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Synopsis
Title: Financial Statement Analysis of National Bank. Introduction: Accounting process involves recording, classifying and summarizing various business transactions. The daily transactions of a business are recorded in different subsidiary books. The transactions are posted into various ledger accounts and the balances are taken out at the end of the financial period. The aim of maintaining various records is to determine profitability of the enterprise from its operations of business and also find out the financial position. One of the effective ways of communicating the financial information is through financial statements. A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. The term analysis of financial statements is applied to almost every kind of detailed inquiry into financial data. A financial executive has to evaluate the past performance, present financial position, liquidity situation, enquire into profitability of the concern and to plan for the future operations. Financial performance analysis includes analysis and interpretation of financial statements in such a way that it undertakes full diagnosis of the profitability and financial soundness of the business. No matter how well the statements are prepared and presented, the need is to be analysed and interpreted to unveil the hidden facts and enhance decision making. All transactions recorded in the books of accounts are periodically summarized and presented in the form of two financial statements. One is the Balance Sheet (or the position statement) the other being Profit and Loss Account (or the Income Statement). While the balance sheet shows the assets, liabilities and capital of the firm on the last day of the accounting period, the profit and loss account shows the results of operations for that period. Financial statement analysis is the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. The analysis of financial statements is an attempt

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to determine the significance and meaning of financial statements data so that the forecasts may be made for future prospects for earnings, ability to pay interest and debt maturities and profitability. Financial statements are prepared to meet external reporting obligations and also for decision making purposes. The investors rely on the financial statement and judge the bank and ensure the these statements are correct, complete, consistent and comparable. The accuracy of the statement can be identified from the report of the auditors. Financial institutions also use these statements while granting loans to banks. The debenture holders, creditors, employees and government can also use the financial statement for different purposes. Creditors are primarily interested in the liquidity of the bank. Their claims are short term, and the ability of the bank to pay these claims quickly is best judged by an analysis of the banks liquidity. The claims of bound holders, on the other hand, are long term. Accordingly, bound holdersare more interested in the cash flow ability of the bank to service debt over a long period of time. Finanacial statement analysis is a useful tool for management of bank. It plays a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. Statement of problem: Although analysis of financial statement is essential to obtain relevant information for making several decisions and formulating corporate plans and policies, it should be carefully performed as it suffers from a number of limitations. The accuracy of financial information largely depends on how accurately financial statements are prepared. If the preparation is wrong, the information obtained from the analysis will also be wrong and mislead in deciasion making decisions. Financial information provided in the financial statements are useful in business decisions. Analysis of financial statements suffers from inherent limitations of financial statements, window dressing changes in account policies of firm, accounting concepts and conventions and personal judgement etc. The

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ratios or other figures explain only probable state events. The basic nature of financial statements is historic. Past can never be hundred percent presentative of the future. Hence, future course of business event should be forecasted and interpreted in the context. Financial statement analysis provide only quantitative information about the companys financial affairs. However, it fails to provide qualitative information such as employer- employee relation, customers satisfaction, managements skills etc which are also equally important for decision making. Thus the use of financial statements in decision- making is not always easy because the analysis of financial statements is only a means to reach conclusions, and not the conclusion in itself. The result of analysis of financial statement should not be taken as an indication of good or bad management. Objectives: 1. To apply theoretical knowledge of various methods of analysis into practice. 2. The project seeks to discuss the framework of investment and financing decision and also helps to expound several analytic methods which are in practice. 3. To explore the financial trends of various elements and their significance as guidelines for future development. 4. To evaluate the Earning Capacity or Profitability of the bank. 5. To know the Financial Strength and the solvency of the QNB. 6. To provide useful information to the stakeholders. 7. To gauge the capability of payment of interest and dividend by the bank to its customers. 8. To know the efficiency of management.

Research Methodology: Data collection method: The data for this study was gathered from the financial statements of Qatar National Bank . The study is based on Secondary data. Other sources being business periodicals and journals, textbooks and various websites.

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Research Design chosen for this study is Descriptive and Analytic Research Design. Descriptive study is based on some previous understanding of the topic. Research has got very specific objective and clear cut data requirement. Sampling design: Sample size of past 4 yrs is taken for present study due to time limitation. Analysis techniques: There are various methods or techniques that are used in analyzing financial statements viz Comparative statements, schedule of changes in working capital, common size percentages, funds flow statement, trend analysis, and ratios analysis. The study applies ratio analysis and trend analysis for the purpose. Liquidity ratios, solvency ratios, efficiency ratios and profitability ratios in relation to investment. Data presentation in the form of tables and graphs. For graphical presentation bar diagrams and pie charts would be used. Intention of Study and Expected outcome: In view of the summarized nature of the information contained in the financial statements, they need to be analyzed and interpreted by means of financial ratios to enable management and stakeholders understand them and make well- informed business decisions. The study presents a brief view the Qatar National Bank and its operations from the viewpoint of a neutral onlooker. Analysis of the financial performance of the Bank would help management in decision making, control and review. Assessment of the banks financial position and evaluating the opportunities in relation to the current position would enable to plan for the future. Also this research is embarked upon to determine the significance and meaning of the financial statements data so that the forecast may be made of the future prospects for earnings, ability to pay interest and debt maturities and profitability.