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Virtual University of Pakistan
Final Proj ect Finance FIN 619
Final Project
FINANCIAL STATEMENT ANALYSIS OF
BANK AL FALAH
AND
HABIB BANK LIMITED
A EPOT
S!BMITTED TO THE DEPATMENT OF MANA"EMENT SCIENCES#
$IT!AL !NI$ESITY OF PAKISTAN
IN PATIAL F!LFILLMENT OF THE E%!IEMENTS FO
THE DE"EE OF MASTES IN B!SINESS ADMINISTATION
Submitted By
Mc&'&(&&('9
S)ei*) +a,a- A).e/
De0art.ent o1 Mana2e.ent Science-#
$irt3al !ni4er-it5 o1 Pa*i-tan
1
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Mc&'&(&&('9
Fi nal Proj ect Fi nance FI N 619
De/ication
I would like to dedicate this project to my parents who have always encourage me
throughout in my academic career and make possible for me to stand where I am today.
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Ac*no6le/2e.ent
In the name of ALLAH the most kind and most merciful.
!irst of all I m grateful to ALLAH AL"I#H$% who bestowed me with health abilities
and guidance to complete the project in a successful manner and without HI& help I was
unable to perform this task.
"ore than anybody else I would like to acknowledge my project advisor 'r.
"uhammad Anwar for his never ending support and untiring efforts. He was always
there to guide me whenever I felt stuck off and his encouragement always worked as
moral booster for me. I have found him very helpful while discussing the tricky issues in
this dissertation work. I would also like to thank "r. "ajid Hassan principal (")I$
Lahore. His critical comments on my work have certainly made me think of new ideas
and techni*ues.
I am thankful to all my class fellow specially Ambreen !atima and all other friends who
help me during the project when problem arises specially my seniors "uhammad %asir
$an+ila ,ia+ !atima and &aeed "ahmood for their kind help.
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Mc&'&(&&('9
E7ec3ti4eS3..ar5
)ommon &i+e !inancial &tatement discloses the internal structure of the firm. It indicates
the e.isting relationship between sales and each income statement account. It shows the
mi. of assets that produce income and the mi. of the sources of capital whether by
current or long/term debt or by e*uity funding.
$he primary objective of financial analysis is to forecast or determine the actual financial
status and performance of a project
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TABLE OF CONTENT
Section I
a8 Intro/3ction99999999999999999999: 6
1.1 1ackground 222222222222222222222.. 3
1.2 Introduction of the organi+ation4s business sector 2222222 5
1.- )ompany4s Introduction 2222222222222.222.. 6
Introduction of Habib 1ank22222222222222. 6
Introduction of 1ank AL !alah222222222222... 7
1.0 List of competitors 2222222222222222222 18
1.9 :bjectives of ;rojects2222222222222.22222 18
1.3 &ignificance of the ;roject2222222222222222. 11
;8 Proce--in2 an/ Anal5-i-9999::99999999:99: 1-
'ata )ollection &ources22222222..2222222222 1-
'ata )ollection $ools2222222222222222.222 10
'ata ;rocessing and Analysis22222222222.22222 10
Project 0rocee/in2-999999999999999999: 1(
1: ,atio Analysis22222222222222222.2222. 10
a< Li*uid ,atio2222222222222222222... 19
b< Leverage ,atio2222222222222222222 16
c< ;rofitability ,atio222222222222222222 20
d< Activity ,atio2222222222222.2.2222.. -2
e< "arket ,atios2222222222222222222. --
f< &tatement of )ash !low222222222222222. -6
2. )ommon &i+e Analysis222222222222222222 -7
a< Hori+ontal Analysis2222..222222222.222 08
b< =ertical Analysis22222..222222222222 07
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- ,eview of 'escriptive Information2222.22222222... 97
0 )omparisons 222222222222222222222.. 38
a< $rend Analysis2222222222222222222 38
b< Industry Averages and )omparisons with )ompetitors222 39
c< &ummary22222222222222222222... 39
d< )onclusions > !indings222222222222222. 33
e< ,ecommendation 22222222222222222. 35
Section II99999999999999999999999: 6<
a< Introduction of the student222222222222222. L?=III
b< Appendi.>Appendices222222222...2222222.L?=III
c< 1ibliography...22222222222222222222L???=II
Section I
a8 Intro/3ction
!inancial statements for banks present a different analytical problem than manufacturing
and service companies. As a result analysis of a bank@s financial statements re*uires a
distinct approach that recogni+es a bank@s somewhat uni*ue risks.
1anks take deposits from savers paying interest on some of these accounts. $hey pass
these funds on to borrowers receiving interest on the loans. $heir profits are derived
from the spread between the rate they pay for funds and the rate they receive from
borrowers. 1y managing this flow of funds banks generate profits acting as the
intermediary of interest paid and interest received and taking on the risks of offering
credit. As one of the most highly regulated banking industries in the world investors
have some level of assurance in the soundness of the banking system. As a result
investors can focus most of their efforts on how a bank will perform in different
economic environments. In this project I am trying to provide assistance to the investors
by showing them the performance of two banks underlying the same functions.
1:1 Bac*2ro3n/ o1 t)e 0roject=
!inancial &tatement Analysis is a method used by interested parties such as investors
creditors and management to evaluate the past current and projected conditions and
performance of the firm. ,atio analysis is the most common form of financial analysis. It
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provides relative measures of the firm@s conditions and performance. Hori+ontal Analysis
and =ertical Analysis are also popular forms. Hori+ontal analysis is used to evaluate the
trend in the accounts over the years while vertical analysis also called a )ommon &i+e
!inancial &tatement discloses the internal structure of the firm. It indicates the e.isting
relationship between sales and each income statement account. It shows the mi. of assets
that produce income and the mi. of the sources of capital whether by current or long/
term debt or by e*uity funding. Ahen using the financial ratios a financial analyst makes
two types of comparisons.
!inancial ratio analysis is an important topic and is covered in all mainstream corporate
finance te.tbooks. It is also a popular agenda item in investment club meetings. It is
widely used to summari+e the information in a company@s financial statements in
assessing its financial health. In today@s information technology world real time financial
data are readily available via the Internet. ;erforming financial ratio analysis using
publications such as ,obert "orris Associates4 Annual &tatement &tudies 'un B
1radstreet4s Cey 1usiness ,atios "oody4s "anuals &tandard B ;oor4s )orporation
,ecords =alue Line Investment &urvey etc. is no longer efficient. &ince students and
investors now have easy access to on/line databases the assignments on financial ratio
analysis can be modified accordingly to enhance learning.
In the current scenario where financial instability is rife and financial intuitions are
becoming popular when it comes to investing the sound analysis of financial statements
is one of the most important elements in the fundamental analysis process. At the same
time the massive amount of numbers in a company@s financial statements can be
bewildering and intimidating to many investors. However through financial ratio
analysis we shall be able to work with these numbers in an organi+ed fashion and present
them in a concise form easily understandable to both the management and interested
investors.
1:> Intro/3ction o1 t)e or2ani?ation@- ;3-ine-- -ector=
$he organi+ations is choose are from the banking sector. 1anking primarily the business
of dealing in money and instruments of credit. 1anks were traditionally differentiated
from other financial institutions by their principal functions of accepting deposits subject
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to withdrawal or transfer by check and of making loans. A bank is a financial institution
licensed by a government. Its primary activity is to lend money. "any other financial
activities were allowed over time. !or e.ample banks are important players in financial
markets and offer financial services such as investment funds. In some countries such as
#ermany banks have historically owned major stakes in industrial corporations while in
other countries such as the Dnited &tates banks are prohibited from owning non/financial
companies. In (apan banks are usually the ne.us of a cross/share holding entity known
as the +aibatsu. In !rance banc assurance is prevalent as most banks offer insurance
services Eand now real estate services< to their clients. $he level of government regulation
of the banking industry varies widely with counties such as Iceland the Dnited Cingdom
and the Dnited &tates having relatively light regulation of the banking sector and
countries such as )hina having relatively heavier regulation.
1anks have traditionally been distinguished according to their primary functions.
)ommercial banks which include national/ and state/chartered banks trust companies
stock savings banks and industrial banks have traditionally rendered a wide range of
services in addition to their primary functions of making loans and investments and
handling demand as well as savings and other time deposits. "utual savings banks until
recently accepted only savings and other time deposits and offered limited types of
loans and services. $he fact that commercial banks were able to e.pand or contract their
loans and investments in accordance with changes in reserves and reserve re*uirements
further differentiated them from mutual savings banks where the volume of loans and
investments was governed by changes in customers@ deposits. "embership in the !ederal
'eposit Insurance )orporation is compulsory for all !ederal ,eserve member banks but
optional for other banks.
1:A Co.0an5@- intro/3ction=
Intro/3ction o1 Ha;i; Ban* o1 Pa*i-tan=
Ha;i; Ban* Li.ite/ commonly referred to as FHBLF and head/*uartered in Habib
1ank ;la+a Carachi ;akistan is the largest bank in ;akistan. H1L is a 1anking
)ompany which is engaged in )ommercial B ,etail 1anking and related services
domestically and overseas. H1L was incorporated on 29
th
August 1701 and operated in
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the private sector until its nationali+ation in 1750. H1L has been approved for
privati+ation and the privati+ation commission has selected a !inancial Advisor to
prepare a comprehensive plan and assist in the sale process. $he government has
appointed a professional management team to restructure the bank and to recover and
clean its doubtful and classified portfolio. H1L is one of the largest commercial bank of
;akistan. It accounts for a substantial share E28G< of the total commercial banking
market in ;akistan with a network of 1589 domestic branchesH 99 overseas branches in
23 countries spread over Iurope the "iddle Iast !ar Iast Asia Africa and the Dnited
&tatesH - H1L wholly owned &ubsidiaries namely Habib 1ank !inancial &ervices E;=$<
L$'. Carachi Habib !inance International L$' EHong Cong< and Habib !inance
Australia Ltd. J &ydneyH 2 (oint =entures namely Habib Kigeria 1ank Ltd. E08G< and
Himalayan 1ank Ltd. E28G< and 2 representative offices in Iran and Igypt. It continues
to dominate the commercial banking sector with a major market share in inward foreign
remittances E99G< and loans to small industries traders and farmers. H1L is one of
;akistan@s premier banks in terms of deposits and advances with a huge domestic and
international network. H1L provides its customers a complete range of banking products
and services including retail banking corporate and institutional banking trade finance
consumer finance and credit cards. H1L is currently rated AA ELong term< and A/1L
E&hort term< and has a balance sheet si+e of over D&' 11 billion. It is the first ;akistani
bank to raise $ier II )apital from e.ternal sources.
$i-ion=
MInabling people to advance with confidence and successN
Mi--ion=
M$o make our customer prosper our staff e.cels and creates value for shareholdersN
Intro/3ction o1 Ban* Al Fala)=
Ban* Al1ala) Li.ite/ is a private bank in ;akistan owned by the Abu 'habi #roup.
1ank Alfalah Limited was incorporated on (une 21st 1772 as a public limited company
under the )ompanies :rdinance 1760. Its banking operations commenced from
Kovember 1st 1775. $he bank is engaged in commercial banking and related services as
defined in the 1anking companies ordinance 1732. $he 1ank is currently operating
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through 179 branches in 50 cities with the registered office at 1.A.1uilding
I.I.)hundrigar Carachi.
$his facilitates the commitment to a culture of innovation and seeks out synergies with
clients and service providers to ensure uninterrupted services to its customers. 1ank Al/
!alah is known to perceive the re*uirements of customers and match them with *uality
products and service solutions. 'uring the past five years this bank has emerged as one
of the foremost financial institution in the region endeavoring to meet the needs of
tomorrow today. Aith a vision to be the premier organi+ation operating locally B
internationality that provides the complete range of financial services to all segments
under one roof 1ank Al/!alah is one of the most important entities in banking sector of
;akistan with a strong credit rating of AA for long term and A one plus for the short
term. &ince its inception as the new identity of H.).I.1 after the privati+ation in 1775
the management of the bank has implemented strategies and policies to carve a distinct
position for the bank in the market place. &ince its inception as the new identity of
H.).I.1 after the privati+ation in 1775 the management of the bank has implemented
strategies and policies to carve a distinct position for the bank in the market place.
&trengthened with the banking of the Abu 'habi #roup and driven by the strategic goals
set out by its board of management the 1ank has invested in revolutionary technology to
have an e.tensive range of products and services.
$i-ion=
M$o be the premier organi+ation operating locally B internationality that provides the
complete range of financial services to all segments under one roofN
Mi--ion=
M$o develop B deliver the most innovative products manage customer e.perience
deliver *uality services that contributes to brand strength establishes a competitive
advantage and enhances profitability thus providing value to the stakeholders of the
bankN
1:( Li-t o1 co.0etitor-=
&tandard )hartered 1ank
Kational 1anks
Allied 1ank Limited
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1:B O;jecti4e- o1 t)e 0roject=
$he objective of this project is to provide insight into how the banks work what are the
strengths and weakness of the banks which bank is financially more feasible than the
other. $he ratios will be compared of both the banks within the industry to see where the
banks stand. Ouestion such as PAhat are the strengths and weaknesses of each bankQ4
will be answered with the comparison of the ratios. $o give the stock holder a clear view
about the financial feasibility of both the banks so that they can take the appropriate
decision. And most significantly it will provide a good understanding of the business
cycle and the yield curve / both of which have a major impact on the economic
performance of banks.
$he primary objective of financial analysis is to forecast and>or determine the actual
financial status and performance of a project and where appropriate of the IAs. $his is
to enable A'1 to combine that information with all other pertinent data Etechnical
economic social etc.< to assess the feasibility viability and potential economic benefits
of a proposed or continuing lending operation. &econdary objective is the provision of
$echnical Assistance to a borrower and an IA to enable them to make similar
assessments for the project and to apply the techni*ues to other non/A'1 investments. A
tertiary objective is to encourage borrowers to make any necessary changes to their
institutional and financial management systems to facilitate the generation of appropriate
data to support good financial analysis. $he objectives of financial analysis as set out
above are intended to measure the achievement of financial objectives of a borrower the
project to be Eor being< financed. $he financial performance of a public and private sector
IA should normally be measured by the use of at least one indicator selected from the
range of the following groups of indicators derived from the financial analysis of a
project and its IAR Ei< operationH Eii< capital structure and Eiii< li*uidity. $his means that
if only one indicator from one of the three categories of indicators above would be the
subject of a loan covenant the remaining indicator or indicators from each group above
recommended by the financial analyst should be the subject of periodic reporting. $he
efficient allocation of resources is an important consideration in pricing policy
particularly for ,IIA services. !inancial analysis is used to describe the impact of such a
policy.
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I worked on the financial statements of the bank i.e. 1alance sheet of the bank and make
some essential calculations in order to give you an idea about the financial stability of the
bank.
1:6 Si2ni1icance o1 t)e 0roject=
!inancial statements provide an overview of a business@ financial condition in both short
and long term. All the relevant financial information of a business enterprise presented in
a structured manner and in a form easy to understand is called the financial statements.
$herefore these financial statements are very useful for the stake holder as they obtain all
insight information. In assessing the significance of various financial data e.perts engage
in ratio analyses the process of determining and evaluating financial ratios. A financial
ratio is a relationship that indicates something about a company@s activities such as the
ratio between the company@s current assets current liabilities or between its accounts
receivable and its annual sales. $he basic source for these ratios is the company@s
financial statements that contain figures on assets liabilities profits or losses. !inancial
ratios are only meaningful when compared with other information. &ince they are most
often compared with industry data ratios help an individual understand a company@s
performance relative to that of competitorsH they are often used to trace performance over
time.
,atio analysis can reveal much about a company and its operations. However there are
several points to keep in mind about ratios. !irst financial statement ratios are FflagsF
indicating areas of strength or weakness. :ne or even several ratios might be misleading
but when combined with other knowledge of a company@s management and economic
circumstances ratio analysis can tell much about a corporation. &econd there is no single
correct value for a ratio. $he observation that the value of a particular ratio is too high
too low or just right depends on the perspective of the analyst and on the company@s
competitive strategy. $hird a ratio is meaningful only when it is compared with some
standard such as an industry trend ratio trend a ratio trend for the specific company
being analy+ed or a stated management objective.
$he significance of my project stems from the very nature of the financial statements i.e.
they are usually lengthy bulky documents which have a huge array of numbers not
readily understandable. !inancial statement analysis is the process of e.amining
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relationships among financial statement elements and making comparisons with relevant
information. It is a valuable tool used by investors and creditors financial analysts and
others in their decision/making processes related to stocks bonds and other financial
instruments. $he goal in analy+ing financial statements is to assess past performance and
current financial position and to make predictions about the future performance of a
company. Investors who buy stock are primarily interested in a company@s profitability
and their prospects for earning a return on their investment by receiving dividends and>or
increasing the market value of their stock holdings. )reditors and investors who buy debt
securities such as bonds are more interested in li*uidity and solvencyR the company@s
short/and long/run ability to pay its debts. !inancial analysts who fre*uently speciali+e
in following certain industries routinely assess the profitability li*uidity and solvency
of companies in order to make recommendations about the purchase or sale of securities
such as stocks and bonds. Analysts can obtain useful information by comparing a
company@s most recent financial statements with its results in previous years and with the
results of other companies in the same industry. "y aim is to summari+e all that data into
a form which is easily understood by all the relevant parties.
;8 Proce--in2 an/ Anal5-i-
$his section should provide solid or concrete foundations to the study. Ouality and value of
the research report depends upon how precisely and accurately the data is collected
processed interpreted and analy+ed so that fruitful conclusions may be drawn out of it. It
includesR
Data Collection So3rce-=
$o think about the issue of data collection means you are wondering about the
characteristics of the methods used. Iach method has its own advantages and
inconveniences. Aith each techni*ue you might also found a few people who will
disapprove its use for such or such reason.
At the beginning of a research E;roject< it can be important to look for documentary
sources. It is what some will callR Mthe review of papers F. And here I use the term
documentary sources in the widest meaning of this term. Indeed the goal is not to find
only written sources. $hese documentary sources I use areR
&ites on the internet
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Articles from scientific publications
'ocuments on various format Eaudio video or computer support<
Advisers with a particular e.pertise
$he purpose of the gathering of documentary sources is to have a better idea of what have
been said or written about my subject. It is not for the intellectual beauty of the matter
which I should do that. $he search for documentary sources allowed me to put a more
ade*uate glance at the data you will later gather.
Also I use secondary sources for data collection for my work that include internet and
then I use stock e.change for data gathering as the banks are listed in Lahore stock
e.change. &o I got their annual reports from there.
Data Collection Tool-=
According to the topic I have selected for my project the tool used for data collection is
direct observation of the financial statements of the banks.
)ompany profile forms
)ompany comparison forms
&tock e.change
Internet past articles
)ase &tudy
Data Proce--in2 an/ Anal5-i-=
Ae can use several tools to evaluate a company but I will use one of the most valuable
tool that is M1inancial ratio-M. ,atios are an analyst4s microscopeH they allow us get a
better view of the firm4s financial health than just looking at the raw financial statements.
,atios are useful both to internal and e.ternal analysts of the firm. For internal
03r0o-e-=ratios can be useful in planning for the future setting goals and evaluating the
performance of managers. E7ternal anal5-t- 3-e ratio-to decide whether to grant credit
to monitor financial performance to forecast financial performance and to decide
whether to invest in the company. I will use "icrosoft Aord and "icrosoft I.cel work
sheets to compute the different ratios and analysis.
Project 0rocee/in2-
1: ATIO ANALYSIS=
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!inancial ratios are useful indicators of a firm@s performance and financial situation.
!inancial ratios can be used to analy+e trends and to compare the firm@s financials to
those of other firms. ,atio analysis is the calculation and comparison of ratios which are
derived from the information in a company@s financial statements. !inancial ratios are
usually e.pressed as a percent or as times per period. ,atio analysis is a widely used tool
of financial analysis. It is defined as the systematic use of ratio to interpret the financial
statements so that the strength and weaknesses of a firm as well as its historical
performance and current financial condition can be determined. $he term ratio refers to
the numerical or *uantitative relationship between two variables. Aith the help of ratio
analysis conclusion can be drawn regarding several aspects such as financial health
profitability and operational efficiency of the undertaking. ,atio points out the operating
efficiency of the firm i.e. whether the management has utili+ed the firm4s assets correctly
to increase the investor4s wealth. It ensures a fair return to its owners and secures
optimum utili+ation of firm4s assets. ,atio analysis helps in inter/firm comparison by
providing necessary data. An inter firm comparison indicates relative position. It provides
the relevant data for the comparison of the performance of different departments. If
comparison shows a variance the possible reasons of variations may be identified and if
results are negative the action may be initiated immediately to bring them in line. %et
another dimension of usefulness or ratio analysis relevant from the =iew point of
management is that it throws light on the degree efficiency in the various activity ratios
measures this kind of operational efficiency.
a8 Li,3i/it5 atio-
;8 Le4era2e atio-
c8 Pro1ita;ilit5 atio-
/8 Acti4it5 atio-
e8 Mar*et atio-
18 State.ent- o1 Ca-) Flo6
atio Anal5-i-
a8 Li,3i/it5 atio-
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Li*uidity ratios measure a firm4s ability to meet its current obligations. $hese includeR
C3rrent atio=
C3rrent atio C C3rrent A--et- D C3rrent Lia;ilitie-
$his ratio indicates the e.tent to which current liabilities are covered by those assets
e.pected to be converted to cash in the near future. )urrent assets normally include cash
marketable securities accounts receivables and inventories. )urrent liabilities consist of
accounts payable short/term notes payable current maturities of long/term debt accrued
ta.es and other accrued e.penses. )urrent assets are important to businesses because
they are the assets that are used to fund day/to/day operations and pay ongoing e.penses.
HABIB BANK
Year >&&6 >&&' >&&<
C3rrent A--et- 959311183 351975970 5-179037-
C3rrent Lia;ilitie- 0680996-2 93339706- 3-17068-6
C3rrent ratio 1:>& 1:19 1:16
BANK AL FALAH
Year >&&6 >&&' >&&<
C3rrent A--et- 239162991 -13752626 --9215051
C3rrent Lia;ilitie- 207783822 26360-700 -19053137
C3rrent ratio 1:&6 1:1& 1:&6
Inter0retation
HABIB BANK
$he current ratio for the year 2883 2885 B 2886 is 1.28 1.17 B 1.13 respectively
compared to standard ratio 2R1 this ratio is lower which shows low short term li*uidity
efficiency at the same time holding less than sufficient current assets mean inefficient use
of resources
BANK AL FALAH
$he ratios for the last - years are 1.83 1.18 B 1.83 shows below standard of 2R1 which
means efficient use of funds but at the risk of low li*uidity.
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Ca0ital
Sale- to +or*in2 Ca0ital=
Sale- to +or*in2 Ca0ital C Sale- D +or*in2 Ca0ital
&ales to working capital give an indication of the turnover in working capital per year. A
low working capital indicates an unprofitable use of working capital
.
HABIB BANK
Year >&&6 >&&' >&&<
Sale- 0-369508 0-369508 3--898--
+or*in2 Ca0ital 79199250 1807-6111 188883399
Sale- to +or*in2
&:B ti.e- &:B ti.e- &:6 ti.e-
BANK AL FALAH
Year >&&6 >&&' >&&<
Sale-
21191470 25783871 31046583
+or*in2 Ca0ital 19253927 -8126660 17501-82
Sale- to +or*in2 1:A< &:<B 1:B'
Inter0retation=
HABIB BANK=
$his li*uidity ratio for the years 2883 2885 B 2886 is 8.98.9 B 8.3 times respectively
compared to standard ratio 2R1 this ratio is lower which shows low short term li*uidity
efficiency at the same time holding less than sufficient current assets mean inefficient use
of resources
BANK AL FALAH=
$he ratios for the last - years are 1.83 1.18 B 1.83 shows below standard of 2R1 which
means efficient use of funds but at the risk of low li*uidity.
+or*in2 Ca0ital=
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+or*in2 Ca0italC C3rrent A--et- E C3rrent Lia;ilitie-
A measure of both a company@s efficiency and its short/term financial health. ;ositive
working capital means that the company is able to pay off its short/term
liabilities. Kegative working capital means that a company currently is unable to meet its
short/term liabilities with its current assets Ecash accounts receivable andinventory).
Alsoknownas "networkinca!ital""ort#e"workinca!italratio".
HABIB BANK
Year >&&6 >&&' >&&<
C3rrent A--et- 959311183 351975970 5-179037-
C3rrent Lia;ilitie- 0680996-2 93339706- 3-17068-6
+or*in2 Ca0ital 9B1BB>'( 1&(9A<111 1&&&&66BB
BANK AL FALAH
Year >&&6 >&&' >&&<
C3rrent A--et- 239162991 -13752626 --9215051
C3rrent Lia;ilitie- 207783822 26360-700 -19053137
+or*in2 Ca0ital 1B>'6B>9 A&1><<<( 19'(1A&>
Inter0retation=
HABIB BANK=
It is very clear from the above calculations that the working capital of the bank is
gradually increasing over the years which shows good short term li*uidity efficiency.
BANK AL FALAH=
$his ratio increased to a great e.tent in 2885 almost double of the year 2883 but later on
in the year 2886 it went down again.
;8 Le4era2e atio-=
1y using a combination of assets debt e*uity and interest payments leverage ratio@s are
used to understand a company@s ability to meet it long term financial obligations.
16
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Leverage ratios measure the degree of protection of suppliers of long term funds. $he
level of leverage depends on a lot of factors such as availability of collateral strength of
operating cash flow and ta. treatments. $hus investors should be careful about
comparing financial leverage between companies from different industries. !or e.ample
companies in the banking industry naturally operates with a high leverage as collateral
their assets are easily collaterali+ed.
$hese includeR
Ti.e Intere-t Earne/=
TIE atio C EBIT D Intere-t C)ar2e-
$he interest coverage ratio tells us how easily a company is able to pay interest e.penses
associated to the debt they currently have. $he ratio is designed to understand the
amount of interest due as a function of company4s earnings before interest and ta.es
EI1I$<. $his ratio measures the e.tent to which operating income can decline before the
firm is unable to meet its annual interest cost.
HABIB BANK
Year >&&6 >&&' >&&<
EBIT -2800920 -0276950 069977-9
Intere-t C)ar2e- 1-2808-5 1719-795 1719-795
TIE ratio >:(A 1:'9 1:<A
BANK AL FALAH
Year >&&6 >&&' >&&<
EBIT 155766-1 21193919 22129710
Intere-t c)ar2e- 192-2663 1332873- 28--1170
TIE ratio 1:16 1:>' 1:&<
Inter0retation
HABIB BANK
17
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Ae can see from this ratio analysis that this company has covered their interest e.penses
2.0- times in 2883 1.57 times in 2885 and 1.6 times in 2886. It means they have
performed pretty much same in 2885 and 2886 but has taken a different look in 2883.
As in 2883 they issued a little high number of long/term loans and does not have good
li*uidity position their I1I$ became high thus making $II a little high as well
BANK AL FALAH
Ae can see that this company has covered their interest e.penses 1.13 times in 2883
1.25 times in 2885 and 1.86 times in 2886. It means they haven4t improved in the past
years.
De;t atio=
De;t atio C Total De;t D Total A--et-
$he ratio of total debt to total assets generally called the debt ratio measures the
percentage of funds provided by the creditors. $he proportion of a firm@s total assets that
are being financed with borrowed funds. $he debt ratio is calculated by dividing total
long/term and short/term liabilities by total assets. $he higher the ratio the more leverage
the company is using and the more risk it is assuming. Assets and liabilities are found on
a company@s balance sheet.
HABIB BANK
Year >&&6 >&&' >&&<
Total /e;t 9-3606182 326590872 36250579-
Total A--et- 978271036 371771921 59572667
De;t atio &:91 &:91 &:9
BANK AL FALAH
Year >&&6 >&&' >&&<
Total /e;t 23-00-973 -12359-86 --1703829
Total A--et- 259369901 -26679192 -06778530
De;t atio &:9B &:9B &:9B
28
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Inter0retation=
HABIB BANK
)alculating the debt ratio we came to see that this company is highly leveraged one
BANK AL FALAH
)alculating the debt ratio we came to see that this company is highly leveraged one.
De;t to E,3it5 atio=
De;t to E,3it5 atio C Total /e;t D Total E,3it5
$he debt to e*uity ratio is the most popular leverage ratio and it provides detail around
the amount of leverage Eliabilities assumed< that a company has in relation to the monies
provided by shareholders. As you can see through the formula below the lower the
number the less leverage that a company is using. $he debt to e*uity ratio gives the
proportion of a company Eor person@s< assets that are financed by debt versus e*uity. It is
a common measure of the long/term viability of a company@s business and along with
current ratio a measure of its li*uidity or its ability to cover its e.penses. As a result
debt to e*uity calculations often only includes long/term debt rather than a company@s
total liabilities. A high debt to e*uity ratio implies that the company has been
aggressively financing its activities through debt and therefore must pay interest on this
financing.
HABIB BANK
Year >&&6 >&&' >&&<
Total /e;t
9-3606182 326590872 36250579-
Total E,3it5 09155330 9983-129 51268782
De;t To E,3it5 atio 11:<< 11:(> 9:B<
BANK AL FALAH
21
S)ei*) +a,a- A).e/
Mc&'&(&&('9
6ort) atio
6ort) atio
Year >&&6 >&&' >&&<
Total /e;t
23-00-973 -12359-86 --1703829
Total E,3it5
18952389 1-53335- 1038692-
De;t To E,3it5 atio
>(:91 >>:'1 >>:'>
Inter0retation
HABIB BANK
Ae can see from the above calculations that this ratios continuously decreasing in the last
three years.
BANK AL FALAH
)alculating this debt ratio we can see that it was 20.71 22.51 B 22.52 in the year 2883
2885 B 2886 respectively. $his shows a decline in the ratio over the years.
C3rrent +ort) D Net 6ort) atio=
C3rrent +ort) to Net 6ort) atioC C3rrent +ort) D Net 6ort) atio
Ae can calculate current worth and net worth by using following formulasR
C3rrent +ort) S $otal )urrent Assets J $otal )urrent Liabilities
Net +ort) S $otal Assets / $otal Liabilities
HABIB BANK
Year >&&6 >&&' >&&<
C3rrent +ort) 79199250 1807-6111 188883399
Net +ort) 9-00--33 3-2-5027 591680-3
C3rrent +ort) to Net
1:'< 1:66 1:AA
BANK AL FALAH
Year >&&6 >&&' >&&<
C3rrent +ort) 19253927 -8126660 17501-82
Net +ort) 12201709 13217600 158005-7
C3rrent +ort) to Net
1:>(' 1:<B 1:1B
22
S)ei*) +a,a- A).e/
Mc&'&(&&('9
6ort) atio
6ort) atio
Inter0retation
HABIB BANK
Ae can see from the above calculations that this ratios continuously decreasing in the last
three years. In 2883 it was 1.56 in 2885 it was 1.33 and in 2886 it was 1.--.
BANK AL FALAH
Analysis shows that this ratio was as high as 1.2 among three years. However it declined
to 1.19 in the year 2886. In 2885 the ratio somewhat increased to 1.69.
Total Ca0itali?ation atio=
Total Ca0itali?ation atio C Lon2Fter. /e;t D lon2Fter. /e;t G -)are)ol/er-H e,3it5
$he capitali+ation ratio measures the debt component of a company@s capital structure or
capitali+ation Ei.e. the sum of long/term debt liabilities and shareholders@ e*uity< to
support a company@s operations and growth. Long/term debt is divided by the sum of
long/term debt and shareholders@ e*uity. $his ratio is considered to be one of the more
meaningful of the FdebtF ratios / it delivers the key insight into a company@s use of
leverage.
HABIB BANK
Year >&&6 >&&' >&&<
Lon2 Ter./e;t 93-72258 32870387 98577719
Lon2 ter./e;tGE,3it5 1819377-0 1151955-0 122868615
Ca0itali?ationatio
&:B6 &:BA &:(>
BANK AL FALAH
Year >&&6 >&&' >&&<
Lon2 Ter./e;t 1-9-5950 296-1-30 13037693
Lon2 ter./e;tGE,3it5 20118157 -79768-5 -1856-57
Ca0itali?ationatio
&:B6 &:6B &:B>
Inter0retation
2-
S)ei*) +a,a- A).e/
Mc&'&(&&('9
De;t=6ort) atio
6ort) atio
De;t=6ort) atio
HABIB BANK
It is obvious from the above calculations that there is a gradual fall in this ratio over the
years.
BANK AL FALAH
$he ratios for the last - years are 8.93 8.39 and 8.92. &hows below standard of 2R1
Lon2 ter. A--et- 4er-3- Lon2 ter. De;t=
Lon2 ter. A--et- 4er-3- Lon2 ter. De;tC Lon2 Ter. A--et-D Lon2 Ter. De;t-
HABIB BANK
Year >&&6 >&&' >&&<
Lon2 Ter. A--et- 10368-32 28-7-725 2975-373
Lon2 ter. /e;t 93-72258 32870387 98577719
L:T A--et- DL:T De;t-
&:>6 &:AA &:B1
BANK AL FALAH
Year >&&6 >&&' >&&<
Lon2 Ter. A--et- 1-55-27- 11722-20 18982778
Lon2 ter. /e;t 1-9-5950 296-1-30 13037693
L:T A--et- DL:T De;t-
1:&1 &:(6 &:6A
De;t Co4era2e atio=
De;t Co4era2e atio C Net O0eratin2 Inco.e D Total De;t
HABIB BANK
Year >&&6 >&&' >&&<
Net O0eratin2 Inco.e 12850532 912109- 9399936
Total De;t 9-3606182 326590872 36250579-
De;t Co4era2e atio
&:&> &:&&< &:&&<A
BANK AL FALAH
20
S)ei*) +a,a- A).e/
Mc&'&(&&('9
6ort) atio 9
Year >&&6 >&&' >&&<
Net O0eratin2 Inco.e
10950172 19116807 13668065
Total De;t 23-00-973 -12359-86 --1703829
De;t Co4era2e atio &:&BBA>1<6 &:&(<AB&6AA &:&B&<BA1
c8 Pro1ita;ilit5 atio-=
;rofitability is the net result of a number of policies and decisions. $his section of the
discusses the different measures of corporate profitability and financial performance.
$hese ratios much like the operational performance ratios give users a good
understanding of how well the company utili+ed its resources in generating profit and
shareholder value. $he long/term profitability of a company is vital for both the
survivability of the company as well as the benefit received by shareholders. It is these
ratios that can give insight into the all important FprofitF. ;rofitability ratios show the
combined effects of li*uidity asset management and debt on operating results. $hese
ratios e.amine the profit made by the firm and compare these figures with the si+e of the
firm the assets employed by the firm or its level of sales. $here are four important
profitability ratios that I am going to analy+eR
Net Pro1it Mar2in=
Net Pro1it .ar2in C Net Pro1it D Sale- 7 1&&
Ket ;rofit "argin gives us the net profit that the business is earning per dollar of sales.
$his margin indicates the profit after all the costs have been incurred it shows that what
G of turnover is represented by the net profit. An increase in the ratios indicates that a
firm is producing higher net profit of sales than before.
HABIB BANK
Year >&&6 >&&' >&&<
Net Pro1it 12588-19 188608-5 19310828
Sale- 0-369508 98061821 3--898--
Net Pro1it Mar2in >9:&'I 19:9'I >(:66I
BANK AL FALAH
29
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Mar2in
Year >&&6 >&&' >&&<
Net Pro1it 1532371 -1-8227 1-81-81
Sale- 21171058 2956-651 -180396-
Net Pro1it Mar2in <:A1I 1>:1I (I
Inter0retation
HABIB BANK
$herefore the Ket ;rofit "argin was 6.-1G in 2883 increase to 12.1G in 2885 and then
decrease to 0G in 2886
BANK AL FALAH
$herefore the Ket ;rofit "argin was 27.85G in 2883 decrease to 17.75G in 2885 and
then again increased to 20.33G in 2886
O0eratin2 Inco.e Mar2in=
O0eratin2 Inco.e Mar2in CO0eratin2 Inco.e 7 1&&
Net Sale-
O0eratin2 Inco.e Mar2in C
Ket mark/up > interest income after provisions L "ark/up > return > interest e.pensed /
$otal non mark/up > interest e.penses
HABIB BANK
Year >&&6 >&&' >&&<
O0eratin2 Inco.e 29256577 20259018 -55-6616
Net Sale- 0-369508 98061821 3--898--
O0eratin2Inco.e
B':9I (<I B9:6I
BANK AL FALAH
23
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Mar2in
Year >&&6 >&&' >&&<
O0eratin2 Inco.e 10950172 19116807 13668065
Net Sale- 21171058 2956-651 -180396-
O0eratin2Inco.e
&:6<''A<6&( &:B<6AA'((A &:B(A'1(<
et3rn on A--et-=
et3rn on A--et- JOA8 C Pro1it a1ter Ta7ation D A4era2e Total a--et- 7 1&&
,:A A measure of a company@s profitability e*ual to a fiscal year@s earnings divided by
its total assets e.pressed as a percentage. $his is an important ratio for companies
deciding whether or not to initiate a new project. $he basis of this ratio is that if a
company is going to start a project they e.pect to earn a return on it ,:A is the return
they would receive. &imply put if ,:A is above the rate that the company borrows at
then the project should be accepted if not then it is rejected.
HABIB BANK
Year >&&6 >&&' >&&<
Net inco.e 12588-19 188608-5 19310828
TotalA4era2e a--et- 997972363.9 301101070.9 520797799
OA >:>'I 1:B'I >:1BI
BANK AL FALAH
Year >&&6 >&&' >&&<
Net inco.e 1532371 -1-8227 1-81-81
Total A4era2e a--et- 1-5733725.9 -82278-03.9 --6702796
OA 1:>'I 1:&1I &:&A<I
Inter0retation
HABIB BANK
25
S)ei*) +a,a- A).e/
Mc&'&(&&('9
,eturn on assets decreased in 2885 and 2886 and it was ma.imum in year 2883. $his
may have occurred because &*uare used more debt financing in 2883 compared to 2885
and 2886 which resulted in more interest cost and brought the Ket income down.
.
BANK AL FALAH
,eturn on assets decreased gradually throughout the years.
et3rn on E,3it5 JOE8=
et3rn on Total E,3it5 CPro1it a1ter ta7ation 7 1&
Total E,3it5
,eturn on I*uity measures the amount of Ket Income earned by utili+ing each dollar of
$otal common e*uity. It is the most important of the M1ottom lineN ratio. 1y this we can
find out how much the shareholders are going to get for their shares. $his ratio indicates
how profitable a company is by comparing its net income to its average shareholders@
e*uity. $he return on e*uity ratio E,:I< measures how much the shareholders earned for
their investment in the company. $he higher the ratio percentage the more efficient
management is in utili+ing its e*uity base and the better return is to investors.
HABIB BANK
Year >&&6 >&&' >&&<
Net inco.e 12588-19 188608-5 19310828
TotalE,3it5 09155330 9983-129 51268782
OE ><:11I 1<:A1I >1:9I
BANK AL FALAH
Year >&&6 >&&' >&&<
Net inco.e 1532371 -1-8227 1-81-81
Total E,3it5 18952389 1-53335- 1038692-
OE 16:6I >>:BI <:9I
Inter0retation
26
S)ei*) +a,a- A).e/
Mc&'&(&&('9
HABIB BANK
$he ,eturn on I*uity was ma.imum in 2883 but decreased in 2885 and went down more
in 2886. $his again may have happened due to the issue of more long/term debt in 2885
and 2886.
BANK AL FALAH
$he ,eturn on I*uity was ma.imum in 2885 but decreased to an e.tent in the following
years 2885 and 2886. $his again may have happened due to the issue of more long/term
debt in 2885 and 2886.
D3Pont et3rn on A--et-=
D3Pont et3rn on A--et- C Pro1it a1ter ta7ation 7 1&&
Total A--et-
HABIB BANK
Year >&&6 >&&' >&&<
Net Pro1it 12588-19 188608-5 19310828
Total a--et- 978271036 371771921 595726-67
D3PontOA >:1BI 1:(6I >:&6I
BANK AL FALAH
Year >&&6 >&&' >&&<
Net Pro1it 1532371 -1-8227 1-81-81
Total a--et- 259369901 -26679192 -06778530
D3PontOA &:&&6 &:&&9 &:&&A
O0eratin2 A--et- T3rno4er=
O0eratin2 A--et- T3rno4er CO0eratin2 A--et- 7 1&&
Net Sale-
HABIB BANK
27
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Mar2in
Mar2in
Year >&&6 >&&' >&&<
O0eratin2 A--et- 702-8082 75297328 118971585
Net Sale- 0-369508 98061821 3--898--
O0eratin2A--et-T3rno4er
19>:'I 19>:'I 1'(:'&I
BANK AL FALAH
Year >&&6 >&&' >&&<
O0eratin2 A--et- 91870-82 975-7008 36801351
Net Sale- 21171058 2956-651 -180396-
O0eratin2A--et-T3rno4er
>:(1I >:A1I >:19I
Detail o1 O0eratin2 A--et- o1 Ha;i; Ban* Li.ite/
>&&<
O0eratin2 A--et-=
)ash and balances with treasury banks 939--1-0
1alances with other banks -7-85-21
:perating fi.ed assets 10591292
11&B91'&'
>&&'
O0eratin2 A--et-=
)ash and balances with treasury banks 99065330
1alances with other banks 25828580
:perating fi.ed assets 1-568999
9'>B96>&
>&&6
O0eratin2 A--et-=
)ash and balances with treasury banks 03-18056
1alances with other banks -9739806
-8
S)ei*) +a,a- A).e/
Mc&'&(&&('9
9(#>A&#(&>
Detail o1 O0eratin2 A--et- o1 Ban* Al Fala) Li.ite/
>&&<
O0eratin2 A--et-=
)ash and balances with treasury banks 25697-38
1alances with other banks 125-1792
B1&9(A&>
>&&'
O0eratin2 A--et-=
)ash and balances with treasury banks 270-3-56
1alances with other banks 16-685-6
:perating fi.ed assets 11722-20
B9'A9((&
>&&6
O0eratin2 A--et-=
)ash and balances with treasury banks -2365--9
1alances with other banks 2196180-
:perating fi.ed assets 1-55-27-
6<&(16'1
et3rn on O0eratin2 A--et-=
et3rn on O0eratin2 A--et- CPro1it a1ter Ta7ation 7 1&&
O0eratin2 a--et-
HABIB BANK
-1
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Year >&&6 >&&' >&&<
Net Pro1it 12588-19 188608-5 19310828
O0eratin2 A--et-
702-8082 75297328
118971585
et3rnonO0eratin2 A--et- 1A:(<I 1&:A'I 11:19I
BANK AL FALAH
Year >&&6 >&&' >&&<
Net Pro1it
1532371 -1-8227 1-81-81
O0eratin2 A--et-
91870-82 975-7008 36801351
et3rnonO0eratin2 A--et- &:&A( &:&B> &:&19
Sale- to Fi7e/ A--et-=
$his ratio is indicates that how much sales are contributed by investment in fi.ed Assets.
Sale- to Fi7e/ A--et- C Net Sale- D Fi7e/ A--et-
HABIB BANK
Year >&&6 >&&' >&&<
Net Sale- 0-369508 98061821 3--898--
Fi7e/ A--et- 11790653 1-568999
10591292
Sale- to Fi7e/ A--et- A:6B ti.e- A:66 ti.e- A:66 ti.e-
BANK AL FALAH
Year >&&6 >&&' >&&<
Net Sale- 21171058 2956-651 -180396-
Fi7e/ A--et- 18982778 11722-20 1-55-27-
Sale- to Fi7e/ A--et- >:&1' ti.e- >:16 ti.e- >:>B ti.e-
/8 Acti4it5 atio-=
-2
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Activity ratio are sometimes are called efficiency ratios. Activity ratios are concerned
with how efficiency the assets of the firm are managed. $hese ratios e.press relationship
between level of sales and the investment in various assets inventories receivables fi.ed
assets etc.
Total A--et T3rno4er=
Total A--et T3rno4er C Total Sale- D Total A--et-
$he amount of sales generated for every dollar@s worth of assets. It is calculated by
dividing sales in dollars by assets in dollars. Asset turnover measures a firm@s efficiency
at using its assets in generating sales or revenue / the higher the number the better. It also
indicates pricing strategyR companies with low profit margins tend to have high asset
turnover while those with high profit margins have low asset turnover.
HABIB BANK
Year >&&6 >&&' >&&<
Total Sale- 0-369508 98061821 3--898--
Total A--et- 978271036 371771921 595726-67
Total A--et T3rno4er &:&' &:&' &:&<
BANK AL FALAH
Year >&&6 >&&' >&&<
Total Sale- 21171058 2956-651 -180396-
Total A--et- 259369901 -26679192 -06778530
Total A--et T3rno4er &:&' &:&' &:&<
Inter0retation
HABIB BANK
$he ,eturn on I*uity was ma.imum in 2883 but decreased in 2885 and went down more
in 2886. $his again may have happened due to the issue of more long/term debt in 2885
and 2886.
--
S)ei*) +a,a- A).e/
Mc&'&(&&('9
BANK AL FALAH
$he ,eturn on I*uity was ma.imum in 2885 but decreased to an e.tent in the following
years 2885 and 2886. $his again may have
e8 Mar*et atio=
"arket =alue ,atios relate an observable market value the stock price to book values
obtained from the firm@s financial statements.
Di4i/en/ 0er S)are E DPS=
Di4i/en/ 0er S)are CTotal a.o3nt o1 Di4i/en/
N3.;er o1 o3t-tan/in2 -)are-
;er share capital S 18 per share
Or
Ko. of shares outstanding S share capital > 18
HABIB BANK
Year >&&6 >&&' >&&<
Total a.o3nt o1 Di4i/en/ 371-98 1-61888 25-8291
N3.;er o1 S)are- 378888 378888 597888
Di4i/en/ 0er S)are 1:&&19 >:&&1( A:B9'
BANK AL FALAH
Year >&&6 >&&' >&&<
Total a.o3nt o1 Di4i/en/ 88 88 759888
N3.;er o1 S)are- 988888 398888 577988
Di4i/en/ 0er S)are && && 1:>1
KoteR $here is no dividend paid by the bank in the year 2883 and 2885
Earnin2 Per S)areF EPS=
Earnin2 Per S)are C Pro1it a1ter Ta7ation
-0
S)ei*) +a,a- A).e/
Mc&'&(&&('9
N3.;er o1 S)are-
$he portion of a company@s profit allocated to each outstanding share of common
stock. Iarnings per share serve as an indicator of a company@s profitability. Iarnings per
share are generally considered to be the single most important variable in determining a
share@s price. It is also a major component used to calculate the price/to/earnings
valuation ratio.
HABIB BANK
Year >&&6 >&&' >&&<
Pro1it a1ter Ta7ation 12588-19 188608-5 19310828
N3.;er o1 S)are- 378888 378888 597888
Earnin2 Per S)are 1<:(1 1(:61 >&:B'
BANK AL FALAH
Year >&&6 >&&' >&&<
Pro1it a1ter Ta7ation 1532371 -1-8227 1-81-81
N3.;er o1 S)are- 988888 398888 577988
Earnin2 Per S)are A:B>B (:<1B 1:6>'
Price D Earnin2 atio=
Price D Earnin2 atio C Stoc* Price Per S)are
Earnin2 Per S)are-
$he ;rice/Iarnings ,atio is calculated by dividing the current market price per share of
the stock by earnings per share EI;&<. EIarnings per share are calculated by dividing net
income by the number of shares outstanding.<
$he ;>I ,atio indicates how much investors are willing to pay per dollar of current
earnings. As such high ;>I ,atios are associated with growth stocks. EInvestors who are
willing to pay a high price for a dollar of current earnings obviously e.pect high earnings
in the future.< In this manner the ;>I ,atio also indicates how e.pensive a particular
stock is. $his ratio is not meaningful however if the firm has very little or negative
earnings. $he ;rice/Iarnings ,atio is calculated by dividing the current market price per
-9
S)ei*) +a,a- A).e/
Mc&'&(&&('9
share of the stock by earnings per share EI;&<. EIarnings per share are calculated by
dividing net income by the number of shares outstanding.< $he ;>I ,atio indicates how
much investors are willing to pay per dollar of current earnings. As such high ;>I ,atios
are associated with growth stocks. EInvestors who are willing to pay a high price for a
dollar of current earnings obviously e.pect high earnings in the future.< In this manner
the ;>I ,atio also indicates how e.pensive a particular stock is. $his ratio is not
meaningful however if the firm has very little or negative earnings.
HABIB BANK
Year >&&6 >&&' >&&<
Stoc* 0rice 0er -)are 18 18 18
EPS 16.01 10.31 28.95
Price D Earnin2 atio &:B( &:6< &:(9
BANK AL FALAH
Year >&&6 >&&' >&&<
Stoc* 0rice 0er -)are 18 18 18
EPS -.929 0.619 1.325
Price D Earnin2 atio >:<A >:&' 6:1(
Inter0retation
HABIB BANK
$he ;>I ratio was 8.90 times in 2883 and increased further to as high as 8.36 times in the
following year. However in 2886 it declined to 8.07 times which is an alarming signal
for the potential investors.
BANK AL FALAH
$he ;>I ratio was 2.6- times in 2883 and decreased a little bit in 2885. However in 2886 it
increased as much higher than before to 3.10 times.
-3
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Di4i/en/ Pa5o3t atio=
Di4i/en/ Pa5o3t atio CDi4i/en/ 0er S)are
Earnin2 0er S)are
$he percentage of earnings paid to shareholders in dividends. $he payout ratio provides
an idea of how well earnings support the dividend payments. "ore mature
companies tend to have a higher payout ratio. $his ratio identifies the percentage of
earnings Enet income< per common share allocated to paying cash dividends to
shareholders. $he dividend payout ratio is an indicator of how well earnings support the
dividend payment.
HABIB BANK
Year >&&6 >&&' >&&<
DPS 1.8817 2.8810 -.975
EPS 16.01 10.31 28.95
Di4i/en/ Pa5o3t atio &:&B(( &:1A' &:1'B
BANK AL FALAH
Year >&&6 >&&' >&&<
DPS 88 88 1.21
EPS -.929 0.619 1.325
Di4i/en/ Pa5o3t atio && && &:'(
Di4i/en/ Yiel/=
Di4i/en/ Yiel/ CDi4i/en/ 0er S)are
S)are Price
!inancial ratio that shows how much a company pays out in dividends each year relative
to its share price. In the absence of any capital gains the dividend yield is the return on
investment for a stock. A stock@s dividend yield is e.pressed as an annual percentage and
-5
S)ei*) +a,a- A).e/
Mc&'&(&&('9
is calculated as the company@s annual cash dividend per share divided by the current price
of the stock. $he dividend yield is found in the stock *uotes of dividend/paying
companies. Investors should note that stock *uotes record the per share dollar amount of
a company@s latest *uarterly declared dividend. $his *uarterly dollar amount is annuali+ed
and compared to the current stock price to generate the per annum dividend yield which
represents an e.pected return.
HABIB BANK
Year >&&6 >&&' >&&<
DPS 1:&&19 >:&&1( A:B9'
S)are Price 18 18 18
Di4i/en/ Yiel/ &:1&&19 &:>&&1( &:AB9'
BANK AL FALAH
Year >&&6 >&&' >&&<
DPS && && 1:>1
S)are Price 18 18 18
Di4i/en/ Yiel/ && && &:1>1
Boo* $al3e 0er S)are=
Boo* $al3e 0er S)are C S)are)ol/er-@ E,3it5
S)are Ca0ital
$his is defined as the )ommon &hareholder@s I*uity divided by the &hares :utstanding
at the end of the most recent fiscal *uarter. It is the Indication of the net worth of the
corporation. &omewhat similar to the earnings per share but it relates the stockholder@s
e*uity to the number of shares outstanding giving the shares a raw value. )omparing the
market value to the book value can indicate whether or not the stock in overvalued or
undervalued.
HABIB BANK
-6
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Year >&&6 >&&' >&&<
E,3it5 09155330 9983-129 51268782
S)are Ca0ital 3788888 3788888 5978888
Boo* $al3e 0er S)are 6:B ':9< 9:A9
BANK AL FALAH
Year >&&6 >&&' >&&<
E,3it5 18952389 1-53335- 1038692-
S)are Ca0ital 9888888 3988888 5779888
Boo* $al3e 0er S)are >:11 >:11 1:<>
18 State.ent o1 ca-) 1lo6=
)ash flow ratios indicate li*uidity borrowing capacity or profitability. $his section of the
financial ratio looks at cash flow indicators which focus on the cash being generated in
terms of how much is being generated and the safety net that it provides to the company.
$hese ratios can give users another look at the financial health and performance of a
company.
O0eratin2 Ca-) Flo6 to Total De;t=
O0eratin2 Ca-) Flo6 to Total De;t C O0eratin2 Ca-) Flo6DTotal De;t
$his coverage ratio compares a company@s operating cash flow to its total debt which for
purposes of this ratio is defined as the sum of short/term borrowings the current portion
of long/term debt and long/term debt. $his ratio provides an indication of a company@s
ability to cover total debt with its yearly cash flow from operations. $he higher the
percentage ratio the better the company@s ability to carry its total debt.
HABIB BANK
-7
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Year >&&6 >&&' >&&<
O0eratin2 Ca-) 1lo6 15691915 93220839 162-1355
Total De;t-
9-3606182 326590872 36250579-
O0eratin2 Ca-) Flo6 to T:De;t &:&AA &:&<9 &:&>'
BANK AL FALAH
Year >&&6 >&&' >&&<
O0eratin2 Ca-) 1lo6 5692-32 -7309-29 2077383
Total De;t- 23-00-973 -12359-86 --1703829
O0eratin2 Ca-) Flo6 to T:De;t &:&>9 &:1>6 &:&&'
O0eratin2 Ca-) Flo6 0er S)are=
O0eratin2 Ca-) Flo6 0er S)are C O0eratin2 ca-) 1lo6 D Total S)are-
HABIB BANK
Year >&&6 >&&' >&&<
O0eratin2 Ca-) 1lo6 15691915 93220839 162-1355
Total S)are- 378888 378888 597888
O0eratin2 Ca-) Flo6 0er S)are >B:<' <1:(< >(:&>
BANK AL FALAH
Year >&&6 >&&' >&&<
O0eratin2 Ca-) 1lo6 5692-32 -7309-29 2077383
Total S)are- 988888 398888 577988
O0eratin2 Ca-) Flo6 0er S)are 1B:'& 6&:99 A:1>
.
>: Co..on Si?e Anal5-i- J$ertical an/ Hori?ontal8=
08
S)ei*) +a,a- A).e/
Mc&'&(&&('9
$he term Ftrend analysisF refers to the concept of collecting information and attempting
to spot a pattern or trend in the information. In some fields of study the term Ftrend
analysisF has more formally/defined meanings. Although trend analysis is often used to
predict future events it could be used to estimate uncertain events in the past. !inancial
statement information is used by both e.ternal and internal users including investors
creditors managers and e.ecutives. $hese users must analy+e the information in order to
make business decisions so understanding financial statements is of great importance.
&everal methods of performing financial statement analysis e.ist. I will discuss two of
these methodsR hori+ontal analysis and vertical analysis.
a8 Hori?ontal Anal5-i-
"ethods of financial statement analysis generally involve comparing certain information.
$he hori+ontal analysis compares specific items over a number of accounting periods.
!or e.ample accounts payable may be compared over a period of months within a fiscal
year or revenue may be compared over a period of several years. It is a procedure in
fundamental analysis in which an analyst compares ratios or line items in a company@s
financial statements over a certain period of time. $he analyst will use his or her
discretion when choosing a particular timelineH however the decision is often based on
the investing time hori+on under consideration.
HOIKONTAL ANALYSIS
HABIB BANK
BALANCE SHEET
AS ON DEC A1 >&&<# >&&' L >&&6
J30ee- in M&&&@8
Hori?ontal Anal5-i-
>&&< >&&' >&&6
ASSETS
>&&< >&&' >&&6
)ash and balances
939--1-0 99065330 03-18056 122.85 117.6 188
with treasury banks
1alances with
-7-85-21 25828580 -9739806 187.27 59.1- 188
other banks
01
S)ei*) +a,a- A).e/
Mc&'&(&&('9
/////// /////////// /////////
Final Project Finance FIN 619
Lending to
financial 317-565 13261-8 3998126 70.93 20.63 188
institutions
Investments 1-610972 155702291 117965053 11.992 106.6 188
Advances 093-99985 -621525-0 -070-2369 1-8.3 187.0 188
:ther assets -9017292 25-03111 15539271 177.-5 19-.7 188
:perating fi.ed
10591292 1-568999 11790653 12-.-7 119.- 188
assets
'eferred ta. asset 11222000 331--52 2529063 011.53 202.3 188
TOTAL ASSETS 'B'9><A<9 691991B>1 B9&>91(6< 1><:( 11':> 1&&
LIABILITIES
1ills payable 7700295 190162-8 95-5095 15-.-2 236.5 188
1orrowings from
financial 03600678 96770387 93-72258 6-.85 180.3 188
institutions
'eposits and other
975878909 9-1276125 097108176 1-8.89 119.5 188
accounts
&ub/ordinate loans -790729 -188888 8 8 8 8
Liabilities against
assets subject to
finance lease
:ther liabilities 2071-2-3 1770-123 19956155 197.72 126 188
'eferred ta.
liability
TOTAL
6<>'('9BA 6><'B(&9> BA6<(<1&> 125.16 115.1 188
LIABILITIES
NET ASSETS 'B1<&(A6 6A>A'(>9 BA((AA66 1(&:6' 11<:A 1&&
EPESENTED BY
S)are)ol/er- E,3it5
&hare capital 5978888 3788888 3788888 118 188 188
,eserves 2020-290 17621099 15682960 1-3.16 111.- 188
Dnappropriated
profit
-7005306 26-01358 28 059868 197.72 126 188
02
S)ei*) +a,a- A).e/
Mc&'&(&&('9
$otal e*uity
attributable to the
51268782 9983-129 09155330 195.56 121.7 188
e*uity holders of
the 1ank
"inority interest 678877 739302 71--15 75.096 189.5 188
&urplus on
revaluation of -8870-9 5286332 5-92-69 (&:9A1 9<:&B 1&&
assets / net of ta.
TOTAL E%!ITY 'B1<&(A6 6A>A'(>9 BA((AA66 108.35 116.- 188
HOIKONTAL ANALYSIS
HABIB BANK
CONSOLIDATED POFIT L LOSS ACCO!NT
AS ON DEC A1 >&&<# >&&' L >&&6
>&&< >&&' >&&6 Hori?ontal Anal5-i-
J30ee- in M&&&@8 >&&< >&&' >&&6
"ark/up > return >
interest earned
3--898-- 98061821 0-369508 100.71 119.3 188
"ark/up > return >
interest e.pensed
23929993 1719-795 1-2808-5 288.67 109.1 188
Ket mark/up >
interest income
-3557055 -1-25830 -806158- 128.33 182.6 188
;rovision against
non/performing
loans and
3780717 62-6225 263-285 201.13 265.5 188
advances / net
)harge > Ereversal<
against off/
balance sheet
-52976 E90323< E090-6< /628.81 128.2 188
obligations
)harge > Ereversal< 1787665 E60-18< E1-375< /1-700 319.9 188
of provision
against diminution
0-
S)ei*) +a,a- A).e/
Mc&'&(&&('9
////////// ////////// /////////////
///////
in the value of
investments
1ad debts written
off directly
7165080 6877271 2680852
D
>'#B9>#&'A >A#>>'#''A >'#6''#6A1 99:691 <A:9> 1&&
Net .ar*F30
intere-t inco.e
a1ter 0ro4i-ion-
!ee commission
and brokerage 0916086 -028891 -7-1518 110.72 63.77 188
income
Income > gain on
investments
2-372-- 205233- 121732- 170.23 282.5 188
Income from
dealing in foreign 2-50-16 1065-50 1182-96 219.-7 1-0.7 188
currencies
#ain on
investments in 0888--8 8 8 8 8
associate
:ther income
-113922 230-853 22-9689 1-7.-7 116.2 188
$otal non/mark/up
> interest income
13-56611 1882-130 6067073 172.7- 116.1 188
0-758660 --2987-5 -3135125 121.96 71.70 188
Non .ar*F30 D
intere-t e70en-e
Administrative
21-06813 16275257 19029031 1-6.-7 116.3 188
e.penses
:ther provisions >
write offs / net
28813- 253111 122918 13-.-7 229.0 188
:ther charges
30591 69192 90676 115.79 199.1 188
Aorkers welfare
fund
-2-959
$otal non mark/up
> interest e.penses
217-3989 16183-2 19382637 108.97 8 188
00
S)ei*) +a,a- A).e/
Mc&'&(&&('9
Pro1it ;e1ore
>>#&A(#A'9 1B#1((#61' 1<#<(&#(<' 116:9B <&:A< 1&&
ta7ation
Ta7ation
/ )urrent 633119 5228515 5100603 8 181.1 188
/ ;rior years 2--188 1336932 E-7835< /973.35 /0251 188
/ 'eferred E205-671< E-626377< E739385< 293.2 -73.9 188
3028-97 188608-5 12588-19 98.99- 57.0 188
1B#61(#&>& 1&#&<(#&A' 1>#'&&#A1B 1>>:9( '9:( 1&&
Pro1it a1ter
ta7ation
Attri;3ta;le to=
I*uity holders of
199-9811 188882-1 123-8297 12- 57.16 188
the 1ank
"inority interest
57887 6-683 58893 112.56 117.3 188
1asic and diluted
19310828 188608-5 12588-19 122.70 57.0 188
28.05 1-.16 16.-8 111.63 52.82 188
earnings per share
HOIKONTAL ANALYSIS
BANK AL FALAH LIMITED
BALANCE SHEET
AS ON DEC A1 >&&<# >&&' L >&&6
09
S)ei*) +a,a- A).e/
Mc&'&(&&('9
J
Year-
30ee- in M&&&@8
Hori?ontal Anal5-i-
>&&< >&&'
ASSETS
)ash and balances
with treasury 116.01 270-3-56
banks
1alances with
137.9 16-685-6
other banks
Lending to
financial 23.313 -092897
institutions
Investments 1-0.03 66071930
Advances 1-2.66 151176772
:perating fi.ed
1-1.10 11722-20
assets
'eferred ta. asset 8
:ther assets 197.96 381-875
TOTAL
1>6:B9 A><<9B1B>
ASSETS
LIABILITIES
1ills payable 111.36 01-620-
1orrowings
from financial 13-.87 212-8375
institutions
'eposits and
129.93 25-15-601
other accounts
&ub/ordinate
57.576 -228696
loans
Liabilities
against assets
8
subject to
finance lease
'eferred ta.
18.69 1-57687
liability
>&&6
25697-38
125-1792
1209339-
93982218
100777-29
18982778
93--891
>'B6<BB(1
-8711-9
6-701-8
2-7987-71
-222183
1721--6
>&&< >&&' >&&6
116.01 189.5 188
137.9 100.0 188
23.313 25.51 188
1-0.03 193.3 188
1-2.66 116.1 188
1-1.10 11-.9 188
8 8 8
197.96 183.5 188
1>6:B9 119:A 1&&
8
111.36 1--.7 188
13-.87 292.7 188
129.93 110.1 188
57.576 77.73 188
8 8 8
18.69 51.62 188
03
S)ei*) +a,a- A).e/
Mc&'&(&&('9
:ther liabilities 190.93 79-1638 5-89073 190.93 1-8.9 188
TOTAL
1>6 A1>6'BA&< >6A((AB96 1>6 11<:' 1&&
LIABILITIES
NET ASSETS 1A9:>A 16>19<(( 1>>(19(B 1A9:>A 1A>:B 1&&
EPESENTED BY
SHAEHOLDES E%!ITY
&hare capital 197.7 3988888 9888888 197.7 1-8 188
,eserves 119.19 20106-- 25079-- 119.19 65.6- 188
Dnappropriated
122.12 0691608 262-852 122.12 151.7 188
profit
1-6.15 1-53335- 18952389 1-6.15 1-8.2 188
&urplus on
revaluation of 109.70 209-151 1337-08 109.70 105 188
assets / net of ta.
TOTAL
1A9:>A 16>19<(( 1>>(19(B 1A9:>A 1A>:B 1&&
E%!ITY
HOIKONTAL ANALYSIS
POFIT L LOSS ACCO!NT
AS ON DEC A1 >&&<# >&&' L >&&6
>&&< >&&' >&&6
Hori?ontal Anal5-i-
E,upees in P8884<
>&&< >&&' >&&6
"ark/up > return >
-180396- 2956-651 21171058 103.91 121.5 188
interest earned
"ark/up > return >
28--1170 1332873- 192-2663 1--.05 187.1 188
interest e.pensed
Ket mark/up > interest
18519-67 7132786 9796960 157.6- 19-.6 188
income
05
S)ei*) +a,a- A).e/
Mc&'&(&&('9
;rovision against non/
performing loans and 28-9775 2-58635 375378 271.62 --7.6 188
advances / net
;rovision for
diminution in value of 1057832 8 8 8
investment
1ad debts written off
26276 9600 19-5 1601.1 -68.2 188
directly
-90--95 2-53511 377225 983.59 --7.7 188
Net .ar*F30 D intere-t
inco.e a1ter '#1'>#&A> 6#'<6#19' B#>B9#AB' 1A6:A' 1>9 1&&
0ro4i-ion-
Non .ar*F30 D
intere-t inco.e
!ee commission and
brokerage income
29-7-21 2027977 1680776 108.36 1-0.3 188
'ividend income -8870- 30522 -5-7- 680.61 15-.1 188
Income from dealing in
foreign currencies
710609 050918 -63775 2-3.0 122.3 188
#ain on sale of
securities
020228 289-172 168591 2-0.5 11-3 188
Dnreali+ed loss on
revaluation of
investments classifies
161951 219-8 25977 395.67 56.81 188
as held for trading
:ther income 1205337 18-1-52 602877 106.13 122.9 188
$otal non/mark/up >
interest income
9209025 38-6033 -2203-7 132.35 165.- 188
1>#(1'#(B9 1>#<>(#66A <#(<A#996 1(6:A6 1B1:> 1&&
Non .ar*F30 D
intere-t e70en-e
Administrative
18501-77 6252965 9650509 162.60 108.6 188
e.penses
;rovisions against off/ 26962 3797 8 8 8 8
balance sheet
06
S)ei*) +a,a- A).e/
Mc&'&(&&('9
obligations
:ther charges 122596 7939 0--83 26-.05 22.87 188
$otal non mark/up >
183225-7 6267111 9716891 157.9 8 188
interest e.penses
Pro1it ;e1ore ta7ation 1#'9(#'>& (#BAB#BB> >#B6B#9(B 69:9(( 1'6:< 1&&
Ta7ation
8 8 8
/ )urrent 15-8891 1523618 053223
/ ;rior years 221575 8 188650 217.66 8 188
/ 'eferred 18106-9 -21065 025782 2-5.15 59.1- 188
07-017 1089-2- 68-290 31.026 159 188
1A&1A&1 A1A&>>9 196>691 66:A&> 1B9:B 1&&
Pro1it a1ter ta7ation
Attri;3ta;le to=
Dnappropriated profit
0691608 262-852 1663609
brought forward
$ransferred from
surplus on revaluation
20963 20969 23850 70.27- 70.27 188
of fi.ed assets / net of
ta.
;rofit available for
3155525 9755663 -359318 136.85 132.3 188
appropriation
;8 $ertical Anal5-i-
It is a method of financial statement analysis in which each entry for each of the three
major categories of accounts Eassets liabilities and e*uities< in a balance sheet is
represented as a proportion of the total account. $he main advantages of analy+ing a
balance sheet in this manner are that the balance sheets of businesses of all si+es can
easily be compared. It also makes it easy to see relative annual changes in one business.
Ahen using vertical analysis the analyst calculates each item on a single financial
statement as a percentage of a total. $he term vertical analysis applies because each year@s
figures are listed vertically on a financial statement. $he total used by the analyst on the
income statement is net sales revenue while on the balance sheet it is total assets. $his
approach to financial statement analysis also known as component percentages produces
common-size financial statements. )ommon/si+e balance sheets and income statements
07
S)ei*) +a,a- A).e/
Mc&'&(&&('9
can be more easily compared whether across the years for a single company or across
different companies.
$ETICAL ANALYSIS
HABIB BANK
BALANCE SHEET
AS ON AS ON DEC A1 >&&<# >&&' L >&&6
98
S)ei*) +a,a- A).e/
Mc&'&(&&('9
&hare capital 5978888 3788888 3788888 1.001 1 1.169
/////// /////////// /////////
J30ee- in M&&&@8
$ertical Anal5-i-
>&&< >&&' >&&6
ASSETS
>&&< >&&' >&&6
)ash and
balances with 939--1-0 99065330 03-18056 5.0967 6.817 5.6090
treasury banks
1alances with
-7-85-21 25828580 -9739806 9.1632 -.789 3.8726
other banks
Lending to
financial 317-565 13261-8 3998126 8.6152 8.2-9 1.1873
institutions
Investments 1-610972 155702291 117965053 1.6225 29.51 28.297
Advances 093-99985 -621525-0 -070-2369 38.211 99.2- 97.175
:ther assets -9017292 25-03111 15539271 0.35-2 -.792 -.8873
:perating
10591292 1-568999 11790653 1.703- 1.771 2.8292
fi.ed assets
'eferred ta.
11222000 331--52 2529063 1.0685 8.793 8.0315
asset
TOTAL
'B'9><A<9 691991B>1 B9&>91(6< 1&& 1&& 1&&
ASSETS
LIABILITIES
1ills payable 7700295 190162-8 95-5095 1.-12 2.226 8.752
1orrowings
from financial 03600678 96770387 93-72258 3.1683 6.929 7.99--
institutions
'eposits and
975878909 9-1276125
09710817
56.557 53.56 55.562
other accounts 6
&ub/ordinate
-790729 -188888 8 8.9216 8.006
loans
Liabilities
against assets
subject to
finance lease
:ther liabilities 2071-2-3 1770-123 19956155 -.265 2.662 2.3-71
'eferred ta.
liability
TOTAL BA6<(<1&
6<>'('9BA 6><'B(&9> 78.861 78.63 78.703
LIABILITIES
91
>
NET ASSETS
S)ei*) +a,a- A).e/
'B1<&(A6 6A>A'(>9 BA((AA66 9.919 9.14 9.054
EPESENTED BY Mc&'&(&&('9
S)are)ol/er- E,3it5
$ETICAL ANALYSIS
HABIB BANK
CONSOLIDATED POFIT L LOSS ACCO!NT
AS ON DEC A1 >&&<# >&&' L >&&6
>&&< >&&' >&&6
$ertical Anal5-i-
J30ee- in M&&&@8
>&&< >&&' >&&6
"ark/up > return >
3--898-- 98061821 0-369508 188 188 188
interest earned
"ark/up > return >
23929993 1719-795 1-2808-5 01.781 -5.70 -8.229
interest e.pensed
Ket mark/up >
-3557055 -1-25830 -806158- 96.877 32.83 37.559
interest income
;rovision against
non/performing
3780717 62-6225 263-285 18.785 13.-2 3.9901
loans and
advances / net
)harge > Ereversal<
against off/
-52976 E90323< E090-6< 8.9663 /8.186 /8.180
balance sheet
obligations
)harge > Ereversal<
of provision
against diminution 1787665 E60-18< E1-375< -.815 /8.135 /8.8-1
in the value of
investments
1ad debts written
////////// ////////// ///////////// 8 8 8
off directly
7165080 6877271 2680852 10.91- 13.80 3.0165
Net .ar*F30 D
intere-t inco.e >'#B9>#&'A >A#>>'#''A >'#6''#6A1 (A:B<6 (6:&1 6A:AB6
a1ter 0ro4i-ion-
!ee commission 0916086 -028891 -7-1518 5.1-59 3.559 7
and brokerage
92
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Mc&'&(&&('9
///////
income
Income > gain on
investments
2-372-- 205233- 121732- -.5023 0.676 2.5716
Income from
dealing in foreign 2-50-16 1065-50 1182-96 -.5983 2.703 2.92-0
currencies
#ain on
investments in 0888--8 8 3.-171 8.-132 8
associate
:ther income
-113922 230-853 22-9689 0.72- 9.2-3 9.1157
$otal non/mark/
up > interest 13-56611 1882-130 6067073 29.65- 17.63 17.0--
income
0-758660 --2987-5 -3135125 37.097 39.65 62.567
Non .ar*F30 D
intere-t e70en-e
Administrative
21-06813 16275257 19029031 --.522 -3.29 -9.-1
e.penses
:ther provisions >
write offs / net
28813- 253111 122918 8.-132 8.905 8.2680
:ther charges
30591 69192 90676 8.182- 8.137 8.1295
Aorkers welfare
fund
-2-959 8.9111 8 8
$otal non mark/up
> interest e.penses
217-3989 16183-2 19382637 -0.392 8 -9.513
Pro1it ;e1ore
ta7ation
>>#&A(#A'9 1B#1((#61' 1<#<(&#(<' A(:<&' A& (A:1>'
Ta7ation
/ )urrent 633119 5228515 5100603 8 10.- 13.-99
/ ;rior years 2--188 1336932 E-7835< 8.-362 -.-89 /8.867
/ 'eferred E205-671< E-626377< E739385< /-.786 /5.960 /2.21
3028-97 188608-5 12588-19 18.102 17.76 27.852
Pro1it a1ter
ta7ation
1B#61(#&>& 1&#&<(#&A' 1>#'&&#A1B >(:66B 19:9< >9:&'>
Attri;3ta;le to=
I*uity holders of 199-9811 188882-1 123-8297 20.90 17.61 26.712
9-
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Mc&'&(&&('9
the 1ank
"inority interest
57887 6-683 58893 8.129 8.15 8.13
19310828 188608-5 12588-19 20.33 28 27.85
1asic and diluted
28.05 1-.16 16.-8 -.2- 2.31 0.167
earnings per share
$ETICAL ANALYSIS
BALANCE SHEET
AS ON DEC A1 >&&<# >&&' L >&&6
J
Year-
30ee- in M&&&@8
$ertical Anal5-i-
>&&< >&&' >&&6
ASSETS >&&< >&&' >&&6
)ash and
balances with -2765--9 270-3-56 25697-38 7.0922 6.79 18.189
treasury banks
1alances with
2196180- 16-685-6 125-1792 3.16-6 9.967 0.316-
other banks
Lending to
financial --19988 -092897 1209339- 8.79 1.89 0.9160
institutions
Investments 5975-2-6 66071930 93982218 21.537 23.71 28.079
Advances 172351137 151176772 100777-29 99.286 92.89 92.973
90
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Mc&'&(&&('9
:perating
1-55-27- 11722-20 18982778 -.7033 -.329 -.6876
fi.ed assets
:ther assets 6767163 381-875 93--891 2.9596 1.626 2.80--
TOTAL
A(<99&'6( A><<9B1B> >'B6<BB(1 1&& 1&& 1&&
ASSETS
LIABILITIES
1ills payable -0928-1 01-620- -8711-9 8.7671 1.296 1.121-
1orrowings
from financial 1-378222 212-8375 6-701-8 -.7226 3.099 -.8006
institutions
'eposits and
-885-2696 25-15-601 2-7987-71 63.152 6-.83 63.656
other accounts
&ub/ordinate
2951137 -228696 -222183 8.5-35 8.757 1.1366
loans
Liabilities
against assets
subject to
finance lease
'eferred ta.
286039 1-57687 1721--6 8.8975 8.02 8.3737
liability
:ther liabilities 11271268 79-1638 5-89073 -.2-90 2.676 2.3077
TOTAL
AA19(6&>B A1>6'BA&< >6A((AB96 9B:116 9B:&' 9B:BB9
LIABILITIES
NET ASSETS 1'&(('A9 16>19<(( 1>>(19(B (:<<( (:9A (:((1
EPESENTED BY=
S)are)ol/er- E,3it5
&hare capital 5779888 3988888 9888888 2.291 1.98 1.814
,eserves -133893 20106-- 25079-- 0.907 0.73 0.997
Dnappropriated
-005035 0691608 262-852 0.988 1.48 1.024
profit
1038692- 1-53335- 18952389 4.186 4.19 3.835
&urplus on
revaluation of 20-3213 209-151 1337-08 0.698 0.75 0.606
assets / net of ta.
99
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Mc&'&(&&('9
TOTAL
1'&(('A9 16>19<(( 1>>(19(B 4.884 4.93 4.441
E%!ITY
$ETICAL ANALYSIS
POFIT L LOSS ACCO!NT
AS ON DEC A1 >&&<# >&&' L >&&6
>&&< >&&' >&&6
$ertical Anal5-i-
E,upees in P8884<
>&&< >&&' >&&6
"ark/up > return > interest
-180396- 2956-651 21171058 188 188 188
earned
"ark/up > return > interest
28--1170 1332873- 192-2663 39.063 30.03 51.662
e.pensed
Ket mark/up > interest
18519-67 7132786 9796960 -0.910 -9.90 01.2-
income
;rovision against non/
performing loans and 28-9775 2-58635 375378 3.99 7.179 -.272-
advances / net
;rovision for diminution
1057832 0.53 8 8
in value of investment
1ad debts written off
26276 9600 19-5 8.871 8.82- 8.885-
directly
-90--95 2-53511 377225 11.01- 7.216 -.2773
Net .ar*F30 D intere-t
inco.e a1ter 0ro4i-ion-
'#1'>#&A> 6#'<6#19' B#>B9#AB' >A:1&1 >6:A> >(:<1<
Non .ar*F30 D intere-t
inco.e
!ee commission and
brokerage income
29-7-21 2027977 1680776 6.1571 7.02- 6.9153
'ividend income -8870- 30522 -5-7- 8.737- 8.291 8.1539
93
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Mc&'&(&&('9
Income from dealing in
710609 050918 -63775 2.7035 1.60 1.6232
foreign currencies
#ain on sale of securities
020228 289-172 168591 1.-330 5.73- 8.6927
Dnreali+ed loss on
revaluation of investments
161951 219-8 25977 8.9606 8.860 8.1-82
classifies as held for
trading
:ther income 1205337 18-1-52 602877 0.8165 0 -.75-6
$otal non/mark/up >
9209025 38-6033 -2203-7 13.679 2-.02 19.215
interest income
1>#(1'#(B9 1>#<>(#66A <#(<A#996 1AB':A >'&A >19>:A
Non .ar*F30 D intere-t
e70en-e
Administrative e.penses 18501-77 6252965 9650509 9719.6 -6020 21263
;rovisions against off/
26962 3797 8 2.2786 8.802 8
balance sheet obligations
:ther charges 122596 7939 0--83 2.-08- 8.896 1.-0-
$otal non mark/up >
183225-7 6267111 9716891 69.905 07.65 37.599
interest e.penses
Pro1it ;e1ore ta7ation 1#'9(#'>& (#BAB#BB> >#B6B#9(B B:'<&' >':>9 1>:1&<
Ta7ation
8 8 8
/ )urrent 15-8891 1523618 053223 9.9520 3.375
/ ;rior years 221575 8 188650 8.5100 8 8.053
/ 'eferred 18106-9 -21065 025782 -.2365 1.205 2.8172
07-017 1089-2- 68-290 1.967- 9.09 -.5789
1A&1A&1 A1A&>>9 196>691 (:191( 1>:1( 7.2315
Pro1it a1ter ta7ation
Attri;3ta;le to=
Dnappropriated profit
0691608 262-852 1663609
brought forward
$ransferred from surplus
on revaluation of fi.ed 20963 20969 23850 8.8572 8.879 8.12-
assets / net of ta.
;rofit available for
3155525 9755663 -359318 17.676 2-.16 15.-09
appropriation
A: e4ie6 o1 De-cri0ti4e In1or.ation
95
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Ha;i; Ban* Li.ite/=
$hese financial statements have been prepared in accordance with approved accounting
standards as applicable in ;akistan. Approved accounting standards comprise of such
International !inancial ,eporting &tandards issued by the International Accounting
&tandards 1oard as are notified under the )ompanies :rdinance 1760 provisions of and
directives issued under the )ompanies :rdinance 1760 and 1anking )ompanies
:rdinance 1732 and the directives issued by &tate 1ank of ;akistan E&1;<. In case the
re*uirements of provisions and directives issued under the )ompanies :rdinance 1760
and 1anking )ompanies :rdinance 1732 and the directives issued by &1; differ the
provisions of and directives issued under the )ompanies :rdinance 1760 and 1anking
)ompanies :rdinance 1732 and the directives issued by &1; shall prevail.
Amended IA& 25 )onsolidated and &eparate !inancial &tatements Eeffective for annual
periods beginning on or after 1 (uly 2887< re*uires accounting for changes in ownership
interest by the group in a subsidiary while maintaining control to be recogni+ed as an
e*uity transaction. Ahen the group loses control of subsidiary any interest retained in the
former subsidiary will be measured at fair value with the gain or loss recogni+ed in the
profit or loss. $he application of the standard is not likely to have an effect on the
#roup@s financial statements. $he auditors conducted their audit in accordance with the
auditing standards as applicable in ;akistan. $hese standards re*uire that they plan and
perform the audit to obtain reasonable assurance about whether the above said statements
are free of any material misstatement. And in their opinion the consolidated financial
statements present fairly the financial position of Habib 1ank Limited as at 'ecember -1
2883 2885 B 2886 and the results of its operations its cash flows and changes in e*uity
for the year then ended in accordance with the approved accounting standards as
applicable in ;akistan.
Ban* Al Fala) Li.ite/=
$he financial statements prepared by the management present fairly its state of affairs
the results of its operating cash flow and changes in e*uity. All directors of the company
are registered as ta. payers and none of them has default in payments of any loan to a
banking company. $he auditors perform their audit in accordance with the auditing
96
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Mc&'&(&&('9
standards as applicable in ;akistan. $hese standards re*uire that they plan and perform
the audit to obtain reasonable assurance about whether the above said statements are free
of any material misstatement. And in their opinion the consolidated financial statements
present fairly the financial position of Habib 1ank Limited as at 'ecember -1 2883
2885 B 2886 and the results of its operations its cash flows and changes in e*uity for the
year then ended in accordance with the approved accounting standards as applicable in
;akistan.
$he board of directors through its sub committee called 1oard ,isk "anagement
)ommittee E1,")< oversees the overall risk of the bank. ,"' is the organi+ational arm
performing the functions of identifying measuring monitoring and controlling the
various risks and assists the Ape. level committee and the various sub/ committees in
conversion of policies into action.
)redit risk "anagement processes encompasses identification assessment measurement
monitoring and control of the credit e.posures. $he bank as per &tate 1ank of ;akistan
#uidelines has migrated to baseII as on (anuary with the standardi+ed approach.
(: Co.0ari-on-
!inancial trend analysis is an applied practical approach for monitoring the financial
condition of any company through the use of financial indicators. I shall use techni*ue to
compare previous three/year period data and observes how they change. $his would
permit an assessment of the current financial condition.
a8Tren/Anal5-i-
A firm@s present ratio is compared with its past and e.pected future ratios to determine
whether the company@s financial condition is improving or deteriorating over time. $rend
analysis studies the financial history of a firm for comparison. 1y looking at the trend of
a particular ratio one sees whether the ratio is falling rising or remaining relatively
constant. $his helps to detect problems or observe good management.
97
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Mc&'&(&&('9
TEND ANALYSIS
HABIB BANK LIMITED
FO THE YEAS >&&6# >&&' L >&&<
Per1or.ance Area >&&6 >&&' >&&< Tren/
a8 Li,3i/it5 atio-
)urrent ,atio
1.28 1.17 1.13
Lower li*uidity in
2886
&ales to Aorking )apital
8.9 times 8.9 times 8.3 times
Increase in 2886
Aorking )apital
79199250 1807-6111 188883399
Lower li*uidity in
2886
;8 Le4era2e atio-
$ime Interest Iarned
2.0- 1.57 1.6-
Lower since 2886
'ebt ,atio
8.71 8.71 8.7
Leverage remain
same
'ebt to I*uity ,atio
11.66 11.02 7.96
'rops in leverage in
2886
)urrent Aorth > Ket worth
,atio
1.56 1.33 1.--
Higher in 2883
$otal )apitali+ation ,atio
8.93 8.9- 8.02
Lower during 2886
Long term Assets versus Long
term 'ebt
8.23 8.-- 8.91
'rops in leverage in
2883
De;t Co4era2e atio
8.82 8.886 8.886-
Lower coverage in
2883
Ket ;rofit "argin
27.85G 17.75G 20.33G
Lower profitability
during 2885
:perating Income "argin
95.7G 06G 97.3G
Increased ;rofitability
since 2886
38
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Mc&'&(&&('9
,eturn on Assets
2.25G 1.95G 2.19G
Lower ,:A during
2885
:perating Assets $urnover
172.5G 172.5G 150.58G
Lower efficiency
since 2886
,eturn on :perating Assets
1-.06G 18.-5G 11.17G
Lower efficiency in
2885
&ales to !i.ed Assets
-.39 times -.33 times -.33 times
Ko change in last -
years
/8 Acti4it5 atio-=
$otal Asset $urnover
8.85 8.85 8.86
Higher efficiency
since 2886
e8 Mar*et atio-=
'ividend per &hare J ';&
1.8817 2.8810 -.975
#ood market
perceptions
Iarning ;er &hare/ I;&
16.01 10.31 28.95
Higher In 2886
;rice > Iarning ,atio
8.90 8.36 8.07
Lower in 2886
'ividend ;ayout ,atio
8.8900 8.1-5 8.159
#ood market
perceptions
'ividend %ield
8.18817 8.28810 8.-975
Lower in 2883
1ook =alue per &hare
3.9 5.76 7.-7
#ood market
perceptions
18 State.ent o1 ca-) 1lo6
:perating )ash !low to $otal
'ebt
8.8-- 8.867 8.825
Lower in 2883
:perating )ash !low per
&hare
29.65 61.06 20.82
Increased during 2885
31
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Mc&'&(&&('9
TEND ANALYSIS
FO THE YEAS >&&6# >&&' L >&&<
Per1or.ance Area >&&6 >&&' >&&< Tren/
a8 Li,3i/it5 atio-
)urrent ,atio
1.83 1.18 1.83
Higher li*uidity in
2885
&ales to Aorking )apital
1.-6 8.69 1.95 Increase in 2886
Aorking )apital 19253927 -8126660 17501-82 Lower li*uidity in
2883
;8 Le4era2e atio-
$ime Interest Iarned 1.13 1.25 1.86
Lower since 2886
'ebt ,atio
8.79 8.79 8.79
Leverage remain
same
'ebt to I*uity ,atio 20.71 22.51 22.52 'rops in leverage in
2886
)urrent Aorth > Ket worth
,atio
1.205
1.69 1.19 Higher during 2885
$otal )apitali+ation ,atio 8.93106578
7
8.392--798
7
8.9277096 Increased during
2885
Long term Assets versus
Long term 'ebt
1.81 8.03 8.3- Higher during
leverage in 2883
32
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Mc&'&(&&('9
'ebt )overage ,atio 8.899-2163
7
8.806-983-
-
8.89869-1 Lower coverage in
2885
Ket ;rofit "argin 8.86G
8.12G 8.80G
Lower profitability
during 2883
:perating Income "argin 8.3655-638
0
8.963--500
-
8.90-5106
Increased
;rofitability since
2883
et3rn on A--et- 8.81255316 8.818-9980
9 1
8.88-6-7- Lower ,:A during
2885
:perating Assets $urnover
2.01G 2.-1G 2.17G
Lower efficiency
since 2886
,eturn on :perating Assets
8.8-0 8.892 8.817
Lower efficiency in
2886
&ales to !i.ed Assets
2.815 times 2.13 times 2.29 times Lower in 2883
/8 Acti4it5 atio-=
$otal Asset $urnover
8.85 8.85 8.86
Higher efficiency
since 2886
e8 Mar*et atio-=
'ividend per &hare J ';&
88 88
1.21 'ividend announced
just in 2886
Iarning ;er &hare/ I;&
-.929 0.619 1.325 Higher In 2885
;rice > Iarning ,atio
8.90 8.36 8.07 Lower in 2886
'ividend ;ayout ,atio
88 88 8.50
#ood market
perceptions
'ividend %ield Ko 'ividend in 2883
88 88 8.121
B 2885
1ook =alue per &hare
2.11 2.11 1.62
#ood market
perceptions
3-
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Mc&'&(&&('9
18 State.ent o1 ca-) 1lo6
:perating )ash !low to $otal
'ebt
8.827 8.123 8.885 Lower in 2886
:perating )ash !low per
&hare
19.58 38.77 -.12
Increased during
2885
;8 In/3-tr5 A4era2e- an/ Co.0ari-on- 6it) Co.0etitor-
$he entire ratio has been compared through above mentioned comparisons and analysis.
Ahich include hori+ontal analysis vertical analysis and trend analysis
c8 S3..ar5
!inancial &tatement Analysis is a method used by interested parties such as investors
creditors and management to evaluate the past current and projected conditions and
performance of the firm. $his report mainly deals with the insight information of the two
mentioned companies. In the current picture where financial volatility is endemic and
financial intuitions are becoming popular when it comes to investing the sound analysis
of financial statements is one of the most important elements in the fundamental analysis
process. At the same time the massive amount of numbers in a company@s financial
statements can be bewildering and intimidating to many investors. However through
financial ratio analysis I tried to work with these numbers in an organi+ed fashion and
presented them in a summari+ing form easily understandable to both the management and
interested investors.
It is re*uired by law that all private and public limited companies must prepare the
financial statements like income statement balance sheet and cash flow statement of the
particular accounting period. $he management and financial analyst of the company
analy+e the financial statements for making any further financial and administrative
decisions for the betterment of the company. $herefore I select this topic so that I have
done some solid financial analysis that will certainly help the management of review their
performance and also assist the interested people like investors and creditors. $hat as a
financial analyst how can I make any important financial decision by analy+ing the
financial statements of the company. 1ecause it is the primary responsibility of the
30
S)ei*) +a,a- A).e/
Mc&'&(&&('9
financial managers or financial analyst to manage the financial matters of the company
by evaluating the financial statements. I am also providing some important suggestions
and opinions about the financial matters of the business.
/8 Concl3-ion D Fin/in2-=
I compare and analysis the financial statements of Habib 1ank Limited and 1ank Al
!alah Limited.
Li*uidity position of both companies is not up to standard both are below
industry average but the li*uidity position of Habib 1ank is better from 1ank
AL !alah Limited. Aorking capital of Habib 1ank is better than 1ank La
!alah but both companies must improve their li*uidity position.
Leverage ratios indicate the high risk associated with both the companies.
#enerally leverage ratios measures the percentage of funds provided by the
creditors. $he proportion of a firm4s total assets is being financed with high
percentage of borrowed funds.
;rofitability ratios of Habib 1ank Limited are better than 1ank AL !alah
Limited. Ket profit of 1ank Al falah Limited is low due to heavy financial
charges.
Habib 1ank has a good market perception due to continuous declaration of
dividends but on the other hand 1ank LA !alah limited has not announced in
dividend in the year 2883 and 2885.
1ook value per share of Habib 1ank Limited is much higher than the Al
!alah 1ank. It is the Indication of the net worth of the corporation. &omewhat
similar to the earnings per share but it relates the stockholder@s e*uity to the
number of shares outstanding giving the shares a raw value. &o the net worth
of Habib 1ank is better than Al !alah 1ank.
Iarning per &hare and :perating cash flow of Habib 1ank Limited is also
better than 1ank AL !alah Limited.
39
S)ei *) +a,a- A).e/
Mc&'&(&&('9
e8 eco..en/ation
$his section deals with your proposed solutions or plans to cover and remove all the ills
and deficiencies that you think Ein light of data processing and analysis< needs to be removed
or improved. ,ecommendations should be vivid lucid and based on your findings. $hey
must be logical and applicable.
Section II
a8 Intro/3ction o1 t)e -t3/ent
1.com E2 %ears<
Aarsan Homoeopathic Laboratories
Assistant Accounts :fficer
2 %ears I.perience
33
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35
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;8 A00en/i7DA00en/ice-
I
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II
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III
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I=
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=
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=I
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=II
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=III
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I?
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?
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?I
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?II
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?III
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?I=
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?=
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?=I
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?=II
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?I?
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c8 Bi;lio2ra0)5
=u hand :uts
Internet sources
www.investopedia.com
www.bankalhabib.com
www.habibbankltd.com
httpR>>www.canadaone.com>tools>ratios>debtTe*uity.html
Financial Statement AnalysisR A ;ractitioner@s #uide -rd Idition.
,oss &.A. ,.A. Aesterfield and 1.'. (ordan. Issentials of )orporate !inance
E1777< 2
nd
Idition Irwin>"c#raw/Hill.
,oss &.A. ,.A. Aesterfield and (. (affe. )orporate !inance E1777< 9
th
Idition
Irwin>"c#raw/Hill.
&cott '.!. (.'. "artin (.A. ;etty and A. Ceown. 1asic !inancial "anagement
E1777< 6
th
Idition ;rentice/Hall Inc.
/8 In/e7
An inde. is an alphabetical list of names places and subjects mentioned in the report
along with the page on which they occur. $hey are rarely included in unpublished
reports.
??
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Mc&'&(&&('9

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