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Introduction (continued)
Are of concern is banking A bank is a financial institution licensed by a government. Banking is one of the most highly regulated industries in the world Analysis of a bank's financial statements requires a distinct approach They generate profit from the flow of funds This work will provide assistance to the investors
Significance (continued)
Significance
It is the process of examining relationships among financial statement elements and making comparisons with relevant information. Important for investors who buy the companys stock. Useful for financial analysts Very useful for the stockholders Summarized all the data into a form which is easily understood by all the relevant parties. Financial ratios are only meaningful when compared with other information Ratio analysis can reveal much about a company and its operations
Stock Exchange Company profile forms Company comparison forms Internet past articles Case Study
Data Processing
Financial Ratios Ratios are an analysts microscope Ratios are useful both to internal and external analysts Microsoft Word and Microsoft Excel work sheets
Data Analysis
a) Financial analysis Ratio analysis Horizontal analysis Vertical analysis b) Industry averages and comparison with competitors
Ratio Analysis
Its a tool which enables the banker or lender to arrive at the following factors : Liquidity position Profitability Solvency Financial Stability Quality of the Management Safety & Security of the loans & advances to be or already been provided
BANK AL FALAH
2006 265182551 249906022 1.06 2007 316972828 286843944 1.10 2008 335217471 315476169 1.06
BANK AL FALAH
Year Sales Working Capital Sales to Working 2006 21191470 15276529 1.38 2007 25783871 30128884 0.85 2008 31046583 19741302 1.57
Working Capital
It is a measure of both a company's efficiency and its short-term financial health Working Capital = Current Assets Current Liabilities
HABIB BANK
Year Current Assets Current Liabilities Working Capital 2006 575611106 480455832 95155274 2007 671597594 566659483 104938111 2008 731954693 631948038 100006655
BANK AL FALAH
Year Current Assets Current Liabilities Working Capital 2006 265182551 249906022 15276529 2007 316972828 286843944 30128884 2008 335217471 315476169 19741302
BANK AL FALAH
2006 EBIT Interest charges TIE ratio 17798831 15232886 1.16 2007 21156515 16620963 1.27 2008 22125914 20331194 1.08
Year
Debt Ratio
The proportion of a firm's total assets that are being financed with borrowed funds Debt Ratio = Total Debt / Total Assets
HABIB BANK
2006 Total debt Total Assets Debt Ratio 536848102 590291468 0.91 2007 628754092 691991521 0.91 2008 682747953 757928,89 0.9
Year
BANK AL FALAH
Year Total debt Total Assets Debt Ratio 2006 263443596 275685541 0.95 2007 312675308 328895152 0.95 2008 331946025 348990764 0.95
BANK AL FALAH
Year Total debt Total Equity Debt To Equity Ratio 2006 263443596 10572605 24.91 2007 312675308 13766673 22.71 2008 331946025 14608523 22.72
BANK AL FALAH
Year Current Worth Net Worth Current Worth to Net worth Ratio 2006 15276529 12241945 1.247 2007 30128884 16219844 1.85 2008 19741302 17044739 1.15
BANK AL FALAH
Year Long Term debt Long term debt + Equity Capitalization Ratio worth Ratio 2006 13537574 24110179 0.56 2007 25831364 39598037 0.65 2008 16469856 31078379 0.52
Year Long Term Assets Long term debt L.T Assets /L.T Debts Debt:worth Ratio
BANK AL FALAH
Year Long Term Assets Long term debt L.T Assets /L.T Debts worth Ratio 2006 13773293 13537574 1.01 2007 11922324 25831364 0.46 2008 10502990 16469856 0.63
BANK AL FALAH
Year Net Operating Income Total Debt Debt Coverage Ratio worth Ratio 2006 14574192 263443596 0.055321869 2007 15118049 312675308 0.048350633 2008 16880487 331946025 0.0508531
BANK AL FALAH
2006 1762691 21191470 8.31% 2007 3130229 25783871 12.1% 2008 1301301 31046583 4%
BANK AL FALAH
2006 Operating Income Net Sales Operating Income Margin 14574192 21191470 0.687738604 2007 15118049 25783871 0.586337443 2008 16880487 31046583 0.5437148
Year
Return on Assets
Return on Assets (ROA) = Profit after Taxation / Average Total assets x 100
HABIB BANK
Year Net income Total Average assets ROA 2006 12700315 559592686.5 2.27% 2007 10084037 641141494.5 1.57% 2008 15614020 724959955 2.15%
BANK AL FALAH
Year Net income Total Average assets ROA 2006 1762691 137966927.5 1.27% 2007 3130229 302290346.5 1.01% 2008 1301301 338942958 0.038%
Year
BANK AL FALAH
Year Net income Total Equity ROE 2006 1762691 10572605 16.6% 2007 3130229 13766673 22.5% 2008 1301301 14608523 8.9%
Year
BANK AL FALAH
Year
BANK AL FALAH
BANK AL FALAH
BANK AL FALAH
Year Total amount of Dividend Number of Shares Dividend per Share 2006 00 500000 00 2007 00 650000 00 2008 975000 799500 1.21
HABIB BANK
Year Profit after Taxation Number of Shares Earning Per Share 2006 12700315 690000 18.41 2007 10084037 690000 14.61 2008 15614020 759000 20.57
BANK AL FALAH
Year Profit after Taxation Number of Shares Earning Per Share 2006 1762691 500000 3.525 2007 3130229 650000 4.815 2008 1301301 799500 1.627
BANK AL FALAH Year Stock price per share EPS Price / Earning Ratio 2006 10 3.525 2.83 2007 10 4.815 2.07 2008 10 1.627 6.14
BANK AL FALAH
2006 DPS EPS Dividend Payout Ratio 00 3.525 00 2007 00 4.815 00 2008 1.21 1.627 0.74
Year
Dividend Yield
Financial ratio that shows how much a company pays out in dividends each year relative to its share price. Dividend Yield = Dividend per Share Share Price
HABIB BANK
Year DPS Share Price Dividend Yield 2006 1.0019 10 0.10019 2007 2.0014 10 0.20014 2008 3.597 10 0.3597
BANK AL FALAH
2006 00 10 00
2007 00 10 00
BANK AL FALAH
Year Equity Share Capital Book Value per Share 2006 10572605 5000000 2.11 2007 13766673 6500000 2.11 2008 14608523 7995000 1.82
HABIB BANK
Year Operating Cash flow Total Debts Operating Cash Flow to T.Debt 2006 7852362 263443596 0.029 2007 39645325 312675308 0.126 2008 2499606 331946025 0.007
BANK AL FALAH
2006 Operating Cash flow Total Shares Operating Cash Flow per Share 7852362 500000 15.70 2007 39645325 650000 60.99 2008 2499606 799500 3.12
Year
Horizontal Analysis
Methods of financial statement analysis Generally involve comparing certain information Compares specific items over a number of accounting periods Decision is often based on the investing time horizon under consideration.
Vertical Analysis
Method of financial statement analysis Also known as component percentages, produces common-size financial statements. The term vertical analysis applies because each year's figures are listed vertically on a financial statement Use three major categories of accounts (assets, liabilities and equities) in a balance sheet Easy to see relative annual changes in one business
Conclusion/Findings
Liquidity position of both companies is not up to standard, both are below industry average Working capital of Habib Bank is better than Bank La Falah Profitability ratios of Habib Bank Limited are better than Bank AL Falah Limited. Net profit of Bank Al falah Limited is low due to heavy financial charges Habib Bank has a good market perception due to continuous declaration of dividends Bank LA Falah limited has not announced in dividend in the year 2006 and 2007 Earning per Share and Operating cash flow of Habib Bank Limited is also better than Bank AL Falah Limited.
Recommendations
Both banks need to improve their liquidity status Bank al falah need to improve their financial performance on the other hand habib bank is going nicely in this competition. Bank Al falah Limited has to minimize it financial charges. Both the banks need to reduce financial leverage risk.
Thank You