of literature is a crucial aspect because it denotes planning of the study. The
main purpose of the literature review is to find out what works have been done in the area
of the research problem under study and what has been done in the field of the research
study being undertaken. For review study, the researcher has reviewed different books,
reports, journals and research studies published by various institutions and unpublished
dissertations submitted by master level students have been reviewed.
Review of literature is based on three headings.
 Conceptual review
 22

 Preview of previous work

 Research gap

1.5.1 Conceptual Review

Literature survey provides the theoretical concepts about the topic under the study.
Without the literature survey, the research will be rather incomplete. So, the conduction
of the literature survey helps students to know about the theoretical aspects of the
research topic. In this topic, reviews of books relating to cash management have been
considered. It is the most important aspect of working capital cash is the basic input
needed to keep the business running on continuous basic so the cash should be managed
efficiently in order to keep the firm sufficient liquid and to use excess cash in some
profitable way.
It was analyzed that the goal of working capital is to manage each of the firm current
assets efficiently in order to maintain the forms liquidity while not keeping any assets as
to high level.

Review of Articles
Due to the increasing importance of cash flow analysis, FASB stated that financial
statements should include information about how a business obtains and spends cash
about its borrowing and repayment activities, about the sales and repurchase of its
ownership securities, about dividend payments and other distribution to its owners and
about others factors that affect a company's liquidity and solvency.
As the article stated further that recognizing the importance of the cash flow analysis,
FASB issued financial statement standards no.95 and statements of cash flows in
November 1987.
As the article suggest following are importance of cash flow statement:
 A company's ability to generate positive future cash flows
 A company's ability to meet its obligations its ability to pay dividends and it's need
for external financing.
Investment activities as the article stated include the lending money (investment) and
collecting on loans buying and selling securities not classified as cash equivalent are
 23

defined as short term highly liquid investment that are readily convertible to known
amounts of cash and must be sufficiently close to its maturity date.
Net cash from financing activities are determined by the flow of short -term loans and
over drafts. There may be some non -cash investing and financing payments and such
payments are not reported in the statement of cash flows.
As per the format of cash flow statement the article stated further that section seven of
Nepal company act 2053 B.S. mentions the company's books of accounts and accounting
system to be adopted by the company. Article 83 of the act is related to annual financial
reporting statements and article 84 of the act mentioned that the balance sheet and profit
and loss account should be prepared in the prescribed format, but the cash flow statement
is not prescribed as such it should in the author's opinion be presented in the format as
prescribed by the FASB.

Shrestha, (2055; B.S.), in his article “A Study on Deposit and Credits of Commercial
Bank in Nepal” concluded that the credit deposit ratio would be 51 .30%, other things
remaining the same in 2000 B.S. So, he had strongly recommended that the commercial
bank should try to give more credit entering new field as far as possible.

Pokharel (2006), in the article entitled "Financial Sector Reform and Challenges",
stresses that highest liquidity makes the financial institutions un bankable by creating
unnecessary burden of bearing the cost of capital. Dr. Pokharel expresses that most of the
financial institutions are lying on uneconomic situation due to ineffectiveness of portfolio
management on the one hand and deficiencies of efficient modern management on the
other.

1.5.2 Review of Previous Related Studies

Thesis related with cash management and working capital has been considered in this
section.
Joshi (2008) in his research work,” Comparative study on Investment Policy of Standard
Chartered Bank Nepal Limited and Everest Bank Limited” has highlighted the main
Objectives:
 24

His main objectives:

 To compare investment policy of concern banks and discusses the fund mobilization of
the sample bank.
 To find out empirical relationship between total investment, deposit and loan &
advance, and net profit and outside assets and compare them.
 To analyze the deposit utilization and its projection for next five years of SCBNL and
EBL.

His major findings:

 It can be concluded that both have good deposit collection. EBL has the highest cash
and bank balance to total deposit, cash and bank balance to current ratio; this may make
the bank to be in good position to meet the daily cash requirement.
 SCBNL has successfully maintained and managed its assets towards different income
generation activities. SCBNL has made high portion of total working fund in investment
on government on share and debentures of other companies.

Shrestha (2009) in his study Analytical and "Comparative Study on Cash flow of Joint
venture Banks in Nepal", has mentioned the strength and weakness of the all joint-
venture banks in Nepal through Cash Flow Analysis.
His main objectives:
 company's ability to generate positive future cash flows
 A company's ability to meet its obligations its ability to pay dividends and it's need for
external financing
 The reasons for differences between income and associated cash receipts and payments

His major findings:

 Although most of the business entrepreneurs along with their business philosophy has
suggested that cash management of the firm should be in adequate position, no one has
had create concrete pillar that cash should be at the would at the level be sufficient for the
business.
 25

 From current review, it is seen that most of the business entity and bank and financial
institution has suffered from the liquidity crisis for which most responsible factors is
cash, clearly pointed out that the cash management is the common and major problem in
Nepalese enterprises.

1.6 Methods
The term research refers to meant to explore or identify new ideas, concept or any
phenomena. In addition to this research is conducted to examine and test (validate)
previous norms, values, terms and so on. The main objectives of the research
methodology are to achieve the basic goals and objectives of the research study.
This chapter explains the research methodology adopted and implied for the resources
used in achieving the permitted objectives as stated in the earlier chapter.

1.6.1 Research Design

Research design is a comprehensive explanation which has to provide answers to
research questions. It is the strategy for conducting research questions. Research design
is the strategy for conducting any research work. This research is concerned with the
past phenomenon. So, this research is based on historical data. It is the guideline and
roadmap to the entire research process.
The research design is basically the cash management based on descriptive approach to
evaluate the liquidity position of Siddhartha Bank Limited. It is based on the basis of
secondary data and financial statement of past five years taken from the banks.

1.6.2 Population and Sample

The objective of the research is to investigate or to explore the cash management of
commercial bank in Nepal from the research point of view. So, among the various banks
in the banking industry, here Siddhartha Bank Limited has been selected as sample of
present study and the financial statements of five years are selected as samples for the
purpose of it.
 26

1.6.3 Sources of Data

There are two sources of data collection. They are:
• Primary Sources
• Secondary Sources
The research is based on secondary sources of data. Secondary data refers to that data
which are already used and gathered by others. Secondary data are mostly used for this
research purpose. The major sources of secondary data are:
• Annual Report of concern Bank, internet, E-mails
• NRB Directives
• Economy survey of Government of Nepal and Ministry of Finance
• Dissertations of Central Library of T.U. and Library of Public Youth campus

1.6.4 Data collection procedure

The data which is not originally collected but obtained from published and an
unpublished source of data is called secondary data. Here secondary data are used to find
out the liquidity position, annual reports of different years, different business magazines,
previous research studies, are analyzed.

1.6.5 Tools for Data Analysis

For the analysis of the study, various financial as well as statistical tools are used to make
analysis more convenient, reliable and authentic. Collected data are managed, analyzed
and presented in proper table and formats.
The following tools are used in this study:
• Financial Tools
• Trend Analysis
• Statistical Tools

1.7 Limitation of the Study

This study is simply conducted for the partial fulfilment of the requirement for the
degree of the bachelor in business studies (BBS). And only the secondary data is used
and analyzed which could not disclose the actual result. The data published by the
institution, certified public accountants are believed as true, accuracy and fairness. As
the whole data
 27

have been extracted from the published financial statements, it is mainly based on
historical financial information.
In order to analyze & compare the financial position consistently, the B/S & P/L A/C of
the selected company has been taken into consideration since F/Y 2074/75 to 2080/81.
Regarding the above, I have mentioned the following points:
 The study is mainly confined to SBL.
 The study is fundamentally based on the data of published financial statements
of bank mention under study.
 Only five years data from F.Y. 2074/075 to 2080/081 is taken for analysis.
 Data are based on historical accounting rather than on inflation accounting.
 28

CHAPTER-II
RESULTS AND ANALYSIS

2.1 Data Presentation

This chapter is basically concerned with presentation and analysis of data. The effort has
made to analyze the liquidity position of SBL. The figures of the data are in Nrs; amount
is in approximate thousands, millions or in crore as required. Every presentation of data
follows its analysis. So, the appropriate conclusion can be drawn out and future
prediction can be initiated.
Data presentation and analysis forms an important part of all academic studies,
commercial, industrial and marketing activities as well as professional practices. It is
necessary to make use of collected data which is considered to be raw data which must be
processed to put for any use. Presenting the data includes the pictorial representation of
the data by using charts, tables and so on. The data collected from different sources have
been properly processed, tabulated and analyzed in this chapter in order to appraise the
performance of the selected commercial bank. For better understanding and presentation;
financial cum statistical tools were used. Tables were based on the data collected and
charts were also created accordingly. An attempt has been made to analyze and interpret
financial data of the subject matter in sequential order.

Introduction of cash flow Statement

Cash is the most liquid asset and essential resource for any organization. Without cash no
business activities can be taken place. Cash flow information is thus widely used by
investors, analysts, creditors, managers and other users. This chapter describes the
preparation, presentation and interpretation of the statement of cash flows. Cash flow
refers to cash inflows and outflows and its analysis is done through statement of cycle
flows.
The statement of Cash Flows gives the major sources and uses of cash. It explains how
cash was generated and how it was used during a period a period. It ends with closing
cash and cash equivalent balance that will have place in balance sheet. If the cash inflow
is less than cash outflows there will be positive cash flows and in opposite, if the cash
inflow is less than cash outflows there will be negative cash flow.
 29

Business Activities in Cash Flow Statement

1. Cash Flow from Operating Activities:

Cash flow from operating activities includes all cash flows from transactions that are not
defined as investing or financing activities and are primarily derived from the revenue
producing activity of the enterprise. Cash flow from operations is necessary for debt
servicing, capital expenditure, dividend payments and other cash outflows from operating
the business. Positive substantial cash flow permits the company to make addition of
property, pay off portion of long- term debts. It also helps to continue to finance for
future growth from owns cash flow without raising debt/equity finance or selling stocks.
Finally, it shows how successful the company is in generating cash from operation.

Table 7 :

Cash flow from operating activities

Fiscal year Cash Flow from Operating Activities

2075/76 2,031,566,633

2076/77 7,032,058,937

2077/78 1,564,095,633

2078/79 13,368,734,306

2079/80 16,455,473,728
Source: Annual report of Siddhartha Bank Limited
 30

Cash flow from operating activities

1.8E+10
1.6E+10
1.4E+10
1.2E+10
1E+10
8E+09
6E+09
4E+09
2E+09
0

2075/76 2076/77 2077/787 2078/79 2080/81

Series 1

Figure 3:Cash flow from operating activities

Interpretation
The table 7 and figure 3 shows about the total operating activities of SBL. The table
consists of five fiscal years showing the increase and decrease in cash from operating
activities during a year. The cash from operating activities is 203.15 crores, 703.20
crores, 156.4 crores, 1336.87 crores, 1645.54 crores in the F/Y 2075/76, 2076/77,
2077/78, 2078/79, 2080/81 respectively.

Decision
The above analysis shows the increasing trend analysis in all the fiscal years except
2075/76 where the cashflow from operating activities is decreased. The cashflow from
operating activities is increased by 246.13% in FY 2076/77, decreased by 77.75% in FY
2077/78 and increased by 754.72% in FY 2078/79 and by 23.08% in FY 2079/80 from
the previous years. The increase in cash from operating activities indicates the decrease in
assets and increase in liability and vice-versa. The bank is able to get profit from
operating activities in the last two years.
 31

2. Cash Flow from Investment Activities:

Investing activities include lending money, that is making investment and collecting on
those loans, buying and selling productive assets that are expected to generate revenues in
future periods, and buying and selling securities not classified as cash equivalent.
Changes in non-current assets (fixed) are generally included in investing activities. For
investing activities cash may be available either from operating activities or from
financing activities or from both, but most of the financially healthy firm, cash from
investment will be able to generate form operating activity.

Table 8:

Cash flow from investing activities

Fiscal year Cash Flow from Investing Activities

2075/76 (1,157,503,793)

2076/77 (5,586,074,040)

2077/78 (4,090,768,045)

2078/79 (15,489,260,798)

2079/80 (17,139,296,966)
 32

Cash flow from investing activities

2075/76 2076/77 2077/78 2078/79 2079/80
0
222222075/76 2

-2E+09

-4E+09

-6E+09

-8E+09

-1E+10

-1.2E+10

-1.4E+10

-1.6E+10

-1.8E+10

Series 1Column1Column2

Source: Annual report of Siddhartha Bank Limited

Figure 4:Cash flow from investing activities

Interpretation
The table 8 and figure 4 shows about the total investing activities of SBL. The table
consists of five fiscal years showing the increase and decrease in cash from investing
activities during a year. The cash from investing activities is 115.75 crores, 558.60 crores,
409.07 crores, 1548.92 crores, 1713.92 crores in the F/Y 2075/76, 2076/77, 2077/78,
2078/79, 2079/80 respectively.

Decision
 33

The above analysis shows the increasing trend analysis in all the fiscal years except
2077/78 where the cashflow from investing activities is decreased. The cashflow from
investing activities is increased by 382.59% in FY 2076/77, decreased by 26.78% in FY
2077/78 and increased by 278.63% in FY 2078/79 and by 10.65 % in FY 2079/80 from
the previous years. The negative cashflow from investing activities includes the purchase
of fixed assets, investments in stocks and lending money. The bank was able to invest a
huge amount in the year 2078/79.

3. Cash Flow from Financing Activities:

Cash Flow from financing activities include borrowing money from creditors, and
repaying the amount to borrower, and obtaining resources from owners, repayment of
borrowed funds/ amount and payment of dividend and cash flow from operating
activities. Changes in non-current liabilities are generally included in financing activities.

Table 9:

Cash flow from financing activities

Fiscal year Cash Flow from Financing Activities

2075/76 896,159,837

2076/77 853,423,600

2077/78 330,048,487

2078/79 2,137,394,388

2079/80 2,636,756,672
Source: Annual report of Siddhartha Bank Limited
 34

Cash flow from financing activities

3E+09

2.5E+09

2E+09

1.5E+09

1E+09

500000000

2075/76 2076/77 2077/78 2078/79 2079/80

Series 1

Figure 5:Cash flow from financing activities

Interpretation
The table 9 and figure 5 shows about the total financing activities of SBL. The table
consists of five fiscal years showing the increase and decrease in cash from financing
activities during a year. The cash from financing activities is 89.6 crores, 85.34 crores,
33.01 crores, 213.73 crores, 263.67 crores in the F/Y 2075/76, 2076/77, 2077/78,
2078/79, 2079/80 respectively.

Decision
The above analysis shows the increasing and decreasing trends in the past five years. The
cashflow from financing activities is decreased by 4.76% in FY 2076/77, further
decreased by 61.32% in FY 2077/78 and increased by 547.60% in FY 2078/79 and by
23.36 % in FY 2079/80 from the previous years. A positive number indicates that cash
has come into the company, which boosts its assets levels. A negative figure indicates
when the company has paid out capital, such as retiring or paying off long-term debt or
making a dividend payment to shareholders.
 35

4. Closing Cash Balance:

Closing cash balance is taken by adding together net increase or decrease in cash and
cash equivalent. It is the reconciliation of the total cash position, which connects to the
balance sheet. The closing cash is king and it should always balance. The closing balance
is generally positive. It determines the situation of the bank.

Table 10 :

Closing cash balance:

Fiscal year Closing cash balance

2075/76 5,856,403,121

2076/77 8,155,811,697

2077/78 5,959,187,692

2078/79 5,976,055,588

2079/80 7,928,988,024
Source: Annual report of Siddhartha Bank Limited

Closing cash balance

9E+09
8E+09
7E+09
6E+09
5E+09
4E+09
3E+09
2E+09
1E+09
0

2075/76 2076/77 2077/78 2078/79 2079/80-

Series 1
 36

Figure 6:Closing cash balance

Interpretation
The table 10 and figure 6 shows about the closing cash balance of SBL. The table
consists of five fiscal years showing the increase and decrease in closing cash balance
during a year. The closing cash balance is 585.64 crores, 815.58 crores, 595.91 crores,
597.60 crores, 792.89 crores in the F/Y 2075/76, 2076/77, 2077/78, 2078/79, 2079/80
respectively.

Decision
The above analysis shows the increasing and decreasing trends of the closing cash
balance in the past five years. The closing cash balance is increased by 39.26% in FY
2076/77, decreased by 26.93% in FY 2077/78 and increased by 0.28% in FY 2078/79 and
by 32.67
% in FY 2079/80 from the previous years. During the FY 2076/77, the closing cash
balance has been greatly increased but by the end of next fiscal year, it is decreased.

2.2 Analysis of Results

SWOT Analysis
None of the organization is perfect in each and every way. There are some weakness and
threats, which affect the organization. It may have a lot of strength to be proud of but
besides with some threats and weakness as well and the organization does not remain
same forever, there will be lots of opportunities in order to expand the transaction. So,
SBL has also its strength to be proud, some weakness to be recovered and threats to be
faced patiently and there are lots of opportunities to expand the transaction.

Strengths
• Financing the profitable business venture.
• Efficient management headed by professional chartered accountant.
• Increasing popularity in the market regarding the share price in the stock market.

Weakness
 37

• Lack of investment and credit.

• Lower opportunities to invest in individual loans.

Opportunities
• More modification and expansion of consumer Banking products by exploring new
opportunities and identifying new sectors for investment.
• Many people deposit their fund in the bank to its reputation in the banking sector.

Threats
• Economic instabilities.
• Growing competition in the market.
• Civil wars, chaos strikes and other natural disasters hampers in the operations of SBL.

2.3 Major Findings

• The bank should grab more opportunities as soon as possible by adopting efficient and
latest strategies. Traditional methods should be left behind.
• The bank has positive cashflows from operating activities during the study except in the
FY 2077/7 which implies that sales revenue is higher than expenses.
• Cash Flow from Operating Activities is negative in year 2077/78 due to the highest Cash
payment than Cash received because of initial period due to which Cash Flow from
Operating Activities is found lowest in the year.
• Cash Flow from Investing Activities seem to be decreased in the year 2077/78. Fixed
assets purchased during the whole year and cash flow from current and non -banking
assets are in increasing and decreasing trend.
• Cash Flow from Financing Activities is decreased drastically in the year
2077/78.However, it is increased in the following years.
• Talking about Closing Cash-balance over the past five years, it is found that SBL has
both decreasing and increasing trend of closing cash balances. It has been observed that
many correspondents are using the services of SBL.
 38

• The Cash Flow statement shows how SBL raised money (cash) and how it spent those
funds during a given period. It's a tool that measures a company's ability to cover its
expenses in the near term.
• However, the closing cash balance is decreased in the year 2077/78.
• The closing cash balance has been decreasing and increasing over the year, decrease
represents SBL is in 'Bad Shape', whereas Increase represent SBL is in ‘Good Shape’.
• From the above data and information, there is no any negative ending cash balance
which implies that SBL has been using their cash in effective and systematic way to meet
all the requirement despite the decreasing trend.
• The above information reflects SBL financial health and its liability to pay its bill and
other liabilities. Overall Net cash flow is found positive in the whole period of study.
 39

CHAPTER-III
SUMMARY AND CONCLUSION

3.1 Summary
The importance of bank in economic life is great. Nepal being an under privileged
country and more than 70% of the people being dependent on agriculture, which sector is
unable to provide full employment to the people.
At present, commercial banks including joint ventures banks are operating in Nepalese
banking industries. Siddhartha Bank Limited is the commercial bank which plays a
crucial role in the mobilization of the fund for rapid industrialization of the country. The
position of this bank has been in the forefront in the banking business. It has maintained
friendly relationship with many banks inside as well as various development activities.
I present the cashflow analysis of Siddhartha Bank Limited into three main categories viz.
Introduction, Results and analysis and Summary and Conclusion. According to this
research, cash flow analysis of bank has been measured by various tools.
The purpose of the research is to assess how often data from the cash flow statement is
used to evaluate, forecast and manage everyday business operations; which methods are
currently employed to prepare the cash flow statement; and how deep the understanding
of the usefulness of the cash flow statement and its analysis in SBL.
Some of major findings are as follows:
 Banking activities and function of SBL is systematic and effective.
 The closing balance of SBL is in both decreasing and increasing trend.
 The bank has suffered to bring in cash then cash out.
 Bank has been able to pay bills and liabilities despite of decreasing and increasing trend
in closing cash balances.
 The findings of the survey establish that the accountants need to receive updates about
changes to accounting standards in the local languages.
The survey results indicate that both methods of reporting cash flows — direct and
indirect are widely used. However, it is of interest that the indirect method of preparation
is more common.
 40

3.2 Conclusions
A bank is an institution, which deals in collecting deposits and advancing loans and other
credit activities. Being a commercial bank, Siddhartha Bank Limited has contributed its
possible strength for the economic development of Nepal. The management of Siddhartha
Bank Limited has tried to cope with the increasing demand of client as well as possible in
a great extent. In spite of competition, Siddhartha Bank Limited has adopted advanced
technology and good financial management. Main objectives of this study are to examine
the cash management of Siddhartha Bank Limited, its objective, current obligation and
finally evaluate the financial strength and weakness of the bank.
Cash and bank balance is most liquid assets; therefore, some provision regarding this
should be made consistency. It recommends having moderate level of cash and bank
balance to meet unanticipated calls on current saving and other deposits. But now a day's
cash flow statement is being mandatory to submit for annual report. If profit is negative
but cash flow is positive then stakeholder believe well that firms are in good position
nowadays. So, cash flow analysis is necessary.
The expenses for employees, income tax, cost for sales and other expenses should be
controlled as according to the income as the trend of cash flows is not satisfactory.
The amount spent on investing activities over the given years is good in comparison to
other cash flows as the current fiscal year suffered negative sign. It is seen that the
amounts are spent on buying and selling of investments and fixed assets.
This study carries a lot of limitations. So, a more comprehensive study needs to be carried
from the concerned authorities and further researchers to reach a more authentic
conclusion depicting the cash flow analysis of the sample bank.
At last, a bank is an organization whose primary functions are concentrated with
accumulation of idle money from general public and advancing loan to individuals,
traders industries and business houses for expenditure. Generally, the bank collects
money from those who have spare of it from their income on which it pays interest
regularly.
 41

BIBLIOGRAPHY

A. BOOKS:
Atkinson, Bnaker, Kaplan Young (1997), Management Accounting, Prentice Hall
International.
Bernstein, Leo Pold (1993), Analysis of Financial statement, TRWIN professional
Publishing.
Bradley, Joseph F.(1964), Administrative Financial Management. Inc. USA, Holt,
Richard and Wiston
Dahal, Rewan Kumar and Keshab Nath Wagle (2007), Management Accounting, Revised
Edition, Khanal Books and Stationary.
Dangol, Ratna Man. (2065), Management Accounting., Bhotahity, Katmandu, Taleju
Prakashan

B. JOURNAL/ REPORTS:
Annual Report of all sampled commercial banks, (MBL, KBL, LxBL and SBL) from F/Y
2060/61 to 2065/66.
Economic Survey, Government of Nepal, Ministry of Finance, F/Y 2008/2009 Published
by NRB.

C. CASE STUDIES:
Adhikari, Niraj, A Comparative Study on Cash Flow with reference to NFC, LUFIL, HIS,
Nepal Commerce Campus, 2059/060
Amit Shrestha "Comparative Study on Cash flow of Joint venture Banks in Nepal",
Central Department of Management T.U. 2009
Gajurel, “Cash Flow Analysis of Nepal Water Supply Corporation.” Central Department
of Management T.U. 2010

D. INTERNET/
Website:
www.cashflow.com
www.mbl.com.np
www.siddharthabank.com
 42

APPENDICES

Annex-1
List of commercial banks in Nepal
1. Nepal Bank Limited 15. Global IME Bank Limited
2. Rastriya Banijya Bank Limited 16. Citizens Bank Limited
3. Agricultural Development Bank 17. Prime Commercial Bank
Limited

4 Nabil Bank Limited 18. Sunrise Bank Limited

5 Siddhartha Bank Limited 19. NMB Bank Nepal Limited
6. Standard Chartered bank Limited 20. NIC Asia Bank Limited
7. Himalayan Bank Limited 21. Laxmi Bank Limited
8. Nepal SBI Bank
9. Sanima Bank Limited
10. Everest Bank Limited
11. Prabhu Bank Limited
12. Nepal Investment Mega Bank
Limited

13. Kumari Bank Limited

14. Machhapuchchhure Bank Limited
(Sources: Nepal Rastra Bank)

Annex-2
Executive Management

Name Designation
 43

Mr. Sundar Prasad Kadel Chief Executive Officer

Mr. Rameshwar Prasad Basyal Deputy Chief Executive Officer

Mr. Sher Bahadur Budhathoki Assistant Chief Executive Officer

Mr. Arjun Bhadra Khanal Chief Credit Underwriting Officer

Mr. Srijan Krishna Malla Chief Information Technology
Mr. Suresh Raj Maharjan Chief Marketing Officer

Mr. Prashanna Khadka Chief Corporate Banking

Mrs. Shailaja Gyawali Chief Integrated Risk

Mr. Manohar KC Chief Retail Banking

Mr. Pradeep Pant Chief MSME Banking

(Siddhrtha Bank, n.d.)

Annex -3
Financial position of Last three years.
Assets 2020/21 2021/22 2022/23
Cash and cash 5,959,187,692 5,976,055,588 7,928,989,024
equivalent
Due from Nepal 9,507,945,122 7,740,641,992 5,730,448,535
Rastra Bank
Placement with 1,067,074,180 3,308,708,365 320,313,255
Financial Institution
Derivative Financial 110,715,819 146,940,556 19,694,323
Instrument
Other Trading 147,021,248 - -
Instrument
 44

Loan & Advances to 4,004,351,952 6,027,862,003 6,403,394,142

B/FIs
Loan & Advances to 123,572,725,466 158,579,235,014 178,587,363,232
customers
Investment Securities 22,502,829,318 41,825,293,770 57,368,161,732
Current Tax Asset 159,621,893 127,218,846 221,065,203
Investment in 51,000,000 51,000,000 51,000,000
subsidiaries
Investment in - - -
associates
Investment in 136,607,745 291,042,098 213,307,612
property
Property and 1,422,340,138 1,451,931,803 3,077,068,355
Equipment
Goodwill and 101,985,674 81,501,245 71,490,971
intangible assets
Deferred tax asset - - -
Other assets 1,841,754,073 3,460,601,613 4,334,727,127
Total Assets 170,585,160,318 229,068,032,894 264,327,023,510

Liabilities 2020/21 2021/22 2022/23

Due to financial 6,759,236,798 7,717,011,244 7,234,641,506
institutions
Due to Nepal Rastra 20,054,195 5,859,906,910 24,965,102,753
Bank
Derivative Financial - 94,517,303 19,359,606
Instruments
Deposit from 139,609,497,543 180,924,009,324 191,550,643,583
customers
Borrowing - - 1,022,800,000
 45

Current Tax liabilities - - -

Provisions - - -
Deferred tax liabilities 159,215,541 966,719,229 239,223,287
Other liabilities 2,863,326,565 4,941,503,558 6,034,819,684
Debt securities issued 5,162,559,000 8,162,559,000 11,662,559,000
Sub-ordinated - - -
Liabilities
Total Liabilities 154,573,889,642 208,666,226,568 242,729,149,419

Equity 2020/21 2021/22 2022/23

Share capital 9,787,767,142 10,962,299,199 12,524,426,835
Share premium - - -
Retained earnings 1,245,988,052 1,808,628,800 1,359,868,480
Reserves 4,977,515,481 7,630,878,326 7,713,578,776
Total equity 16,011,270,676 20,401,806,326 21,597,874,092
Total liabilities and 170,585,160,318 229,068,032,894 264,327,023,510
equity
(Annual report 2022/23)