Research Technique into Ratio Analysis of HSBC Bank

In this task my purpose is to analysis the Ratio Analysis to find budget of the HSBC loan company utilizing the financial tools and also to know the functions of Internet Banking System in HSBC Loan provider. This study predicated on financial statement such as Proportion examination and financial performance. This project helps to identify and present suggestion the area of weaker position of business transaction in HSBC. This study was created to evaluate the Ratio analysis according to trend examination.

Here I have given the Subject, Aim, Goals of the job, Introduction and background of the business chosen. It also gives the brief summary regarding the literature review, methodology using for the research, data collection methods and data analyzing strategies.


Finance is very essential for every business to perform successfully. To perform the business enterprise every organization will require financial support.

In our present overall economy finance is thought as the provision of money at the time when it's required. Every organization whether big or small needs money to transport on its goal. In fact funding is so essential today. It can be said as blood vessels of an venture. Without adequate fund no enterprise can possible accomplish its goals.

In the first many years of its advancement it was cured synonymously with the rising of funds. In today's literature regarding financial management a broader opportunity to be able to use in addition to procurement of cash effective use of resources is universally acknowledged.

Nowadays internet is broadly used by all sectors of people. Today loan company has presented various facilities through internet. E-Banking is a trend that changes the bank operating system surrounding the world. E-Banking is more comfortable for the customers and bank or investment company.


Critically analyzing the ratios of HSBC bank or investment company to review the financial performance of lender during 2010-2011 and also analyze the functions of internet bank operating system in HSBC lender.


To research the financial performance of HSBC bank or investment company by analyzing the financial ratio's from days gone by five years financial data and also analyze the role of internet bank operating system in HSBC bank.

Objective of the analysis:

To evaluate and evaluate the financial performance of HSBC Bank

To review the growth of HSBC in conditions of comparative evaluation and trend evaluation of financial statements for the past five years, from 2006 to 2010.

To review the roles of Internet Bank in HSBC

To review the advantages of internet banking to customer and bank

To make ideas & tips for improving the financial position


Personal Rationale:

As I am a financing student, am quite definitely enthusiastic about doing the ratio analysis of the business because of that we can in a position to know the financial performance of any business. I am very eager to know the financial position of the HSBC loan provider always. Because this standard bank is globalized bank, it is atlanta divorce attorneys area of the world. Now it offers introduced the whole lot of facility in Internet bank that benefits the customers. I have the partnership with the bank for the past five years. So, Personally, i fascination with doing with HSBC Bank financial performance and internet bank sector.

Organizational Rationale:

As it is standard bank, we have vast range of information available in website, articles, publications, magazines and papers. HSBC employees are extremely friendly with their customers. They can be always prepared to explain their assignments of internet bank operating system. For the financial data, we will able to get the financial statement from other website so there is no insufficient information supply.

Policy Rationale:

The system and the techniques followed by the HSBC lender is also one of my hobbies to find the HSBC bank or investment company. This bank uses the banking regulations given by the federal government and reasonable trade practice. That's make the client safety banking. In internet bank operating system, there are many choices for doing the deal easily and properly.

Academic Rationale:

There tend to be resources available for accomplishing this work. There are plenty of financial books open to elaborate the percentage analysis. We have studied in deep about the ratio evaluation and Internet banking system.


The subject material of financial management is of enormous interest for each and every financial analyzer. It needs special attention due to complexities involve in managing profit present day banking function.

The important aspect is the estimation of how much of finance.

The business company requires and for what purpose.

The most important portion of financial management is the working capital management.

Here the analysis tries to uncover the bank's position and performance by evaluating the relationship between various components parts of financial claims.

Ration evaluation has been considered as an instrument in evaluating the performance of the company according of the next aspects.

Liquidity Position

. Long-term solvency.



This study really helps to know the use and the benefits associated with internet bank system

This study helps to analyze the functions of internet bank in UK HSBC bank

Literature Review:


Ratio analysis is one of the techniques of financial evaluation where ratios are being used as a yardstick for evaluating the partnership between component parts of financial statements to obtain a better understanding of the firm's position and performance. It can be used as tool by the business or individual to analysis the quantitative performance of the company financial record.


Ratio is associations expressed in numerical terms between statistics which are linked with one another for some reason. Proportion will be computed from current 12 months figures and it is compared with prior year to be able to know the financial performance of the company.

It is thought as the systematic use of proportion to interpret the financial assertions so the strengths and weaknesses of a company as well as its historical performance and current financial condition can be established.

The need for ratio analysis depends in the fact that it presents facts over a comparative basis

Conclusions can be attracted regarding the liquidity position of a company. It is helpful for examining the long-term financial viability of a company. It throws light on the amount of efficiency in the management and utilization of its property.

It helps in inter-firm assessment and also with industry averages.

Liquidity Ratios:

It is the percentage which can be used to look for the company's capacity to pay its short- period debt burden. If the value of the percentage is high, then the margin of safety can be high so that the company in a position to cover its short term debts. Liquidity percentage includes Current proportion, Quick/Acid percentage and Operating cashflow ratio.

Current Ratio

It is a quantitative romantic relationship between current investments and current liabilities and shows and enterprises capacity to meet up with the current obligation. Current assets make reference to liquid resources and must be sufficient enough to pay current liabilities when they mature.

A relatively high current percentage is an Indicator that the company has potential to pay its current obligations with time as and on the other palm a comparatively low current ratio presents that the company shall not be able to pay its current liabilities with time without facing difficulties. An increase in the current ratio presents improvement in the liquidity position of a firm while a reduction in the current ratio indicates that there has been deterioration in the liquid assets of the organization. The ratio add up to the guideline is 2:1.

Quick/Acidity Test Ratio:

The ratio is ascertained by company's liquid property and current liabilities. Here liquid belongings are those assets that happen to be immediately convertible directly into cash without much loss. Additionally it is known as liquidity proportion. It shows the power of the organization to meet its short-term obligation without deal and assortment of inventories.


It is the percentage which can be used to estimate the financial leverage of the business inorder to learn the techniques of financing using by the company and to measure the ability of the business to meet its financial obligations.

Debt-equity Ratio

This ratio shows the comparative proportions of credit debt and equity in funding the belongings of a firm. One procedure is to express the debt-equity percentage in conditions of the comparative percentage of long-term debts and shareholders collateral.

The arrears considered here's exclusive of current liabilities. It is an important tool of financial analysis to appraise the financial framework of a company. A high percentage shows a large share of financing by the creditors of the firm, a low ratio implies an inferior claim of creditors.

Interest Coverage Proportion :

These ratios are computed from information available in the revenue and loss profile. Additionally it is known as time-interest attained ratio. This ratio measures the debt servicing capacity of a firm insofar as set interest on long-term loan is concerned. It is determined by dividing the operating profits or cash flow before interest and taxes (EBIT) by the resolved interest charges on loans.

Proprietary Proportion:

This ratio shows whether the organization is employing a reasonable percentage of personal debt or if seriously loaded with credit debt in which particular case its solvency is subjected to serious stress. This ratio relates the owner's/proprietor's funds with total possessions. The ratio suggests the proportion of total property financed by owners.


This ratio helps to access the power of business to be able to generate the wages of the business enterprise by assessing the expenses and relevant costs through the specific period of time.

Net profit Proportion:

This measures the relationship between net profits and sales of a company. With regards to the concept of world wide web profit applied.

A high net profit margin would ensure enough return as well as permit a company to with stand unfavorable monetary conditions when selling price is declining cost of production is growing and demand for the product is failing. A low net revenue merging could have the contrary implications.

Return on Resources:

Thus profitability proportion is measured in terms of the relationship between net profit and property. This might also be called profit-to-asset proportion.

The concept of net income may be net profits after taxes net income after taxes plus interest and online profits after fees plus interest minus taxes savings. Possessions may be defined as total assets fixed investments and tangible property.

Return on capital Employed:

The term capital used refers to long-term funds supplied by the creditors and owners of the company. Here the gains are related to the total capital employed. It can be computed as

The capital utilized provides a test of profitability related to the sources of long-term funds. The bigger the percentage the more efficient is the utilization of capital employed. A comparison of this proportion with similar organizations with the industry average and as time passes would provide sufficient insight into how proficiently the long-term cash of owners and lenders are being used.

Debtor turnover ratio:

Debtor turnover ratio indicates the amount of times the debtors are converted over through the calendar year. Generally if the worthiness of debtor turnover is high, then there exists more efficient in the management of obligations and sales.


Fixed Belongings Ratio

This proportion relates the web resources and the long-term money. Here the percentage should be high. This is the handling of fixed property should be higher than the long-term funds at an appropriate level.


Electronic banking system is the machine that allows the given individual to do the banking activities by resting in one place. Electronic funds copy means doing the financial trades electronically. This is utilized for the amount of different pursuits like electronic repayments and card orders where the holder makes repayment by using their credit or debit credit cards. [Brain Dixon and Mary Dixon 2006]

Internet bank is also known as as online banking, it can be an outgrowth of Computer banking. Internet bank uses the internet as the delivery route for conducting bank activity, it is utilized for the purpose of transferring money, paying bills, really helps to checking and conserving account amounts, paying mortgage loans and also help to acquire financial musical instruments. [Benton E Gup 2005]

According to Richard H Baker, improvement in technology helps to develop the machine of internet bank.

According to industry experts, internet banking provides many facilitiies

Able to gain access to the bank at any time

World large connectivity

Very easy to access the information by transacting data

"Direct customer control of international movements of funds without intermediation of finance institutions in customer's jurisdiction

According to the survey of Global Market for Internet Banking, more than 172 bankers in Europe are running the internet bank operating system and they are incredibly successful in working online banking.



Research is a process where the researcher wishes to determine the end result for confirmed problem and so the solution assists with future plan of action. The research has been defined as "A careful analysis or enquiry especially through seek out new facts in branch of knowledge"


Redman and Mory (1923) described research as a "systematic work to gain new knowledge" Relating to Clifford Woody "research comprises determining or redefining problems, formulating hypothesis or providing solutions, collecting, organizing, evaluating the info, making deductions and achieving conclusions with carefully testing the final outcome to determine whether they fit the formulating hypothesis"

The research design found in this job is Analytical in nature the task using, which researcher has to use facts or information already available, and evaluate these to make a critical evaluation of the performance.

With particular mention of working capital management, for the prosecution of the study, both the principal and secondary data.


Primary Data:

Primary data is the info gathered by the researcher in first palm. This data is accumulated by the researcher inorder to evaluation the research. Major data is collected from the field group selected that is from the employees, customers and watching the real life situations. The main benefit of the primary data is collected only for the precise study so it is more relevant to the study. But you can find disadvantage for the collection of main data it consists of more cost and time. It isn't suitable for short term study. Key data because of this proposal will be gathered from the employees and customers of HSBC bank or investment company inorder to learn that they run the internet banking system and the functions and advantages of internet banking system in HSBC standard bank. Key research may be quantitative and qualitative research. Qualitative research is the technique where in fact the researcher arranged the questionnaire which will give to large numbers of respondents (Scalp, Wolfinbarger, Ortinau, and Bush, 2008, p81). Based on the responses the data will be analysed. Within this review, questionnaire will be given to the clients and employees of HSBC loan provider to analyse the info about the functions of Internet Bank.

Secondary Data

Secondary data is the info which is gathered already and it is used for some other tests by different researcher. This data not only used for the current study. The resources of supplementary data are catalogs, journals, articles, papers, internet, government, commercial reports and library. The benefit of this data it is easily available and also very cheap compared to most important data. In such a study we are using extra data for the analyses of proportion in order to learn the financial performance of HSBC bank or investment company.

From the total annual reports managed by the company.

Data are collected from the business's website.

Books and journals pertaining to this issue.

Research Methodology:

There are two types of research solutions Inductive and Deductive techniques. Inductive way is the procedure that starts with specific targets and become generalized. It begins by identifying the issue by observation or being prepared.

Deductive methodology is the techniques where the conclusions produced from the situation. It begins with standard situation and ends by identifying the specific concern. Arguments based on the rules, laws and regulations and legislation will be using deductive solutions and the debate predicated on the observations will be using the inductive techniques.



It is the process of choosing small number of individuals for doing the study from the top population. That sample group will be examined, analyzed by let's assume that sample group represents the complete group (Crouch, S. and Housden, M. , 1996, p116).

Sampling Unit

In this research the mark populations will be the customers of HSBC Bank Alperton Branch. The sizes of the sampling will be 100 customers. Sampling type will be random choosen on the list of large society group. From the full total sample size the analysis will be done for the 10 customers and 5 employees of HSBC lender.

Ethnography procedure will be utilized for analyzing the info based on the info collection method. In this method it takes profile of words, context and non-verbals.


Tool for Data Collection

Questionnaire will be used as an instrument for data collection as it offers the features of allowing the respondents to answer at their convenience and faster data collection. The questionnaire explicitly mentioned the purpose of study as academics and sure confidentiality of information solicited from the respondent.

Percentage method

This method is employed in making evaluation between two are usually more series of data. Percentages are being used to describe romance. Percentages can also be used to compare the comparative terms, the circulation of several series of data.

The data collected through questionnaire response method was analyzed in the following manner

Raw data will be coded and tabulated and the tabulated data will be converted into percentages, to show the percentage of judgment among respondents.

Percentage analysis thus involves the easy interpretation / analysis of the many items taken up in the questionnaire on a share basis from the info gathered. Interpretations of the graphs likewise incorporate mean results obtained by the business on every aspect / item as computed.

Number of respondent

Percentage of Respondents = ___________________________________ * 100

Total number of people questioned

Weighted average method

Weighted average method is defined as the average whose component items are multiplied by certain value (weights) and the aggregate of the merchandise are divided by the total of weights

In the Weighted Average Method, the weighted average can be calculated by the following formula

K XW = ‹ WX/ ‹X


XW represents the weighted average

"X1, X 2, X3. Xn" signifies the value for adjustable values

"W1, W2, W3 Wn" symbolizes the weight age group given to the variable.


Multiply the weights(W) by the variables(X) to obtain WX

Add all WX to acquire ‹WX

Divide ‹WX by total of the weights (‹X) to get weighted average.


Correlation is the techniques of deciding the amount of correlation between two parameters in case of ordinal data where ranks receive to different values of the parameters.

Spearman's coefficient of relationship (or)

1 - 6  ˜di †

r = _____________

n (n† - 1)


Ratio Analysis.

Comparative Balance Sheet.

Trend Analysis


This dissertation proposal starts with the launch of finance, and helps to know the importance of fund for banking sector. The researcher will continue to work towards the financial ratios of HSBC bank from the resources of annual studies, financial claims like balance sheet in orer to know the financial position of HSBC standard bank and assess the role of internet banking in HSBC by getting the data from the lender customer and employees.

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