may be nothing left over for its stockholders after the company has satisfied its debtholders.

> Total debt/equity - It indicates what proportion of equity and debt the company is usingto finance its assets. A high debt/equity ratio generally means that a company has beenaggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. Source:Http://money.rediff.com/money/jsp/ratio.jsp?companyCode=14030055INTE RPRETATION -There is growth of the bank and it is able to manage its funds fromthe internal sources. The equity capital has increased its share in the liabilities in balancesheet over 90% in comparison to the outside debts. This helps the bank to maintain highcredit reputation in market.Rs(lacs)Total liabilities 6820686 8480246 12167937Shareholders equity 529953 6433 15 1149723Source: Annual Report of HDFC Bank 6) Coverage Ratio - A coverage ratio encompasses many different types of f i n a n c i a l r a t i o s . T yp i c a l l y, t h e s e k i n d s o f r a t i o s i n v o l v e a c o m p a r i s o n o f a s s e t s a n d liabilities. The better the assets "cover" the liabilities, the better off the company is.> Interest Coverage Ratio - This ratio is used to determine how easily a company can payinterest on outstanding debt. The interest coverage ratio is calculated by dividing a bank'searnings before interest and taxes (EBIT) of one period by the bank's interest expenses of the same period.T h e l o w e r t h e ratio, the more the compa ny is burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may b e q u e s t i o n a b l e . A n i n t e r e s t c o v e r a g e r a t i o b e l o w 1 i n d i c a t e s t h e c o m p a n y i s n o t generating sufficient revenues to satisfy interest expenses.Year 05-06 0607 0708Interest coverage ratio 1.87 1.9 1.79Source: Http://money.rediff.com/money/jsp/ratio.jsp?c ompanyCode=14030055Also ,Rs (lacs)Year 05-06 06-07 07-08Interest expenses: 192950 317945 488712Year 05-06 06-07 07-08Total debt/equity 10.53 10.62 8.76

EBIT : 434581 652541 1011752Source: Annual Report of HDFC Bank INTERPRETATION -The ratio for the year 06 is 1.87 which is reasonable and not below1 . 5 . T h i s i n d i c a t e s t h a t t h e b a n k i s i n a s o u n d f i n a n c i a l h e a l t h a n d i s a b l e t o p a y t h e interest on its outstanding debts. The ratio was best in 06 -07 among the three financialyears. But has reduced in the year 08 to 1.79. Still the bank has maintained a healthy ratioover the years. 7) Asset Quality Ratio

: The most important ratio for the stakeholders of bank is the Non-Performing Assets ratio which is covered under the asset quality ratio. T h i s r a t i o s h o w s t h e t r u e p i c t u r e o f t h e q u a l i t a t i v e v a l u e o f a s s e t s r a t h e r t h a n t h e quantitative value of assetsYear 06-07 07-08 Net NPA to Net Advances(%): 0.43 0.47Source: Annual Report of HDFC Bank INTERPRETATION -The ratio shows a decline. But comparing the components of theratio the 0.04% decline has occurred when in the background the increase in loans givenshows a 35% increase which means the bank has adhered to strict policies in allocation of funds and it has not been aggressive in allocating loans.Rs (lacs)Year 06-07 0708 Net NPA 20289 29852 Net Advances 4699478 6342690Source: Annual Report of HDFC Bank 8) Credit to Deposit Ratio (CD Ratio) : The ratio is indicative of the percentage of funds lent by the bank out of the total amount raised through deposits.Higher ratio reflects ability of the bank to make optimal use of the available resources.The point to note here is that loans given by bank would also include its investments in debentures, bonds and commercial papers of the companies.Year 06-07 07-08CD 68.7 62.9Source: Annual Report of HDFC Bank Also,Rs (lacs)Year 06-07 0708Advances 4694478 6342690Deposits 6829794 10076860Source: Annual Report of HDFC Bank

INTERPRETATION -This ratio forms an integral part of analysis as it indicates theamount of reliability the bank has earned in the minds of its customers and evidence of itsrobustness .The ratio for 06-07 is 68.7. It has decreased in the subsequent year as a resultof global economic depression that has panicked the customers from making any newinvestments and so lesser credit is being asked for. 9) Component Ratio : This ratio shows the components and their compositionin the business of the bank. One such ratio is Long term assets to total assets. The highratio indicates more investment in fixed assets that bank has purchased to continue its operations smoothly.Year 05-06 06-07 0708Long term assets/total assets 0.92 0.89 0.91Source:Http://money.rediff.com/money/jsp/rati o.jsp?companyCode=14030055Also,Rs (lacs)Year 05-06 06-07 07-

08Long term assets 85508 96667 117513Total assets 7350639 9123561 13317660Source: Annual Report of HDFC Bank INTERPRETATION -In the year 06-07 there was a decline in the ratio which shows thatthe bank had more of investments and current assets. And as the company had expansion plans in the other two years the ratios are higher